1
EXHIBIT 10.35
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 24, 1995 between HOME
SHOPPING NETWORK, INC., a Delaware corporation (the "Company"), and XXXXX HELD
("Executive").
This Agreement sets forth the terms and conditions of Executive's
employment by the Company as the Company's President and Chief Executive
Officer.
In consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, do hereby agree as follows:
1. Term and Termination.
(a) Term. The term of Executive's employment under this
Agreement (the "Employment Term") shall commence on December 1, 1995 (the
"Effective Date") and end on the fourth anniversary of such date. The
Employment Term shall be automatically extended beyond the original four year
term for successive one year periods unless at least one hundred eighty (180)
days prior to the expiration of the original Employment Term or any subsequent
renewal thereof, either party notifies the other party in writing that it is
electing to terminate this Agreement at the expiration of the then current
term. During the Employment Term, the Company agrees to employ Executive and
Executive agrees to serve the Company upon and subject to the terms and
conditions set forth in this Agreement.
(b) Termination by the Company. Executive's employment
by the Company may be terminated by the Company only as provided in clauses
(i), (ii), (iii) and (iv) below.
(i) Upon the death of Executive.
(ii) Upon six (6) months' prior written notice from
the Company to Executive (the "Notice Period"), in the event of an
illness or other disability which has incapacitated Executive from
performing his duties hereunder, as determined in good faith by the
Board of Directors of the Company, for an aggregate of one hundred
eighty (180) consecutive days during the twelve calendar months
preceding the month in which such notice is given; provided, however,
that in the event that prior to the end of the Notice Period,
Executive recovers from such illness or other disability to an extent
permitting him to perform his duties hereunder, the notice of
termination pursuant to this clause (ii) shall be of no further force
and effect.
2
(iii) At any time upon giving written notice of such
termination to Executive and by (x) paying to Executive in a lump sum
upon such termination an amount equal to Annual Base Salary (as
hereinafter defined) that would have been payable to Executive had his
employment by the Company continued until the expiration of the
Employment Term and (y) committing to pay to Executive (as and when
due as provided in Section 4) the amount of Annual Bonus (as
hereinafter defined) that Executive would have been entitled to
receive had his employment by the Company continued until the end of
the fiscal year in which such termination occurred (such amount of
Annual Bonus is hereinafter referred to as the "Remainder Bonus").
(iv) At any time for "Cause", which for purposes of
this Agreement shall be deemed to have occurred only on the happening
of any of the following:
(A) the plea of guilty to, or conviction
for, the commission of a felony offense by Executive;
provided, however, that after indictment, the Company
may suspend Executive from the rendition of services,
but without limiting or modifying in any other way
the Company's obligations under this Agreement;
(B) a material breach by Executive of a
material fiduciary duty owed to the Company;
(C) a material breach by Executive of any of
the covenants made by him in Sections 6 and 7 hereof;
or
(D) the willful and gross neglect by
Executive of the material duties specifically and
expressly required by this Agreement;
provided, however, that any claim that "Cause", within the meaning of
clauses (B), (C) or (D) above, exists for the termination of
Executive's employment may be asserted on behalf of the Company only
by a resolution duly adopted by two-thirds of the total number of
members of the Board of Directors of the Company, and only after 15
days prior written notice to Executive during which period he may cure
the breach or neglect that is the basis of any such claim, if curable;
provided, further, that no state of facts that, with or without notice
to Executive or the passage of time or both, would give rise to the
right of the Company to terminate Executive's employment pursuant to
clause (ii) of this Section 1(b) may, directly or indirectly, in whole
or in part, be the basis for a claim that Cause, within the meaning of
clause (D) above, exists for the termination of Executive's
employment; provided, further, that during the period of
twelve (12) months following a Change in Control (as hereinafter
defined), Cause shall be deemed to have occurred only upon the
happening of an event referred to in clause (A) above; and provided,
further, that the term "material" as used in clauses (B), (C) and (D)
above and in Section 10 hereof shall be
-2-
3
construed by reference to the effect of the relevant action or
omission on the Company and its subsidiaries taken as a whole.
