Exhibit 2.5
Dated as of June 6, 2000
Mr. Mark Amin
c/o Trimark Pictures
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Re: EMPLOYMENT AGREEMENT FOR MARK AMIN
Dear Mark:
This letter shall set forth the terms of the agreement ("Agreement")
between Lions Gate Entertainment Corp., a corporation incorporated under the
laws of British Columbia ("Company"), and Mark Amin ("Amin") with respect to the
employment of Amin by the Company that will commence upon closing of the
proposed merger (the "Merger") between the Company, LGE Merger Sub, Inc. and
Trimark Holdings, Inc., a Delaware corporation ("Trimark"), pursuant to that
certain Agreement and Plan of Merger dated June 6, 2000 (the "Merger
Agreement"). Capitalized terms used herein without definition shall have the
respective meanings set forth in the Merger Agreement. The parties hereby agree
as follows:
1. EMPLOYMENT RELATIONSHIP; SERVICE ON BOARD.
a) The Company hereby engages Amin to serve during the Term (as
defined below) as an employee of the Company, reporting to the Board of
Directors of the Company (the "Board") and the Company's Chief Executive
Officer, on the terms and conditions set forth herein. Amin shall not be an
officer of the Company but shall provide advisory and consulting-type services
to the Company's and Trimark's home video operations and such other areas of the
Company's operations as the Company's Chief Executive Officer and Amin shall
agree. The Company and Amin may agree at any time to convert Amin's status from
employee to consultant.
b) During the Term, Amin shall also serve as Vice Chairman of the
Company and shall retain his current position and substantially similar
perquisites and benefits as Chairman of CinemaNow, Inc., a majority-owned
subsidiary of Trimark ("CinemaNow"), for so
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long as CinemaNow shall remain under the control of the Company, such
perquisites and benefits to be provided by CinemaNow.
c) Upon closing of the Merger, the Company shall issue and Amin
shall be entitled to purchase all of the issued and outstanding Series B
Preferred Shares of the Company (the "Series B Shares") for an aggregate
purchase price of US$100.00, subject to shareholder approval of an amendment to
the Certificate of Incorporation of the Company providing for the issuance of
the Series B Shares (the "Amendment"). The rights, preferences, privileges and
restrictions pertaining to the Series B Shares are set forth on Annex A hereto
and incorporated by reference herein, and shall provide that Amin shall be
appointed to and under certain circumstances shall have the right to continue as
a member of the Board. The Company shall submit the Amendment for approval by
the Company shareholders with the unanimous recommendation of the Company's
Board at the same time as the Merger is submitted for shareholder approval.
d) In the event the Company shareholders shall fail to approve the
Amendment prior to closing of the Merger, Amin shall have the right under this
Agreement to serve on the Board under the same terms and conditions as if the
Series B Shares had in fact been issued to and purchased by Amin, and the
Company agrees to take all action necessary to provide for Amin's service on the
Board under such terms and conditions.
e) If (i) the Company shareholders shall fail to approve the
Amendment by the requisite vote and (ii) the Company shall be in breach of its
obligations under Section 1(d), such breach shall be deemed a material breach of
this Agreement by the Company, whereupon in addition to any other remedies
provided for under this Agreement in respect of such breach, including but not
limited to under Section 9(a) hereof, (x) Amin's obligations under the stand-off
agreement ("Stand-Off Agreement") entered into by Amin and certain other parties
(set forth in Section 13 of that certain Registration Rights Agreement of even
date herewith among Lions Gate, Amin and the other stockholders named therein)
shall thereupon immediately terminate, and (ii) Amin's obligations under Section
7(b) and Section 8 below shall thereupon immediately terminate.
2. TERM. Amin's employment hereunder shall commence upon the closing of
the Merger, and shall continue for a period of three (3) years following such
date, unless earlier terminated in accordance with the provisions of Section 9
of this Agreement (the "Term"). As a bonus in respect of entering into this
Agreement and Amin's efforts on behalf of CinemaNow, Inc., upon closing of the
Merger, the loan made to Amin by Trimark, with a principal amount as of March
31, 2000 of approximately US$795,000, together with all accrued but unpaid
interest thereon and any other amounts due in respect thereof as of the closing
of the Merger, shall be forgiven in its entirety. Notwithstanding the foregoing,
in the event the Merger is terminated pursuant to Article XI of the Merger
Agreement or is otherwise abandoned, then this Agreement
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shall be null and void and neither the Company nor Amin shall have any rights or
obligations hereunder.
3. COMPENSATION. During the Term, in consideration for Amin's services,
the Company shall pay Amin annual fixed compensation at the rate of not less
than US$500,000, payable in equal semi-monthly installments. The Company may
increase, but not decrease, Amin's rate of compensation at any time. The Company
hereby grants Amin options to purchase 1,000,000 shares of the common stock of
the Company at a price of US$2.55 per share as set forth on Schedule 1 attached
hereto and incorporated herein by reference, in accordance with the terms
thereof. Options to purchase an additional 400,000 shares of common stock of the
Company at a price of US$4.00 per share are also hereby granted as set forth on
Schedule 1. Company agrees that such options (i) are fully vested and not
subject to mitigation, and (ii) will be provided on terms not less favorable
than those applicable to any stock or stock options provided to Michael Burns or
Jon Feltheimer, including as such stock or stock options may from time to time
be amended. Amin's existing options to acquire shares of Trimark common stock
shall be treated as provided in Section 2.11 of the Merger Agreement. All equity
interests, whether options, warrants or otherwise, are subject to immediate
acceleration in the event of a change in control of the Company, as such term is
defined on Schedule 2 attached hereto and incorporated herein by reference. The
Company shall provide Amin with an excise tax "gross-up" as provided in Annex B
hereto, which is incorporated by reference herein.
