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Re:
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Amended and Restated Employment
Agreement
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On behalf of Lions
Gate Films Inc. (the “Company”), this letter is to
confirm the terms of your employment by the Company. We refer to
you herein as “Employee.” The employment agreement
entered into as of March 28, 2007 between Employee and the
Company (the “Prior Employment Agreement”), is hereby
amended and restated in its entirety. The terms of Employee’s
employment are as follows:
(a) The
term of this agreement (this “Agreement”) will begin
April 1, 2007 (the “Effective Date”) and end
April 1, 2011, subject to early termination as provided in
this Agreement (the “Term”). During the Term of this
Agreement, Employee will serve as President and Chief Operating
Officer, subject to the following:
(i) in the
event that the Company hires a senior executive with
responsibilities extending over Lions Gate Films, the Company may
change Employee’s title to Co-Chief Operating
Officer;
(ii) in
the event that the Company’s current CEO takes on the title
of Chief Operating Officer as the result of a merger or acquisition
or other transaction, Employee agrees to relinquish the title of
Chief Operating Officer; and
(iii) in
the event that there is material growth of the Company, by means of
strategic transactions or otherwise, the Company, subject to good
faith consultation with Employee, may change his title and
responsibilities without breach of this Agreement; provided,
however, that the new title will not be less than President of a
division which encompasses more than Home Entertainment.
Employee shall
report to the CEO of the Company, currently Jon Feltheimer, or
his/her designee, consistent with the provisions above. Employee
shall render such services as are customarily rendered by persons
in Employee’s capacity in the motion picture and home video
industries and as may be reasonably and lawfully requested by the
Company.
(b) So
long as this Agreement shall continue in effect, Employee shall
devote
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Employee’s full business time, energy and
ability exclusively to the business, affairs and interests of the
Company and matters related thereto, shall use Employee’s
best efforts and abilities to promote the Company’s
interests, and shall perform the services contemplated by this
Agreement in accordance with policies established by the
Company.
(a)
Salary . The following base salary will be paid to Employee
during the Term of this Agreement:
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(i)
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April 1, 2007 through
March 31, 2008 — the rate of SIX HUNDRED THOUSAND
DOLLARS ($600,000.00) per year (“Base Salary — Period
1”), payable in accordance with the Company’s normal
payroll practices in effect.
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(ii)
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April 1, 2008 through the end
of the Term — the rate of SEVEN HUNDRED FIFTY THOUSAND
DOLALRS ($750,000.00) per year (“Base Salary — Period
2”), payable in accordance with the Company’s normal
payroll practices in effect.
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(b)
Payroll . Nothing in this Agreement shall limit the
Company’s right to modify its payroll practices, as it deems
necessary.
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(i)
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EBITDA Bonus.
During the Term,
Employee shall be entitled to receive an annual bonus on the
Company attainment of an EBITDA target (the “E Target”)
if such E Target is attained in the following amounts:
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(A)
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If
the Company attains at least 105% of the E Target, Employee shall
receive 12.5% of his Base Salary;
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(B)
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If
the Company attains at least 115% of the E Target, Employee shall
receive an additional 12.5% of his Base Salary.
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For each fiscal
year of the Term, the Company shall designate the upcoming
year’s E Target after it is approved by the Company’s
Board of Directors, on or before April 1 of the applicable fiscal
year, or as soon thereafter as approved by the Board of Directors,
and it shall notify Employee in writing of such E Target for the
fiscal year to which the E Target applies. The E Target shall not
be greater than the E Target for other Presidents receiving a
similar bonus based on an EBITDA target. The fiscal year commences
April 1 of each year. The Company shall establish a
reserve
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amount for
uncollectible receivables equal to 2% (the “E
Reserve”). The E Target shall include the E Reserve. For each
portion of a fiscal year that Employee is employed by Company,
Employee shall be entitled to a pro-rata portion of the E Bonus, if
and when earned. Any bonus payable to Employee hereunder shall be
paid within thirty (30) days following the end of the audit
for the applicable fiscal year and in all events within the
“short-term deferral” period provided under Treasury
Regulation Section 1.409A-1(a)(4) (generally within two
and one-half months after the end of the fiscal year for which the
bonus is paid).
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(ii)
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During the Term, Employee shall be
entitled to receive performance bonuses at the full discretion of
the CEO of the Company. Employee must be employed with the Company
through the last day of the bonus year to be eligible to receive a
discretionary performance bonus for that year, and any such bonus
will be paid within the “short-term deferral” period
provided under Treasury Regulation
Section 1.409A-1(a)(4).
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As an employee of
the Company, Employee will continue to be eligible to participate
in all benefit plans to the same extent as other salaried employees
subject to the terms of such plans.
(a) Employee
shall be entitled to take paid time off without a reduction in
salary, subject to (i) the approval of the CEO, which shall
not be unreasonably withheld, and (ii) the demands and
requirements of Employee’s duties and responsibilities under
this Agreement. There are no paid vacation days.
(b) Employee
will be eligible to be reimbursed for any business expenses in
accordance with the Company’s current Travel and
Entertainment policy.
(c) In
addition, Employee shall be entitled to (i) business class
travel for flights in excess of four (4) hours; (ii) all
customary “perqs” of division heads within the Company;
(iii) a cell phone, which may be expensed; (iv) a
reserved parking space; and (v) reimbursement for all expenses
reasonably incurred in connection with his employment.
(d) The
Company reserves the right to modify, suspend or discontinue any
and all of the above referenced benefits, plans, practices,
policies and programs (including those in Section 3) at any
time (whether before or after termination of employment) without
notice to or recourse by Employee so long as action is taken in
general with respect to other similarly situated persons and does
not single out Employee.
