AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxx XX ("Executive"), dated as of
September 10, 1997.
WHEREAS, the Company and Executive entered into that certain
Employment Agreement dated as of March 7, 1997 (the "Original Agreement").
WHEREAS, the Company and Executive desire to amend and restate
the Original Agreement in its entirety by entering into this Amended and
Restated Employment Agreement (the "Agreement").
IT IS, THEREFORE, AGREED THAT THE ORIGINAL AGREEMENT IS HEREBY
AMENDED AND RESTATED, AND THE PARTIES HEREBY AGREE, AS FOLLOWS:
1. EMPLOYMENT AND TERM. The Company hereby agrees to continue
Executive in its employ, and Executive hereby agrees to continue such employment
as Chief Financial Officer and Treasurer of the Company (or such other position
determined in accordance with Section 9(d)(ii) of this Agreement) reporting to
the President and Chief Executive Officer for the period commencing on the date
first above written and ending on February 28, 2001; PROVIDED, HOWEVER, that
effective on March 1, 2001 and on each March 1 thereafter, the term of this
Agreement shall be extended for an additional period of one year from the then
current expiration date unless the Company or Executive shall have given written
notice to the other of its or his election not to so extend the term of this
Agreement on or before the immediately prior December 1, subject, however, to
earlier termination as provided in Section 9 herein (the "Employment Period").
The Executive also agrees, during the Employment Period, to serve (without
additional compensation) on the Board of Directors (and appropriate committees
thereof) of the Company, if requested by the Board of Directors. The Employment
Agreement, dated as of May 15, 1994, between the Company and Executive is hereby
superseded by the Agreement and terminated with no further force or effect
effective as of the close of business on December 31, 1996.
2. TERMS OF EMPLOYMENT. (a) During the Employment Period,
Executive agrees, subject to the provisions of Section 9(d)(ii) of this
Agreement, to devote all but a DE MINIMUS amount of his business time and
attention to the business and affairs of the "Telemundo Group" (as defined
below) and to use his best efforts to perform faithfully and efficiently such
responsibilities. For purposes of this Agreement, the term "Telemundo Group"
shall mean any and all of the Company and any of its current or future divisions
or subsidiaries.
(b) The principal place of employment of Executive
shall be Hialeah, Florida. Executive understands and agrees that in connection
with his employment hereunder, he will be required to travel extensively on
behalf of the Telemundo Group.
3. BASE SALARY. During the Employment Period Executive shall
receive a base salary (the "Base Salary") as follows. For the period of the
Employment Period beginning on the effective date of this Agreement and ending
on February 28, 1998, the Base
Salary shall be payable to Executive at an annual rate of $325,000. For the
period of the Employment Period beginning on March 1, 1998 and ending on the
last day of the Employment Period, the Base Salary shall be payable to Executive
at an annual rate of $400,000. The Base Salary shall be payable consistent with
the executive payroll practices of the Company. Executive acknowledges and
agrees that he has been paid in full his Base Salary for periods prior to the
effective date of this Agreement.
4. BONUS. For 1997 (or portion thereof) during the Employment
Period, Executive will be paid bonuses as set forth in Section 4(a) below if
certain performance targets set by the Compensation and Stock Option Committee
(the "Compensation Committee") of the Board of Directors are met. For each of
the 1998, 1999, 2000 and 2001 fiscal years and any subsequent fiscal years (or
portion thereof) during the Employment Period, Executive will be paid a bonus
(the "Budget Bonus") as set forth below in subsection (b) (the bonuses described
in the first sentence of this Section 4 and the "Budget Bonus" are hereinafter
collectively referred to as the "Bonus"). Executive shall receive the Bonus only
if Executive is employed by the Company on the last day of the fiscal year to
which the Bonus relates, subject to the provisions of Sections 9(a), 9(c) and
9(d).
(a) For the fiscal year ended December 31, 1997,
Executive will be eligible for a bonus in an amount computed in accordance with
Exhibit A hereto. Such Bonus shall be paid at the times bonuses are customarily
paid to the Company's executives.