4. BENEFITS. During the Term, Amin shall be entitled to all benefits
provided by the Company to senior executive officers and directors of the
Company, including without limitation the right to participate in the Company's
medical insurance and retirement plans and, subject to the approval of the
Board, the appropriate incentive/bonus compensation and stock option plans (it
being understood that Amin shall be eligible to receive bonuses under cash bonus
plans in which members of the Company's senior management participate);
PROVIDED, that Amin shall be provided with substantially equivalent benefits to
all benefits provided by the Company from time to time to its Vice-Chairma(e)n
and its Chief Executive Officer, or similar senior-level management of the
Company.
5. OFFICE/PERSONNEL. During the Term, Company shall (a) provide Amin with
parking and an office for his exclusive use, which office shall be furnished and
equipped in accordance with his reasonable requirements, and (b) pay for the
services of one assistant (including, without limitation, any applicable
benefits) for Amin's exclusive use. Amin shall have the right to select such
employee, subject to Company's approval not to be unreasonably withheld. The
Company hereby pre-approves an annual salary of no greater than US$45,000 for
such employee.
6. BUSINESS EXPENSES. The Company shall promptly reimburse Amin for all
first class travel, entertainment and other reasonable business expenses
incurred by him in promoting the business of the Company and performing his
other duties hereunder.
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7. DEVOTION OF TIME/SERVICES.
a) During the Term, Amin shall devote such of his business time to
the business and interests of the Company as Amin and the Company agree in good
faith shall be reasonably necessary to carry out his duties to the Company (as
set forth in Section 1(a)), and shall perform such services in Los Angeles or at
such locations as Amin and the Company shall reasonably agree. Notwithstanding
the foregoing, but subject to the provisions of Sections 7(b) and 8 below, Amin
shall retain the right to engage in outside employment, consulting, business,
charitable and/or investment activities and shall not be required to dedicate
such number of hours to the performance of his duties hereunder as would
materially interfere with Amin's taking on substantial daily responsibilities
unrelated to his employment hereunder.
b) The parties acknowledge that the parties would not have entered
into this Agreement, but for the agreements and covenants of the parties
contained in this Agreement, and specifically, Amin's agreements in this Section
7(b) of the Agreement. Accordingly, Amin covenants and agrees that within the
four (4) year period following the closing of the Merger (the "Restricted
Period"), Amin shall not do any of the following (the "Restricted Activities"):
(i) Have any ownership interest (of record or beneficial) in, or
have any interest as an employee, salesperson, consultant, officer or
director in any firm, corporation, partnership, limited liability
company, proprietorship or other business that is significantly
engaged materially in any city, town, county, parish or other
municipality in any state of the United States (the names of each such
city, town, parish or other municipality, including, without
limitation, the name of each county in the State of California, being
expressly incorporated by reference herein) in the business of United
States theatrical distribution, United States home video distribution,
and/or foreign theatrical or home video distribution, in each case of
theatrical or home video motion pictures (the "Core Business"), for so
long as and to the extent that the Company or any successor in
interest of the Company remains materially engaged in the Core
Business; PROVIDED, HOWEVER, that nothing herein shall restrict Amin
from being permitted to engage in the development, pre-production,
financing or production of one or more motion pictures and, subject to
the requirements of Section 8 below, the distribution thereof and to
receive compensation, including, without limitation, participations in
relation thereto ("Amin Productions"); and PROVIDED, FURTHER, that in
addition to Amin Productions, from and after such time as Amin shall
no longer be serving on the Board, Amin shall be permitted to serve in
an executive or other capacity with any entity all or a portion of
whose business consists of the Core Business, so long as his duties
with such entity do not directly involve the Core Business; and
PROVIDED, FURTHER, that at all times Amin may own, directly or
indirectly, solely as an investment, securities of any entity,
corporation, company, association, joint venture, joint stock company,
partnership, trust, organization,
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individual (including personal representatives, executors and heirs of
a deceased individual), nation, state, government (including agencies,
branches, departments, bureaus, boards, divisions and
instrumentalities thereof), trustee, receiver or liquidator (for
purposes of this Section 7, a "Person") which are traded on any
national securities exchange if Amin (A) is not a controlling person
of, or a member of a group which controls, such Person or (B) does
not, directly or indirectly, own five percent (5%) or more of any
class of voting securities of such Person;
(ii) Request or advise any present or future customer of the Core
Business to withdraw, curtail or cancel its business dealings with the
Company or any of its affiliates; PROVIDED, that acts consistent with
Amin's rights and obligations under Section 8 shall not be deemed to
be in breach of Amin's obligations under this subsection (ii); or
(iii) Directly or indirectly (A) solicit or encourage any
employee of the Core Business to leave the employ of the Company or
any of its affiliates (it being understood that the placing of a
general advertisement shall not constitute a breach hereof) or (B)
hire any employee who has voluntarily terminated employment with the
Company or any of its affiliates if such hiring is proposed to occur
within six months following the date of such termination of
employment, PROVIDED, that there shall be no restriction on hiring any
such employee (x) whose employment has been terminated by the Company
or any affiliate (or who otherwise terminates employment with the
consent of the Company or such affiliate or pursuant to a settlement
agreement) or (y) who has voluntarily terminated employment following
(I) a material reduction in such employee's titles, duties, status or
responsibilities within the Company, (II) a material reduction in such
employee's salary, benefits or overall compensation or (III) a request
by the Company that such employee relocate more than fifty (50) miles
from such employee's then current principal place of employment.