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(i)
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The
Company shall request that the Compensation Committee of Lions Gate
(“CCLG”) authorize and grant Employee 212,500
restricted share units (“Time-Based Grant”) of Lions
Gate Entertainment Corp. in accordance with the terms and
conditions of the existing and/or future Employee Stock Plan
(collectively, the “Plan”). Employee acknowledges that
this Time-Based Grant of stock is subject to the approval of the
CCLG. The award date (“Award Date”) shall be the date
of the board meeting when the Time-Based Grant is
approved.
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(ii)
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Vesting . Notwithstanding Section 5(d) and
(e), and subject to Section 5(a)(iii) below, the Time-Based
Grant shall vest as follows:
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(A)
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the
first 53,125 restricted share units of the Time-Based Grant will
vest on the 1 st anniversary of the Award
Date;
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(B)
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an
additional 53,125 restricted share units of the Time-Based Grant
will vest on the 2 nd anniversary of the Award
Date;
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(C)
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an
additional 53,125 restricted share units of the Time-Based Grant
will vest on the 3 rd anniversary of the Award
Date;
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(D)
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the
final 53,125 restricted share units of the Time-Based Grant will
vest on the 4th anniversary of the Award Date.
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(iii)
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Continuance of Employment
. The vesting schedule
in Section 5(a)(ii) above requires continued employment or
service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Time-Based Grant and
the rights and benefits under this Agreement.
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(i)
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The
Company shall request that the CCLG authorize and grant Employee
212,500 restricted share units (“Performance Grant”
and, together with the Time-Based Grant, the “Grants”)
of Lions Gate Entertainment Corp. in accordance with the Plan.
Employee acknowledges that this Performance Grant of stock is
subject to the approval of the CCLG.
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(ii)
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Vesting . Notwithstanding Section 5(d) and
(e), and subject to Section 5(b)(iii) below, the Performance
Grant shall be eligible to vest based on the following schedule
(each, a “Performance Vesting Date”):
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(A)
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the
first 53,125 restricted share units of the Performance Grant shall
be eligible to vest on March 31, 2008;
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(B)
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an
additional 53,125 restricted share units of the Performance Grant
shall be eligible to vest on March 31, 2009;
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(C)
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an
additional 53,125 restricted share units of the Performance Grant
shall be eligible to vest on March 31, 2010;
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(D)
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the
final 53,125 restricted share units of the Performance Grant shall
be eligible to vest on March 31, 2011.
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The
vesting of the Performance Grant on such Performance Vesting Dates
shall be subject to satisfaction of annual Company performance
targets approved in advance by the CCLG for the twelve
(12) month period ending on such Performance Vesting Date. The
Performance Grant shall vest on a sliding scale basis if the
Company’s performance targets have not been fully met for a
particular year. For purpose of example only, if seventy-five
percent (75%) of Company’s targets have not been met for a
particular year, seventy-five percent (75%) of the Performance
Grant for that year would vest. Notwithstanding the foregoing, the
CCLG may, in its sole discretion, provide that any or all of the
Performance Grant scheduled to vest on any such Performance Vesting
Date shall be deemed vested as of such date even if the applicable
performance targets are not met. Furthermore, the CCLG may, in its
sole discretion, provide that any of the Performance Grant
scheduled to vest on any such Performance Vesting Date that do not
vest because the applicable performance targets are not met may
vest on any future Performance Vesting Date if the performance
targets applicable to such Performance Vesting Date are
exceeded.
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(iii)
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Continuance of Employment
. The vesting schedule
in Section 5(b)(ii) above requires continued employment or
service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Performance Grant and
the rights and benefits under this Agreement.
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(i)
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The
Company shall also request that the CCLG authorize and grant
Employee the right (the “Option”) to purchase 425,000
common shares of Lions Gate Entertainment Corp. in accordance with
the Plan. Employee acknowledges that this Option grant of stock is
subject to the approval of the CCLG. The award date (“Option
Award Date”) shall be the date of the board meeting when the
Option is approved.
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(ii)
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Vesting . Notwithstanding Section 5(d) and
(e), and subject to Section 5(c)(iii) below, the Option shall
vest as follows:
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(A)
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the
Option to purchase 106,250 common shares will vest on the 1
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anniversary of the
Option Award Date;
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(B)
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the
Option to purchase an additional 106,250 common shares will vest on
the 2 nd anniversary of the Option Award
Date;
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(C)
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the
Option to purchase an additional 106,250 common shares will vest on
the 3 rd anniversary of the Option Award
Date;
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(D)
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the
Option to purchase the final 106,250 common shares will vest on the
4 th anniversary of the Option Award
Date.
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(iii)
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Continuance of Employment
. The vesting schedule
in Section 5(c)(ii) above requires continued employment or
service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Option and the rights
and benefits under this Agreement.
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(d)
Acceleration of Grants and Options upon Death of Employee.
In the event that Employee dies during the Term of this Agreement,
all Grants and Options granted pursuant to Sections 5(a)-(c)
of this Agreement shall accelerate and immediately become fully
vested.
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(i)
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If
a Change of Control occurs during the Term of this Agreement and
concludes on or after April 1, 2008, all Grants and Options
granted pursuant to Sections 5(a)-(c) of this Agreement shall
accelerate and immediately become fully vested.
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(ii)
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For
the purposes of this Agreement, “Change of Control”
shall mean:
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(A)
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if
any person, other than a trustee or other fiduciary holding
securities of Lions Gate Entertainment Corp. (“LGEC”)
under an employee benefit plan of LGEC, becomes the beneficial
owner, directly or indirectly, of securities of LGEC representing
33% or more of the outstanding
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