AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is being
executed as of January 1, 2000 (the "Effective Date") between SFX ENTERTAINMENT,
INC. ("Employer"), a Delaware corporation, and XXXXX XXXX ("Employee")
(collectively the "Parties") to be effective as of the Effective Date.
WHEREAS, the Employer and the Employee entered into a certain Employment
Agreement effective as of April 29, 1998 (The "Employment Agreement"); and
WHEREAS, the Employer and the Employee desire to amend and restate the
Employment Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, the Parties do hereby agree as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment, subject to the terms and conditions set forth below.
2. Duties.
2.1. Capacities
2.1.1 Employee shall be employed in the capacity of Chairman of
SFX Sports Holdings, Inc., and SFX Sports Group, Inc. (together the
"Sports Group"), and in such capacity, shall have the rights and
responsibilities attendant to that of the chief executive officer of a
subsidiary of a publicly traded company. Employee will, subject to
consultation with, and approval of, the Executive Chairman and the
President and Chief Executive Officer of the Employer, have decision
making power over any decisions, with respect to changing the Sports
Group's policies, personnel, culture, compensation structure,
reporting systems or configuration and alignment of operating
divisions. Employee's duties in such capacity shall be to control,
direct and supervise the day-to-day operations of the Sports Group.
All sports-related businesses of Employer (other than motorized
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sports or any sports-related business that provides less than 25% of
the revenues of any entity acquired by Employer, if a condition of the
purchase agreement for such entity is for such business to be operated
within the entity acquired) will be operated under the Sports Group
and will report to Employee subject only to the oversight and
direction of the Employer's Board of Directors (the "Board"). Employee
shall also perform other duties which may be reasonably assigned to
him from time to time by the Executive Chairman and the President and
Chief Executive Officer of Employer, or by Employer's Board of
Directors, and that are consistent with his position.
2.1.2 Employee shall be a member of the Office of the Chairman of
Employer, which shall be the highest management body of Employer,
reporting solely and directly to the Executive Chairman of Employer.
The Office of the Chairman shall include (in addition to the Executive
Chairman and the Employee) the President and Chief Executive Officer
of Employer, the ("Chief Executive Officer") the Chief Financial
Officer of Employer, and one or more Executive Vice Presidents of
Employer
2.1.3 It is expressly understood that Employee may (1) devote a
reasonable amount of time to charitable, civic and industry-related
boards or organizations, (2) manage his personal, financial and legal
affairs and (3) with the express prior written approval of the Board,
which approval shall not be unreasonably withheld, serve as a director
of any corporate entity; provided, that any such activity does not
substantially interfere with the performance by Employee of his duties
and responsibilities under this Agreement, including continuing to be
associated with or serving on any associations, organizations and
boards, with which Employee is associated with or is serving on as of
the Effective Date.
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2.2. Additional Positions. During the Term of Employment (as
defined in Section 5.1 hereof), Employee agrees, and Employer shall
appoint Employee, to serve as a director of Employer, the Sports Group
and each subsidiary of the Sports Group; provided, Employer agrees
that Employee shall be indemnified for serving in any and all such
capacities on a basis no less favorable than is provided by the
Employer's bylaws as may be amended from time-to-time or by any
written agreement between the Employee and the Employer regarding
indemnification, in a manner consistent with that provided to Senior
Executives (as defined in Section 9.2 hereof) of the Employer, and, if
ever not so indemnified, Employee may, without limiting any other
remedies, cease serving in such director positions. In addition,
Employee shall continue as Chairman of Financial Advisory Management
Enterprises, Inc.
2.3. Place of Performance. In connection with his employment by
the Employer, Employee shall be based in the Washington, D.C.
metropolitan area at the current offices of the Sports Group. Employee
shall be provided with office space and support staff equivalent to
that provided to him by the Sports Group immediately before the
Effective Date.
3. Compensation.
3.1. Salary and Withholding.
3.1.1 Salary. During the Term of Employment, as compensation for
services rendered by Employee, Employer shall pay Employee a base
salary ("Salary") in semi-monthly installments at an annual rate equal
to $450,000. Employee's Salary shall be reviewed by the Executive
Chairman of Employer in accordance with Employer's standard policies
and practices, and may be increased, but not decreased, at Employer's
discretion. In any event, Employee's Salary shall be increased
effective as of each anniversary of the Effective Date by 5.0% over
the then effective Salary.
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3.1.2 Withholding for Taxes. Compensation (herein defined) shall
be subject to any and all applicable payroll and withholding
deductions required by the law of any jurisdiction, state or federal,
taxing authority with respect to such Compensation.
3.1.3 Definition of Compensation. The Salary, and the other
perquisites set forth in this Agreement including the Benefits, are
herein collectively referred to as the "Compensation."