c) If during the Restricted Period Amin is engaged in or wishes to
engage in any activity which could be construed as a Restricted Activity, Amin
may (but shall not be required to) give written notice to the Company specifying
the nature of such activity. During the 10-day period after such notice, the
Company may object to such activity if it believes in good faith that such
activity breaches or would breach the provisions of Section 7(b), absent which
objection, Amin shall be free to engage in such activity. In the event the
Company believes Amin is breaching any of the provisions of Section 7(b),
whether or not Amin has provided any written notice to the Company, the Company
shall give prompt written notice to Amin specifying the nature of the alleged
breach. If Amin provides notice to the Company within 10 days of receipt of
notice of the alleged breach that Amin disputes the facts alleged by the Company
or whether the activity or the facts alleged constitute a breach of Section
7(b), the
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parties will meet as soon as practicable and in any event within 15
days thereafter to resolve such dispute, with the parties to use reasonable
efforts to resolve such dispute within 30 days following receipt of such notice
(the "Resolution Period"). Amin shall not be subject to damages or claims under
this Section 7(c) to the extent that (i) any Restricted Activity in which he is
engaged is not prohibited under Section 7(b)(ii) or (iii) and Amin cures such
Restricted Activity prior to the end of the Resolution Period or (ii) Amin
otherwise cures any breach of Section 7(b) within the Resolution Period.
8. RIGHT OF FIRST REFUSAL.
a) The Company shall have a right of first refusal (a "Right of
First Refusal") with respect to worldwide distribution rights in any motion
picture produced by Amin (other than as a producer for hire) alone or in
conjunction with others during the Term (a "Qualifying Picture") to the extent
that Amin controls the licensing of such distribution rights; PROVIDED, that
such Right of First Refusal shall not apply to any rights to distribute a
Qualifying Picture which has been licensed, transferred or otherwise disposed of
prior to the time that Amin controls the licensing of such distribution rights
unless at such later time Amin has obtained the control of the Subject
Distribution Rights. Such a Right of First Refusal shall apply to all rights to
distribute the Qualifying Picture in the United States ("U.S. Rights") and to
all rights to distribute the Qualifying Picture outside of the United States
("Foreign Rights"). The rights as to which the Company has the Right of First
Refusal set forth in this Section 8(a) shall be referred to herein as "Subject
Distribution Rights".
b) Amin shall notify the Company in writing of any Qualifying
Picture (a "First Refusal Notice") setting forth a description of the Material
Elements. For purposes of this Agreement, "Material Elements" shall mean the
proposed director, lead actor and amount of the budget for the Qualifying
Picture. The Company shall have until 5:00 p.m. on the eighth (8th) business day
following provision of a First Refusal Notice by Amin (the "Exercise Period") to
notify Amin in writing (an "Exercise Notice") that the Company is exercising its
right to negotiate in good faith to acquire the U.S. Rights and/or the Foreign
Rights. If the Company so exercises its Right of First Refusal with respect to
the U.S. Rights and/or with respect to the Foreign Rights, the Company shall
thereupon be obligated to negotiate with Amin in good faith for a period of ten
(10) business days ("Negotiation Period").
c) If the parties fail to reach agreement (or are deemed to fail to
reach agreement) prior to the expiration of the Negotiation Period with respect
to U.S. Rights and/or Foreign Rights, subject to and in accordance with
subsections (e) and (f) below, Amin may accept any third party offer to acquire
U.S. Rights and/or Foreign Rights on monetary terms or conditions materially
more favorable to Amin than the monetary terms and conditions last offered by
the Company to Amin during the Negotiation Period and/or may sell or license
Foreign Rights on a territory-by-territory basis without any further obligation
to the Company.
