Exhibit 10.5
EMPLOYMENT AGREEMENT made as of the 15th day of February, 1996 by and
between LANCIT MEDIA PRODUCTIONS, LTD. with offices at 601 West 50th Street, New
York, New York 10019 (hereinafter "Employer") and NOEL RESNICK, residing at
10335-1/2 Wilshire Blvd., Los Angeles, California 90024 (hereinafter
"Employee").
WHEREAS, the parties desire to set forth the terms and conditions of
employment of Employee by Employer.
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
the parties hereto agree as follows:
1. Term: Employer hereby employs Employee as Senior Vice President
Development for a period of two (2) years commencing on February 16,
1996 ("Initial Term").
2. Services: (a) Employee shall be responsible for Employer's development
of quality children's and family entertainment television, film and
other media projects and allied activities consistent with Employer's
primary mission to deliver quality content and quality production
values, and expanding Employer's presence into mainstream children and
family programming venues.
(b) Employee will perform her services within a mutually agreed
annual budget, it being understood that if Employer and Employee
cannot agree on such budget, Employer's decision regarding such
budget shall be final. Employee agrees to devote her full working
time and efforts to the business and affairs of Employer and to
all of its subsidiaries and affiliates, if any (hereinafter
collectively referred to as the "Corporate Group"), and hold such
additional offices in components of the Corporate Group to which
she shall accept, such acceptance not to be unreasonably withheld
and to which from time to times she may be elected or appointed,
provided that they are of the same general character and of at
least the same degree of responsibility as the offices in
Employer which she shall hold at the time of the execution of
this Agreement. Employer agrees that Employee will be a named
insured under Employer's Director & Officer liability insurance
policy, as the same may be modified from time to time, a copy of
the Certificate of Insurance naming Employee is annexed hereto as
Exhibit A. Employer will not be asked to be an officer or
director of any component of the Corporate Group not covered by
such policy.
(c) Employee shall have a private, enclosed office and will share a
secretary/assistant employed by Employer with one other employee
of Employer and will have a reserved parking space at the
Employer's office. Employee's primary place of employment will be
at Employer's office in Los Angeles, California. Employer and
Employee will mutually agree on the times when
Employee shall render her services in New York City, it being
understood that if Employer and Employee cannot agree on such
times, Employer's decision shall be final. Employer acknowledges
that the current expectation is that Employee will be in New York
City, on average, for no more than one (1) week per month.
Employer agrees to discuss any such change in such expectation
with Employee, and in no event shall Employer require Employee to
relocate her primary residence outside of the Los Angeles,
California metropolitan area.
(d) Nothing contained in this Agreement shall be construed to prevent
Employee from managing her private investments in any business,
except that Employee will be permitted to own not more than two
(2%) percent of the issued and outstanding stock or other
securities of a competitive company. Employee shall, in the
performance of her duties, be at all times subject to the
direction and supervision of Employer, and shall report directly
to the Chief Executive Officer of Employer.
(e) Notwithstanding the provisions of subparagraph 2(a), Employer
acknowledges that Employee currently has and will continue to
have an interest in the projects described in Exhibit B annexed
hereto (hereinafter "Outside Projects"). Employee will be
permitted to continue to be involved in the Outside Projects upon
the following conditions:
(i) Employee's involvement in such activities shall not
interfere with the performance of Employee's duties
hereunder, as determined in Employer's sole reasonable
discretion;
(ii) Employee shall not engage in line producing or other similar
activities which require anything other than supervisory
involvement during the term of this agreement; and
(iii)Employee agrees that she will use her reasonable best
efforts to attach Employer to each Outside Project as a
producer providing services to the entity controlling such
Outside Project, but Employee shall not be required to
attach Employer to any Outside Project as a condition of her
employment. "Reasonable best efforts" shall include, at a
minimum, good faith efforts to arrange a meeting with
representatives of the entity controlling each Outside
Project. Employer acknowledges that the timing of Employee's
efforts to attach Employer to the Outside Projects depends
on events outside the control of Employee, but Employee
agrees to commence such efforts at the earliest practicable
time.
(f) Subject to all of the provisions of this Agreement including,
without limitation, subparagraph 2(b) hereof, Employer
acknowledges that Employee shall be entitled to render non-
exclusive services in connection with Outside Projects and
projects produced by Employee prior to the date hereof and to
receive contractual passive producer fees for such projects.
Notwithstanding the foregoing, if Employer is attached to any
Outside Project and, as a result of such attachment, Employee's
and Employer's respective fees are paid as a single fee, Employer
and Employee will negotiate in good faith regarding how such fee
should be allocated between Employee and Employer.