(b) For each of the 1998, 1999, 2000, 2001 fiscal
years and any subsequent fiscal years (or portion thereof) during the Employment
Period, Executive will be paid a Budget Bonus based upon the Company's
achievement of targets with respect to its earnings, before interest, taxes,
depreciation and amortization ("EBITDA") during such fiscal year (which fiscal
year target shall not be greater than the Company's budget for EBITDA for such
fiscal year), as follows. During the first quarter of each such fiscal year, the
Compensation Committee shall establish a budgeted EBITDA target (the "EBITDA
Target") for such fiscal year and notify Executive in writing of the EBITDA
Target. Pursuant to subsection (c), the Committee shall determine the Company's
EBITDA for such fiscal year and shall notify Executive of its determination of
the amount of the Company's EBITDA for such fiscal year and of the amount of
Executive's Budget Bonus for such year, which Budget Bonus shall be equal to (i)
100% of Executive's Base Salary for such fiscal year if the Company's EBITDA is
100% or more of the EBITDA Target, (ii) 50% of Executive's Base Salary for such
fiscal year if the Company's EBITDA is 90% of the EBITDA Target and (iii) pro
rated between 50% and 100% of Executive's Base Salary for such fiscal year if
the Company's EBITDA is more than 90% of the EBITDA Target but less than 100% of
the EBITDA Target. Executive shall be paid no Budget Bonus for any such fiscal
year in which the Company's EBITDA is less than 90% of the EBITDA Target for
such fiscal year.
(c) Each Bonus shall be paid upon certification by
the Compensation Committee (which the Compensation Committee will make within 30
days after the certification by the Company's independent auditors of the
financial statements for such fiscal year) that the performance targets
entitling Executive to a Bonus with respect to such fiscal year have been met.
If the Compensation Committee so certifies, the Bonus will be paid promptly but
in no event later than ten days after such certification.
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(d) For purposes of this Agreement, the "Compensation
Committee" shall mean a committee consisting of at least two (2) directors of
the Company, each of whom is a "non-employee director" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").
(e) The Company's obligation to pay Budget Bonuses is
conditioned upon the holders of a majority of the outstanding shares of the
Company approving a senior officer incentive plan covering Executive and the
other top three senior officers of the Company, under which plan incentive
compensation will be payable based upon the achievement of performance goals to
be established from time to time by the Compensation Committee.
5. EMPLOYEE BENEFIT PLANS; ETC. (a) Executive shall be
entitled during the Employment Period to participate in all retirement,
disability, pension, savings, medical, insurance and other plans of the Company
generally available to all senior executives (other than any performance based
bonus or option (or similar) plans). Executive shall be entitled to paid
vacations during each year of his employment consistent with the Company's
vacation policy for executive level employees (which shall provide for a least
20 vacation days per year).
(b) The Company agrees that it will provide
Executive, in his capacity as an officer and, if applicable, as a director, with
indemnification rights which are not materially less favorable to the Executive,
in his capacity as an officer and as a director, than those provided as of the
date of this Agreement in the By-laws of the Company.
6. Intentionally omitted.
7. STOCK OPTION AGREEMENTS. The parties hereto acknowledge and
agree that that certain Nonqualified Stock Option Agreement For Corporate
Officers, dated as of December 31, 1994, with respect to an aggregate of 50,000
shares of Common Stock (as defined below) is, as set forth in that certain
letter agreement dated January 27, 1997 between the Company and Executive, no
longer outstanding. The parties hereto further acknowledge and agree that the
Nonqualified Stock Option Agreement For Corporate Officers (the "Stock Option
Agreement"), dated as of June 30, 1995, with respect to an aggregate of 50,000
shares of the Company's Series A Common Stock, par value $.01 per share (the
"Common Stock"), shall be amended and restated concurrently with the execution
of this Agreement (such amendment and restatement being the "Amended Option
Agreement). Contemporaneously with and in connection with the execution of this
Agreement, the parties hereto are entering into a Nonqualified Stock Option
Agreement For Corporate Officers with respect to an aggregate 30,000 shares of
Common Stock (the "1997 Option Agreement").