(c) Effect of Termination by the Company. If Executive's
employment is terminated by the Company pursuant to Section 1(b) hereof, all
Annual Base Salary and Annual Bonus (to the extent not otherwise included in
Remainder Bonus) that has accrued in favor of Executive as of the date of such
termination, to the extent unpaid or delivered, shall be paid or delivered to
Executive on the date of termination. If Executive dies while employed by the
Company or during the period that he is receiving payments pursuant to the
immediately succeeding sentence and, in either case, prior to the expiration of
the Employment Term, the Company shall, as promptly as practicable following
Executive's death, pay to Executive's designated beneficiary or beneficiaries
in a lump sum an amount equal to the Annual Base Salary that would have been
payable to Executive had his employment by the Company continued until the
expiration of the Employment Term plus the Remainder Bonus and his beneficiary
or beneficiaries shall be eligible to receive benefits under the Company's life
insurance and death benefit plans or practices in which he is participating, to
the extent provided in such plans or practices. If Executive's employment is
terminated pursuant to Section 1(b)(ii) of this Agreement, the Company shall
(i) continue to pay to Executive his Annual Base Salary as and when the same
would otherwise be due in accordance with Section 4 of this Agreement until the
first to occur of the expiration of the Employment Term or the date of
Executive's death and (ii) pay the Remainder Bonus to Executive on the date
such payment is due pursuant to the terms of Section 4. The amounts payable by
the Company pursuant to the foregoing two sentences shall be reduced by the
amount of any long term disability benefits paid directly to Executive pursuant
to any benefit or welfare plans maintained by the Company for Executive's
benefit. The phrase "designated beneficiary or beneficiaries" shall mean the
person or persons named from time to time by Executive in a signed instrument
filed for this purpose with the Company. If the designation made in any such
signed instrument shall for any reason be ineffective, of if there is no such
designation, the phrase "designated beneficiary or beneficiaries" shall mean
Executive's estate. With respect to the payment of Annual Base Salary in
respect of time periods subsequent to the date of termination of Executive's
employment with the Company, such amount shall be calculated at the annual rate
of Executive's Annual Base Salary in effect at the time of termination and the
calculation of the remaining Employment Term shall be made without
consideration of any renewal thereof, unless at the time of such termination
such renewal would otherwise be automatic. With respect to the payment of the
Remainder Bonus, such amount shall be the amount which would have been payable
to Executive as his Annual Bonus in accordance with this Agreement had
Executive's employment continued until the end of the fiscal year of the
Company in which such termination occurred, but without regard to any
requirement that Executive be employed by the Company at any time following the
conclusion of such succeeding fiscal year in order to receive his Annual Bonus;
provided, however, that in the event Executive's employment is terminated as a
result of his death or disability, the amount of the Remainder Bonus shall be
not less than the minimum amount of Annual Bonus specified in Section 4.
Notwithstanding the foregoing, in the event Executive's employment is
terminated for Cause, Executive shall be entitled only to the amount specified
in the first sentence of this paragraph (c) and shall not be entitled to any
Remainder Bonus.
-3-
4
(d) Termination by Executive. The Executive's employment
may be terminated during the Employment Term by the Executive (i) for Good
Reason or (ii) without any reason during the twelve (12) month period
immediately following a Change in Control. For purposes of this Agreement,
"Good Reason" shall mean:
(A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 2 of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(B) any material breach of this Agreement by the
Company which is not remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(C) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement;
(D) any failure by the Company to comply with
and satisfy Section 13 of this Agreement; or
(E) failure to elect or appoint Executive to the
Board of Directors within ninety (90) days of the Effective Date or
failure to reelect Executive as a member of the Board of Directors or
the removal of Executive as a member of such Board, in each case
during the Employment Term; provided, however, that such failure to
reelect or removal shall not constitute "Good Reason" during any
period of the suspension of Executive's services pursuant to the
proviso set forth in Section 1(b)(iv)(A).
For purposes of this subsection (d), a determination of "Good Reason" by the
Executive which is reasonable and is made in good faith shall be conclusive.