3.2. Expenses. Employer shall reimburse Employee, in accordance with
Employer's standard expense reimbursement policy, for reasonable expenses
incurred by Employee, upon presentation of documentation reasonably
acceptable to Employer in accordance with the policies applicable to Senior
Executives of the Employer. Expenses incurred by Employee that are
consistent with the practices of the Sports Group prior to the Effective
Date, including but not limited to hotel accommodations and first class air
travel, shall be deemed reasonable under this Section 3.2. In connection
with such reimbursement, Employer shall provide Employee with a credit card
or cards to be used for paying such expenses. Such card or cards shall be
the property of Employer and upon termination of the Term of Employment
shall be returned to Employer by Employee. Employee shall be responsible
for and shall reimburse Employer for any and all payments made by Employer
for Employee's personal, non-reimbursable expenses charged on any such card
or cards. To the extent appropriate, Employee shall be permitted to travel
on charter flights or on the Employer's corporate jet.
3.3. Grant of Stock Options and Restricted Stock.
3.3.1 Grants. Employer shall grant Employee stock options (the "
Stock Options") and stock to Employee during the Term of Employment in
a manner and amount consistent
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with grants made to Senior Executives of the Employer; provided, that
Stock Options for at least 45,000 shares of Common Stock shall be
granted in each of the calendar years comprising the Term of
Employment). Each Stock Option shall have an exercise price equal to
the closing price of the Common Stock on the date of the grant. Each
Stock Option shall have a ten-year term and shall vest and become
exercisable on a schedule to be determined by the Board or the Stock
Option Committee, but in no event shall the vesting schedule exceed
the Term of Employment, nor shall the terms and conditions of such
options (including those terms and conditions described above) be any
less favorable than the terms and conditions applicable to options
granted to the other Senior Executives of Employer. The Employee shall
be permitted to use shares of Common Stock to exercise the Stock
Options and to pay any withholding obligation upon such exercise. The
Stock Options shall be granted as incentive stock options under the
Internal Revenue Code of 1986, as amended (the "Code"), to the extent
permitted under the Code.
3.3.2 Termination of Employment. Notwithstanding the foregoing,
in the event that Employee ceases to be employed by Employer for any
reason whatsoever (including upon death or permanent and total
disability of Employee) other than as a result of a voluntary
termination (that is not a Constructive Termination Event) or
termination for Cause, (x) all restricted stock which may be granted
pursuant to this Section 3.3 shall vest immediately and all options
granted pursuant to this Section 3.3 shall vest and become exercisable
immediately, and (y) the balance of all remaining stock options to be
granted during the Term of Employment pursuant to this Section 3.3
shall immediately be granted and shall vest and become exercisable
immediately at an exercise price per share equal to the lower of (A)
the closing price of the Common Stock on the date of the relevant
event or occurrence and (B) the exercise price of the last option
granted to Employee prior to such event or occurrence, and Employee
shall retain the right to exercise each such options described in
clauses (x) and (y) during the remaining original term of each such
option. In the event of Employee's voluntary
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termination (that is not a Constructive Termination Event) or
termination for Cause, all unvested options and restricted stock shall
be forfeited, all vested option shall remain exercisable until the
first to occur of the end of the original term or one year following
the termination of employment, and no Stock Options not thereto
granted will be granted.
3.3.3 Adjustments. The number of shares subject to the Stock
Options to be granted under this Section 3.3, and the kind of shares
subject to such options shall be equitably adjusted to reflect any
change in the Common Stock including, without limitation, a
recapitalization, spin-off, stock split, consolidation, reorganization
or merger. To the extent applicable, this Section 3.3 shall
automatically be deemed to be modified to ensure that Employee's
rights with respect to acceleration of option grants, acceleration of
option vesting and other rights are at least as favorable as the
rights that from time to time are generally applicable to other Senior
Executives of Employer.
3.4. Other Benefits. During the Term of Employment, Employer shall
provide the following additional benefits to Employee:
3.4.1 Health Insurance. Medical, dental and hospitalization
insurance for Employee and his family with the same scope and coverage
and on the same terms as is provided by Employer to the Chief
Executive Officer and other Senior Executives of Employer, as may be
amended from time to time; provided, that such insurance shall have no
gap in coverage with Employee's current insurance; and provided,
further, that such insurance will have no exclusions for pre-existing
conditions.
3.4.2 Term Life Insurance. Term life insurance upon the life of
Employee in an amount and on the same terms consistent with insurance
made available to the Chief Executive
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Officer and other Senior Executives of Employer, as may be amended
from time to time, including, if applicable, split-dollar insurance
policies, provided, that such insurance shall have no gap in coverage
with Employee's current insurance; and provided, further, that such
insurance will have no exclusions for pre-existing conditions.