8. EXPENSES. The Company shall reimburse Executive for all
reasonable expenses properly incurred by him in accordance with the policies of
the Telemundo Group in effect from time to time, on behalf of the Telemundo
Group in the performance of his duties hereunder, provided that proper vouchers
are submitted to the Company by Executive evidencing such expenses and the
purposes for which the same were incurred.
9. TERMINATION. The Company shall have the right to terminate
Executive's employment only as expressly provided in this Agreement.
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(a) DEATH OR DISABILITY. Except as otherwise provided
herein, this Agreement shall terminate automatically upon Executive's death.
The Company may terminate this Agreement after having
established Executive's "Disability" (as defined below), by giving Executive
written notice of its intention to terminate Executive's employment. For
purposes of this Agreement, "Disability" means Executive's inability to perform
substantially all his duties and responsibilities to the Telemundo Group by
reason of a physical or mental disability or infirmity (i) for a continuous
period of twelve consecutive months or (ii) at such earlier time as Executive
submits medical evidence satisfactory to the Company or the Board of Directors
determines in good faith and upon competent medical advice that Executive has a
physical or mental disability or infirmity that will likely prevent Executive
from substantially performing his duties and responsibilities for twelve
consecutive months or longer. The date of Disability shall be the day on which
Executive receives notice from the Company pursuant to this Section 9.
Upon termination of Executive's employment because of
death or Disability, the Company shall pay Executive or his estate or other
personal representative (i) within 60 days, the amount of Executive's Base
Salary earned up to the date of death or Disability, as the case may be, through
the date of termination, (ii) all benefits and other items referred to in
Sections 5 and 8 which are due up to the date of death or Disability and (iii)
when otherwise due in accordance with the provisions of Section 4, the Bonus, if
any, earned for the year in which such termination occurred, without regard to
whether Executive is an employee of the Company on the last day of such year.
(b) CAUSE; RESIGNATION WITHOUT GOOD REASON OR AS A
SPECIFIED RESIGNATION. The Company shall have the right to terminate Executive's
employment for "Cause" as defined below. Except as provided in Section 15
herein, (i) upon termination of Executive's employment for Cause or (ii) upon
Executive resigning as an employee pursuant to a resignation that is without
Good Reason and is not a Specified Resignation (as defined in Section 9(d)(i)),
this Agreement shall terminate and the Executive shall not be entitled to
receive any compensation or other benefits other than (x) Base Salary earned up
to the date of such termination or resignation and (y) all benefits and other
items referred to in Sections 5 and 8 which are due up to the date of such
termination or resignation.
For purposes of this Agreement, "Cause" shall mean
(i) the willful and continued failure by Executive to perform substantially all
his duties to the Company or the failure by the Executive to comply with the
reasonable written policies, procedures and directives of the Board of Directors
(other than any such failure resulting from his death or Disability), in each
case after being given written notice by the Board of Directors of a failure to
perform or comply (which notice specifically identifies the manner in which
Executive has failed to perform or comply) and a reasonable opportunity to cure
such noncompliance or nonperformance; (ii) the willful misconduct by Executive
in the performance of his duties to the Company, provided that (for purposes of
this clause (ii) only and not for any other purpose or interpretation of this
Agreement) an act shall be considered "willful" only if done in bad faith and
not in the best interests of the Company; (iii) the grossly negligent
performance by Executive of his duties to the Company; (iv) the conviction of
Executive by a court of competent jurisdiction of the commission of (x) a felony
or (y) a
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crime involving moral turpitude; or (v) a material breach by Executive of
Sections 10 or 11 hereof.
Notwithstanding the foregoing, the Company shall not
be entitled to terminate Executive for any of the reasons specified in clause
(i), (ii), (iii) or (v) of the immediately preceding paragraph unless such
termination is authorized by a resolution adopted by the Board of Directors of
the Company at a meeting called and held for this purpose (after five business
days' prior written notice to Executive, which prior written notice shall state
the general facts, circumstances or deficiencies supporting a claim for Cause
termination, and after affording Executive and his counsel an opportunity to be
heard before the Board of Directors).
(c) TERMINATION WITHOUT CAUSE; NON-RENEWAL.