(e) Effect of Termination by the Executive. If Executive
terminates his employment with the Company pursuant to Section 1(d) of this
Agreement, or if the Company terminates the Executive's employment under this
Agreement in any way that is a breach of this Agreement by the Company, the
Company shall (i) pay to Executive in a lump sum upon such termination an
amount in cash equal to (x) all Annual Base Salary and Annual Bonus (to the
extent not otherwise included in the Remainder Bonus) that has accrued in favor
of Executive as of the date of termination, to the extent unpaid or delivered
and (y) the Annual Base Salary that would have been payable to Executive had
his employment by the Company continued until the expiration of the Employment
Term, and (ii) commit to pay to Executive (as and when due as provided in
Section 4) the Remainder Bonus. Amounts payable pursuant to the preceding
sentence shall not be reduced by any amounts received by Executive from a
subsequent employer in respect of any period
-4-
5
subsequent to such termination. In addition, if the Executive is terminated
under the circumstances set forth in the first sentence of this Section 1(e),
the Company shall reimburse Executive for the costs and expenses (which shall
be limited to the costs and expenses of physically relocating, such as moving
expenses, but shall not include matters such as the reimbursement of temporary
housing expenses) relating to the relocation of Executive and his family to an
area within the continental United States specified by Executive. In the event
Executive terminates his employment other than for Good Reason or pursuant to
Section 1(d)(ii), Executive shall be entitled to receive only the amount
specified in clause (i)(x) in the second preceding sentence.
(f) Survival. Upon termination of Executive's employment
and payment of the amounts due Executive pursuant to Section 1 of this
Agreement, the obligations of the Company and the Executive under this
Agreement shall terminate, except that the Company's obligations with respect
to the payment of amounts upon the death or disability of Executive set forth
in the second and third sentences of Section 1(c) (if and to the extent
applicable), Section 1(h) (Continuation of Benefits), Section 4(e)
(Indemnification), Section 5 (Reimbursement of Expenses) (as it relates to
expenses incurred prior to such termination, including, without limitation,
relocation expenses incurred pursuant to Section 5(c) and Schedule 5(c)),
Section 12 (Options) and Section 13 (Successors), and the Executive's
obligations under Sections 6 (Noncompetition), 7 (Confidentiality), 8 (Delivery
of Materials) and 9 (Noninterference), will survive (in accordance with the
terms and conditions thereof) any such termination.
(g) Change of Control. For purposes of this Agreement, a
"Change of Control" shall mean the acquisition following the date hereof by any
individual, entity or group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")(a
"Person")(other than Xxxxx Xxxxxx ("Xxxxxx"), Liberty Media Corporation
("Liberty") or Tele-Communications, Inc. ("TCI") or any of their respective
subsidiaries (which, for purposes of this Section 1(g) shall be deemed to
include any entity in which such person, directly or indirectly, owns at least
a majority of the outstanding equity securities, without regard to the voting
power of such securities or any proxy or other voting agreement granting voting
power of such securities to any other person) or affiliates (within the meaning
of Rule 12b-2 promulgated under the Exchange Act)), of (i) beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a
majority of the combined voting power of the then-outstanding voting securities
of the Company entitled to vote generally upon matters submitted to the
stockholders of the Company, (ii) all or substantially all of the assets of the
Company, or (iii) in the event that Xxxxxx, Liberty, TCI or their respective
subsidiaries or affiliates collectively cease to own, directly or indirectly,
equity securities of the Company representing a majority of the voting power of
the then-outstanding equity securities of the Company, beneficial ownership of
the greatest of (x) equity securities of the Company representing 10 percent of
the voting power of the then-outstanding equity securities of the Company, (y)
equity securities of the Company having an aggregate voting power in excess of
the aggregate voting power represented by the equity securities of the Company
then owned, directly or indirectly, by Liberty and the members of its
Stockholder Group (as defined in the Agreement, dated as of August 24, 1995, as
amended, between Liberty and Xxxxxx), and (z) equity securities of the Company
having an aggregate voting power in excess of the aggregate voting power
represented
-5-
6
by the equity securities of the Company then owned, directly or indirectly, by
Xxxxxx and the members of his Stockholder Group.
