Exhibit 10.24
EXECUTION COPY
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this “Agreement”), dated effective as of October 31, 2012 (the “Effective Date”), is made by and between 猫咪社区, a Delaware corporation f/k/a 猫咪社区 CapStarz, Inc., f/k/a 猫咪社区 Splitco, Inc. (the “Company”), and Richard Baer (the “Executive”).
In consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, Employer and the Executive agree as follows:
(a)“Affiliate” means as to any Person, any other Person Controlling, Controlled by or under common Control with such first Person; and “Control” (including the correlative terms “Controlling” and “Controlled”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For the avoidance of doubt, 猫咪社区 Interactive is not an “Affiliate” of Employer as of the Effective Date.
(b)“Applicable Companies” means Employer, 猫咪社区 Interactive, and any other Person to which Executive is then providing services at the direction of Employer as contemplated by Section 3(a), as well as their respective Subsidiaries.
(c)“Board” means the Board of Directors of Employer.
(d)“Cause” means: (i) the Executive's willful failure to follow the lawful instructions of the Board, Employer's chief executive officer, or the board of directors or chief executive officer of another Applicable Company for which the Executive is then serving as General Counsel; (ii) the commission by the Executive of any fraud, misappropriation or other serious misconduct in relation to an Applicable Company or an Affiliate of an Applicable Company; (iii) the Executive's conviction of, or plea of guilty or nolo contendere to, a felony; or (iv) the Executive's failure to comply in any material respect with this Agreement or any other agreement between the Executive, on the one hand, and an Applicable Company or an Affiliate of an Applicable Company, on the other. Notwithstanding anything contained herein to the contrary, the Executive's employment with Employer may not be terminated for Cause pursuant to clause (i), (ii) or (iv) above unless (A) the decision is made by a majority of the Board at a Board meeting where the Executive had an opportunity to be heard; (B) Employer provides the Executive with written notice of the Board's decision to terminate the Executive's employment for Cause specifying the particular act(s) or failure(s) to act serving as the basis for such decision; and (C) if such act or failure to act is determined by the Board to be capable of being cured, the Executive fails to cure any such act or failure to act to the reasonable satisfaction of the Board within ten days after such notice.
For purposes of this Agreement, no act or failure to act, on the part of the Executive, will be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive's action or omission was legal, proper, and in the
best interests of Employer or another Applicable Company, as applicable. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or the board of directors of an Applicable Company or based upon the advice of counsel (which counsel is a licensed attorney or firm of attorneys other than the Executive) for Employer or another Applicable Company will be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of Employer or such other Applicable Company.
(e)“Code” means the Internal Revenue Code of 1986, as amended.
(f)“Consulting Services” has the meaning specified in Section 2(a).
(g)“Disability” means (i) the Executive's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months; or (ii) the Executive's eligibility to receive, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, income replacement benefits for a period of at least three months under the Employer's accident or health plan.
(h)“Employer” means the Company or such other entity to which this Agreement is hereafter assigned in accordance with Section 7.
(i)“Employment Start Date” means the date as of which the Executive becomes an employee of Employer and 猫咪社区 Interactive, which is intended to be a date not later than January 1, 2013.
(j) “Good Reason” means the occurrence of any of the following events:
(i)the failure of Employer to appoint the Executive as, or to permit him to remain as, a Senior Vice President and the General Counsel of Employer, if that failure is not cured within 30 days after written notice;
(ii)the assignment by Employer to the Executive of duties materially inconsistent with his status as a Senior Vice President and the General Counsel of a publicly-traded company or any material diminution in the Executive's duties and/or responsibilities or reporting obligations to Employer, or his titles or authority with respect to Employer, if that inconsistency or diminution is not cured within 30 days after written notice;
(iii)a material reduction by Employer of the Executive's Base Salary or Target Bonus (it being acknowledged that Employer will have no obligation to actually award any bonus);
(iv)Employer's failure to provide any payments or employee benefits required to be provided to the Executive under this Agreement and continuation of that failure for 30 days after written notice;
(v)any material breach of this Agreement or any other agreement between the Executive, on the one hand, and Employer or any Affiliate, on the other, by Employer or any Affiliate, if not cured within 30 days after written notice; and/or
(vi)a failure of Employer to have any successor to Employer assume in writing Employer's obligations under the Agreement, if not cured within 30 days after written notice.