(g) In connection with productions acquired, developed or set up by
Employee hereunder, Employee shall be entitled to receive credit
as Executive Producer for supervisory producing services rendered
by Employee. In connection with productions acquired, developed
or set up by Employee hereunder with respect to which Employee
which does not render day to day supervisory production services,
Employee will receive a producing credit, the exact form of which
shall fairly reflect Employee's services and be negotiated in
good faith by Employer and Employee. For purposes of this
Agreement, a production will have been "set up" by Employee if,
due to the efforts of Employee, the production has been placed in
active development with a third party financier(s) who has agreed
to provide at least 50% of the budget (exclusive of development
costs) for the production. Employer will accord Employee its
executive producer or other producer credit on the same card and
wherever and whenever the other like producers of such production
receive credit, subject to approval of the distributor of such
production. Employer agrees to use best efforts to obtain such
approval, but Employee acknowledges that best efforts shall not
require Employer to make such approval a condition of such
distributor's participation in the project. An inadvertent
failure by Employer to grant Employee such credit shall not be a
breach of this Agreement, although Employer shall, upon receipt
of written notice of such failure from Employee, use reasonable
efforts to cure such failure on a prospective basis. It is
acknowledged and agreed that if Employee has rendered such
services in connection with a production during the term of this
Agreement, such credit shall be accorded regardless of whether or
not Employee is an employee of Employer at the time the
production is actually produced.
3. Compensation:
(a) As compensation for services rendered to the Corporate Group
during the term of this Agreement, Employee shall be paid
compensation at the annual base rate (the "Base Salary") of
$125,000 per year during the first year of this Agreement. The
Base Salary during the second year of this Agreement shall be not
less than $130,000 per year, but may also be raised based on
Employee's performance and in amounts as may be determined by her
supervisor and approved in accordance with company policies. The
Base Salary shall be payable in accordance with Employer's then
applicable payroll practice.
(b) Employer has adopted an Incentive Bonus Plan whereby executive
officers of Employer as a group shall receive a bonus of five
(5%) percent of pre-tax income of Employer, as set forth in
Employer's audited financial statements provided that: (i)
Employer's pre-tax income in any given fiscal year is at least
$250,000; (ii) in such fiscal year, Employer's net income per
share is at least $.05 per share (adjusted for stock splits and
stock dividends); and (iii) the net income in such fiscal year
exceeds the net income in the immediately preceding fiscal year.
The amount of any bonus to be paid to Employee which may be
available for distribution pursuant to such Incentive Bonus Plan,
in any year of this Agreement, shall be determined by Employer.
Employee shall be eligible to participate in such Incentive Bonus
Plan starting with the fiscal year which commences on July 1,
1996, and if the term of Employee's employment terminates prior
to the close of Employer's fiscal year, Employee shall be
eligible to participate in a pro-rata portion of any bonus
payable as of the close of such fiscal year.
(c) (i) Subject to the terms of this Agreement, Employer's 1990 Stock
Option Plan (as it may be amended from time to time) and any
applicable I.R.S. regulations, Employee was granted an option to
purchase 45,000 shares of Employer's Common Stock (the "Signing
Options") effective as of February 16, 1996 (the "Effective
Date"). The Signing Options vested and become exercisable in
accordance with the provisions below. The Signing Options were
granted pursuant to Employer's 1990 Stock Option Plan. Options
with respect to 15,000 shares of the Signing Options become
exercisable as of the Effective Date. Options with respect to an
additional 15,000 shares of the Signing Options become
exercisable as of February 16, 1997. Options with respect to the
final 15,000 shares of the Signing Options become exercisable as
of February 15, 1998. All such Signing Options are exercisable at
an exercise price per share equal to $10.3125 per share, which
was the average of the closing bid and asked quotations for a
share of Employer's Common Stock on the Effective Date.