(h) Continuation of Certain Benefits. In the event
Executive's employment is terminated due to death or disability or for any
reason other than for Cause, or if Executive terminates under Section 1(d),
then for the remainder of the Employment Term the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with this Agreement if the
Executive's employment had not been terminated, in accordance with the most
favorable plans, practices, programs or policies of the Company as in effect
and applicable generally to other executives and their families; provided,
however, that the Company may terminate such benefits if the Executive becomes
reemployed with another employer and is eligible to receive similar benefits
under such subsequent employer's benefit plans. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to the Company's
plans, practices, programs and policies, the Executive shall be considered to
have remained employed until the end of the Employment Term and to have retired
on the last day of such period.
2. Services to be Rendered by Executive. The Company and
Executive agree that Executive will serve the Company as its President and
Chief Executive Officer and shall have the rights, powers, duties and
obligations relating to such offices as is specified in the By-laws of the
Company as in effect on the date of this Agreement. In such capacity,
Executive shall perform all reasonable acts customarily associated with such
positions, or necessary or desirable to protect and advance the best interests
of the Company. Executive shall perform such acts and carry out such duties,
and shall in all other respects serve the Company faithfully and to the best of
his ability (subject, however, during the Transition Period (as defined below)
to Executive fulfilling his duties to his prior employer as provided in the
first sentence of Section 3 hereof). The Company and Executive acknowledge and
agree that the Executive's primary reporting responsibility shall be to the
current Chairman of the Board of Directors of the Company, and if the person
currently serving as Chairman ceases to be Chairman, then to the Board of
Directors.
3. Time to be Devoted by Executive. Executive agrees to devote
substantially all of his business time, attention, efforts and abilities to the
business of the Company and to use his best efforts to promote the interests of
the Company; provided, however, that during the period from the Effective Date
to January 3, 1996 (the "Transition Period"), the parties acknowledge and agree
that the Executive shall be employed on a part-time basis while Executive
fulfills certain obligations to his prior employer. During the Employment Term
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) fulfill speaking
engagements and (iii) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
-6-
7
4. Compensation.
(a) Salary. During the Employment Term, the Executive
shall receive an annual base salary of not less than $500,000 ("Annual Base
Salary"), which amount shall be reviewed at least annually and may not be
decreased during the Employment Term and which shall be paid in accordance with
the Company's customary payroll practices for salaried employees.
(b) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be entitled to receive an annual bonus (the "Annual Bonus")
calculated in accordance with the provisions set forth on Exhibit A hereto.
The Annual Bonus shall be paid as soon as practicable following the Company's
receipt of audited financial results in each year and in any event not later
than 90 days after the conclusion of each fiscal year. All payments of Annual
Bonus shall be made in cash, without liability for interest on any such payment
by the Company. All payments of Annual Bonus shall, when paid, be subject to a
deduction for any or all taxes required by any government to be withheld by the
Company and paid over to such government for the account of Executive. The
payment to any such government of an amount so withheld shall be deemed a
payment thereof to Executive. Executive acknowledges and agrees that the
Company's obligation to pay the Annual Bonus is an unfunded, unsecured
obligation of the Company, and that nothing contained herein shall give the
Executive any rights greater than those of a general creditor of the Company.
(c) Benefits. During the Employment Term, the Executive
(including, where applicable, Executive's family) shall be entitled to benefits
in accordance with the welfare benefit and incentive plans, practices, programs
and policies of the Company (including, but not limited to, retirement,
savings, incentive and stock compensation plans, employee stock purchase plans,
medical, death and disability, and life and other insurance plans and
policies), and the minimum service eligibility conditions of such plans shall
be waived unless such a waiver would adversely affect the plan or the
participants therein.
(d) Vacation. During the Employment Term, the Executive
shall be entitled to four weeks of paid vacation per year or such longer period
as may be provided by the Company in accordance with the plans, policies,
programs and practices of the Company applicable to executives of the Company
generally.
(e) Indemnification.