3.4.3 Disability Insurance. Disability insurance in an amount and
on the same terms consistent with insurance made available to the
Chief Executive Officer and other Senior Executives of Employer, as
may be amended from time-to-time, provided, that such insurance shall
have no gap in coverage with Employee's current insurance; and
provided, further, that such insurance will have no exclusions for
pre-existing conditions.
3.4.4 Other Benefit Programs. Employee shall be entitled to
participate in all other employee benefit programs of Employer which
the Board may, in its sole discretion, regularly make available to the
other Senior Executives of Employer (such as a stock bonus plan,
retirement plans and fringe benefits), on terms no less favorable than
those provided to such other Senior Executives.
3.4.5 Office in New York. Employer shall provide reasonable
office facilities in New York, New York at its principal executive
offices, with secretarial and support services, for the use of
Employee.
3.4.6 Gross-Up.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment, award, benefit or distribution (or any acceleration of
any payment, award, benefit or distribution) by Employer (or any
of its affiliated entities) to or for
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the benefit of Employee (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any
corresponding provisions of state or local tax laws, or any
interest or penalties are incurred by Employee 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 Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") from Employer in an
amount such that after payment by Employee of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, Employee retains an amount
of the Gross-Up Payment equal to 100% of the Excise Tax imposed
upon the Payments. The payment of a Gross-Up Payment shall not be
conditioned upon the occurrence of a termination of employment.
(b) Subject to the provisions of Section 3.4.6(a), all
determinations required to be made under this Section 3.4.6,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
Employer's independent accounting firm as of immediately prior to
the Change in Control (the "Accounting Firm"), which shall
provide detailed supporting calculations both to Employer and
Employee within fifteen (15) business days of the receipt of
notice from Employee that there has been a Payment, or such
earlier time as is requested by Employer. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control,
Employer shall appoint another nationally recognized accounting
firm reasonably acceptable to Employee to make the determinations
required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be bome solely by Employer. Any
Gross-Up Payment, as determined pursuant to this Section 3.4.6,
shall be paid by Employer to Employee within five (5) days
following receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm
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shall be binding upon Employer and Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not
have been made by Employer should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that Employee thereafter is required
to make a payment of any Excise Tax (or any additional Excise
Tax), the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by Employer to or for the benefit of Employee. In
the event of any claim by the Internal Revenue Service for any
Excise Tax or additional Excise Tax, Employer shall have the
right to control the defense of such claim and Employee shall
cooperate and assist Employer in connection therewith as
reasonably requested by Employer; provided that all expenses of
such claim (including any additional interest or penalties) shall
be paid by Employer, and Employer shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or
income tax (including any interests and penalties) imposed as a
result of such representation and payment of costs and expenses.
In addition, Employee will cooperate as reasonably requested by
Employer with Employer in making any refund claim for any Excise
Tax already paid, and any refunds of any such tax (or any
Gross-Up Payments or other payments made by Employer in respect
thereof) obtained by the Employee shall be promptly returned to
Employer.
If Employer directs the Employee to pay such claim and xxx
for a refund, Employer shall advance the amount of such payment
to the Employee, on an interest-free basis and shall indemnify
and hold the Employee harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee
with respect to which such contested amount is claimed to be due
is limited solely to such contested amount.
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Furthermore, Employer's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
The reimbursement of expenses provided for in Section 3.2,
the stock and option awards provided for in Section 3.3. the
benefits provided for in this Section 3.4 and any other benefits
hereafter granted to Employee by the Board are hereinafter
referred to as the "Benefits."
4. Intentionally Deleted.
5. Term of Employment.
5.1. Definition of Term of Employment. The "Term of Employment", as
used in this Agreement, shall mean the period commencing on the Effective
Date and terminating with the first to occur of the following:
5.1.1 April 29, 2003 (the "Term Date");
5.1.2 termination of the Term of Employment by Employer without
Cause;
5.1.3 termination of the Term of Employment by Employee by notice
to Employer at any time following a Constructive Termination Event (as
such term is defined in Section 9.1 hereof); and
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5.1.4 termination of the Term of Employment as permitted by, and
in accordance with, the provisions of Section 6.
