AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
AMENDED AND
RESTATED EMPLOYMENT AGREEMENT, made as of January 1, 2009 (the
“ Restatement Date ”), between CKX, Inc., a
Delaware corporation (the “ Employer ”), and
Robert F.X. Sillerman (the “ Executive
”).
WHEREAS, the
Employer and the Executive entered into that certain Employment
Agreement, dated as of February 8, 2005, between the Employer
and the Executive, which was amended and restated as of
January 10, 2008 (as so amended and restated, the “
Employment Agreement ”);
WHEREAS, the Board
of Directors of the Employer (the “ Board ”)
originally determined that it is in the Employer’s interest
to enter into the Employment Agreement with the executive in order
to secure, and in the future to be assured of, the
Executive’s abilities, services, and judgment as a member of
senior management of the Employer, upon the terms and provisions
and subject to the conditions stated in this agreement;
and
WHEREAS, the Board
and the Executive desire to amend and restate the Employment
Agreement as of the Restatement Date in order to comply with
Section 409A of the Internal Revenue Code of 1986 (as amended
from time to time, the “ Code ”) and final
regulations issued under Section 409A.
NOW, THEREFORE,
the Employer and the Executive agree as follows:
1.
Employment . Upon the terms and subject to the conditions of
this agreement, the Employer employs the Executive, and the
Executive accepts employment.
2. Term;
Dates . The term of the Executive’s employment shall
commence on February 8, 2005 and continue until the sixth
annual anniversary thereof (the “ Employment Agreement
Term ”), unless earlier terminated or renewed in
accordance with this agreement.
2.1 This agreement
refers to the dates defined in this section, as follows:
(i) the date of commencement of employment is the
“Effective Date”; (ii) the period of time during
which the Executive is an employee of the Employer pursuant to and
in accordance with the terms and provisions of this agreement is
hereinafter referred to as the “Term”; and
(iii) the last date of employment is the “Expiration
Date.”
3.
Executive’s Position, Duties, and Authority . The
Employer shall employ the Executive, and the Executive shall serve
as Chief Executive Officer of the Employer, and in such other
positions with the Employer and its subsidiaries that are
reasonably acceptable to the Executive. The Executive shall have
executive duties, functions, authority, and responsibilities
commensurate with the office or offices he from time to time holds
with the Employer in a corporation that is public, subject, in
accordance with applicable law, to the supervision and direction of
the Board.
3.1 During the
Term and prior to the Expiration Date, the Employer shall use its
best efforts to have the Executive nominated to serve on the Board
or other governing body of the Employer. If the Employer, including
any successor, forms any Executive Committee of the Board or
similar senior management committee or group which is approved or
otherwise recognized by the Board during the Term, the Executive
shall be a member of such committee or group. The Executive shall
have no obligation to serve or continue to serve: (i) on the
Board or any committee of the Board; or (ii) as an officer or
director of any subsidiary or affiliate of the Employer, in the
event that the Employer or any such subsidiary or affiliate of the
Employer or any of their respective successors fails to provide and
maintain to and on behalf of the Executive indemnification rights
no less beneficial to the Executive than those provided by
Section 10 of this agreement and, to the extent more
beneficial to the Executive now or in the future, every right to
indemnification and defense of an officer or director of any entity
formed and existing under the laws of the State of Delaware. The
future occurrence of any event described in the preceding sentence,
or the Employer’s failure within a reasonable time to
reimburse the Executive pursuant to and in accordance with the
terms and provisions in Section 8 for all expenses
reasonably incurred in the course of fulfilling his duties and
responsibilities as a director and/or officer of the Employer, any
subsidiary or affiliate of the Employer or any of their respective
successors, additionally, and immediately, shall constitute a
Constructive Termination of the Executive without Cause as such
term is defined in this agreement.
3.2 The Executive
agrees to tailor his conduct with the written employment policies
which the Employer generally applies to all of its employees, and
additionally agrees that the Employer may make necessary and
reasonable amendments to its policies from time to time during the
Term, to the extent not inconsistent with the terms of this
agreement. The Executive and the Employer agree that these policies
supplement, but do not amend or otherwise modify, the express terms
of this agreement in the manner authorized by
Section 17.5 of this agreement.