(i) In addition to any separate agreements between
Executive and the Company relating to indemnification, the Company
will indemnify and hold harmless Executive, to the fullest extent
permitted by applicable law, but subject to the provisions of clause
(iv) below, in respect of any liability, damage, cost or expense
(including reasonable counsel fees) incurred in connection with the
defense of any claim, action, suit or proceeding to which he is a
party, or threat thereof, by reason of his being or having been an
officer or director of the Company or any subsidiary or affiliate of
the Company, or his serving or
-7-
8
having served at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership,
joint venture, trust, business organization, enterprise or other
entity, including service with respect to employee benefit plans.
Without limiting the generality of the foregoing, the Company will pay
the expenses (including reasonable counsel fees) of defending any such
claim, action, suit or proceeding in advance of its final disposition,
upon receipt of an undertaking by Executive to repay all amounts
advanced if it should ultimately be determined that Executive is not
entitled to be indemnified under this Section.
(ii) In addition to the foregoing, the Company
agrees to pay promptly as incurred, to the full extent permitted by
law, all legal fees and expenses incurred by Executive in connection
with the defense (including in connection with the defense of
counterclaims or cross-claims) of any claim, action, suit or
proceeding relating to the enforcement by the Company (including
claims, actions, suits or proceedings brought in the right of the
Company) of the provisions of Sections 6, 7, 8 or 9 of this Agreement;
provided, however, that in the event that the Company (or any person
asserting the Company's right) is the prevailing party in such
enforcement action (as determined by a court of competent jurisdiction
in a final adjudication not subject to appeal), the Executive shall
reimburse the Company for all payments made by it pursuant to this
Section 4(e)(ii).
(iii) Except as otherwise provided in Section
4(e)(ii) above, the Company agrees to pay promptly as incurred, to the
full extent permitted by law, all legal fees and expenses which
Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, Executive or others of the
validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof (including as a
result of any contest by Executive about the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended.
(iv) Notwithstanding anything contained herein to
the contrary, the Company shall not be obligated to indemnify
Executive or advance or reimburse expenses pursuant to this Section
4(e) with respect to any claims, actions, suits or proceedings which
arise out of, or relate to any termination of Executive's employment
or other arrangements with any prior employer, including, but not
limited to, matters relating to non-competition and confidentiality
agreements.
5. Expenses; Relocation Expenses; Loan; Automobile.
(a) During the Employment Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the policies, practices and procedures of
the Company.
-8-
9
(b) In addition, the Company shall reimburse Executive
for the costs and expenses relating to the temporary and permanent relocation
of Executive and his family to the Tampa, Florida area, including, but not
limited to, reimbursement of Executive for all reasonable temporary housing
expenses for Executive and his family during the period of their temporary
relocation, not to exceed a reasonable period, plus any taxes imposed upon
Executive with respect to such reimbursed expenses.
(c) In connection with Executive's relocation to the
Tampa, Florida area, the Company agrees to make a loan to the Executive in the
principal amount of $1,000,000 for the purpose of purchasing and, if
applicable, making improvements upon, a residence in the area. In the event
that, after completion of the improvements to be undertaken by Executive within
a reasonable period of time following the purchase of such residence, the fair
market value of such residence is less than $800,000, the Executive shall repay
a portion of the principal amount of the loan in an amount equal to the
difference between such fair market value and $800,000. The other terms of
such loan shall be as follows:
(i) The loan shall be evidenced by a note
executed by Executive and secured by a first mortgage upon such residence.
(ii) The loan shall bear interest at 5.0% per
annum.
(iii) Executive shall be required to pay only the
interest payable (which shall be payable on a monthly basis) on such loan prior
to the principal amount of such loan becoming due and payable as provided
below.
(iv) The principal amount of such loan, together
with any accrued and unpaid interest thereon, shall become due and payable (x)
in the event Executive's employment with the Company is terminated for any
reason, on the first anniversary of such termination or (y) in the event such
residence is sold or transferred, immediately upon the consummation of such
sale or transfer.