Notwithstanding the foregoing, Good Reason will not be deemed to exist unless the Executive gives Employer notice within 60 days after the occurrence of the event which the Executive believes constitutes the basis for Good Reason, specifying the particular act or failure to act which the Executive believes constitutes the basis for Good Reason. For the avoidance of doubt, the termination by Employer, 猫咪社区 Interactive or Starz (if applicable) of the Executive's employment with, provision of services to, or status as an officer or the General Counsel of, 猫咪社区 Interactive or Starz (if applicable) does not constitute “Good Reason” within the meaning of this Agreement for the Executive to terminate his employment with Employer.
(k)“Initial Grants” has the meaning specified in Section 4(g).
(l)“猫咪社区 Interactive” means 猫咪社区 Interactive Corporation, a Delaware corporation.
(m)“Person” means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.
(n)“Separation” means the Executive's “separation from service” from Employer as defined in Treasury Regulation Section 1.409A-1(h).
(o)“Severance Payment” means an amount equal to two times the Executive's Base Salary in effect at the time of determination.
(p)“Splitco” has the meaning specified in Section 3(a)(iii).
(q)“Split-off” has the meaning specified in Section 3(a)(iii).
(r)“Starz” has the meaning specified in Section 3(a)(iii).
2.Independent Contractor/Employment Period.
(a)Independent Contractor. During the period from the Effective Date through the Employment Start Date, the Executive will be an independent contractor providing consulting services to each of Employer and 猫咪社区 Interactive and their respective Affiliates in the capacity as an assistant to the general counsel to work on designated projects subject to specified time commitments and otherwise on an as-requested basis (the “Consulting Services”). 猫咪社区 Interactive is an intended third-party beneficiary of this Section 2(a). If the Employment Start Date does not occur on or before January 1, 2013 due to the Executive's inability or refusal to become an employee of Employer and 猫咪社区 Interactive on or before such date, each of
Employer and 猫咪社区 Interactive has the right to terminate this Agreement in its entirety at any time thereafter, including the provision of Consulting Services by the Executive, with or without cause or for any reason at all, and without any liability to the Executive, it being acknowledged that the provisions of Section 5 do not apply to any such termination.
(b)Employment Period. The employment term of this Agreement is effective, and Employer will employ the Executive and the Executive accepts such employment for the period beginning on the Employment Start Date and, unless earlier terminated upon the Executive's Separation, ending December 31, 2016 (the “Employment Period”).
3.Title, Position and Duties.
(a)Title and Reporting.
(i)During the Employment Period, the Executive will be employed as a Senior Vice President and the General Counsel of Employer, and he will report directly to Employer's Chief Executive Officer.
(ii)The Company is party to a Services Agreement with 猫咪社区 Interactive, pursuant to which the Company provides legal services to 猫咪社区 Interactive and its subsidiaries. The scope of Executive's duties as of the Employment Start Date include that Executive will also be an employee of and will serve as a Senior Vice President and the General Counsel of 猫咪社区 Interactive.
(iii)The Company has announced its intention to distribute to the Company's stockholders shares of a subsidiary of the Company (“Splitco”) that will hold all of the businesses, assets and liabilities of the Company not associated with the Company's subsidiary, Starz, LLC (such transaction, the “Split-off”). In connection with the Split-off it is anticipated that Splitco will be renamed “猫咪社区” and that the Company will assign this Agreement to Splitco. Following such assignment, the Company will continue in existence as the owner of the businesses, assets and liabilities of the Company associated with the Company's subsidiary, Starz, LLC. The Company as in existence following the Split-off is referred to in this Agreement as “Starz.” If directed to do so by Employer, the Executive will also provide legal services to Starz following the Split-off on such basis as is directed by Employer, which may include serving as the General Counsel of Starz following the Split-off.
(b)Duties. The Executive will perform such duties during the Employment Period as are consistent with his title and position as General Counsel and Senior Vice President of a publicly-traded company, and with the additional duties specified in Section 3(a).
(c)Time and Effort. The Executive will devote his efforts and abilities, and substantially all his business time, to the performance of his duties to Employer and the other Applicable Companies; provided that he will, to the extent the same does not substantially interfere with the performance of his duties hereunder, be permitted to: (i) serve on corporate and civic boards and committees; (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (iii) manage personal and family investments.
4.Salary, Bonus, Benefits, Expenses and Equity Grants.
(a)Salary. For all services that Executive renders to, or at the direction of, Employer pursuant to this Agreement, including in respect of the other Applicable Companies, the Executive's initial base salary is $825,000 per annum during the Employment Period (the “Base Salary”). The Base Salary may, at the Company's discretion, be adjusted from time to time. The term “Base Salary” as used in this Agreement will refer to the Base Salary as it may be so adjusted.