3.3 The Executive
acknowledges that during the Term, the Employer may, without the
necessity of obtaining the Executive’s consent, implement one
or more corporate reorganizations for financial, tax, or related
business reasons which do not constitute a Change in Control as
such event is defined in Section 12.2 of this
agreement. The Executive agrees that, so long as any such
reorganization does not constitute a Change in Control, the
reorganized Employer shall be deemed the Employer for all purposes
in connection with this agreement, and without a requirement that
additional consideration be delivered to the Executive in
connection with the reorganization.
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Occupation . The Executive shall devote his working time to the
business and affairs of the Employer and to the fulfillment of his
duties under this agreement in a diligent and competent fashion,
consistent with industry standards.
4.1 The Employer
acknowledges and agrees that during the Term:
(a) the
Executive may wish to continue, or commence, service as a director
and officer (or in a similar capacity) on the governing body of
other business entities whose business is not competitive with that
of the Employer or any of its subsidiaries; and
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(b) the
Executive agrees that his service as described in
Section 4.1(a) shall be subject to the approval of the
Employer’s Board, so long as the Board’s discretion is
not applied unreasonably.
Where the Board
declines to approve the commencement of the Executive’s
service or his continued service, or the Board withdraws its
approval for the continuation of the Executive’s service as
described in Section 4.1(a), the Executive agrees that
he will resign from such position, or withdraw himself from
consideration. The Executive and Employer agree that nothing in
this Section 4.1 applies to the Executive’s
membership or contribution of his non-working time or services, in
a non-remunerative capacity, to any: charitable or educational
organization, foundation, or association; political organization or
campaign; religious group, foundation, or organization; or
non-profit trade, professional, community, or recreational
organization or club, so long as the purpose or aim of any such
organization presents no conflict with the business of the
Employer, as determined by the Board.
4.2 The Employer
acknowledges and agrees that during the Term, the Executive may
devote a portion of his business time to personal investments and
outside business commitments, provided, however that:
(a) such activities do not conflict with the business of
Employer, (b) such activities do not interfere, directly or
indirectly, with the performance by the Executive of his
obligations under this Agreement, and (c) such activities do
not result in a breach by the Employer of any non-competition or
any other similar type of agreement to which the Employer, or its
officers or directors, may be a party.
4.3 No provision
of this agreement shall be construed to prohibit the
Executive’s: (a) acquisition, ownership, or trading,
including without limitation the Executive’s indirect
ownership, of less than five percent (5%) of the issued and
outstanding stock (or comparable bonds, options, derivatives, or
negotiable instruments) of a business entity having securities
publicly traded anywhere in the world; or (b) passive
ownership of stock, partnership interests, or comparable ownership
interests or securities in any for-profit private business entity
that is not directly competitive with the business of the Employer
or any of its subsidiaries. The Employer additionally agrees that
nothing in this agreement shall operate to prohibit the
Executive’s acceptance of a testamentary gift, bequest, or
its equivalent, nor the Executive’s retention of any such
gift, bequest, or its equivalent following its delivery, so long as
the Executive retains the interest(s) solely for investment
purposes.
4.4
Notwithstanding anything contained in this Section 4 ,
the Employer acknowledges and agrees that the Executive shall be
entitled to continue to participate in the investments and
activities set forth on Schedule 4.4 attached hereto. In
addition, Executive shall, and shall be entitled to, accept the
positions of Chairman and Chief Executive Officer of FX Real Estate
and Entertainment Inc. (“ FXREE ”) and to take
all actions and provide all services for and on behalf of FXREE as
shall be necessary and appropriate thereto. Executive acknowledges
that Employer is both consenting to and requiring such appointment
in furtherance of Employer’s obligations under that certain
Shared Services Agreement dated as of December 31, 2007 (the
“ Shared Services Agreement ”) by and between
the Employer and FXREE. In connection therewith, Executive agrees
to provide, when requested by Employer, a reasonable estimate of
the allocation of his time spent in furtherance of his duties for
FXREE to allow for an accurate accounting of costs under
Section 3.1(a) of the Shared Services Agreement.
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5.
Location of Employment . Unless the Executive otherwise
consents in writing, the usual place for the performance of his
services shall be the Employer’s principal office located in
the Borough of Manhattan, New York, New York, or such other
location within Manhattan or Nassau County, New York, as
established by the Employer. In addition, the Executive may perform
his services in Southampton, New York, provided, that there is no
additional cost to the Employer beyond those that would otherwise
be reimbursed pursuant to Section 8 hereof.
