EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of July 1, 1997 (this "Agreement"), between
dick clark productions, inc., a Delaware corporation (the "Company"), and
RICHARD W. CLARK (the "Executive").
The Executive is currently employed as the Chairman and Chief
Executive Officer of the Company pursuant to an Employment Agreement dated as of
July 1, 1992 (the "Existing Agreement"). The Company considers the Executive's
continued employment with the Company to be crucial to the continued operations
and performance of the Company. Accordingly, the Company desires to secure the
continued services of, and to continue the employment of the Executive with the
Company and the Executive desires to continue in the employ of the Company.
Therefore, the Company shall continue to Employ the Executive on the terms,
provisions and conditions set forth in this Agreement and the Executive is
willing to continue such employment, upon such terms, provisions and conditions.
Accordingly, the Company and the Executive hereby agree as follows:
1. Employment
(a) The Company shall employ the Executive, and the
Executive shall serve the Company during the term hereof, as Chairman and Chief
Executive Officer of the Company, with such duties and responsibilities normally
associated with those positions; and the Executive hereby accepts such
employment and agrees to serve the Company as the Chairman and Chief Executive
Officer of the Company. The Company may request the Executive to serve as the
Chief Executive Officer of certain of its subsidiaries, and if so requested, the
Executive agrees
to serve as the Chief Executive Officer of those subsidiaries. The Executive
shall also provide the Company with his creative and executive producer services
in connection with the Company's television, video and motion picture production
activities. The Executive shall devote his best efforts and the major portion of
his business time to the performance of his duties under this Agreement and
shall perform them faithfully, diligently and competently. The Executive shall
report directly and exclusively to the Company's Board of Directors. The
Executive's services shall be performed in Burbank, California (or such other
location as the Executive and the Company may agree upon), subject to travel
reasonably and customarily required by the Company in connection with the
performance of the Executive's services hereunder.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Executive may devote a significant portion of his business
time to other business activities, including, without limitation (i) performing
(as actor, host or otherwise) on television, radio and other media, consulting
(other than in connection with television, video and motion picture production
in the United States); (ii) owning and managing cable television systems
(including the related telephony and data transmission on such systems); (iii)
authoring and writing books, magazine articles or other publications (provided
that the Executive will not during the Term of this Agreement license to any
third party the right to exploit any television, video or motion picture rights
of such books, articles or other publications without first affording the
Company the right to acquire such rights as follows: the Executive will first
negotiate with the Company in good faith for a period of thirty (30) days prior
to negotiating with any third parties; if an agreement with the Company does not
result from such negotiations, the Executive shall be free to license such
rights to third parties on terms which are no less favorable to the Executive
-2-
than the terms last offered by the Company during the negotiations with the
Company and if the terms with the third party are less favorable to the
Executive, then the Executive shall once again offer such terms to the Company
on an exclusive basis for a period of twenty (20) days) in which case the
Company can match such terms; (iv) making personal appearances on his own behalf
and on behalf of third parties in his capacity as a celebrity; (v) making
product and third party endorsements; (vi) licensing his name, voice, sobriquet,
biographical material and likeness in connection with any business activities
permitted by this Section 1(b); (vii) serving as an officer or director of
companies a majority of whose equity is owned or controlled, directly or
indirectly, by the Executive on the date of this Agreement and companies a
majority of whose equity is owned by the Executive after the date of this
Agreement (provided such companies do not compete with any business conducted by
the Company or are companies in which the Company declined to make an
investment); (viii) serving as an officer or director of other companies or
entities which do not compete with the business conducted by Company; and (ix)
serving as an officer or director of other companies or entities or otherwise
being involved in a business whose activities or operations may be similar to a
business engaged in by the Company, if the Executive becomes involved in such
business only after the Executive has offered the business opportunity which is
presented to him to the Company and the Company has declined such opportunity
and only if the Board of Directors have determined that the Executive's
involvement with any such company or business activity would not be detrimental
or adverse to the interests of the Company; provided, further, that in each case
the activities to be engaged in by the Executive do not materially interfere
with the Executive's performance of any of his duties and obligations under this
-3-
Agreement. As used in this Section 1(b), the term "Company" shall include the
Company and its subsidiaries.