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d) The Company's failure to provide an Exercise Notice prior to the
expiration of the Exercise Period shall be deemed an election by the Company to
not exercise its Right of First Refusal to acquire any of the Subject
Distribution Rights. In the event the Company fails to provide an Exercise
Notice within the applicable Exercise Period or fails to negotiate with Amin
during the appropriate Negotiation Period, Amin shall have the right to dispose
of the Subject Distribution Rights with respect to a Qualifying Picture without
any further obligation to the Company.
e) Subject to subsection (f), if at any time there is a substantial
change in the Material Elements pertaining to a Qualifying Picture, Amin shall
within ten (10) business days following such change to provide a First Refusal
Notice to the Company describing such change of Material Elements. The Exercise
Period, Negotiation Period and the mechanics for the Company's exercise or
deemed election not to exercise its rights under any such First Refusal Notice
shall be the same as set forth in subsection (b) above. For purposes of this
Agreement, a "substantial change" in the Material Elements pertaining to a
Qualifying Picture shall mean (i) any change in the proposed director or lead
actor or (ii) a decrease of more than ten percent (10%) in the amount of the
proposed budget.
f) Notwithstanding anything to the contrary in this Agreement, if
Amin enters into an agreement with a third party regarding the U.S. Rights or
the Foreign Rights in a Qualifying Picture, thereafter there is a substantial
change in Material Elements pertaining to such Qualifying Picture, and Amin has
theretofore complied with his first refusal obligations as set forth herein, the
Company's Right of First Refusal shall not apply to such Qualifying Picture. By
way of clarification, in such event, Amin would, among other things, not be
required to provide a subsequent First Refusal Notice to the Company with
respect to a Qualifying Picture, even if the Material Elements of such
Qualifying Picture were to change substantially subsequent to the time such
agreement is entered into.
g) Schedule 3 attached hereto and incorporated herein by this
reference lists motion picture projects which have been created by Amin and/or
which were brought to Trimark by Amin ("Amin Projects"). As of the closing of
the Merger, Amin shall have the exclusive right, in perpetuity, to each Amin
Project, subject to the requirement that upon or before commencement of
principal photography of such Amin Project, he shall pay to the Company an
amount equal to the direct out-of-pocket expenses incurred and paid by Trimark
in connection with such Amin Project prior to the closing of the Merger (such
amounts being set forth on Schedule 3), PROVIDED, that with respect to the Amin
Project "Untitled Low Budget Thriller," Amin must pay such amount ($85,000) to
the Company at or before closing of the Merger.
h) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
facsimile to the numbers set forth below or by registered or certified mail,
return receipt requested, postage prepaid, or by a nationally recognized
overnight courier addressed as follows:
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If to Amin:
Mark Amin
c/o Trimark Pictures
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Facsimile: 310/399-4238
With a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
1999 Avenue of the Stars, Suite 1600
Los Angeles, CA 90067
Attention: Barry L. Dastin, Esq.
Facsimile: 310/788-1200
If to the Company:
Lions Gate Entertainment Corp.
5750 Wilshire Boulevard, Suite 501
Los Angeles, CA 90036
Attention: Jon Feltheimer
Facsimile: 323/692-7367
With a copy to:
Loeb & Loeb
10100 Santa Monica Boulevard
Los Angeles, CA 90067
Attention: Thomas E. Rohlf, Esq.
Facsimile: 310/282-2192
or to such other address as either party furnishes to the other in writing in
accordance with this Section 8(h). Notices and communications shall be effective
when actually received by the addressee.
9. TERMINATION.
a) COMPANY'S RIGHT TO TERMINATE. The Company shall have the right to
terminate Amin's employment prior to the expiration of the Term only for the
following reasons: (a) upon the death of Amin; (b) for cause ("cause" as used
herein means (i) Amin's conviction
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of a felony (except a felony relating to a traffic accident or traffic violation
or a felony predicated solely on vicarious liability relating to Amin's capacity
as a director or officer of the Company), or (ii) Amin's gross negligence or
willful misconduct with respect to the Company; PROVIDED, HOWEVER, the Company
shall not terminate Amin hereunder pursuant to this clause (b) of Section 9
unless it shall first give Amin written notice of the alleged defect and the
same is not cured within fifteen (15) business days of such written notice); or
(c) the Company may terminate Amin without cause by paying Amin in a lump sum
within ten (10) days following the date of such termination the entire balance
of the compensation due under this Agreement (but in no event less than one
year's worth of such compensation on an annualized basis), together with any
unreimbursed business expenses of Amin. In no event shall the termination of
Amin's employment hereunder under any circumstances and for any or no reason
cause Amin to lose any previously granted stock options, warrants or other
equity interests in the Company, and in no event shall Amin have any duty to
mitigate and in no event shall there be any mitigation of amounts earned in
respect of any other employment with respect to equity interests or any other
compensation due hereunder. In the event of any material breach of this
Agreement by the Company which is not cured by the Company within ten (10) days
of being provided notice by Amin of such breach, such breach shall be deemed to
constitute the Company's termination of Amin without cause triggering the
Company's payment obligation set forth in clause (c) of this Section 9(a); and
in such event or in the event the Company terminates Amin pursuant to clause (c)
of this Section 9(a), Amin's obligations under Sections 7(b) and 8 of this
Agreement and under the Stand-Off Agreement shall thereupon immediately
terminate.
b) AMIN'S RIGHT TO TERMINATE. Amin shall have the right to terminate
his employment with the Company voluntarily hereunder at any time and retain his
positions as Vice-Chairman and a member of the Board as otherwise provided in
this Agreement and pursuant to the Series B Shares.
c) EFFECT OF TERMINATION.
i) WITH CAUSE. If the Company terminates Amin's employment
relationship with the Company "for cause" as defined in Section 9(a) hereof, the
Company shall have no further obligation to pay Amin any salary payments other
than accrued but unpaid salary or expense reimbursement, if any.
ii) DEATH. In the event of the termination of Amin's employment
relationship with the Company by reason of Amin's death, the Company shall have
the obligation to pay Amin's estate: (A) in a lump sum, the present value (using
the then prevailing rate of interest charged to the Company by its principal
lender as the discount rate) of Amin's then salary for the remainder of the then
Term; and (b) in a lump sum, any theretofore unreimbursed business expenses of
Amin.