6. Base
Salary . During the Term, the Employer shall pay or cause to be
paid to the Executive an initial annualized base salary (the
“ Base Salary ”), payable in equal installments
during each year of the Term, equal to (x) Six Hundred Fifty
Thousand Dollars ($650,000) (the “ Base Amount
.” less (y) the total value of all fringe benefits,
perquisites or other amounts (“ Perquisites ”)
that the Employer and the Executive agree at the beginning of each
year will be provided to the Executive for such year (whether or
not paid in cash) and that the Employer is required
to report as compensation to the Executive on Form W-2.
If the total of the Base Salary plus the Perquisites received by
the Executive in any year of the Term exceeds the Base Amount, an
amount equal to the excess compensation received by the Executive
for such year shall be deducted on a pro-rata basis from the
Executive’s Base Salary during the first two and one-half
months of the following year. The Base Amount shall be increased
upon each anniversary of the date of this agreement by an amount
equal to the greater of: (a) five percent (5%) of the Base
Amount then in effect; or (b) the product derived by
multiplying: (i) the Base Amount then in effect; by
(ii) the percentage increase in the Consumer Price Index
published by the federal Bureau of Labor Statistics for the New
York, New York metropolitan area during the previous twelve
(12) full calendar months. The Board additionally shall review
the Executive’s Base Amount at least annually and the Board
may increase, but not decrease, the Base Amount in an amount
greater than the increase required by the preceding
sentence.
6.1
Notwithstanding Section 6 above, the Employer shall
provide the Executive with a full-time driver in addition to the
Base Salary.
6.2 The Executive
authorizes the Employer to deduct from the Base Salary and any
other consideration payable in cash to the Executive pursuant to
this agreement all tax withholdings, tax related deductions, or
other governmentally imposed charges against income as may be
required by law.
6.3 The Executive
acknowledges that his attendance and participation in executive
retreats, seminars, motivational or instructional programs, and
business, corporate, and employee relations training may be
requested by the Employer during the Employment Agreement Term. In
such event, the Executive agrees that he in good faith will make
reasonable efforts to attend and participate in such events,
provided that the Executive will not be required to attend or
participate in more than two such events in any calendar
year.
6.4 The Executive
shall be eligible to accrue the equivalent of six (6) weeks
vacation during each full year of the Term, in accordance with the
accrual methodology and vacation day accrual limitations in the
vacation leave policy applied by the Employer to its employees,
except that the Employer will credit the Executive
for his full annual accrual at the commencement of each full year
of the Term, i.e. , not on a proportional basis during the
course of each year of the Term. The Executive additionally shall
be entitled to remain away from work for as many or as
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few days as
required by the Executive due to the Executive’s bona fide
illness, subject to the provisions of Section 13 of
this agreement. The Executive may observe any legal holidays, other
holidays recognized by the Employer, and religious holidays that
the Executive deems appropriate, in the sound exercise of his
business judgment.
7. Bonus
and Option Grants.
7.1 The Executive
shall be eligible to receive an annual discretionary bonus payable
in any combination of cash, stock or restricted stock, stock
options, and/or other consideration beneficial to the Executive
during the continuance of the Executive’s employment
hereunder (the “ Bonus ”), after and pursuant to
the affirmative recommendation of the Compensation Committee of the
Board. The Employer’s decision to make or to not make a
discretionary bonus payment to the Executive in any year
(including, without limitation, the consideration to be received or
methodology applied by the Employer to a discretionary bonus
eligibility determination in any year) shall have no bearing on the
Executive’s eligibility to earn a bonus in any succeeding
year, nor shall the amount, form, or payment timing of any such
discretionary bonus in any year have any bearing on any aspect of a
discretionary bonus determination in any subsequent
year.
8.1 The Employer
shall reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive during the Term in the
performance of the Executive’s services. The Employer shall
make reimbursement within a reasonable time following the
Executive’s presentation of expense statements, vouchers,
receipts, or such other supporting information as the Employer
reasonably may require from the Executive. The Executive
acknowledges that the Employer’s policies regarding the
documentation of expenses for which reimbursement is sought may
change from time to time, and the Executive agrees that he will
comply with the Employer’s reasonable documentation
requirements, provided that each and every reimbursement due
hereunder shall be requested and paid not later than two years
after being incurred.