Notwithstanding anything to the contrary contained herein, the Company shall
have the right to terminate the employment of Executive at any time without
Cause and the Company shall be entitled to determine, in its sole and absolute
discretion, not to extend the Employment Period as provided in Section 1. Upon a
termination without Cause, except as provided in Section 15, this Agreement
shall terminate and the Executive shall not be entitled to receive any
compensation or other benefits, except that the Company shall (i) through the
later of February 28, 2001 or the first anniversary of the date of termination
of Executive's employment (the "Entitlement Date") continue to pay to Executive
the Base Salary in effect immediately prior to the date of termination, such
payments to be made in installments at the times such amounts would have been
paid if the Agreement had not been so terminated, and (ii) pay to the Executive,
when otherwise due in accordance with Section 4, the Bonus, if any, earned for
the fiscal year in which such termination occurs, without regard to whether
Executive is employed on the last day of such fiscal year and (iii) through the
Entitlement Date continue Executive's benefits and other items referred to in
Section 5 or, to the extent the Company is legally unable to provide any such
benefits or other items as a result of Executive no longer being an employee,
reimburse Executive for his cost (not to exceed the actual cost to the Company
if he were still an employee) of obtaining the equivalent coverage and benefits.
During the period in which Executive receives the payments required by the
immediately preceding sentence, Executive shall be subject to the provisions set
forth in Sections 10 and 11 below. In the event that Company elects not to
extend the Employment Period, then, absent any termination pursuant to Section
9, the Company shall continue paying to Executive his Base Salary during the
period, if any, beginning on the date Executive's employment terminates and
ending on the first anniversary of the date on which the Company gives its
notice of non-renewal to Executive. During the period in which Executive
receives the payments required by the immediately preceding sentence, Executive
shall be subject to the provisions set forth in Sections 10 and 11 below.
(d) TERMINATION FOR GOOD REASON; SPECIFIED
RESIGNATION RIGHT.
(i) Executive shall have the right to
terminate his employment under this Agreement upon the occurrence of any event
that constitutes Good Reason by giving written notice to the Company. "Good
Reason" means any of the following: (A) a Diminution in Duty (as defined below),
(B) a Designated Relocation (as defined below), or (C) any Other Good Reason
Event (as defined below); PROVIDED, HOWEVER, that Good Reason shall not be
deemed to have occurred prior to the giving of written notice by the Executive
to the Company generally describing the alleged Good Reason, and the
5
actions the Executive believes are necessary to cure such alleged Good Reason,
and the Company's failure to so cure within 15 days of receipt of such notice.
The giving of such notice and the action or failure to take action by the
Company shall be irrelevant in determining whether a Good Reason has in fact
occurred. If a Change of Control Transaction (as defined in the Amended Option
Agreement) occurs, then, during the period beginning on the date that is 14
months after the consummation of the Change of Control Transaction and ending on
the date that is 15 months after the consummation of the Change of Control
Transaction, Executive shall have the right to terminate his employment under
this Agreement for any reason whatsoever by giving written notice of such
termination to the Company (such termination being a "Specified Resignation"
and, for purposes of this Agreement, a Specified Resignation shall be treated
exactly like a termination for Good Reason). Upon a termination for Good Reason
or a Specified Resignation, except as provided in Section 15, this Agreement
shall terminate and the Executive shall not be entitled to receive any
compensation or other benefits other than the Company shall (i) through the
Entitlement Date continue to pay to Executive the Base Salary in effect
immediately prior to the date of termination, such payments to be made in
installments at the times such amounts would have been paid if the Agreement had
not been so terminated, (ii) pay to the Executive, when otherwise due in
accordance with Section 4, the Bonus, if any, earned for the fiscal year in
which such termination occurs, without regard to whether Executive is employed
on the last day of such fiscal year and (iii) through the Entitlement Date
continue Executive's benefits and other items referred to in Section 5 or, to
the extent the Company is legally unable to provide any such benefits or other
items as a result of Executive no longer being an employee, reimburse Executive
for his cost (not to exceed the actual cost to the Company if he were still an
employee) of obtaining the equivalent coverage and benefits. During such period,
Executive shall be subject to the provisions set forth in Sections 10 and 11
below.