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iii) STOCK OPTIONS. Upon termination of Amin's employment
relationship with the Company under any circumstances and for any or no reason
or cause, all of Amin's stock options shall be deemed vested at the time of his
termination, subject to the exercise, timing and price conditions of such stock
options set out in Schedule 1 of this Agreement.
iv) EFFECT OF AMIN'S VOLUNTARY TERMINATION. In the event of
Amin's voluntary termination of employment pursuant to Section 9(b) hereunder
(which termination is not treated as a deemed termination of Amin's employment
by the Company by reason of material breach of this Agreement pursuant to clause
(c) of Section 9(a)), (x) Amin shall no longer be entitled to receive his fixed
annual compensation (other than accrued but unpaid salary and expense
reimbursement), (y) for so long as he is serving as a non-employee member of the
Board he shall be entitled to receive all compensation and benefits provided to
other non-employee members of the Board and (z) Amin's obligations under Section
8 shall thereupon immediately terminate.
10. MISCELLANEOUS.
a) GOVERNING LAW/ARBITRATION. This Agreement shall be governed and
construed in accordance with the laws of the State of California applicable to
contracts entered into and fully performed in California. Any dispute or claim
arising out of or relating to this Agreement shall be submitted to binding
arbitration to be held in Los Angeles, California. In no circumstances shall
Amin be entitled to seek to enjoin the production, development, distribution,
advertising or exploitation of any motion picture, television, animation or
studio facility production or activity carried on by the Company, except with
respect to Amin Projects or Amin Productions, but including Covered Programs (as
defined below) that are not Amin Projects or Amin Productions. In no
circumstances shall the Company be entitled to seek to enjoin the production,
development, distribution, advertising or exploitation of any Amin Picture or
Amin Production. The prevailing party as to the material issues in any such
dispute shall be entitled to reimbursement from the non-prevailing party for his
or its reasonable attorneys fees and expenses (including without limitation
arbitration expenses) incurred by the prevailing party in connection with such
dispute, PROVIDED, that Amin's obligation to provide such reimbursement to the
Company shall be limited to a maximum of $25,000.
b) AMENDMENTS. This Agreement may be amended or modified only by a
written instrument, executed by each of the parties hereto.
c) TITLES AND HEADINGS. Paragraph or other headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of any of the terms or provisions hereof.
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d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and, except for the
Merger Agreement and all ancillary documents executed and delivered pursuant
thereto, supersedes all prior agreements, negotiations and understandings of the
parties in connection therewith.
e) SUCCESSORS AND ASSIGNS. This Agreement is binding upon the
parties hereto and their respective successors, permitted assigns, heirs and
personal representatives. Except as specifically provided herein, neither of the
parties hereto may assign the rights and duties of this Agreement or any
interest therein, by operation of law or otherwise, without the prior written
consent of the other party, EXCEPT THAT, without such consent, the Company shall
assign this Agreement to and provide for the assumption thereof by any successor
to all or substantially all of its assets and business by merger, consolidation
or transfer of assets.
f) WAIVER. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.
g) MUTUAL DRAFTING. Each of the parties hereto has been represented
by counsel in the negotiation and drafting of this Agreement. Accordingly, no
inference as to the meaning or interpretation of any clause or provision of this
Agreement shall be made on the basis of which party was the "drafter" of such
clause or provision.
11. INDEMNIFICATION. The Company shall (a) indemnify and hold Amin
harmless, to the full extent permitted under applicable law, for, from and
against any and all losses, claims, costs, expenses, damages, liabilities or
actions (including security holder actions, in respect thereof) related to or
arising out of Amin's service as a director and/or consultant of the Company;
and (b) pay all reasonable costs, expenses and attorney's fees incurred by Amin
in connection with or relating to the defense of any such loss, claim, cost,
expense, damage, liability or action. Following any termination of Amin's
service with the Company, the Company shall cause any director and officer
liability insurance policies applicable to Amin prior to such termination to
remain in effect at the same or higher levels of coverage for six (6) years
following the date of termination of service.
12. CREDIT.
a) Subject to obligations of the Company to third parties incurred
prior to Amin's involvement in a Covered Program and subject to the Company's
ability to accord credit in order to obtain financing pursuant to co-production
treaties and the requirements of the Canadian Audio-Visual Certification Office
("CAVCO"), the Societe de Developpment des
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Entreprises Cultures ("SODEC") or similar entities, Amin shall be accorded
credit as an executive producer or producer at Amin's election on all Covered
Programs (as defined below), the production of which commenced at any time
(whether prior to or following the date of this Agreement) Amin was employed by
or provided consulting services to the Company or any subsidiary, PROVIDED, that
Amin shall not be denied such credit pursuant to CAVCO or SODEC unless no
non-Canadian receives such credit with respect to such Covered Program. Such
credit shall be in the main titles on a separate card if there are main titles
or on a separate card in the end titles and shall be equal in size, type and
style of the credits accorded all other producers or executive producers on the
respective Covered Programs. The foregoing credit shall be accorded in all paid
ads issued by or under the direct or indirect control of the Company, except for
customary exclusions (I.E., award, nomination or congratulatory ads in which
only the person honored is mentioned). Except as expressly provided herein,
Company shall, in its sole discretion, determine the manner, form, size, style,
nature and placement of any credit given to Amin. No casual or inadvertent
failure to comply with the foregoing credit provisions will constitute a breach
of this Agreement. Company shall use its reasonable efforts to cure
prospectively any breach of these credit provisions following receipt of notice
of same from Amin.