2. Term of Employment. The term of Executive's employment by the
Company under this Agreement shall commence on and as of the July 1, 1997, and,
subject to earlier termination pursuant to Section 5 or 7 hereof, shall
terminate on June 30, 2002 (the "Term"). Notwithstanding the foregoing, unless
the Company gives written notice to the Executive prior to April 1 in any year
during the Term of this Agreement that it does not intend to have the Term of
this Agreement extended, the Term of this Agreement shall automatically extend
for an additional year from its then current expiratory date. For purposes of
this Agreement, the term "Term" shall include any extension of the then
applicable Term as provided in this Section 2. An example of the operation of
this Section 2 is as follows: if by April 1, 1998 the Company does not furnish a
notice to the Executive that the Company does not desire the Term to be
extended, then the Term shall automatically be extended until June 30, 2003.
3. Compensation
(a) As full compensation for all services rendered by the
Executive to the Company under this Agreement, the Company shall pay to the
Executive (i) a base salary at an annual rate of $975,000, payable in equal
installments (once every two weeks) in accordance with the Company's customary
payroll practice for its executives, and (ii) a bonus determined in accordance
with Section 3(b).
(b) With respect to each fiscal year of the Company during
the term of the Executive's employment under this Agreement, commencing with the
fiscal year ending
-4-
June 30, 1998, the Company shall pay to the Executive a bonus equal to the
following amounts with respect to the Pre-tax Profits of the Company, if any,
during that fiscal year:
If Pre-tax Profits are:
Over But Not over Payment
---- ------------ -------
0 - $ 7,000,000 0
$ 7,000,000 - $10,000,000 $380,000 + 4% of Pre-tax
Profits over $7,000,000
$10,000,000 - $15,000,000 $500,000 + 3% of Pre-tax
Profits over $10,000,000
$15,000,000 - $650,000 + 2% of Pre-tax
Profits over $15,000,000
The bonus, if any, payable to the Executive pursuant to this Section 3(b) with
respect to any fiscal year shall be paid not later than thirty (30) days after
the receipt by the Company from its independent public accountants of the
audited financial statements of the Company with respect to that fiscal year.
Nothing herein shall alter, modify, or amend the obligation of the Company
pursuant to Section 3(b) of the Existing Employment Agreement to make a payment
to the Executive pursuant to said Section 3(b) for the fiscal year ended June
30, 1997, which obligation shall remain in full force and effect,
notwithstanding the execution and delivery of this Agreement.
(c) As used in this Agreement the term "Pre-tax Profits"
of the Company for any fiscal year shall mean the net income before taxes of the
Company as shown on the audited consolidated statement of profit and loss of the
Company and its subsidiaries for that fiscal year, but without giving effect to
accruals for the bonus, if any, payable for such fiscal year to the Executive
pursuant to Section 3(b) hereof and any similar bonus payable, to Mr. Francis C.
-5-
La Maina for that fiscal year pursuant to Mr. La Maina's then current employment
agreement with the Company.
(d) If the Executive's employment is terminated prior to
the end of a fiscal year by his death or by the Company as a result of his
disability, the bonus payable pursuant to Section 3(b) in respect of that fiscal
year, if any, shall be calculated (i) if such termination shall occur during the
first quarter of the Company's fiscal year, by multiplying the amount determined
pursuant to Section 3(b) for that entire fiscal year by a fraction of which the
numerator is the number of days in that fiscal year prior to the date of
termination and the denominator is the number of days in that fiscal year; and
(ii) if such termination shall occur subsequent to the first quarter of the
Company's fiscal year, as if the Executive had been employed for that entire
fiscal year. If the Executive's employment is terminated prior to the end of any
fiscal year for "Cause" (as hereinafter defined), no bonus shall be payable to
the Executive pursuant to Section 3(b) in respect of that fiscal year.