(ii) "Diminution in Duty" means, without
Executive's express prior written consent: (A) the assignment to Executive of
any duties inconsistent in any respect with Executive's position on the date of
this Agreement, or (B) any adverse change in Executive's status, offices,
titles, reporting requirements, authority, duties or responsibilities as in
effect on the date of this Agreement; PROVIDED, HOWEVER, that after a Change of
Control Transaction (as defined in the Amended Option Agreement), a "Diminution
in Duty" means a change in Executive's position with the Company so that he is
neither (1) the Chief Financial Officer and Treasurer of the Company, nor (2)
the Chief Financial Officer and Treasurer of a successor to any part of the
Company's business or assets. Notwithstanding anything whatsoever to the
contrary contained in this Agreement (or in the Amended Option Agreement or in
the 1997 Option Agreement), if after a Change of Control Transaction any of the
events described in clause (A) or (B) of the immediately preceding sentence
occurs (without regard to the application of the proviso in such sentence),
Executive shall have the absolute right to change his position with the Company
to a position that has such work location, time commitment, duties,
responsibilities and terms as shall be specified by Executive in his sole and
absolute discretion after consultation with the Company, and the requirement of
Section 2(a) that Executive devote his full time and attention to the Telemundo
Group shall cease to apply.
(iii) "Designated Relocation" means the
Company requiring Executive's work location to be other than within thirty (30)
miles of the Company's current corporate offices in Hialeah, Florida.
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(iv) "Other Good Reason Event" means any of
the following: (A) a material breach of this Agreement by the Company (which
shall include, without limitation, any reduction in the amount of any
compensation or benefits provided to Executive under this Agreement) or (B) any
termination or attempted termination by the Company of Executive's employment
other than as expressly permitted in this Agreement.
(e) OFFICER AND BOARD POSITIONS. Upon the termination
of employment with the Company for any reason, Executive shall be deemed to have
resigned any and all of his positions as an officer and a member of the Board of
Directors of the Company and any of its subsidiaries and as a member of any
committees of such Boards, effective on the date of termination.
(f) CERTAIN CONDITION. Notwithstanding anything to
the contrary contained in this Section 9, the obligations of the Company under
this Section 9 shall continue only so long as the Executive does not breach his
obligations under Section 10 and 11.
(g) CERTAIN EFFECT. As used in this Agreement,
termination of this Agreement shall also result in and mean termination of the
Employment Period hereunder.
(h) MITIGATION OF DAMAGES. Executive shall have no
duty to mitigate any of his damages in the event of any breach of or default or
failure in performance under this Agreement by the Company.
(i) STOCK OPTIONS. The references in Section 9(a),
9(b), 9(c) or 9(d) to Executive, other than as therein stated, not being
entitled to receive compensation or benefits upon termination of his employment
under any of such Sections shall not affect Executive's rights under the Amended
Option Agreement or the 1997 Option Agreement.
10. CONFIDENTIALITY, ETC. Executive will not divulge, furnish
or make accessible to anyone (otherwise than in the regular course of business
of the Telemundo Group) any confidential information, plans or materials or
trade secrets of the Telemundo Group or with respect to any other confidential
or secret aspects of the business of the Telemundo Group; PROVIDED, HOWEVER,
that during his employment, Executive shall have the latitude customarily given
a chief financial officer to disclose information in good faith for the benefit
of the Company and its stockholders (taken as a whole). All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, on microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to him relating
to the Telemundo Group are and shall be the Company's property and shall be
delivered to the Company promptly upon the termination of his employment with
the Company; PROVIDED, HOWEVER, that (i) this obligation shall not apply to
information that (A) is not confidential (other than as a result of Executive's
breach of this Section) and (B) does not contain certain trade secrets of the
Company, (ii) Executive shall have the right to retain such of the foregoing as
shall be reasonably necessary to enforce his rights under this Agreement and to
comply with and enforce his rights, including the right to defend himself
against claims, provided copies of such retained information are provided to the
Company and the retained information remain subject to the provision of this
Section, and (iii) Executive shall have no obligation to return information that
is no longer in his possession, custody or control. This Section 10 shall
survive the expiration or termination or termination of this Agreement, the
Employment
7
Period and the term of employment; PROVIDED, HOWEVER, that if Executive's
employment is terminated pursuant to Section 9(c) or Section 9(d), then this
Section 10 will terminate on the Entitlement Date.