8.2 The Executive
at all times shall be entitled to: (a) travel in first class
seating (or its equivalent) on a reputable airline when the
Executive travels on domestic flights up to three hours in length
in connection with the Employer’s business; (b) charter
a private flight when the Executive travels internationally or on
domestic flights in excess of three hours in length in connection
with the Employer’s business; (c) to hotel
accommodations while outside New York on business at a full-service
hotel offering a hotel suite with sufficient space, furnishings,
and technological facilities and appointments for the
Executive’s comfortable and productive work in the room; and
(d) private car service when required to travel in connection
with the Employer’s business, attend business meetings, or
work or attend functions outside of normal business hours or on
weekends or holidays.
8.3 In the event
that the Employer’s business requirements cause or require
the Executive to cancel personal vacation or travel plans for which
the Executive or any member of his family is unable to obtain a
full refund of any deposit or comparable amount expended by the
Executive in advance, the Employer agrees that it will reimburse to
the Executive, in accordance
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with the
process described in Section 8.1 , the full amount not
refunded or refundable to the Executive or any such family
member.
9.1 During the
Term, the Executive shall be eligible to participate in any
pension, profit sharing, incentive stock option, stock purchase,
stock grant program or plan, and retirement savings program or plan
established by the Employer or any of its subsidiaries for which
the Executive provides services hereunder (“ Participating
Subsidiaries ”), including, without limitation, any such
program or plan offered by the Employer or Participating
Subsidiaries to its executive or non-executive employees. The
Executive additionally shall be eligible to participate in any
group life insurance, hospitalization, medical, health and
accident, dental, disability, or similar plan or program made
available by the Employer or Participating Subsidiaries to its
executive or non-executive employees. The Executive acknowledges
that his participation in any benefit plan described in this
Section 9.1 may require, where required from other
senior executives of the Employer or Participating Subsidiaries,
the Executive’s co-payment of a periodic premium as a
deduction from the Base Salary payable to him. The Executive
additionally acknowledges that the Executive’s actual ability
to participate in any program, plan, or other benefit opportunity
in which the Executive otherwise is eligible to participate
ultimately may be determined and governed by the terms and
conditions of a third-party provider’s plan or program, and
the Executive affirms that any third-party’s decision denying
the Executive’s participation in a particular program or
plan, the provision of coverage or a benefit in respect of a
particular circumstance or expense, or a comparable decision
adversely affecting the Executive shall not constitute a breach of
this agreement by the Employer, so long as the Employer does not
offer, designate, or select a program or plan with the actual
intention of excluding the Executive’s eligibility or
participation in the opportunity.
9.2 The Executive
acknowledges that the Employer may, as it deems appropriate, seek,
obtain, and maintain during all or part of the Term insurance
connected with the life of the Executive, and for the benefit of
the Employer. In the event that the Employer elects to do so, the
Executive agrees: to provide any medical information required by
the insurer issuing such coverage; to submit no more frequently
than semi-annually to any medical examination required by the
insurer in connection with the granting or renewal of such
coverage; and to otherwise cooperate reasonably with the
Employer’s attempts to obtain such coverage. Any
insurer’s rejection of an application submitted by the
Employer connected with this Section 9.2 in no event
shall constitute a breach of this agreement by the Executive, and
the Employer shall not request nor in another manner seek any
information from the Executive, the insurer, or any other person(s)
connected with the rejection.
9.3 The Employer
agrees that in the event of the Executive’s death during the
Term, the Employer will pay to the Executive’s estate the
following, which shall be distributed in accordance with the
Executive’s will or testamentary plan, as directed by any
court having jurisdiction over such estate, or as directed by any
duly appointed administrator or executor of the Executive’s
estate:
(a) all
earned but unpaid Base Salary at the time of the Executive’s
death, plus an amount equal to three times the Base Salary
in effect at the time of the Executive’s death,
with
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the Employer
making both of such payments as soon as practicable but not later
than the March 15th immediately after the end of the calendar year
in which Executive’s death occurs;
(b) the full
costs relating to the continuation of any group health, dental, and
life insurance program or plan provided through the Employer in
which the Executive participated at the time of his death, and
through which coverage was provided to any dependent(s) of the
Executive at the time of the Executive’s death, for a period
of three (3) years following his death, without regard to the
availability or expiration of any continuation option or feature
provided by the program(s) or plan(s), or as otherwise provided to
a lesser extent by applicable law at the time of the
Executive’s death; and
(c) the
Employer additionally shall cause any stock options, restricted
stock or other equity-based instruments that previously were issued
to the Executive to vest fully and shall take all action necessary
to cause the assignment or transfer of such options, securities or
other instruments as directed by the Executive’s will or
testamentary plan, or as directed by any duly appointed
administrator or executor of the Executive’s
estate.