(b)Bonus. For calendar year 2013 and each subsequent calendar year during the Employment Period, the Executive will be eligible to receive a target cash bonus of 100% of the Executive's Base Salary for such year (the “Target Bonus”); provided, that in no event will the aggregate bonus paid to the Executive for any year (the “Bonus”) exceed two times the Executive's Base Salary for such year. Any bonus paid to the Executive by an Applicable Company other than Employer for calendar year 2013 or any subsequent calendar year during the Employment Period will reduce the amount of the Bonus that the Executive is eligible to receive from Employer under this Section 4(b). The Bonus, if any, payable with respect to services performed in any calendar year will be paid prior to March 15th of the year following the year to which such service relates. The Executive acknowledges that payment of any Bonus to the Executive is discretionary and may be made subject to the achievement of one or more performance objectives.
(c)Benefits. During the Employment Period, the Executive, and his dependents, if applicable, will be entitled to participate in and be covered on the same basis as other senior executives of Employer, under all employee benefit plans and programs of Employer, including without limitation vacation, retirement, health insurance and life insurance.
(d)Vacation. During the Employment Period, the Executive will be entitled to paid vacation and/or paid time off in accordance with the plans, policies, programs and practices of Employer provided generally to other senior executives of Employer.
(e)Perquisites. During the Employment Period, Employer will provide the Executive with those perquisites and other personal benefits provided by Employer from time to time to its other senior executive officers during the Employment Period.
(f)Business Expenses. The Company will promptly pay or reimburse the Executive for reasonable expenses incurred in connection with the Executive's employment in accordance with Employer's standard policies and practices as in effect from time to time.
(g)Equity Awards. As part of the consideration for the Executive's services to be provided pursuant to this Agreement, the Company and 猫咪社区 Interactive, as applicable, have approved the grant to the Executive of the following equity awards, which grants will be made to the Executive on November 8, 2012 pursuant to separate grant agreements dated as of such date, substantially in the form previously provided to the Executive (collectively, the “Initial Grants”), (i) options to acquire 516,443 shares of 猫咪社区 Interactive's Series A 猫咪社区 Interactive common stock, (ii) 90,377 restricted shares of 猫咪社区 Interactive's Series A 猫咪社区 Interactive common stock, (iii) options to acquire 26,010 shares of 猫咪社区 Interactive's Series A
猫咪社区 Ventures common stock, (iv) 4,552 restricted shares of 猫咪社区 Interactive's Series A 猫咪社区 Ventures common stock, (v) options to acquire 110,696 shares of the Company's Series A 猫咪社区 Capital common stock, and (vi) 19,372 restricted shares of the Company's Series A 猫咪社区 Capital common stock. The Initial Grants will terminate and be forfeited in their entirety upon termination of the Consulting Services pursuant to Section 2(a) without the Executive contemporaneously becoming an employee of Employer and 猫咪社区 Interactive in accordance with the terms of this Agreement.
(h)Entirety of Compensation. The compensation payable to the Executive pursuant to this Agreement, together with the Initial Grants, constitutes the entire compensation payable to Executive in respect of the services to be provided by the Executive to the Applicable Companies.
(i)Code Section 409A Timing of Reimbursements. All reimbursements under this Agreement, including without limitation Section 4(f), will be made as soon as practicable following submission of a reimbursement request, but no later than the end of the year following the year during which the underlying expense was incurred. Additionally, reimbursements or in-kind benefits made or provided to the Executive during any taxable year will not affect the expenses eligible for reimbursement or in-kind benefits provided in any other taxable year and no such reimbursements or in-kind benefits will be subject to liquidation or exchange for another benefit.
5.Termination of Employment.
(a)Termination Due to Death. In the event of the Executive's death during the Employment Period, the Executive's estate or his legal representative, as the case may be, will receive from Employer: (i) a lump sum payment equal to any Base Salary earned but unpaid as of the date of Separation; (ii) a lump sum payment of any unpaid expense reimbursement and any amounts required by law to be paid to the Executive; (iii) a lump sum payment of any accrued but unpaid Bonus for the prior year; and (iv) a lump sum payment of the Severance Payment. All such payments will be made on the 53rd day after the effective date of the Executive's Separation, unless that day is not a day on which banking institutions in Denver, Colorado are open for business (a “business day”), in which case such payments will be made on the immediately succeeding business day.
(b)Termination Due to the Executive's Disability. Upon 30 days' prior written notice to the Executive, Employer may terminate the Executive's employment with Employer due to Disability. If such event occurs during the Employment Period, the Executive or his legal representative, as the case may be, will receive: (i) a lump sum payment equal to any Base Salary earned but unpaid as of the date of Separation; (ii) a lump sum payment of any unpaid expense reimbursement and other amounts required by law to be paid to the Executive; (iii) a lump sum payment of any accrued but unpaid Bonus for the prior year; and (iv) a lump sum payment of the Severance Payment. All such payments will be made on the 53rd day after the effective date of the Executive's Separation or, if that day is not a business day, on the next succeeding business day.