11. NO INTERFERENCE; AFFILIATE TRANSACTIONS.
(a) During the Employment Period and for one year
thereafter, Executive will not, directly or indirectly, for himself, or as agent
of or on behalf of, or in conjunction with, any person, firm, corporation, or
other entity, engage or participate in the Company Business (as hereinafter
defined), whether as employee, consultant, partner, principal, shareholder or
representative, or render advisory or other services to or for any person, firm,
corporation or other entity, which is engaged, directly or indirectly, in the
Company Business; PROVIDED, HOWEVER, that (i) Executive may own less than 5% of
the common stock of a publicly traded company that is engaged in the Company
Business and (ii) Executive may own Common Stock and securities convertible into
Common Stock (or securities into which Common Stock is converted in any business
combination transaction). For purposes of this Section 11(a), "Company Business"
shall mean and be limited to any of (x) the provision of Spanish language
television programming in the United States (which includes Puerto Rico), (y)
the ownership of television broadcast stations, networks or any over-the-air
television signal, and cable in the United States (which includes Puerto Rico)
that broadcast primarily Spanish language programming, and (z) the sale of
television advertising time and programs inside and outside the United States
(which includes Puerto Rico) for Spanish language television stations, cable and
networks.
(b) During the Employment Period and for one year
after such period, Executive agrees and covenants that he will not interfere
directly or indirectly in any way with the Company. "Interfere" means to
influence or attempt to influence, directly or indirectly, present or active
prospective customers, employees, suppliers, performers, directors,
representatives, agents or independent contractors of the Company, or any of its
network affiliates to restrict, reduce, sever or otherwise alter their
relationship with the Telemundo Group or any of its network affiliates.
(c) Executive agrees that during the Employment
Period, he will not at any time enter into, on behalf of the Telemundo Group, or
cause the Telemundo Group to enter into, directly or indirectly, any
transactions (each, a "Transaction") with any business organization in which he
or, to his knowledge after due inquiry, any member of his family may be
interested as a partner, trustee, director, officer, employee, shareholder,
lender of money or guarantor, except to the extent disclosed to the Company and
agreed to by the board of directors of the Company in writing; PROVIDED,
HOWEVER, that no such disclosure and agreement shall be required for the Company
or Telemundo Group to enter into any transaction with Xxxxxxx May or May
International Productions or their affiliates or successors (if such transaction
would otherwise be subject to this Section 11(c)) so long as such transaction
(i) is in the ordinary course of business of Xxxxxxx May or May International
Productions on one hand and the Company or Telemundo Group on the other hand,
(ii) is on no less favorable terms to the Company or Telemundo Group than would
be available if no such relationship existed and (iii) does not involve an
amount of more than $10,000 during any 12-month period. Executive will use his
best efforts to ensure that any Transaction is disclosed to the Board of
Directors of the Company and approved thereby prior to entering into a contract
relating thereto and/or consummation thereof, as contemplated by the preceding
sentence.
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(d) From and after the termination of Executive's
employment, Executive shall not disparage the Company, its officers, directors,
employees or business, nor shall the Company or any of its officers, directors,
employees or agents disparage the Executive or members of his family, and
neither party shall disclose any facts relating to such termination; provided,
that nothing contained in this Section 11(d) shall restrict the parties from
making any statements or disclosure believed necessary to enforce in any
judicial or similar proceeding the provisions of this Agreement or as a party
believes may be required by applicable law.
(e) In the event any court having jurisdiction
determines that any part of this Section 11 is unenforceable, such court shall
have the power to reduce the duration or scope of such provision and such
provision, in its reduced form, shall be enforceable. This Section 11 shall
survive the expiration or termination of this Agreement and the Employment
Period; PROVIDED, HOWEVER, that if Executive's employment is terminated pursuant
to Section 9(c) or Section 9(d), then this Section 11 will terminate on the
Entitlement Date.