5.2. Effect of Termination of Term of Employment. Upon termination of
the Term of Employment, the following provisions shall apply:
5.2.1 Employee shall no longer be employed by Employer;
5.2.2 Employee shall no longer be obligated to provide any
employment, consulting or similar services to Employer;
5.2.3 If the Term of Employment is terminated pursuant to
Sections 5.1.2 or 5.1.3 hereof, then the provisions of Section 7.1
hereof shall become effective and the Employer shall be irrevocably
and unconditionally obligated to fulfill and discharge all of the
obligations imposed upon it pursuant to the provisions thereof,
5.2.4 In the event Employer issues a press release concerning the
termination of Employee's employment with Employer, Employee will be
offered an opportunity that is reasonable under the circumstances to
comment on such release; and
5.2.5 Employee (or his guardian or estate, as applicable) shall
in all events be paid (within thirty (30) days following the date of
termination of the Term of Employment), (A) all accrued but unpaid
Salary through the date of termination, (B) all accrued vacation
through the date of termination, and (C) all unreimbursed business
expenses through the date of termination. In addition, Employee shall
retain all rights with respect to vested equity awards (and the
applicable
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provisions of Section 3.3), and shall be entitled to all other
Benefits which are provided in accordance with and subject to the
terms of Employer's generally applicable employee benefit plans,
practices and policies. The payments and Benefits described in this
Section 5.2.5 shall be referred to herein as the "Accrued
Obligations."
6. Termination of Employment.
6.1. Employer's Right to Terminate the Term of Employment. During the
Term of Employment, Employer may terminate the Term of Employment with or
without Cause (as herein defined) by providing written notice thereof to
Employee.
6.1.1 Effect of a For Cause Termination. If Employer terminates
the Term of Employment for Cause, such termination shall take effect
immediately upon written notice thereof being provided to Employee
subsequent to the completion of the procedure set forth in Section
6.1.2. In such event, Employer shall provide Employee with the Accrued
Obligations. Upon Employer's full, complete and timely fulfillment and
discharge of the aforesaid obligations, all obligations of Employer to
Employee hereunder shall be totally and completely satisfied, and
Employer shall have no further obligations of any type to Employee
pursuant to this Agreement (except as may be provided under Sections
3.3, 3.4.6, 18 or 19).
6.1.2 Definition of "Cause". Cause for termination of the Term of
Employment shall exist only if, during the Term of Employment:
(a) Employee is convicted of a felony involving moral
turpitude which would render Employee unable to perform his
duties set forth in this Agreement; or
(b) Employee engages in conduct that constitutes willful
gross neglect
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or willful gross misconduct in carrying out his duties under this
Agreement resulting, in either case, in a material adverse
economic effect upon the business of Employer.
For purposes of this Section 6. 1, no act, or failure to act, by Employee
shall be considered "willful" unless committed in bad faith, and without a
reasonable belief that the act or omission was in the best interests of Employer
or any of its subsidiaries. Cause shall not exist under this Section 6.1 unless
and until Employer has delivered to Employee a copy of a resolution duly adopted
by a majority of the Board at a meeting of the Board called and held for such
purpose (after reasonable, but in no event less than ten (10) days notice, to
Employee and an opportunity for Employee, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board, Employee
was guilty of the conduct set forth in this Section 6.1 and specifying the
particulars thereof in detail. This Section 6.1 shall not prevent Employee from
challenging in an arbitration proceeding the Board's determination that Cause
exists or that Employee has failed to cure any act (or failure to act) that
purportedly formed the basis for the Board's determination. Employer must
provide notice to Employee that it is intending to terminate his employment for
Cause within sixty (60) days after Employer has knowledge of the occurrence of
the event it believes constitutes Cause.
6.2. Termination of the Term of Employment upon Employee's Death or
Permanent and Total Disability. The Term of Employment shall be deemed
terminated in the event of death or upon the termination of Employee's
employment following the permanent and total disability of Employee during
the Term of Employment.
6.2.1 Effect. In the event of a termination of the Term of
Employment for death or permanent and total disability, Employer shall
provide Employee with the Accrued Obligations. Upon Employer's full,
complete and timely fulfillment and discharge of the aforesaid
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obligations, all obligations of Employer to Employee hereunder shall
be totally and completely satisfied, and Employer shall have no
further obligations of any type to Employee pursuant to this Agreement
(except as may be provided under Sections 3.3, 3.4.6, 18 or 19).
6.2.2 Definition and Effective Date. Employee shall be considered
"permanently and totally disabled" for purposes of this Section 6.2 if
he is unable to perform with reasonable continuity his material duties
hereunder by reason of any medically determinable physical or mental
impairment, which inability to perform has lasted for a continuous
period of not less than six (6) months. A termination for permanent
and total disability shall take effect upon thirty (30) days written
notice from Employer to Employee, provided Employee does not return to
perform his material duties with reasonable continuity during such
30-day period.
6.3. Employee's Right to Terminate. Employee may terminate the Term of
Employment at any time, for any reason, by providing thirty (30) days
written notice thereof to Employer, and such termination shall not be
deemed a breach of this Agreement.