(d) Executive shall be entitled during the Employment
Term to the use of a luxury automobile supplied to him by the Company. The
Company shall bear all costs and expenses associated with the acquisition and
use of such automobile, including but not limited to, fuel, maintenance and
insurance.
6. Noncompetition. Executive agrees that while in the employ of
the Company and, if Executive terminates his employment with the Company prior
to the expiration of the Employment Term in breach of his obligations
hereunder, for the period beginning on the date Executive terminates his
employment and ending on the date the Employment Term was otherwise scheduled
to expire (the "Subject Period"), Executive will not, directly or indirectly,
as principal or agent, or in any other capacity, own, manage, operate,
participate in or be employed by or otherwise be interested in, or connected in
any manner with, any person, firm, corporation or other enterprise which
directly competes in a material respect with the business of the Company or any
of its
-9-
10
majority-owned subsidiaries as it is conducted while Executive is employed by
the Company, except as provided in Schedule 6 hereto. Nothing herein contained
shall be construed as denying Executive the right to own securities of any such
corporation which is listed on a national securities exchange or quoted in the
National Association of Security Dealers, Inc. Automated Quotation System to
the extent of an aggregate of 5% of the total number or voting power of such
securities outstanding.
7. Confidentiality. Executive agrees that while in the employ of
the Company (otherwise than in the performance of his duties hereunder) and
during the period of two years following the scheduled expiration of the
Employment Term, he shall not, directly or indirectly, make use of, or divulge
to any person, firm, corporation, entity or business organization, and shall
use his best efforts to prevent the publication or disclosure of, any
Confidential Information (as hereinafter defined) concerning the Company, but
this Section 7 shall not prevent Executive from responding to any subpoena,
court order or threat of other legal duress, provided Executive notifies the
Company thereof with reasonable promptness so that the Company may seek a
protective order or other appropriate relief. The term "Confidential
Information" shall mean information disclosed to Executive by the Company in
connection with his employment relating to the business of the Company,
including its accounts and finances, customers and customer lists, and its
future plans and proposals, to the extent that the foregoing matters are
considered proprietary by the Company; provided, however, that the following
shall not be deemed to be Confidential Information:
(a) information which is or becomes publicly known other
than as a result of a breach of this provision by Executive;
(b) information lawfully in the possession of Executive
prior to disclosure to him by the Company;
(c) information disclosed to Executive by any third party
who is not affiliated with the Company or otherwise subject to a
confidentiality obligation in favor of the Company; or
(d) information developed independently by Executive
subsequent to the termination of Executive's employment by the Company.
8. Delivery of Materials. Executive agrees that upon the
termination of his employment he will deliver to the Company all documents,
papers, materials and other property of the Company relating to its affairs
which may then be in his possession or under his control.
9. Noninterference. Executive agrees that he will not, while in
the employ of the Company and, in the event Executive terminates his employment
with the Company prior to the expiration of the Employment Term in breach of
his obligations hereunder, during the Subject Period, solicit the employment of
any employee of the Company on behalf of any other person, firm, corporation,
entity or business organization, or otherwise interfere with the employment
relationship between any employee or officer of the Company and the Company.
-10-
11
10. Remedies of the Company. Executive agrees that, in the event
of a material breach by Executive of this Agreement, in addition to any other
rights that the Company may have pursuant to this Agreement, the Company shall
be entitled, if it so elects, to institute and prosecute proceedings at law or
in equity to obtain damages with respect to such breach or to enforce the
specific performance of this Agreement by Executive or to enjoin Executive from
engaging in any activity in violation hereof. Executive agrees that because
Executive's services to the Company are of such a unique and extraordinary
character, a suit at law may be an inadequate remedy with respect to a breach
by Executive of Sections 6, 7, 8 and 9 hereof, and that upon any such breach or
threatened breach by him of such Sections the Company shall be entitled, in
addition to any other lawful remedies that may be available to it, to
injunctive relief.
11. Notices. All notices to be given hereunder shall be deemed
duly given when delivered personally in writing or mailed, certified mail,
return receipt requested, postage prepaid and addressed as follows:
(a) If to be given to the Company:
Home Shopping Network, Inc.