(e) For purposes of Sections 3(b) and 3(c) hereof, if the
Company's fiscal year shall change (the fiscal year presently being July 1
through June 30), resulting in a fiscal year which shall be less than twelve
(12) months, the bonus payable pursuant to Section 3(b) in respect of that short
fiscal year shall be calculated (i) by multiplying the amount of the Pre-tax
Profits determined pursuant to Section 3(c) for that entire short fiscal year by
a fraction of which the numerator is twelve (12) and the denominator is the
number of months in that short fiscal year; (ii) by determining the bonus in
accordance with Section 3(b) based on the amount resulting from the calculations
in clause (i) above; and (iii) by multiplying such bonus amount resulting
-6-
from the calculation in clause (ii) above by a fraction of which the numerator
is the number of months in that shortened fiscal year and the denominator is
twelve (12).
(f) Anything in this Agreement to the contrary
notwithstanding, the Executive shall not receive any additional compensation for
his services as a producer or executive producer of television or other
programming for or on behalf of the Company, except that the Executive shall be
entitled to such additional compensation for his services as a performer on
television or other programming or with respect to productions (whether live or
otherwise) for or on behalf of the Company and its subsidiaries and for the
licensing to the Company and its subsidiaries of his name and likeness with
respect to products outside of the television, video and motion picture business
and the restaurant business (including, without limitation, with respect to
product merchandising, commercial tie-ins and product endorsements which may be
ancillary to the business of the Company or any of its subsidiaries) as shall be
agreed upon by the Executive, the Company or such subsidiary, as applicable,
commensurate with fees and other compensation generally received by performers
of the Executive's stature. If the Executive would otherwise be entitled to
receive a payment from an affiliate of the Company or a third party of
compensation for his services as a producer or an executive producer of
television, video or motion picture programming, the Executive shall cause such
affiliate or third party to pay such compensation directly to the Company.
Nothing in this Agreement shall affect any other rights the Executive may have
with respect to his services as a producer or executive producer, including,
without limitation, his rights to credits.
-7-
4. Fringe Benefits; Expenses
(a) The Executive shall be entitled to receive all health
(other than disability) and pension benefits provided by the Company to its
senior executives and to all other fringe benefits provided by the Company to
its executives as a group and shall also be entitled to participate in all
benefit plans provided by the Company to its executives as a group.
(b) The Company shall reimburse the Executive for all
reasonable out-of-pocket expenses (including, without limitation, entertainment
expenses) incurred by the Executive in connection with the performance of the
Executive's services for the Company hereunder (it being agreed that first-class
travel and accommodations are reasonable expenses), upon submission of vouchers
and/or receipts by the Executive in accordance with the Company's policies and
procedures.
(c) The Company shall provide the Executive with the use
of a Company vehicle, such vehicle to be used in connection with the performance
by the Executive of his duties on behalf of the Company.
(d) The Executive shall be entitled to eight (8) weeks of
vacation time annually (based upon the period from July 1 through June 30),
which shall be taken at times selected by the Executive which are consistent
with the proper performance of the Executive's duties under this Agreement. The
Executive may accrue up to two (2) weeks of unused vacation time annually.
-8-
5. Disability or Death
(a) If, as the result of any physical or mental
disability, the Executive shall have failed or been unable to perform the
Executive's duties hereunder for a period of one hundred eighty (180)
consecutive days, the Company may, by notice to the Executive subsequent
thereto, terminate the Executive's employment under this Agreement prior to the
end of the Term, effective as of the date of the notice. If the Executive's
employment is terminated pursuant to this Section 5(a), the Company shall pay to
the Executive (in equal installments every two (2) weeks) (i) for the period
from the date of termination through the June 30 next succeeding such date of
termination, an amount equal his base salary for such period at the date of
termination; (ii) for the next succeeding twelve (12) month period, an amount
equal to 65% of his base salary at the date of termination; (iii) for the next
succeeding twelve (12) month period, an amount equal to 60% of his base salary
at the date of termination; and (iv) for the twenty-four (24) month period
commencing on the date of the last payment required to be made pursuant to
clauses (i), (ii) and (iii) above, an amount equal to 50% of his base salary at
the date of termination.