6.3.1 Effective Date. If Employee so terminates the Term of
Employment (other than under Section 5.1.3) such termination shall
take effect upon the date designated in the notice provided to
Employer which shall, in no event, be earlier than thirty (30) days
following the delivery of such notice; provided, that Employer shall
have the right in the event of such notice by Employee to accelerate
the Employee's effective date of termination to any such date that the
Employer deems appropriate in its sole discretion.
6.3.2 Effect. If Employee so terminates the Term of Employment
(other than under Section 5.1.3), Employer shall provide Employee with
the Accrued Obligations. Upon
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Employer's full, complete and timely fulfillment and discharge of the
aforesaid obligations, all obligations of Employer to Employee
hereunder shall be totally and completely satisfied and Employer shall
have no further obligations of any type to Employee pursuant to this
Agreement (except as may be provided under Sections 3.3., 3.4.6, 18 or
19 hereof).
6.4. Termination of Agreement upon Fulfillment of Post Termination of
Employment Obligations. If the Term of Employment is terminated pursuant to
Sections 5.1.2 or 5.1.3 hereof, then this Agreement shall thereafter be
deemed to be terminated upon Employer's full, complete and timely
fulfillment and discharge of all obligations imposed upon Employer pursuant
to the provisions of Sections 3.3, 3.4.6, 7.1, 18 or 19 hereof.
7. Post-Termination of Employment Obligations.
7.1. Employer's Obligations after Termination of Term of Employment.
If the Term of Employment is terminated pursuant to Sections 5.1.2 or 5.1.3
hereof, then the following provisions shall apply:
7.1.1 If the Term of Employment is so terminated, Employer shall
provide Employee with the Accrued Obligations. In addition, Employer
shall be obligated to pay to the Employee, for a period of time
commencing on the date of termination of the Term of Employment and
continuing until the Term Date (herein called the "Surviving
Obligation Period"), Employee's Salary for the remaining period
pursuant to this Agreement.
7.1.2 Employee shall continue to be entitled to participate
during the Surviving Obligation Period in any and all of the
profit-sharing and retirement income, stock purchase, savings,
executive compensation plans at the same level, in the same amount and
to the
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same degree the Employee was entitled to participate at the time of
such termination, to the extent permitted by the terms of such plans,
and applicable law. If Employee's participation in any such plan is
barred, Employer shall arrange to provide Employee during the
Surviving Obligation Period with benefits substantially similar to
those which he was entitled to receive under such plans prior to the
time of such termination.
7.1.3 Employer shall maintain in full force and effect for
Employee for the longer of (a) one year after termination of the Term
of Employment and (b) the Surviving Obligation Period all life,
accident, medical and health care plans and disability benefit
programs and programs or arrangements in which Employee was entitled
to participate immediately prior to the time of such termination
provided that Employee's continued participation is possible under the
general terms and provisions of such plans and programs, and under
applicable law. If Employee's participation in any such plan or
program is barred, Employer shall arrange to provide Employee with
benefits substantially similar to those which he was entitled to
receive under such plans and programs of Employer prior to the time of
such termination; provided, however, that the cost to Employer to
provide such benefits shall be no greater than the contribution made
by Employer for such benefits for other senior executives of Employer.
In such event, appropriate adjustment shall be made so that the after
tax value thereof to Employee is similar to the after tax value to him
of the benefit plans in which Employee is not eligible to participate.
At the end of such period, Employee shall have the option to have
assigned to him at no cost and with no apportionment of pre-paid
premiums, any assignable insurance policy owned by Employer and
relating specifically to Employee.
7.1.4 Employer shall be obligated to provide to Employee, for a
one year period commencing on the date of termination of the Term of
Employment, use of a similar office and secretarial support.
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7.2 No Mitigation. Under no circumstances shall the Employee be
required, whether by seeking other employment or otherwise, to mitigate the
amount of any payment or benefit under this Agreement, and there shall be
no offset against amounts due the Employee under this Agreement or any
other agreement on account of any subsequent employment he may obtain or
for any amount allegedly due Employer by Employee.
8. Employee's Rights on Change in Control.
8.1 Change in Control Payments. In the event of a Change in Control,
the Term of Employment shall not terminate, but Employer shall be obligated
to pay to Employee an amount equal to Employee's Salary for the period from
the date of the Change in Control until the Term Date. Such payment shall
be paid to Employee in a lump sum within thirty (30) days of a Change in
Control.