0000 000xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman of the Board of Directors
With a separate copy addressed to the Legal
Department, Attention: General Counsel
(b) If to be given to Executive:
Home Shopping Network, Inc.
0000 000xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
With a separate copy to:
Kronish, Lieb, Weiner & Xxxxxxx L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
and to:
-00-
00
Xxxxxx X. Xxxxxx, Xxx.
0000 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, XX 00000-0000
or to such other address as a party may request by notice given in accordance
with this Section 11.
12. Stock Options.
(a) The Company hereby grants to Executive, effective
November 24, 1994 (the "Grant Date"), but subject to (x) Executive having
entered into this Agreement no later than December 7, 1995, and (y) the receipt
of stockholder approval of a new Stock Option Plan (the "Plan") of the Company
(which has been approved in principle by the Board of Directors of the
Company), options (the "Options") to purchase up to 2,500,000 (the "Total
Number of Options") shares of the Company's common stock, par value $.01 per
share (the "Common Stock", which term shall include the Common Stock of the
Company as it exists on the date hereof and any class or series into which it
may hereafter have been changed). The Options granted hereunder (i) shall have
an exercise price per share of $8.50 (such price being the closing price of the
Common Stock on the trading day prior to the Grant Date); (ii) shall vest and
become exercisable, subject to the provisions of Section 12(b) hereof, over
four years as follows: 1/4 of the Total Number of Options shall vest and
become exercisable on the first anniversary of the Grant Date, and an
additional 1/4 of the Total Number of Options shall vest and become exercisable
on each subsequent anniversary of the Grant Date, such that the Total Number of
Options shall have become vested and exercisable upon the fourth anniversary of
the Grant Date; and (iii) shall have a term expiring 10 years from the Grant
Date. The Company covenants and agrees to use its reasonable best efforts to
cause such Plan to be approved by the stockholders of the Company at the next
annual or special meeting of stockholders.
(b) Options granted hereunder shall provide that upon
termination of Executive's employment by the Company without Cause, or by
Executive for Good Reason or during the period described in Paragraph 1(d)(ii),
or by reason of Executive's death or pursuant to Section 1(b)(ii), all
outstanding but unexercised Options will immediately vest and be exercisable
for one year; provided, however, that all Options shall terminate upon the 10th
anniversary of the Grant Date. If Executive is terminated for Cause, the
Options will be exercisable for not more than three months following the date
of termination and then only to the extent vested as of the date of
termination. If Executive terminates in violation of this Agreement, all
Options shall immediately terminate and cease to be exercisable.
(c) In the event of a stock dividend, recapitalization,
reorganization, split-up, spin-off, combination, exchange of shares, warrants
or rights offering to purchase Common Stock or other similar corporate event
affecting the Common Stock such that an adjustment is required in order to
preserve the benefits of this Section 12, an adjustment shall be made to
increase or decrease any or all of (i) the number and kind of shares subject to
the Options granted hereunder and/or (ii) the exercise price of the Options, in
such manner as the Company's board of directors may deem
-12-
13
reasonable and appropriate; provided, however, that the number of shares
subject to the Options granted hereunder shall always be a whole number.
(d) The grant of Options hereunder shall not affect in
any way the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business structure or
to merge, consolidate, liquidate, sell or otherwise dispose of all or any part
of its business or assets.