(c)Termination by Employer Without Cause or by the Executive for Good Reason. Upon 30 days' prior written notice to the Executive, Employer may terminate the Executive's employment with Employer without Cause. Upon 30 days' prior written notice to Employer, the Executive may terminate his employment with Employer for Good Reason. If either such event occurs during the Employment Period the Executive will receive: (i) a lump sum payment equal to any Base Salary earned but unpaid as of the date of Separation; (ii) a lump sum payment of any unpaid expense reimbursements and any amounts required by law to be paid to the Executive; (iii) a lump sum payment of any accrued but unpaid Bonus for the prior year and (iv) a lump sum payment of the Severance Payment. All such payments will be made on the 53rd day after the effective date of the Executive's Separation or, if that day is not a business day, on the next succeeding business day.
(d)Termination For Cause. Subject to the provisions of Section 1(d), Employer may terminate the Executive's employment with Employer for Cause. In such event, the Executive will receive: (i) a lump sum payment equal to any Base Salary earned but unpaid as of the date of Separation; and (ii) a lump sum payment of any unpaid expense reimbursements and any amounts required by law to be paid to the Executive. All such payments will be made on the 45th day after the Separation date or, if that day is not a business day, on the next succeeding business day.
(e)Termination Without Good Reason. Upon 30 days' prior written notice to Employer, the Executive will have the right to terminate his employment with Employer without Good Reason or any reason at all. In such event, the Executive will receive: (i) a lump sum payment equal to any Base Salary earned but unpaid as of the date of Separation; (ii) a lump sum payment of any accrued but unpaid Bonus for the prior year; and (iii) a lump sum payment of any unpaid expense reimbursements and any amounts required by law to be paid to the Executive. All such payments will be made on the 45th day after the effective date of the Executive's Separation or, if that day is not a business day, on the next succeeding business day.
(f)Specified Employee. Notwithstanding any other provision of this Agreement, if (i) the Executive is to receive payments or benefits under Section 5 by reason of his Separation other than as a result of his death, (ii) the Executive is a “specified employee” with respect to Employer within the meaning of Section 409A of the Code on the date of Separation, and (iii) such payment or benefit would otherwise subject the Executive to any tax, interest or penalty imposed under Section 409A of the Code (or any regulation promulgated thereunder) if the payment or benefit were to commence within six months after a termination of the Executive's employment, then such payment or benefit required under Section 5 will instead be paid as provided in this Section 5(f). Each severance payment contemplated under this Section 5 will be treated as a separate payment in a series of separate payments under Treasury Regulation Section 1.409A-2(b)(2)(iii). Such payments or benefits which would have otherwise been required to be made during such six month period will be paid, without interest, to the Executive in one lump sum payment or otherwise provided to the Executive on the first business day that is six months and one day after the termination of the Executive's employment. Thereafter, the payments and benefits will continue, if applicable, for the relevant period set forth above. For purposes of this Agreement, all references to “Separation,” “termination of employment” and other similar language will be deemed to refer to the Executive's “separation from service” with Employer as
defined in Treasury Regulation Section 1.409A-1(h), including, without limitation, the default presumptions thereof.
(g)Full Settlement; No Mitigation. Employer's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder will not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Employer or any Affiliate may have against the Executive. In no event will the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.
(h)Non-exclusivity of Rights. Nothing in this Agreement will prevent or limit the Executive's continuing or future participation in any employee benefit plan, program, policy or practice provided by Employer or an Affiliate and for which the Executive may qualify, except as specifically provided herein. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of Employer or an Affiliate at or subsequent to a Separation will be payable in accordance with such plan, policy, practice or program, except as explicitly modified by this Agreement.
(i)Termination of Employment with 猫咪社区 Interactive or Starz. The Executive's employment with, provision of services to, or status as an officer or the General Counsel of, 猫咪社区 Interactive or Starz may be terminated at any time, with or without cause or for any reason at all, and without any liability to the Executive, it being acknowledged that the provisions of this Section 5 do not apply to any such termination; provided, however, that notwithstanding anything in this Agreement to the contrary, any such termination shall not in and of itself result in a diminution, reduction or termination of the Executive's Base Salary, Bonus potential or other benefits to which the Executive is entitled under this Agreement.
(j)Release Condition. If the Executive's employment hereunder is terminated pursuant to Section 5(a), Section 5(b) or Section 5(c), the payment by Employer to the Execu