8.2 Stock and Option Acceleration. In addition to the payment required
under Section 8.1, in the event of a Change in Control (i) all restricted
stock which may be granted pursuant to Section 3.3 hereof shall vest
immediately and all Stock Options granted pursuant to Section 3.3 shall
vest and become exercisable immediately, and (ii) the balance of all
remaining Stock Options to be granted during the Term of Employment
pursuant to Section 3.3 shall immediately be granted and shall vest and
become exercisable immediately. The exercise price of all Stock Options
accelerated on a Change in Control shall be the lower of (a) the closing
price of the Common Stock on the date of the Change in Control, and (b) the
lowest price of any options granted to Employee prior to the Change in
Control. Employee shall retain the right to exercise all Stock Options
granted prior to, or which are accelerated upon, a Change in Control during
the remaining original term of each such option. Upon the acceleration of
all Stock Options, Employer shall have no obligation to grant any
additional Stock Options to Employee.
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9. Certain Definitions. As used herein, the following terms shall have
the meanings indicated below:
9.1. Constructive Termination Event. A "Constructive Termination
Event" shall be deemed to be the occurrence of any one or more of the
following events during the Term of Employment:
9.1.1 the assignment by Employer to the Employee of duties that
are inconsistent with the Employee's office with Employer at the time
of such assignment, or the removal by Employer from the Employee of
those duties described in Section 2.1 above, including without
limitation failure to nominate or re-nominate Employee for election to
the Board of Directors of Employer and failure of Xxxxxx F.X.
Sillerman (and his affiliates) to vote his (and their) shares in favor
of such nomination; or
9.1.2 any removal of the Employee from, or any failure to elect
or reelect the Employee to, the Designated Office (as defined in
Section 9.3 hereof), except in connection with the Employee's
promotion, with his prior written consent, to a higher office (if any)
with Employer; or
9.1.3 a reduction by Employer in the amount of the Employee's
Salary as then in effect, or the failure of Employer to pay such
Salary to the Employee at the time and in the manner specified in
Section 3 of this Agreement; or
9.1.4 the discontinuation or material reduction by Employer of
the Employee's participation in any stock option, bonus or other
employee benefit plan or arrangement
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(including, without limitation, any profit-sharing, life insurance,
medical, dental, hospitalization, incentive compensation or retirement
plan or arrangement) in which the Employee is a participant or the
failure to grant the Stock Options; or
9.1.5 the failure of Employer to obtain the assumption by any
successor to Employer of the obligations imposed upon Employer under
this Agreement, as required by Section 17 of this Agreement; or
9.1.6 the failure by Employer to reimburse the Employee for the
reasonable business expenses incurred by the Employee in the
performance of his duties to Employer, including, without limitation,
reasonable expenditures for business entertainment and for travel in
connection with Employer's business; or
9.1.7 the failure of Employer to observe, fulfill or perform any
obligation, requirement or restriction imposed upon it pursuant to
this Agreement which is not referenced in the foregoing subsections of
this Section 9.1, and such failure continues uncorrected for thirty
(30) days after notice thereof to Employer; or
9.1.8 Intentionally Deleted.
9.1.9 Intentionally Deleted.
9.1.10 the failure by Employer to put any sports related business
of Employer (other than motorized sports or any sports related
business that provides less than 25% of the revenues of any entity
acquired by Employer, if a condition of the purchase agreement for
such entity
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is for such business to be operated under the entity acquired) into
the Sports Group, in which case the sports related business may be
held by Employer outside of the Sports Group.
Employee's right to terminate the Term of Employment for a
Constructive Termination Event shall not be affected by his mental or
physical incapacity, and his continued employment prior to terminating
employment for a Constructive Termination Event shall not constitute
consent to or a waiver of rights with respect to, any act or failure
to act constituting a Constructive Termination Event.
9.2. Senior Executives. The "Senior Executives" shall mean all members
of Employer's Office of the Chairman (howsoever called), and all senior
executive officers of Employer.
9.3. Designated Office. The "Designated Office" shall mean Chairman of
the Sports Group and member of the Office of the Chairman of Employer.
9.4. Change in Control. A "Change in Control" shall mean the
occurrence of any one of the following events:
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934 (other than Employee or entities
controlled by Employee), becomes a beneficial owner of 50% or more of the
voting power of Employer or of the Common Stock beneficially owned by
Xxxxxx F.X. Sillerman as of the date hereof;
(ii) all or substantially all of the assets or business of Employer
are disposed of pursuant to a merger, consolidation, sale or other
transaction (unless the shareholders of Employer, immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
20
indirectly, in substantially the same proportion as they owned the voting
power of Employer, all of the voting power or other ownership interests of
the entity or entities, if any, that succeed to the business of Employer);
(iii) Employer combines with another company and, immediately after
such combination, (A) the shareholders of Employer immediately prior to the
combination do not hold, directly or indirectly, more than 50% of the
voting power of the combined company or (B) the members of the Board
immediately prior to the Board's approval of the merger transaction do not
constitute a majority of the combined company's board of directors;
(iv) the majority of the Board consists of individuals other than
incumbent directors (which term shall mean members of Board as of the
Effective Date), except that any person who becomes a director subsequent
to such date whose election or nomination was supported by two-thirds of
the directors who then comprise the incumbent directors shall be considered
an incumbent director;
(v) (A) a direct or indirect (including by sale or transfer of any
intermediate holding company) sale or transfer of the voting securities of
the Sports Group (including by way of merger, consolidation or similar
transaction) following which one or more persons other than Employer
beneficially owns 50% or more of the voting power of the Sports Group or
(B) a sale or transfer of all or substantially all the assets of the Sports
Group and its subsidiaries as a whole; or the liquidation or dissolution of
Employer or of the Sports Group.