b) "Covered Program" means (i) any Trimark project which commences
production prior to the closing of the Merger and (ii) any other project of the
Company or any subsidiary as to which, in the good faith reasonable judgment of
Amin and the Company, Amin makes a material contribution beyond the normal
performance of his duties as Vice Chairman.
13. ATTORNEYS FEES. On the date of closing of the Merger, the Company
shall reimburse Amin for his reasonable attorneys fees and expenses incurred in
negotiating this Agreement, the Merger Agreement, the Registration Rights
Agreement and the Voting Agreement in the amount of $50,000.
14. SEVERABILITY. Each Section, Subsection, Paragraph and lesser portion
of this Agreement constitutes a separate and distinct undertaking, covenant
and/or provision hereof. In the event that any provision of this Agreement shall
finally be determined to be unlawful or unenforceable, such provision shall be
deemed to be severed from this Agreement, but every other provision shall remain
in full force and effect.
The parties understand that time is of the essence.
Please indicate your agreement to the foregoing by signing in the space
provided.
Very truly yours,
LIONS GATE ENTERTAINMENT CORP.
/s/ Jon Feltheimer
----------------------------------
By: /s/ Jon Feltheimer
Its: CEO
ACCEPTED AND AGREED:
/s/ Mark Amin
- ----------------------------
Mark Amin
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ANNEX A: TERMS OF SERIES B PREFERRED SHARES
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PART 27
LIONS GATE ENTERTAINMENT CORP.
SPECIAL RIGHTS AND RESTRICTIONS OF PREFERRED SHARES,
RESTRICTED VOTING, NON-TRANSFERABLE SERIES B
DESIGNATION AND NUMBER
27.1 The second series of Preferred Shares shall consist of ten (10 )
Preferred Shares, which shares shall be designated as Preferred Shares,
Restricted Voting, Non-Transferable Series B (the "Series B Preferred
Shares") and which, in addition to the rights, privileges, restrictions
and conditions attached to the Preferred Shares as a class, shall have
attached thereto the rights, privileges, restrictions and conditions as
set forth herein.
ISSUE PRICE
27.2 For the purposes hereof, the issue price of each Series B Preferred
Share shall be deemed to be ten dollars in United States currency
(US$10) per share (the "Issue Price").
DIVIDENDS
27.3 The holders of Series B Preferred Shares shall not, as such, have any
entitlement to receive dividends.
LIQUIDATION, DISSOLUTION OF WINDING UP
27.4 In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, or any other distribution of
the assets of the Company among its members for the purposes of winding
up its affairs (each a "Liquidation"), the holders of the Series B
Preferred Shares shall be entitled, subject in all cases to the rights
of the Series A Preferred Shares (to which the Series B Shares are
subordinate in the event of a Liquidation), but in priority to the
rights of the holders of Common Shares or all other shares ranking
junior to the Series B Preferred Shares, an amount (the "Series B
Liquidation Amount") equal to the Issue Price with respect to each
Series B Preferred Share held by them.
27.5 If upon any Liquidation of the Company, the assets of the Company
available for distribution shall be insufficient to pay in full the
amounts so payable as above provided, then such assets shall be
distributed among the holders of Series B
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Preferred Shares ratably in accordance with the respective amounts that
would be payable on such Series B Preferred Shares if such assets were
sufficient to permit payment in full of all amounts payable thereon.
27.6 After payment to the holders of the Series B Preferred Shares of the
amounts so payable to them as provided above, holders of the Series B
Preferred Shares shall have no right or claim to share in any further
distribution of the property or assets of the Company.
VOTING
27.7 If and for so long as any Series B Preferred Shares are outstanding and
for so long as Mark Amin is legally qualified to serve on the board of
directors of the Company, the holders of the Series B Preferred Shares,
exclusively and separately as a class, shall be entitled to elect one
member of the board of directors of the Company, who shall be Mark Amin
(and only Mark Amin).
27.8 Except as provided in Section 27.7 above, the holders of Series B
Preferred Shares shall not, as such, have any voting rights for the
election of directors or, subject to any voting rights accorded them
pursuant to the provisions of the COMPANY ACT (British Columbia) (the
"Company Act"), for any other purpose, nor, except for the purpose of
exercising any voting rights accorded to them pursuant to the Company
Act, shall they be entitled to receive notice of or attend meetings of
the members of the Company.