(b) The period of the Executive's employment under this
Agreement shall automatically terminate upon the Executive's death. In the event
of the Executive's death, the Company shall pay to the beneficiary designated in
writing by the Executive to the Company (or if the Executive fails to so
designate a beneficiary, to the Executive's estate), an amount at an annual rate
equal to his base salary in affect on the date of the Executive's death for a
period of two (2) years from the date of the Executive's death, payable in equal
installments on the first day of the month next succeeding the data of death and
the first day of every third month thereafter.
-9-
6. Non-Competition; Confidential Information.
(a) (i) During the term of the Executive's employment
under this Agreement or (ii) through the current Term of this Agreement, if the
Executive voluntarily terminates his employment or the Executive's employment is
terminated for "Cause" (as such term is hereinafter defined), the Executive
shall not, directly or indirectly, engage or be interested (as a stockholder,
director, officer, agent, broker, partner, individual proprietor, lender,
consultant or otherwise) in any other business or enterprise which is
competitive with any of the businesses engaged in by the Company or any of its
subsidiaries at the time of the termination of the Executive's employment with
the Company, except that the Executive may (i) engage in the activities
otherwise permitted pursuant to Section l(b) hereof, whether or not competitive
with the Company or any of its subsidiaries; and (ii) hold not more than 5% of
the outstanding securities of any class of any publicly held company; provided
that this Section 6 shall not prohibit the Executive from holding more than 5%
of the outstanding securities of any class of capital stock of the Company.
(b) The Executive shall not, directly or indirectly,
either during the period of the Executive's employment under this Agreement or
thereafter, disclose to any person or entity (except in the regular course of
the Company's business or as may be required by applicable law or subpoena), or
use in competition with the Company, any information, acquired by the Executive
during the Executive's employment by the Company, concerning or in any way
relating to any confidential or secret aspect of the Company's business,
affairs, operations, plans, prospects, strategies or condition (financial or
otherwise), unless such information has become
-10-
known by the general public other than by reason of actions of the Executive,
whether direct or indirect.
(c) The Executive shall not, directly or indirectly,
either during the period of the Executive's employment under this Agreement or
for a period of one (1) year thereafter, solicit the services of any person who
was a full-time employee of the Company (other than Ms. Karen Clark, and the
Executive's executive secretary, and employees who have been employed by the
Company for limited periods of time in connection with the production of
particular television or motion picture programming) during the last year of the
period of the Executive's employment under this Agreement.
(d) The Executive acknowledges and agrees that the remedy
at law (including, without limitation, a remedy calculated as money damages),
for breach of his covenants under this Section 6 will be inadequate and,
accordingly, in the event of any breach or threatened breach by the Executive of
any of the provisions of this Section 6, the Company shall be entitled, in
addition to all other rights and remedies available to the Company, whether at
law, in equity or otherwise, an injunction restraining any such breach or
threatened breach (without posting any bond or other security or being required
to prove actual damages).