10. Non-Compete Covenant.
10.l. During Period of Employment. During the Term of Employment,
Employee will not, without the prior written approval of the Board, become
employed in any capacity by, or become an officer, director or general
partner of, any partnership, corporation or other entity that directly
competes with any business of Employer, or any subsidiary of Employer
whether now or hereafter conducted.
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10.2. After Termination of Employment. For the period of one (1) year
following the termination of the Term of Employment by Employer for Cause
or by Employee on his own initiative (other than due to a Constructive
Termination Event), Employee will not become employed in any capacity by,
or become an officer, director, shareholder or general partner of, any
partnership, corporation or other entity that competed with any material
business of Xxxx Associates Management Enterprises, Inc. ("FAME") conducted
as of April 29, 1998; provided, that this Section 10.2 shall not prevent
Employee from owning no more than 5% of any class of securities of any
publicly traded entity. The material businesses of FAME conducted as of
April 29, 1998 shall be limited to the representation, as a sports agent in
contract and marketing negotiations, of male basketball and football
athletes in professional sports, and shall exclude, without limitation,
such representation of (a) athletes in sports other than basketball and
football and (b) female professional athletes, as well as the management,
marketing and/or operation of professional sports teams, sports leagues,
sports organizational committees or other sports businesses (or related
consulting or other services), and the organization or the sponsorship of
sports leagues.
10.3. No Solicitation of Other Employees. Employee additionally agrees
that, throughout the Term of Employment and for a period of one (1) year
after the termination of the Term of Employment by Employer for Cause or by
Employee on his own initiative (other than due to a Constructive
Termination Event), Employee shall not directly or indirectly, solicit, or
attempt to solicit, any employee of Employer's Affiliated Group to leave
Employer's Affiliated Group for any reason whatsoever.
10.4. Definition of Affiliated Group. As used above, the term
"Employer's Affiliated
22
Group" shall mean Employer and all corporations, partnerships or other
organizations which, directly or indirectly, are controlled by Employer.
10.5. Extraordinary Remedies. In the event of a breach of Employee's
covenants in this Section 10, it is understood and agreed that Employer
shall be entitled to injunctive relief as well as other applicable remedies
at law or in equity available to Employer against Employee or others.
10.6. Survival. The provisions of this Section 10 shall survive the
termination of the Term of Employment and the termination of this Agreement
to the extent applicable; it being understood that in the event of a
termination of the Term of Employment pursuant to Sections 5.1.1, 5.1.2 or
5.1.3 hereof, the provisions of this Section 10 shall be of no force or
effect.
11. Disclosure of Confidential Information. Except to the extent (a)
authorized by the express prior consent of the Board, (b) required by law or any
legal process or (c) desirable in performing his duties under this Agreement,
Employee will not, directly or indirectly, at any time during the Term of
Employment, or at any time subsequent to the termination of the Term of
Employment, disseminate, disclose, or divulge to any person, firm, corporation,
association or other business entity, Confidential Information (herein defined)
of Employer. As used herein, the term "Confidential Information" means any and
all information about or relating to the trade secrets of Employer or any of its
subsidiaries disclosed to Employee or known by Employee as a consequence of or
through his employment by Employer, if such information is not generally known
in any industry in which Employer or any of its subsidiaries is or may become
engaged during the Term of Employment. In the event of a breach or threatened
breach by Employee of this Section 10, Employer shall be entitled to injunctive
relief as well as other applicable remedies at law or in equity available to
Employer against Employee or others.
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12. Notice. Any notice, request, reply, instruction, or other communication
provided or permitted in this Agreement must be given in writing and may be
served by depositing same in the United States mail in certified or registered
form, postage prepaid, addressed to the Party or Parties to be notified with
return receipt requested, or by delivering the notice in person to such Party or
Parties. Unless actual receipt is required by any provision of this Agreement,
notice deposited in the United States mail in the manner herein prescribed shall
be effective on dispatch. For purposes of notice, the address of Employee, his
spouse, any purported donee or transferee or any administrator, executor or
legal representative of Employee or his estate, as the case may be, shall be as
follows:
The address of Employee shall be:
c/o SFX Sports Group, Inc.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxx
The address of Employer shall be:
SFX Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
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with a copy to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxxx
Employer shall have the right from time-to-time and at any time to change
its address and shall have the right to specify as its address any other address
by giving at least ten (10) days written notice to Employee. Employee shall have
the right from time-to-time and at any time to change his address and shall have
the right to specify as his address any other address by giving at least ten
(10) days written notice to Employer.