REDEMPTION
27.9 Subject to applicable law, the Company may upon giving notice as
hereinafter provided redeem all and not less than all of the
outstanding Series B Preferred Shares on payment for each share of an
amount equal to one hundred percent (100%) of the price or deemed price
at which such shares were issued (hereinafter referred to as the
"Series B Redemption Amount") upon and subject to the occurrence of
either of the following events (each referred to as a "Series B
Redemption Event"):
(a) REDUCTION IN COMMON SHAREHOLDINGS. If, at any time after the last day
of the thirty-sixth (36th) month following the first issue date of any
Series B Preferred Shares, the holders of Series B Preferred Shares
and each of their controlled affiliates, family members, including,
without limitation, siblings, and trusts over which such holders
maintain sole voting power, as a group, are the registered or
beneficial holders of less than two million (2,000,000) Common Shares
in the capital of the Company (hereinafter referred to as the "Series
B Threshold Amount"); or
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(b) CHANGE OF CONTROL If at any time the Company or its shareholders shall
be a party to any transaction, including without limitation, any
amalgamation, arrangement, takeover bid, issuer bid, consolidation or
merger which results in the holders of Common Shares immediately prior
to the effective date of such transaction (calculated on a pro forma
basis, including the Common Shares issuable upon the conversion of all
outstanding Series A Preferred Shares) holding, in the aggregate, less
than fifty percent (50%) of the surviving corporation or entity which
results from the transaction, or any sale of all or substantially all
of the Company's assets (each of the foregoing being referred to as a
"Transaction", which for greater certainty includes a series of
transactions among the substantially the same parties).
27.10 In the event that the Company should at any time or from time to time
after the issue date of any Series B Preferred Shares consolidate,
split or subdivide the outstanding Common Shares of the Company or make
any distribution by which the holders of Common Shares are entitled to
receive a dividend or other distribution payable in additional Common
Shares or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional Common
Shares (hereinafter referred to as "Common Share Equivalents") without
payment of any consideration by such holder for the additional Common
Shares or Common Share Equivalents (including the additional Common
Shares issuable upon conversion or exercise thereof), then, as of the
date of such consolidation, split, subdivision or distribution, the
Series B Threshold Amount will be adjusted in proportion to the
increase or decrease in the number of Common Shares outstanding as a
result thereof.
27.11 Any notice given pursuant to Section 27.9 above will be effective for
all purposes if delivered by registered mail or in person (including by
courier with acknowledged receipt) to a holder of Series B Preferred
Shares at such holder's address as last recorded in the register of
members of the Company.
27.12 The Series B Shares may not be sold or otherwise transferred.
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ANNEX B EXCISE TAX GROSS-UP
(a) In the event that any payment or benefit received or to be
received by Amin pursuant to the terms of the Agreement or of any other plan,
arrangement or agreement of the Company (or any affiliate, including without
limitation Trimark) (collectively, the "Payments") would be subject to the
excise tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), as determined as provided below, the
Company shall pay to Amin, at the time specified in paragraph (b) below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Amin, after deduction of the Excise Tax on Payments and any federal, state and
local income and employment or other tax and the Excise Tax upon the Gross-Up
Payment, and any interest, penalties or additions to tax payable by Amin with
respect thereto, shall be equal to the total Payments. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amounts of such Excise Tax, (1) the total amount of the Payments shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to
the extent that, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to Amin and selected by the accounting firm which was, immediately
prior to the event giving rise to the Payment, the Company's independent auditor
(the "Auditor"), a Payment (in whole or in part) does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the Code, or
such "excess parachute payments" (in whole or in part) are not subject to the
Excise Tax, (2) the amount of the Payments that shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total amount of the
Payments or (B) the amount of "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code (after applying clause (1) hereof), and (3) the
value of any noncash benefits or any deferred payment or benefit shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, Amin shall be deemed to pay federal income taxes at the
highest marginal rates of federal income taxation applicable to individuals in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the state and locality of Amin's residence in
the calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes that can be obtained from deduction of
such state and local taxes, taking into account any limitations applicable to
individuals subject to federal income tax at the highest marginal rates.
(b) The Gross-Up Payments provided for in Paragraph (a) hereof shall
be made upon the imposition upon Amin or payment by Amin of any Excise Tax.
(c) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding that the Excise Tax is less than the
amount taken into account under paragraph (a) hereof, Amin shall repay to the
Company within thirty (30) days of
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Amin's receipt of notice of such final determination the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the portion of the Gross-Up Payment being repaid by Amin if and to the extent
that such repayment results in a reduction in Excise Tax and a dollar-for-dollar
reduction in Amin's taxable income and wages for the purpose of federal, state
and local income taxes) plus any interest received by Amin on the amount of such
repayment. If it is established pursuant to a final determination of a court or
an Internal Revenue Service proceeding that the Excise Tax exceeds the amount
taken into account hereunder (including without limitation by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment
pursuant to paragraph (a) in respect of such excess within ten (10) days of the
Company's receipt of notice of such final determination or proceeding. Amin and
the Company shall each reasonably cooperate with the other in connection with
any administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Payments.
(d) In the event of any change in, or further interpretation of,
sections 280G or 4999 of the Code and the regulations promulgated thereunder,
Amin shall be entitled, by written notice to the Company, to request an opinion
of Tax Counsel regarding the application of such change to any of the foregoing,
and the Company shall use its best efforts to cause such opinion to be rendered
as promptly as practicable. All fees and expenses of the Auditor and Tax Counsel
incurred in connection with this Agreement shall be borne by the Company.