(e) Subject to the provisions hereof, the Executive may
exercise one or more Options at any time when they are exercisable by giving
written notice of exercise to the Company specifying: (i) the number of shares
of Common Stock with respect to which the Options are being exercised; (ii) the
method of withholding of taxes that the Executive has chosen in accordance with
the Plan, if not previously specified; and (iii) whether the Executive elects
to pay the exercise price by (A) tendering to the Company previously owned
shares of Common Stock with an aggregate Fair Market Value (calculated as of
the day before the date of exercise) equal to the aggregate exercise price of
the Options being exercised or (B) delivering to the Company (1) a copy of an
irrevocable instruction from the Executive to an underwriter or broker
directing such underwriter or broker to sell shares of Common Stock to be
acquired by the exercise of such Options in an amount, net of brokers' and
underwriters' fees, commissions or discounts, sufficient to pay such exercise
price in full, and promptly remit to the Company the amount of such exercise
price, all of which arrangements shall be reasonably satisfactory to the
Company, (2) irrevocable instructions from the Executive to the Company to
withhold from the shares of Common Stock to be acquired by the exercise of such
Options a number of shares having a Fair Market Value on the date of exercise
sufficient to pay such exercise price in full or (3) a combination of the
foregoing (in the case of (1), (2) or (3), a "Cashless Exercise"). The term
"Fair Market Value" shall mean, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock in the
over-the-counter market, as reported by NASDAQ, or, if the Common Stock is
listed on a national securities exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national security exchange on which the Common Stock is listed or
admitted to trading, on that date or, if there are no reported sales on that
date, on the next day after that date on which there are such reported sales.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. However, no rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity or the sale or
liquidation of all or substantially all of the assets of the Company.
-13-
14
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and replaces and
supersedes as of the date hereof any and all prior agreements and
understandings with respect to Executive's employment by the Company, whether
oral or written, between the parties hereto. This Agreement may not be changed
nor may any provision hereof be waived except by an instrument in writing duly
signed by the party to be charged. This Agreement shall be interpreted,
governed and controlled by the law of the State of Florida, without reference
to principles of conflict of laws.
(b) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(c) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(d) The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the
-14-
15
Executive to terminate employment for Good Reason pursuant to Section 1(d) of
this Agreement, shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement.
(e) This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
ATTEST: HOME SHOPPING NETWORK, INC.
-------------------------- By:
Name: ---------------------------
Title: Name:
Title:
---------------------------
Xxxxx Held
-15-
16
EXHIBIT A
DETERMINATION OF ANNUAL BONUS
The Executive's Annual Bonus for each fiscal year of the Company
during the Employment Term shall be calculated as follows:
The Executive's Annual Bonus shall equal the greater of (x) $150,000
or (y) in the event Actual EBITDA equals or exceeds Target EBITDA, $250,000
plus 1.25% of the amount by which Actual EBITDA exceed Target EBITDA for such
fiscal year.
Where:
(i) "Actual EBITDA" means the earnings for the Company and its
subsidiaries on a consolidated basis for the fiscal year in
question, determined in accordance with generally accepted
accounting principles consistently applied (except to the
extent described in clause (ii) below), before interest,
taxes, depreciation, amortization and any net extraordinary
gains or losses of the Company or any such subsidiary for the
fiscal year in question.
(ii) "Target EBITDA" means $66.57 million (or such other amount as
the Chairman of the Board and the Executive shall agree in
good faith, based upon certain adjustments to the 1996
projected budget, constitutes the revised Target EBITDA, which
revised budget a2and Target EBITDA shall have been approved by
the Board of Directors), as such amount may be adjusted in
good faith by the Board of Directors from time to time in
order to give effect to (x) any accounting or other financial
reporting changes adopted by the Company for periods
subsequent to fiscal year 1995 or (y) without limiting in any
manner the Company's ability to operate its business and
structure the timing and amounts of income and expenses,
changes in the calculation of EBITDA resulting from the
inclusion of an item into income or expense which item had in
fiscal year 1995 been included in a category which was not
includable in the calculation of EBITDA. (By way of example,
if the Company were to restructure its payments to cable
system operators in such a way that, without effecting the
Company's aggregate obligations to such operators, a higher
percentage of the amount payable would be included as an
expense item than is currently includable (by, for example,
determining not to amortize such payments), then the
calculation of EBITDA would be appropriated adjusted such that
the basis upon which EBITDA is calculated from year to year is
consistent).
All determinations of EBITDA and Target EBITDA shall be based upon the
information contained in the Company's audited financial statements, or in the
event the Company is not required to publish financial information which has
been audited by the Company's independent accountants
17
in any such year, the financial results of the Company for such year, prepared
in accordance with generally accepted accounting practices consistently applied
(except to the extent set forth in clause (ii) above), and certified by the
Company's Chief Financial Officer.
-2-