12. INJUNCTIVE RELIEF. Executive acknowledges that the
provisions of Sections 10 and 11 herein are reasonable and necessary for the
protection of the Telemundo Group and the Telemundo Group will be irrevocably
damaged if such provisions are not specifically enforced. Accordingly, Executive
agrees that, in addition to any other relief to which the Company may be
entitled in the form of damages, the Company shall be entitled to seek and
obtain injunctive relief from a court of competent jurisdiction (without the
posting of a bond therefor) for the purposes of restraining Executive from any
actual or threatened breach of such provisions.
13. REMEDIES; SERVICE OF PROCESS.
(a) Except when a party is seeking an injunction or
specific performance hereunder, the parties agree to submit any dispute
concerning this Agreement to binding arbitration. The parties may agree to
submit the matter to a single arbitrator or to several arbitrators, may require
that arbitrators possess special qualifications or expertise or may agree to
submit a matter to a mutually acceptable firm of experts for decision. In the
event the parties shall fail to thus agree upon terms of arbitration within
twenty (20) days from the first written demand for arbitration, then such
disputed matter shall be settled by arbitration under the Rules of Employment
Arbitration of the American Arbitration Association, by three arbitrators
appointed in accordance with such Rules. Such arbitration shall be held in
Miami, Florida. Once a matter has been submitted to arbitration pursuant to this
section, the decision of the arbitrators shall be final and binding upon all
parties. The cost of arbitration shall be shared equally by the parties and each
party shall pay the expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration, attorneys and accountants'
fees, as well as costs, to the party that they determine to be the prevailing
party in any such arbitration.
(b) The Company and Executive hereby irrevocably
consent to the jurisdiction of the Courts of the State of Florida and of any
Federal Court located in such State in connection with any action or proceedings
arising out of or relating to the provisions of Sections 10 and 11 of this
Agreement. Executive further agrees that he will not commence or move to
transfer any action or proceeding arising out or relating to the
9
provisions of Sections 10 and 11 of this Agreement to any Court other than one
located in the State of Florida. In any such litigation, Executive waives
personal service of any summons, complaint or other process and agrees that the
service thereof may be made by certified mail directed to Executive at his
address for purposes of notice under Section 17(b) hereof.
14. SUCCESSORS. This Agreement and the rights and obligations
hereunder are personal to Executive and without the prior written consent of the
Company and Executive shall not be assignable.
15. SURVIVAL OF PROVISIONS. Notwithstanding anything to the
contrary contained herein, the provisions of Sections 5(b), 9, 10, 11, 12, 13,
14, 15, 16 and 17 hereof shall survive the termination or expiration of this
Agreement, irrespective of the reasons therefor.
16. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything to the contrary
contained herein, if it shall be determined that any payment, distribution or
benefit received or to be received by Executive from the Company ("Payments"),
whether under this Agreement or otherwise (including without limitation, the
Amended Stock Option Agreement and the 1997 Option Agreement), would be subject
to the excise tax imposed by Section 4999 of the Code, or any successor or
counterpart section thereto (the "Excise Tax ), then Executive shall be entitled
to receive an additional payment (the "Excise Tax Gross-Up Payment") in an
amount such that the net amount retained by Executive, after the calculation and
deduction of any Excise Tax on the Payments and any federal, state and local
income taxes, employment taxes and excise tax on the Excise Tax Gross-Up Payment
provided for in this Section 16, shall be equal to the Payments. For the
avoidance of doubt, in determining the amount of the Excise Tax Gross-Up Payment
attributable to federal income taxes the Company shall take into account the
maximum reduction in federal income taxes that could be obtained by the
deduction of the portion of the Excise Tax Gross-Up Payment attributable to
state and local income taxes. Finally, the Excise Tax Gross-Up Payment shall be
net of any income or excise tax withholding payments made by the Company or any
affiliate to any federal, state or local taxing authority with respect to the
Excise Tax Gross-Up Payment that was not deducted from compensation payable to
Executive.