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SCHEDULE 1: OPTION GRANT
(i) Effective as of the date of this Employment Agreement (the "Grant Date"),
but subject to shareholder approval as set forth in section (iii) below,
the Company hereby grants to Amin under the Lions Gate Entertainment Corp.
Employees' and Directors' Equity Incentive Plan (the "Plan") incentive
stock options ("Options") to purchase 1,400,000 shares of Common Stock of
the Company (the "Shares") at an exercise price of US$2.55 per Share in
respect of 1,000,000 of such Shares and US$4.00 in respect of the balance
of such Shares.
Amin shall have the right in his sole discretion to allocate some portion
of the options to Trimark employees, PROVIDED, that no allocation will be
made to the extent it would require the exercise price of the options to be
less than the fair market value of the Shares on the date of grant, as
determined in accordance with the Plan.
(ii) The Options may be exercised as follows:
1) At any time following the closing of the Merger until the date that is
five years following the Grant Date (the "Expiry Date"), Options with
an exercise price of US$2.55 per share shall be exercisable in respect
of up to 125,000 Shares.
2) At any time after the first anniversary of the Grant Date until the
Expiry Date, options with an exercise price of US$2.55 per share shall
be exercisable in respect of up to an additional 425,000 Shares,
PROVIDED, that the average closing trading price of the Shares on the
Toronto Stock Exchange, or such other principal stock exchange on
which the Shares may be listed, for any period of 20 consecutive
trading days commencing on or after the Grant Date which ends
subsequent to the closing of the Merger, is not less than US$4.00 (the
"$4.00 Price Criterion").
3) At any time after the second anniversary of the Grant Date until the
Expiry Date, options with an exercise price of US$2.55 per share shall
be exercisable in respect of up to an additional 212,500 Shares,
PROVIDED, that the $4.00 Price Criterion has been satisfied.
4) At any time after the second anniversary of the Grant Date until the
Expiry Date, options with an exercise price of US$2.55 per share shall
be exercisable in respect of up to an additional 212,500 Shares,
PROVIDED, that the average closing trading price of the Shares on the
Toronto Stock Exchange, or such other principal stock exchange on
which the Shares may be listed, for any period of 20 consecutive
trading days commencing on or after the Grant Date which ends
subsequent to the closing of the Merger, is not less than US$6.00 (the
"$6.00 Price Criterion").
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5) At any time after the third anniversary of the Grant Date until the
Expiry Date, options with an exercise price of US$2.55 per share shall
be exercisable in respect of up to an additional 25,000 Shares,
PROVIDED, that the $6.00 Price Criterion has been satisfied.
6) At any time after the third anniversary of the Grant Date until the
Expiry Date, options with an exercise price of US$4.00 per share shall
be exercisable in respect of up to an additional 400,000 Shares,
PROVIDED, that the $6.00 Price Criterion has been satisfied.
(iii) The Company shall submit to its shareholders a proposal to amend the Plan
(the "Amendment") to increase the number of shares reserved for issuance
under Section 5.1 of the Plan to a sufficient number to provide for the
grant of the Options to Amin and to otherwise amend the terms of the Plan
(including without limitation the other terms of Section 5.1) in any manner
necessary to provide for the grant of the Options to Amin as set forth
herein. The Company shall submit the Amendment for approval by the
Company's shareholders as part of the proposal to approve the Merger, such
that if the Merger is approved, the Amendment will automatically be
approved without further action of the shareholders. Approval of the Merger
Agreement by the shareholders without approval of the Amendment shall
constitute a material breach of the Employment Agreement.
(iv) Notwithstanding anything to the contrary herein, no portion of the Options
shall vest and become exercisable until the closing of the Merger, and the
Options shall immediately terminate in the event the Merger Agreement is
terminated pursuant to Article XI of the Merger Agreement or the Merger is
otherwise abandoned.
(v) Except as otherwise provided in this Schedule 1 or elsewhere in the
Agreement, the options shall be evidenced by an Incentive Plan Stock Option
Agreement substantially in the form of the January 5, 2000 Incentive Plan
Stock Option Agreement between the Company and Michael Burns.
(vi) Promptly following the closing of the Merger, the Company register (and
shall thereafter maintain the registration of) the Shares and shall take
all other actions necessary to provide for free transferability of the
Shares by Amin from and after exercise of the Options.
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SCHEDULE 2: CHANGE IN CONTROL DEFINITION
A "change in control" of the Company shall be deemed to have occurred if,
as the result of a single transaction or a series of transactions, the event set
forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding voting securities;
or
(2) Incumbent Directors cease at any time and for any reason to
constitute a majority of the number of directors then serving on the Board.
"Incumbent Directors" shall mean directors who either (A) are directors of
the Company as of the closing of the Merger or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least
a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors to the Board); or
(3) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 50% of the combined voting power of
the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (ii)
a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding voting securities; or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
"Affiliate" shall have the meaning set forth in Rule 12b-2 under Section 12
of the Exchange Act.
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"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act, except that a Person shall not be deemed to be the Beneficial
Owner of any securities which are properly filed on a Form 13G.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
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