(ii) Subject to the terms of this Agreement, Employer's 1990
Stock Option Plan and any applicable I.R.S. regulations, Employee
was also granted an additional option to purchase 21,000 shares
of Employer's Common Stock (the "Bonus Options") effective as of
Effective Date. The Bonus Options vest and become exercisable in
accordance with the provisions below. The Bonus Options were
granted pursuant to Employer's 1990 Stock Option Plan. Options
with respect to 7,000 shares of the Bonus Options become
exercisable on the earlier of (A) the date that aggregate gross
revenues received by Employer, directly attributable to projects
acquired, developed or set up by
Employee on behalf of Employer, equal $2,000,000 or (B) January
17, 2006. Options with respect to an additional 7,000 shares of
the Bonus Options become exercisable on the earlier of (A) the
date that aggregate gross revenues received by Employer, directly
attributable to projects acquired, developed or set up by
Employee on behalf of Employer, equal $4,000,000 or (B) February
9, 2006. Options with respect to the final 7,000 shares of the
Bonus Options become exercisable on the earlier of (A) the date
that aggregate gross revenues received by Employer, directly
attributable to projects acquired, developed or set up by
Employee on behalf of Employer, equal $6,000,000 or (B) February
9, 2006. All such Bonus Options are exercisable at an exercise
price per share equal to $10.3125 per share, which was the
average of the closing bid and the closing asked per share price
of Employer's Common Stock on the Effective Date. For the
purposes of this subparagraph 3(c)(ii), "aggregate gross
revenues" shall be defined as all forms of compensation received
by or credited to Employer in respect of development and/or
production costs, including, without limitation, license fees,
producer fees, contingent compensation (when and if actually
received) and the cash value of "in kind" materials, products or
services and barter received.
(iii) The terms of the Signing Options and the Bonus Options are
governed by Employer's 1990 Stock Option Plan and Employee's
Stock Option Agreement (including the provisions regarding the
effect of Employer's liquidation, merger and consolidation),
copies of which have been delivered to Employee prior to the
execution hereof.
(iv) Employee acknowledges and agrees that, as a corporate
officer of Employer, she may be deemed a "Named Executive
Individual" and is an insider, for the purposes of SEC filings
and reporting and securities laws. Employee agrees to comply with
all applicable securities laws including, without limitation,
timely filing of Form 3, "Initial Statement of Beneficial
Ownership of Securities." Employer acknowledges that Employee has
filed Form 3 in a timely fashion.
4. Termination: (a) In addition to any other rights and remedies provided
by law or this agreement, Employer may terminate Employee's employment
hereunder upon written notice for "cause". For purposes of this
paragraph, "cause" shall include: (i) commission of any act of
material fraud or gross negligence by Employee in the course of her
employment hereunder which, in the case of gross negligence, has a
materially adverse effect on the business or financial condition of
Employer; (ii) willful and material misrepresentation at any time
during the term hereof by Employer to any officer of Employer; (iii)
failure, refusal or neglect by Employee to comply with a reasonable
instruction of the Chief Executive Officer of Employer; (iv)
engagement by
Employee in any act, whether with respect to her employment or
otherwise, which is in violation of the criminal laws of the United
States or any state thereof or any similar foreign law to which
Employee may be subject involving acts of moral turpitude; or (v)
death or disability of Employee. Employee shall be deemed disabled if
she shall be unable by reason of mental or physical incapacity from
performing her duties hereunder for a period of 90 consecutive days or
an aggregate of 120 days in any consecutive six-month period. In case
of each provision above, when a cure is possible, Employee shall be
given notice, details of the grounds for termination and a reasonable
opportunity to cure, provided that the foregoing opportunity to cure
shall not be available with respect to conduct which has been the
subject of a previous notice and opportunity to cure. If Employee's
employment shall be terminated pursuant to this subparagraph 4(a),
Employee shall be entitled to receive only the base salary actually
earned and payable to Employee pursuant to subparagraph 3(a) above
through the date of the termination of her employment and any properly
reimbursable expenses and other accrued employee benefits through the
date of termination. Options which are vested as of the date of such
termination may only be exercised by Employee during the ninety (90)
day period (one (1) year if termination is due to death or disability)
following such date and unexercised vested options shall expire on the
last day of such period. Options granted pursuant to subparagraph 3(c)
which are not vested as of the date of termination shall,
notwithstanding termination pursuant to this subparagraph 4(a), vest
as provided in subparagraph 3(c), subject to the further condition
that the options may only be exercised by Employee during the ninety
(90) day period (one (1) year if termination is due to death or
disability) following vesting, and any unexercised options remaining
after such period shall expire on the last day of such period.
Employee shall not thereafter be entitled to receive any further
salary, expenses, benefits (other than medical or disability benefits
if applicable) or other compensation of any kind hereunder. Any bonus
which has been earned, but not paid, shall be paid at the time it
would otherwise be payable.
