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EXHIBIT 10.3
[INTERNATIONAL FAMILY ENTERTAINMENT LETTERHEAD]
As of June 1, 1997
K.J. "▇▇▇" ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
This letter will set forth the terms of the agreement between you and
International Family Entertainment, Inc. ("IFE"), regarding your employment with
IFE.
1. Employment
You will serve as IFE's President, Family Channel Programming, and as such you
will perform those duties which are normal and customary in the industry for
like positions. You will be responsible for other similar areas which relate
thereto for IFE and its affiliates and will be responsible to perform other such
duties which are reasonably assigned to you by IFE. You will report directly to
the President and Chief Executive Officer of IFE and will serve as a member of
IFE's Executive Management Committee. You will perform full-time service on an
exclusive basis for IFE and its affiliates. Your principal base of employment
shall be in Los Angeles, California. You acknowledge that IFE is not required to
actually utilize your services hereunder, but that IFE's sole obligation shall
be to pay you the compensation and provide you the benefits set forth herein,
subject to all the terms and conditions of this Agreement.
2. Term
Your employment under this Agreement shall commence June 1, 1997, and, unless
sooner terminated pursuant to the terms of Paragraph 6 of this Agreement, shall
continue for an initial period of five (5) years (as completed or earlier
terminated pursuant to the express terms hereof, the "Initial Period").
Following the completion of the Initial Period, unless thereupon terminated or
renewed pursuant to the terms of this Paragraph 2, your employment under this
Agreement shall continue from year to year, subject to earlier termination
pursuant to the terms of Paragraph 6 of this Agreement (each subsequent year, as
completed or earlier terminated, an "Additional Period," and together with the
Initial Period, the "Term"). IFE may terminate this Agreement as of the last day
of the Initial Period or any Additional Period by giving you written notice of
such termination not less than ninety (90) days prior to such date. IFE may
elect to renew your employment by offering you a renewal employment agreement
(the
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"Renewal Agreement") not less than ninety (90) days prior to the last day of the
Initial Period or any Additional Period (the "Renewal Notice Period"), upon
terms and conditions no less favorable to you than those set forth in this
Agreement (including, but not limited to, title; reporting relationship;
services to be rendered; five (5) year minimum term; termination, renewal, and
severance provisions; scheduled base salary increases and annual bonus
percentage; benefits; etc.). The initial annual base salary specified in such
Renewal Agreement shall be not less than your annual base salary for the
previous calendar year, adjusted to reflect the greater of (i) a five per cent
(5%) increase in such annual base salary, or (ii) the increase, if any, in the
cost of living, determined by multiplying your then current annual base salary
by a fraction, the numerator of which is the Consumer Price Index (U.S. City
Average--[1967 = 100%]-- All Items, Bureau of Labor Statistics of the U.S.
Department of Labor) (the "CPI") for the month prior to the proposed
commencement date of such Renewal Agreement and the denominator of which is the
CPI for the month prior to the month in which your annual base salary was most
recently adjusted. You acknowledge and agree that IFE has no obligation to allow
this Agreement to renew, to offer you a Renewal Agreement, or to otherwise
continue your employment after expiration of the Initial Period or any
Additional Period, and you expressly acknowledge that no promises or
understandings to the contrary have been made or reached. In the event you do
not accept an offered Renewal Agreement as of the last day of the Initial Period
or Additional Period during which you first received such Renewal Agreement, you
shall be deemed to have rejected such Renewal Agreement and your employment
shall be terminated as of such date. In the event IFE has not offered you a
Renewal Agreement within the Renewal Notice Period, you may terminate this
Agreement upon thirty (30) days prior written notice to IFE, provided such
termination notice is received by IFE no less than thirty (30) days following
the conclusion of the applicable Renewal Notice Period, in which case the terms
of Paragraph 7(a) of this Agreement shall apply.
3. Base Compensation
As compensation for your services hereunder, IFE shall pay you, and you shall
accept, an initial annual base salary of Four Hundred Fifty Thousand Dollars
($450,000.00), less all appropriate deductions and withholdings, payable in
accordance with the schedule IFE may adopt or alter from time to time in its
discretion, but in any event not less frequently than monthly. IFE shall review
the performance of your duties hereunder on at least an annual basis. Your
annual base salary will be adjusted on January 1 of each calendar year of the
Term to reflect the greater of (i) a five per cent (5%) increase in such annual
base salary, or (ii) the increase, if any, in the cost of living, determined by
multiplying your then current annual base salary by a fraction, the numerator of
which is the CPI for the month of December of the most recently completed
calendar year and the denominator of which is the CPI for the month prior to the
month in which your
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annual base salary was most recently adjusted. In addition, the Board
of Directors of IFE may increase your annual base salary at such times as it, in
its sole discretion, deems appropriate.