The Executive
acknowledges that the Employer at its option may, in the sole
exercise of its discretion, acquire and maintain a current whole
life insurance policy (“ Policy ”) on the life
of the Executive from a reputable carrier which provides
substantially equivalent benefits on behalf of the Executive in
respect of the amounts provided in Sections 9.3(a) and
(b) . Such Policy, if acquired and maintained, is intended
to meet the Employer’s obligations to the Executive pursuant
to Sections 9.3(a) and (b) . The Executive shall have
no preferred claim on, or any beneficial ownership interest in, the
Policy which will be subject to the claims of the Executive’s
general creditors under federal and state law in the event of
insolvency. While the Executive is an employee of the Employer, the
Employer shall be the named beneficiary of the Policy and the
Policy shall not be assignable. However, upon termination without
Cause, Constructive Termination without Cause or termination
following a Change in Control (all as defined in
Section 12 below), the Employer shall assign the Policy
to the Executive and, upon the assignment, the Executive shall have
all rights with respect to the Policy. Where the Employer elects to
seek such insurance coverage, the Executive agrees to provide any
medical information required by the insurer issuing such coverage;
to submit to any medical examination required by the insurer in
connection with the granting or renewal of such coverage; and to
otherwise cooperate reasonably with the Employer’s attempts
to obtain such coverage. Any insurer’s rejection of an
application submitted by the Employer in connection with this
Section 9.3 in no event shall relieve the Employer of
any of its obligations hereunder.
10.
Indemnification . The Employer shall indemnify the Executive
against all losses, claims, expenses, or other liabilities of any
nature arising by reason of the fact that he: (a) is or was a
director, officer, employee, or agent of the Employer or any of its
subsidiaries or affiliates; or (b) while a director, officer,
employee or agent of the Employer or any of its subsidiaries or
affiliates, is or was serving at the request of the Employer as a
director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another corporation,
partnership, joint venture, trust, employee benefit plan or other
entity, in each case to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may
hereafter be amended. Without limiting the generality of the
foregoing, the Executive shall be entitled in connection with his
employment and in connection with his services as an officer and
director of
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the Employer to
the benefit of the provisions relating to indemnification and
advancement of defense costs and expenses contained in the bylaws
and certificate of incorporation of the Employer, as the same in
the future may be amended (not including any amendments or
additions that limit or narrow, but including any that add to or
broaden, the protection afforded to the Executive), to the fullest
extent permitted by applicable law. The Employer shall advance to
the Executive all costs of investigation or defense incurred by the
Executive in connection with any pending or threatened claim for
which the Executive may be entitled to indemnification hereunder,
provided that the Executive shall agree to return to the Employer
any such reimbursed amounts, without interest, if it is determined
in a final, non-appealable judgment by a Court of competent
jurisdiction that the Executive is not entitled to indemnification
by the Employer for losses incurred in connection with such claim.
The indemnification obligations of the Employer shall survive from
the Effective Date of this agreement and continue until three
(3) months after the expiration of any applicable statute of
limitations with respect to any claim made against the Executive
for which the Executive is or may be entitled to indemnification
(the “ Survival Period ”), and shall survive
after the Survival Period with respect to any indemnification claim
as to which the Employer has received notice on or prior to the end
of the Survival Period. The Employer’s belief regarding a
statute of limitations applicable to a claim, any position taken by
the Employer in response to a claim, or the determination of any
judicial, quasi-judicial, or arbitral body in connection with a
claim and any statute of limitations applicable to a claim(s) shall
in no event relieve the Employer from its obligation to indemnify
the Executive. The Employer shall prepay in full, and maintain
fully during the Survival Period for the benefit of the Executive,
on an “occurrence” basis, a directors and officers
errors and omissions insurance policy, or a similar insurance
policy(ies), providing coverage from a financially reputable
carrier, in form and substance reasonably acceptable to the
Executive. Anything in this agreement to the contrary
notwithstanding, this Section 10 shall survive the
termination of this agreement for any reason.
11.
Confidential Information . The Executive acknowledges that
his employment will fully familiarize the Executive with the trade
secrets and confidential and proprietary information of the
Employer (the “ Confidential Information ”).
Examples of the Employer’s Confidential Information include,
without limitation, information regarding the Employer’s
costs, profits, markets, sa
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