(b) If Employer shall terminate Employee's employment other than for
"cause", as provided in subparagraph 4(a) above:
(i) Employee shall be entitled to receive, as damages, and as
her sole and exclusive right and remedy on account of such
termination, the base salary to which Employee would
otherwise have been entitled hereunder throughout the
remaining term hereof together with any properly
reimbursable business expenses and other employee benefits
to the date of termination. Amounts payable by Employer
under this subparagraph 4(b)(i) shall be payable when and as
the same would otherwise have been payable under the terms
hereof and shall not be subject
to any duty to mitigate damages by using reasonable efforts
to seek other comparable employment; however, compensation
(in whatever form) earned by Employee on account of other
employment during the unexpired term of this Agreement shall
be applied in reduction of Employer's obligations hereunder.
Employee shall not thereafter be entitled to receive any
further salary, expenses, benefits (other than medical or
disability benefits, if applicable) or other compensation
hereunder, except that Employee shall be eligible to receive
a pro-rata share of any bonus due hereunder for the fiscal
year in which Employee is terminated under this subparagraph
4(b)(i). In the event of termination pursuant to this
subparagraph 4(b)(i), Employee shall not be entitled to any
damages by reason of such termination other than as set
forth in this subparagraph 4(b)(i).
(ii) With respect to the options granted pursuant to subparagraph
3(c) which are not vested as of the date of termination,
such options shall vest as provided in subparagraph 3(c),
subject to the further condition that the options may be
exercised by Employee during the ninety (90) day period
following vesting, and any unexercised options remaining
after such period shall expire on the last day of such
period.
(c) Employee may not terminate this Agreement, except in the event of
a material breach of this Agreement by Employer.
5. Expenses: Employer shall reimburse Employee for all reasonable
expenses of business travel (including car service to and from
airports), hotel, business-related car telephone, entertainment or
otherwise incurred by Employee in connection with and on behalf of the
business of Employer upon presentation of receipt, voucher or
itemization of expenses in accordance with Employer's then applicable
expense reimbursement policies and procedures for senior executives.
Air travel and hotel expenses shall be reimbursed at rates comparable
to those reimbursed for Employer's other senior management executives.
In addition, and in lieu of the gas/mileage reimbursement which would
normally be payable to Employee in connection Employee's use of her
car for Employer's business, Employer shall pay Employee a $600
monthly non-accountable car allowance. Employee acknowledges and
agrees that such car allowance payments shall be reported to the
Internal Revenue Service as part of Employee's gross compensation.
6. Disability: If Employee is unable to perform her duties hereunder by
reason of any illness, disability or incapacity, as determined by
Employer, she shall be entitled to one hundred (100%) percent of her
Base Salary for the first ninety (90) days of her disability, and
fifty (50%) percent of those amounts for the next ninety (90) days,
unless she is terminated for disability pursuant to subparagraph 4(a),
less
such benefits or compensation payable to Employee by reason of State,
Federal, Social Security, disability, worker's compensation or
comparable government benefits and such policies of disability
insurance procured by Employer. Notwithstanding the foregoing
sentence, if Employer agrees that Employee is unable to perform her
duties hereunder by reason of any illness, disability or incapacity,
as determined by Employer in its sole reasonable discretion, she shall
be entitled to terminate this Agreement at any time during the one
hundred eighty (180) day period described above. The foregoing periods
of disability during which compensation shall be paid constitute
aggregate periods during the full term of this Agreement.
7. Employee Benefits: Employee shall be entitled to participate, to the
extent she is eligible under the terms and conditions thereof, in any
bonus, pension, profit-sharing, retirement, hospitalization,
insurance, medical service, or other employee benefit plan including
disability insurance generally available to the senior executives of
Employer which may be in effect from time to time during the period of
her employment hereunder. Employer shall be under no obligation to
continue the existence of any such employee benefit plan. Employee
shall be entitled to two (2) weeks vacation time (exclusive of any
company-wide holidays or vacations).
8. Disclosure of Confidential Information: Employee recognizes and
acknowledges that certain information is proprietary to and
confidential with Employer and/or the Corporate Group, including
without limitation the following: Employer's and the Corporate Group's
strategic and/or business plan, pending projects, projects in
development, acquisition targets at both the individual project and
corporate level, co- production arrangements, joint ventures, funding
sources, distribution arrangements, the contacts at such entities and
the financial terms of such agreements with Employer and/or the
Corporate Group (collectively, "Confidential Information").
Confidential Information shall not include information (a) already
lawfully known to the receiving party, (b) generally known to the
public, or (c) lawfully obtained from any third party without any
confidentiality obligation. Employee will not directly or indirectly,
on behalf of herself or others, during or at any time after the
termination of her providing services hereunder, irrespective of time,
manner or reason for termination, disclose, publish, disseminate or
utilize such Confidential Information, or any part thereof except in
furtherance of the business of Employer or another member of the
Corporate Group. Employee will not remove or duplicate in any manner
at any time any lists or other records, or any parts thereof,
concerning Employer's Confidential Information and upon termination of
her employment will return to Employer any and all lists and records
concerning Employer's Confidential Information
thereof in her possession.