4. Bonus Structure
a. Annual Bonus. In accordance with the executive bonus plan established
by IFE, as may be amended from time to time, in addition to annual base
salary, you shall be eligible to earn and receive an annual bonus based
on your achievement of certain goals during each annual review period
(which shall commence January 1 and conclude December 31 of each
calendar year of the Term). During the first forty-five (45) days of
each annual review period of the Term, IFE, with your consultation,
shall establish reasonable goals for you and your division to achieve
during such review period.
In the event IFE determines that the goals set for any annual review
period have been achieved, you shall be entitled to receive a targeted
bonus of thirty three and one-third per cent (33.33%) of your annual
base salary for such calendar year, with the exact amount of such bonus
to be determined in the discretion of IFE, subject to the terms of the
executive bonus plan then in effect, but in any event not less than
twenty per cent (20%) of your annual base salary for such calendar
year. In the event IFE determines that the goals set for any annual
review period have not been achieved during such annual review period,
you shall receive bonus compensation for such year, if any, as IFE, in
its discretion, deems appropriate, but in any event not less than
twenty per cent (20%) of your annual base salary for such calendar
year.
b. Apportionment. For those periods of your employment which do not
coincide with the calendar year, the amount of the annual bonus shall
be prorated for the number of months you are in the employ of IFE
during such period.
c. Payment. Payment of the annual bonus shall be made no later than
December 31 of the annual review period for which the annual bonus is
calculated.
d. Further Bonuses. From time to time, IFE may enter into supplemental
agreements or memorandums in writing with you for the award and payment
to you of additional compensation or bonuses upon such terms and
conditions as IFE shall deem to be in its business interest. In the
event of the execution by IFE of any such agreements or memorandums,
your right to additional compensation or bonuses shall be determined in
accordance with the applicable provisions thereof, subject, however, to
the provisions of this sub-paragraph. In
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the absence of any such supplemental agreements or memorandums, IFE
shall not be obligated to pay you any additional compensation or bonus
whatsoever, irrespective of the payment of additional compensation or
bonus in any past or succeeding year or the payment or additional
compensation or bonus to other executives in any year, but may do so in
its sole discretion.
e. Incentive Compensation. From time to time, IFE may offer phantom stock,
stock appreciation rights, stock options in IFE and its affiliates
and/or other forms of long-term incentives upon such terms and
conditions as IFE shall determine to be in its business interests.
5. Reimbursement for Expenses
The parties recognize that in the course of performing your duties hereunder,
you will necessarily incur expenses in connection with your duties for such
items as entertainment, traveling, hotels, and similar items. You shall be
entitled to have paid or be reimbursed all reasonable expenses incurred by you
in the performance of your duties hereunder, subject to such requirements,
procedures, and rules as may be established by IFE for similarly situated
executives from time to time in its discretion, including, without limitation,
the requirement of submission of appropriate receipts for such expenses prior to
reimbursement.
6. Termination by IFE
IFE shall have the right to terminate this Agreement, and your employment
hereunder, at any time, for cause, immediately upon written or oral notice to
you. As used herein, termination of this Agreement "for cause" shall mean
termination due to your willful breach of contract, habitual neglect of duties,
or gross misconduct. This Agreement shall not otherwise be terminable by IFE.
Except as otherwise specifically set forth herein, in the event your employment
is terminated for cause, all benefits set forth in this Agreement shall cease as
of the last day of your employment hereunder.