7. Termination
(a) The Company shall have the right to terminate and the
Executive's employment with the Company hereunder (i) for "Cause" or (ii)
Without Cause. For purposes of this Agreement, the term "Cause" shall mean any
material breach of the Executive's obligations under Section 6 of this Agreement
which is not cured within thirty (30) days after written notice thereof to the
Executive; the conviction of the Executive of a felony, gross misconduct by the
-11-
Executive related to the Executive's position with, or duties or obligations to,
the Company, which is likely to materially and adversely affect the Company's
business or financial condition, the chronic addiction of the Executive to drugs
or alcohol which materially and adversely affects the Executive's performance of
his duties under this Agreement; or the Executive's willful failure to perform
his material duties to the Company hereunder within a reasonable period under
the circumstances after written notice (specifically identifying the manner in
which the Board of Directors believes that the Executive has so failed to
perform his duties) from the Board of Directors of the Company to the Executive
(provided such duties are consistent, in the reasonable opinion of the Executive
after obtaining an opinion of counsel reasonably acceptable to the Company, with
this Agreement and applicable law).
(b) If the employment of the Executive hereunder is
terminated for "Cause", the Company shall not be obligated to make any further
payments to the Executive hereunder (other than accrued and unpaid salary and
expenses to the date of termination), or continue to provide any benefit (other
than benefits which have accrued pursuant to any plan or applicable law to the
date or termination) to the Executive under this Agreement. If the employment of
the Executive is terminated Without Cause, the Company shall pay to the
Executive all of his compensation (base salary and bonuses) pursuant to Section
3 as if this Agreement had not been terminated for the greater of (x) the
remainder of the then current Term and (y) three (3) years after termination,
all regardless of the amount of compensation the Executive may earn or be able
to earn with respect to any other employment that the Executive may obtain or be
able to obtain (i.e. the Executive shall have no duty to mitigate and the
Company shall have no right to offset). For purposes hereof, the term "Without
Cause" shall mean a
-12-
termination of the Executive's employment hereunder by the Company for a reason
other than pursuant to Section 7(a) hereof.
(c) The Executive shall have the right to terminate his
employment under this Agreement upon thirty (30) days' prior notice to the
Company given within sixty (60) days following the occurrence of any of the
following events: (i) the Executive's title is changed so that the Executive is
no longer both Chairman and Chief Executive of the Company or (ii) any action by
the Company, pursuant to which the Company materially reduces the Executive's
duties and responsibilities hereunder and the Executive objects thereto within
thirty (30) days of any such reduction and the Company does not restore such
duties and responsibilities within thirty (30) days thereafter. The Executive
shall not have any rights pursuant to this Section 7(c) if the occurrence of the
triggering events was the result, directly or indirectly, of a transaction in
which all or substantially all of the stock or assets of the Company is sold or
the Company is a party to a merger, consolidation or similar transaction, in
which the Company is not the surviving entity.
(d) The parties believe that payments made to the
Executive based upon a termination Without Cause do not constitute "Excess
Parachute Payments" under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"). Notwithstanding such belief, if any benefit is determined
to be an "Excess Parachute Payment" the Company shall pay the Executive an
additional amount such that (x) the excess of all Excess Parachute Payments
(including any payments under this Section 7(d)) over the sun of excise tax
thereon under section 4999 of the Code and income tax thereon under subtitle A
of the Code and under applicable state law is equal to (y) the excess of all
Excess Parachute Payments (excluding payments under this sentence) over income
tax thereon under Subtitle A of the Code and under applicable state law.
-13-
The above determination shall be made without regard to interest and penalties
for failure to pay or underpayment of taxes.
8. Name and Likeness
(a) Except with respect to the outside activities of the
Executive permitted pursuant to Section 1(b) hereof, the Company shall have the
exclusive right during the Term of this Agreement to the commercial use in
connection with its television and motion picture business of the Executive's
name, reasonably approved likeness, voice, reasonably approved biography,
reasonably approved photograph and reasonably approved picture; provided that
any such use by the Company is not in the nature of a direct or indirect
endorsement of any product, commodity or service without the Executive's prior
written consent.