(b) All determinations required to be made under this
Section 16, including whether and when an Excise Tax Gross-Up Payment is
required and the amount of such Excise Tax Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, except as specified in Section
16(a) above, shall be made by Deloitte & Touche LLP (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the Company and
Executive within 15 business days after the Company becomes obligated to make
any Payments to Executive. The determination of tax liability made by the
Accounting Firm shall be subject to review by Executive's tax advisor and, if
Executive's tax advisor does not agree with the determination reached by the
Accounting Firm, then the Accounting Firm and Executive's tax advisor shall
jointly designate a nationally recognized public accounting firm, which shall
make the determination. All fees and expenses of the accountants and tax
advisors retained by either Executive or the Company shall be borne by the
Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section
16 shall be paid by the Company to Executive within five days after the receipt
of the
10
determination. Any determination by a jointly designated public accounting firm
shall be binding upon the Company and Executive.
(c) As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination hereunder,
it is possible that Excise Tax Gross-Up Payments will not have been made by the
Company that should have been made consistent with the purpose of this Section
16 ("Underpayment"). In the event that Executive is required to make a payment
of any Excise Tax, any such Underpayment calculated in accordance with and in
the same manner as the Excise Tax Gross-Up Payment in Section 16 above shall be
promptly paid by the Company to or for the benefit of Executive. In the event
that the Excise Tax Gross-Up Payment exceeds the amount subsequently determined
to be due, such excess shall constitute a loan from the Company to Executive
payable on the fifth day after demand by the Company (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code).
17. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws.
(b) All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
telecopied or mailed, certified or registered mail, return receipt requested:
If to Executive:
Xxxxx X. Xxxxxxx XX
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
If to the Company:
Telemundo Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
Phone: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Telemundo Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee or upon refusal if properly delivered.
11
(c) The Company may withhold from any amounts payable
under this Agreement such Federal, state of local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(d) Executive represents and warrants that he is not
a party to any agreement, contract or under-standing, whether employment or
otherwise, which would in any way restrict or prohibit him from undertaking or
performing employment in accordance with the terms and conditions of this
Agreement.
(e) This Agreement, the Amended Option Agreement and
the 1997 Option Agreement set forth the entire understanding of the parties with
respect to the subject matter hereof, and no statement, representation, warranty
or covenant has been made by either party except as expressly set forth herein.
This Agreement shall not be changed or terminated orally. This Agreement amends
the Original Agreement and supersedes and cancels all other prior agreements
between the parties, whether written or oral, relating to the employment of
Executive. The headings and captions contained in this Agreement are for
convenience only and shall not be deemed to affect the meaning or construction
of any provision hereof.
(f) If, at any time subsequent to the date hereof,
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any provision of
this Agreement.
(g) The Company's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision hereof. Executive's failure to insist upon
strict compliance with any provision hereof shall not be deemed to be a waiver
of such provision or any other provision hereof.
(h) This Agreement shall inure to the benefit of and
be binding upon any successor to the Company and shall inure to the benefit of
Executive's successors, heirs and personal representatives.
(SIGNATURE PAGE FOLLOWS)
12
IN WITNESS WHEREOF, Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ XXXXX X. XXXXXXX XX
---------------------------
Xxxxx X. Xxxxxxx XX
TELEMUNDO GROUP, INC.
By: /s/ XXXXX XXXXXXX
-----------------------
Name: Xxxxx Xxxxxxx
Title: Chairman of the
Compensation Committee
13
EXHIBIT A
Telemundo Group, Inc.
Bonus Schedule
(dollars in thousands)
Net Contribution 1
% OF SALARY IF
TARGET ACHIEVED 2 1997 TARGETS
----------------- ------------
100% $52,200
75% $45,900
50% $39,500
--------
1 "Net Contribution" means operating income plus depreciation and
amortization determined in accordance with generally accepted
accounting principles, without giving effect to any income, gain or
loss associated with WSNS, but determined consistent with the
accounting method for determining "Net Contribution" on the Company's
internal financial statements in prior periods and adjusted to
eliminate the impact of changes in accounting principles after the date
of this Agreement and of acquisitions or divestitures of operating
units after the date of this Agreement if taking such operating units
into account would either increase or decrease the actual Net
Contribution by at least 5% of the 50% Net Contribution target in the
year of acquisition or divestiture on an annualized basis
2 If Net Contribution is between targets, % of salary will be determined
by linear interpolation.