7. Severance Payment
a. In the event this Agreement is terminated by IFE at the conclusion of
the Initial Period or any Additional Period pursuant to Paragraph 2 of
this Agreement, or in the event IFE fails to offer you a Renewal
Agreement and you elect to terminate this Agreement as set forth in
Paragraph 2 of this Agreement, then IFE's sole obligation shall be to
pay you (i) for all accrued but unused vacation (determined in
accordance with Paragraph 8(a) of this Agreement), which sum shall be
paid to you, less all appropriate deductions and withholdings, in a
single
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payment not more than thirty (30) days following the effective date of
such termination; and (ii) a severance payment equal to the sum of (x)
your then current base salary for twenty-four (24) months, plus (y) the
annual bonus paid to you for the prior calendar year multiplied by two
(2), which severance payment shall be paid to you, less all appropriate
deductions and withholdings, in equal, bi-weekly installments over the
twenty-four (24) month period commencing with the date of termination
(the "Severance Period"). During the Severance Period, IFE shall
provide you with comprehensive health, disability, and life insurance
policies providing benefits at least equivalent to those you received
on the last day of the Term hereof.
b. In the event you reject a Renewal Agreement offered you pursuant to
Paragraph 2 of this Agreement, or in the event IFE terminates this
Agreement pursuant to Paragraph 6 of this Agreement, then IFE's sole
obligation shall be to pay you for all accrued but unused vacation
(determined in accordance with Paragraph 8(a) of this Agreement), which
shall be paid to you, less all appropriate deductions and withholdings,
in a single payment not more than thirty (30) days following the
effective date of such termination.
c. In the event you become permanently and totally disabled, or if you die
during the Term of this Agreement, then you or your estate, as the case
may be, shall be paid (i) for all accrued but unused vacation
(determined in accordance with Paragraph 8(a) of this Agreement), which
sum shall be paid to you, less all appropriate deductions and
withholdings, in a single payment not more than thirty (30) days
following the effective date of such termination; (ii) the sum of (x)
your then current base salary through the end of the Term, and (y) your
annual bonus for the prior calendar year for each calendar year through
the end of the Term, which sum shall be paid to you, less all
appropriate deductions and withholdings, in equal, bi-weekly
installments through the end of the Term; and (iii) following the end
of the Term, a termination payment equal to the sum of (x) your then
current base salary for twenty-four (24) months, plus (y) the annual
bonus paid to you for the prior calendar year multiplied by two (2),
which termination payment shall be paid to you, less all appropriate
deductions and withholdings, in equal, bi-weekly installments over the
twenty-four (24) month period commencing as of the date of termination
(the "Termination Period"). The payments set forth in this paragraph
shall be reduced by the amount of any benefits payable to you or your
estate, as the case may be, under any disability or life insurance plan
provided by, and the premiums of which are paid by, IFE. During the
Termination Period, IFE shall provide you, if you are then alive, with
comprehensive health, disability, and life insurance benefits at least
comparable to those you received on the last day of the Term hereof.
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d. Notwithstanding any other provision of this Agreement to the contrary,
in the event of termination of this Agreement for any reason, you agree
that IFE may offset from any payment made under this Paragraph 7 any
sums owed by you to IFE.
8. Other Benefits
a. Vacation. For each year of the Term of this Agreement, you will be
entitled to four (4) weeks vacation with pay, to be accrued and taken
in accordance with IFE's normal personnel policies regarding vacation
for similarly situated executives, as such policies may be modified
from time to time in the discretion of IFE. Notwithstanding the
foregoing, upon your accruing four (4) weeks of vacation time, vacation
time will cease to accrue and must be used before additional vacation
time will accrue.
b. Health Plans. IFE may, in its discretion, from time to time establish
and maintain employee health, medical, life, and disability insurance
benefit plans. During the Term of this Agreement, your eligibility to
participate in such plans shall be governed by the generally applicable
terms and conditions of the particular plan, as such terms and
conditions may be amended from time to time in the discretion of IFE.
c. 401(k) Plan. IFE may, in its discretion, from time to time, establish
and maintain, or participate in an affiliated company's, 401(k)
retirement plan. During the Term of this Agreement, your eligibility to
participate in such plan shall be governed by the generally applicable
terms and conditions of such plan, as such terms and conditions may be
amended from time to time in the discretion of IFE or such affiliated
company.
d. Additional Benefits. You expressly agree and acknowledge that following
the Term of this Agreement, you will be entitled to no additional
benefits except as otherwise specifically set forth in this Agreement,
and except as specifically provided under the benefit plans referred to
in this Paragraph 8 and those benefit plans in which you may
subsequently become a participant, subject in every case to the terms
and conditions of each such plan.
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9. No Duty to Mitigate; Offset
It is expressly agreed and understood that in the event of the termination of
this Agreement by IFE you shall have no affirmative duty to mitigate the damages
payable to you by IFE and further that no amounts actually earned or accrued by
you for employment or similar services during the period of time subsequent to
such termination will be offset against any amounts to which you are otherwise
entitled hereunder.