13. Vacation. Employee shall be entitled to a minimum of four (4) weeks of
paid vacation during each calendar year, but in no event less than the vacation
provided to other Senior Executives of Employer.
14. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the laws of
the State of Maryland.
15. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of Employee, and any prior employment
agreement between Employer and Employee shall be terminated effective as of the
Effective Date.
16. Severability. If any provision of the Agreement is rendered or declared
illegal or unenforceable by reason of any existing or subsequently enacted
legislation or by decree of a court of last resort, the Parties shall promptly
meet and negotiate substitute provisions for those rendered or declared illegal
or unenforceable, but all remaining provisions of this Agreement shall remain in
full force and effect.
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17. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon Employee and his heirs, executors, administrators, legal
representatives, successors and assigns and the Employer and its successors and
assigns. Employee may not assign any rights or obligations hereunder without the
prior written consent of Employer and, except with respect to a successor entity
(as described below), Employer may not assign any rights or obligations
hereunder without the prior written consent of Employee. Employer shall require
any person who is the successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or a substantial portion of the
business or assets of Employer to expressly assume the obligations of Employer
hereunder. The term "Employer" as used in this Agreement shall expressly include
any such successors.
18. Indemnification. Employer shall indemnify Employee and his legal
representatives to the fullest extent permitted by the laws of the State of
Delaware, and Employee shall be entitled to the protection of such insurance
policies which Employer maintains for the benefit of its directors and officers,
against all costs, charges or expenses whatsoever incurred or sustained by him
or his legal representatives in connection with any action, suit or proceeding
to which he or his legal representatives may be made a party by reason of his
being or having been a director of officer of Employer, or because of actions
taken purportedly on behalf of Employer after the Effective Date. Employer
shall, upon request by Employee, promptly advance or pay any amount for costs,
charge or expenses (including, without limitation, legal fees and expenses
incurred by counsel retained by Employee) in respect of his right to
indemnification hereunder, subject to a later determination as to Employee's
ultimate right to receive such payment. Employee's identification and the
insurance policies maintained for his benefit shall be at least to the same
extent, of the same type and in the same amount as that maintained by Employer
for the Chief Executive Officer of Employer, as may be amended from
time-to-time.
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19. Legal Fees and Expenses. Employee shall be entitled to receive from
Employer the amount of his legal fees (and expenses) reasonably incurred in
connection with claims or disputes under this Agreement, if Employee is the
prevailing party on any issue in any such dispute. The reimbursement shall be
made as soon as practicable following the resolution of such claim or dispute to
the extent Employer receives reasonable written evidence of such fees and
expenses.
20. Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without an
affirmative vote of the Board, and the consent in writing of Employee and
Employer. The failure of a party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver by a 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.
21. Beneficiaries. Whenever this Agreement provides for any payment to
Employee's estate, such payment may be made instead to such beneficiary or
beneficiaries as Employee may have designated in a writing filed with Employer.
Employee shall have the right to revoke any such designation and to redesignate
a beneficiary or beneficiaries by written notice to Employer (and any applicable
insurance company) to such effect.
22. Resolution of Disputes. Any dispute or controversy between the parties
relating to or arising out of this Agreement or any amendment or modification
hereof shall be determined by arbitration in New York, New York by and pursuant
to the rules then prevailing of the American Arbitration Association, other than
claims for injunctive relief under Sections 10 or 11. All claims
27
for legal remedies under this Agreement shall be limited to the actual damages
of Employer or Employee, respectively, but shall not limit any payments or
damages provided to Employee under the terms of this Agreement. The arbitration
award shall be final and binding upon the parties and judgment may be entered
there on by any court of competent jurisdiction. The service of any notice,
process, motion or other document in connection with any arbitration under this
Agreement or the enforcement of any arbitration award hereunder may be
effectuated either by personal service upon a party or by certified mail duly
addressed to him or to his executors, administrators, personal representatives,
next of kin, successors or assigns, at the last known address or addresses of
such party or parties.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original. It shall not be
necessary when making proof of this Agreement to account for more than one
counterpart.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
SFX ENTERTAINMENT, INC.
/s/ By: /s/ Xxxxx Xxxx
---------------------------- ----------------------------
Title: Xxxxx Xxxx
Name:
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