9. Interference with Employer's Business: (a) Employee agrees that during
the Non-Solicitation Period (defined below), neither Employee nor any
Related Person (defined below) shall knowingly, either directly or
indirectly, for herself or for any other person or entity, (i) call
upon, solicit or take away, or attempt to call upon, solicit or take
away, any person then employed by Employer or the Corporate Group or
(ii) knowingly employ any employee of Employer or the Corporate Group
who voluntarily terminates such employment until six (6) months have
passed following termination of such employment, unless such condition
is waived by Employer in writing. "Non-Solicitation Period" shall mean
the period from the date hereof until one (1) year after the
termination of this agreement. "Related Person" shall mean any person
or entity who or which, directly or indirectly, is controlled by
Employee or any person who is a member of Employee's family.
(b) Employee agrees that during the term of her employment with
Employer and for the two (2) years following termination of such
employment, neither Employee nor any Related Person shall knowingly,
either directly or indirectly, for herself or for any other person or
entity, enter into any agreement, or assist any other person or entity
in entering into any agreement or other arrangement regarding any of
the projects introduced to Employer or the Corporate Group during the
term of Employee's employment, without Employer's prior written
consent, such consent not to be unreasonably withheld. Employer agrees
that the restriction of this subparagraph 9(b) shall not apply to (i)
any project which was the subject of a written agreement between
Employer and a third party, the term of which has ended, and which is
not then the subject of a negotiation for an extended or new term or
(ii) projects which were rejected by Employer during the term of this
Agreement. Notwithstanding the foregoing, projects shall only qualify
as having been "rejected by Employer during the term of this
Agreement" if Employee, within thirty (30) days following the end of
the term of this Agreement, provides Employer with a written notice
identifying such projects, and Employer acknowledges in writing that
such projects have been rejected. Employer agrees not to withhold its
acknowledgement unreasonably. At the end of the term of this
Employee's right to enter into an agreement or other arrangement
regarding projects described by the subparagraph 9(b)(i) shall be
subject to Employee's obligation to send Employer notice of Employee's
intention to do so, and Employer's failure to commence negotiations
for such project, within five (5) business days after receipt of such
notice.
10. Severability: In the event any of the terms or provisions of this
Agreement are found to be invalid, void or
voidable for any reason whatsoever such finding will not affect the
remaining terms and provisions of this Agreement and they shall remain
in full force and effect.
11. Governing Law: This Agreement shall be governed in all respects by the
laws of the State of New York.
12. Notices: Any notice required or given under this Agreement shall be
sufficient if in writing and sent by registered mail or certified mail
to the addresses hereinabove set forth or to such other addresses as
any of the parties hereto may designate in writing, transmitted by
registered or certified mail to the other. Duplicate copies of any
notices to Employer shall also be sent to Rubin, Bailin, Ortoli,
Mayer, Baker & Fry, LLP, 405 Park Avenue, 15th Floor, New York, New
York 10022, Attention: Marc L. Bailin, Esq. Duplicate copies of any
notices to Employee shall also be sent to Robert M. Lange, Esq. at
Kleinberg Lopez Lange Brisbin & Cuddy, 1880 Century Park East, Suite
1150, Los Angeles, California 90067.
13. Entire Agreement: This Agreement contains the entire agreement between
the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. No modification
or amendment of this Agreement can be made other than in writing
signed by the parties hereto.
14. Injunctive Relief: Employee acknowledges that the services to be
rendered by her hereunder are of a special, unique and intellectual
character which gives them peculiar value, and that a breach or
threatened breach of any provision of this Agreement, including,
without limitation the material provisions of Paragraphs 8 and 9, will
cause Employer immediate irreparable injury and damage which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, Employee agrees that Employer shall be entitled to
injunctive relief to enforce and protect its rights under this
Agreement. Nothing herein shall be construed to prohibit Employer from
pursuing any other legal or equitable remedies available to it for
such breach, including the recovery of damages form Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LANCIT MEDIA PRODUCTIONS, LTD.
BY: /s/CECILY TRUETT
/s/NOEL RESNICK
------------------------------
Noel Resnick, Employee
EXHIBIT A
Director and Officer Liability Policy
Certificate of Insurance
EXHIBIT B
Outside Projects
1. "Nutcracker"
2. "Canterville Ghost"
3. "Not Quite Human"