10. Remedy For Breach
(a) Notwithstanding the agreement to settle disputes by arbitration as
provided in Paragraph 11 of this Agreement, both parties recognize that
the services to be rendered under this Agreement by you are special,
unique, and of an extraordinary character, and that in the event of a
breach by you of any term or condition of this Agreement, IFE shall be
entitled, if it so elects, to institute and prosecute proceedings in
any court of competent jurisdiction to obtain the specific performance
thereof by you, or to enjoin you from performing services for any other
person, firm, or corporation, during the period herein contracted for,
and nothing herein contained shall be construed to prevent such remedy.
In the event IFE institutes proceedings against you pursuant to this
Paragraph 10 and is the prevailing party, you shall pay to IFE the
amount of any fees (including reasonable attorneys' fees), costs, or
expenses incurred by IFE in the prosecution of any such proceeding.
(b) The payments and benefits provided to you pursuant to this Agreement
shall constitute your sole and exclusive remedy against IFE in the
event of any claim you may have arising out of or in any way connected
with your employment by IFE or IFE's termination thereof. You do hereby
expressly waive any right you may have to seek punitive damages in
connection with any such claim.
11. Disputes
Except as provided in Paragraph 10 of this Agreement, any and all disputes,
controversies, or claims arising out of or relating to your employment or
cessation of employment with IFE shall be settled exclusively by final and
binding arbitration in Virginia Beach, Virginia, before an arbitrator selected
in accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association ("AAA"). Such disputes include, but are not limited to,
claims arising under this Agreement as well as other employment-related legal
claims such as discrimination or
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tort. Any arbitration shall be conducted in accordance with the Employment
Dispute Resolution Rules of the AAA.
12. Entire Agreement; Modification
Except as specifically referenced herein, this instrument contains the entire
Agreement between you and IFE with respect to the subject matter hereof and
supersedes all prior or contemporaneous understandings or agreements. This
Agreement may be altered only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, or discharge is
sought.
13. Choice of Law; Binding Effect
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia without reference to conflicts of laws principles
and shall be binding upon and inure to the benefit of any successor or
successors of IFE and the personal representatives of you. The parties to this
Agreement hereby consent to the exclusive personal jurisdiction of the Circuit
Court of the City of Virginia Beach or, provided other jurisdictional
requirements are satisfied, the United States District Court for the Eastern
District of Virginia, Norfolk Division, for the adjudication of any proceedings
referenced in Paragraph 10 of this Agreement, or the enforcement of any final
and binding arbitration pursuant to Paragraph 11 of this Agreement, or for the
resolution of any other dispute arising from, relating to, or in any other way
connected with this Agreement or your employment hereunder.
14. Severability
If any clause or provision of this Agreement shall be adjudged invalid or
unenforceable by a court of competent jurisdiction or by operation of any
applicable law, it shall not affect the validity of any other clause or
provision, which shall remain in full force and effect.
15. Confidential Information
You agree that any information received by you during the Term which concerns
the financial, business, or other affairs of IFE, its clients, or its affiliates
will be treated by you in full confidence and that you shall not, at any time
during or after the Term, reveal, directly or indirectly, to any persons, firms,
or organizations, or otherwise make use of such confidential information. The
obligation set forth in this Paragraph 15 shall survive the expiration or
termination of this Agreement.
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16. Remedies Cumulative; No Waiver
All remedies, rights, undertakings, obligations, and agreements contained in
this Agreement shall be cumulative, and none of them shall be in limitation of
any other remedy, right, undertaking, obligation, or agreement of either party,
whether under this Agreement or otherwise. The failure of IFE to insist upon
strict performance of any provision of this Agreement shall not be construed as
a waiver of any subsequent breach of the same or similar nature.
17. Paragraph Headings
The titles of the paragraphs of this Agreement are for convenience only and
shall not in any way affect the interpretation of any paragraphs of this
Agreement or of the Agreement itself.
If this letter accurately sets forth our agreement, please sign where indicated
below.
Very truly yours,
International Family Entertainment, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
READ AND AGREED:
/s/ K.J. "▇▇▇" ▇▇▇▇▇ 5/20/97
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K.J. "▇▇▇" ▇▇▇▇▇