(b) With respect to any motion picture, video, television
or other programming (each a "Program") in connection with which the Executive
renders services to the Company as executive producer, the Company shall accord
the Executive (unless the Executive, in his sole discretion, elects not to
receive such credit) screen credit on the Programs and credit in all paid
advertising and publicity issued by or under the control of the Company with
respect to any such Program, as executive producer of the Program, on a separate
card on the screen, placement as is customary in the television and motion
picture industry, and in a size no less than the size of type used to display
the credit given to any other individual (other than performers) in connection
with any such Program. Subject to the foregoing, the Company shall determine, in
its sole discretion, the manner, form, size, style, nature and placement of any
credit given to the Executive. No inadvertent failure of the Company to comply
with the provisions hereof with respect to credit shall constitute a breach of
this Agreement, unless the Company fails to use its
-14-
best efforts to cure the same, on a prospective basis only, promptly upon notice
thereof. In the event of any breach of these credit provisions, the Executive's
remedies, if any, shall be limited to the right to recover damages in an action
at law, and in no event shall the Executive be entitled to terminate or rescind
this Agreement, revoke any of the rights herein granted or to enjoin or restrain
the distribution or exhibition of the Programs.
9. Miscellaneous
(a) This Agreement shall be governed by and construed in
accordance with the law of California applicable to agreements made and to be
performed in California, and without regard to principles of conflicts of law.
(b) This Agreement sets forth the entire understanding and
agreement between the Company and the Executive with respect to its subject
matter, supersedes all previous agreements between them relating to such subject
matter (whether written or oral), all of which are merged herein (including,
without limitation, the Existing Agreement). There are no representations,
warranties or promises between the parties with respect to the subject matter
hereof, other than those set forth herein.
(c) Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received by the party
hereto who is the intended recipient and shall be delivered personally, or
mailed by certified mail, return receipt requested (postage prepaid), or sent by
telecopy if sent before 4:00 p.m. (California time) on a business day, to the
parties at their respective addresses or facsimile numbers, as the case may be,
set forth below (or at such other address, or facsimile number, as a party may
specify by notice to the other party):
-15-
If to the Company, to it at:
3003 West Olive Avenue
Burbank, California 91510-4590
Attn: President
Telecopy No.: (818) 566-6690
with a copy to;
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Telecopy No.: (212) 704-6288
If to the Executive, to him at:
3003 West Olive Avenue
Burbank, California 91510-4590
Telecopy No.: (818) 566-6690
with a copy to:
Joel Behr, Esq.
Behr and Robinson
2049 Century Park East 26th Floor
Los Angeles, California 90067
Telecopy No.: (310) 556-9229
(d) The failure of a party to insist upon strict adherence
to any term or provision of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or provision on any other occasion or any other
term or provision of this Agreement. Any waiver shall be limited to the specific
instance for which it is given executed by the party affected thereby. This
Agreement may not be waived, amended, modified or altered, except by an
instrument in writing duly executed by each of the Company and the Executive.
-16-
(e) The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or enforceability of
the remaining terms or provisions of this Agreement which shall remain in full
force and effect and any such invalid or unenforceable term or provision shall
be given full effect as far as is possible under applicable law. If any term or
provision of this Agreement is invalid or unenforceable in one jurisdiction, it
shall not affect the validity or enforceability of that term or provision in any
other jurisdiction.
(f) This Agreement is not assignable by either party,
except that it shall inure to the benefit of and be binding upon any successor
to the Company by merger or consolidation or the acquisition of all or
substantially all of the Company's assets or stock; provided such successor
assumes all of the duties and obligations of the Company hereunder; and this
Agreement shall inure to the benefit of the heirs, estate and legal
representatives of the Executive. The duties and obligations of the Executive
hereunder may not be delegated.
(g) Section headings are inserted herein for convenience
of reference only, and shall have no substantive aspect and shall not be taken
into account in connection with the interpretation or construction of this
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed and
delivered this Agreement as of the day and year first above written.
dick clark productions, inc.
By: /s/
-----------------------------------
Name:
Title:
/s/ Richard W. Clark
-----------------------------------
Richard W. Clark
-17-