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Exhibit
99.2
DREAMWORKS ANIMATION SKG,
INC.
1000 FLOWER
STREET
GLENDALE, CA
91201
September 7, 2007
Philip Cross
c/o Munger, Tolles & Olsen
LLP
355 South Grand Avenue
35 th Floor
Los Angeles, CA 90071
Attn: Rob Knauss
Dear Phil:
Upon the Commencement Date
(as defined below) DreamWorks Animation SKG, Inc.
(“Studio” or “Employer”) agrees to employ
you and you agree to accept such employment upon the terms and
conditions set forth in this agreement (“Agreement”).
Employer shall have no obligation under this Agreement unless and
until Employer has received from Employee a fully executed copy of
this Agreement (in form and substance satisfactory to
Employer).
1. Term . The
term of your employment hereunder shall commence on the date hereof
(the “Commencement Date”) and shall continue through
and including January 1, 2010. This period shall hereinafter
be referred to as the “Employment Term.”
2.
Duties/Responsibilities .
a. General . Your
title shall be “Chief Accounting Officer” of
Studio.
b. Services . During
the Employment Term you shall render your exclusive full time
business services to Studio and/or its divisions, subsidiaries or
affiliates in accordance with the reasonable directions and
instructions of the President of Studio, all as hereinafter set
forth. Employee shall report to the President of Employer
(currently, Lew Coleman). Notwithstanding the foregoing, Studio may
not require you to render services on a permanent basis outside Los
Angeles County without your consent. If Studio moves its primary
operations outside of Los Angeles County and you do not consent to
render permanent services at such new location, then you may elect
to terminate this Agreement.
3. Exclusivity
. You shall not during the Employment Term perform services for any
person, firm or corporation (hereinafter referred to collectively
as a “person”) without the prior written consent of
Studio and will not engage in any activity which would interfere
with the performance of Studio’s services hereunder, or
become financially interested in any other person engaged in the
production, distribution or exhibition of motion pictures or
television programs (including, without limitation, motion pictures
produced for, distributed to or exhibited on free, cable, pay,
satellite and/or subscription television, music and/or
interactive), anywhere in the world. Nothing contained herein shall
prevent you from owning publicly traded minority stock interests
not to exceed five percent (5%), limited partnership interests or
other passive investment interests in businesses performing any of
the aforesaid activities.
4. Compensation
.
a. Base Salary . For
all services rendered under this Agreement, Studio will pay you a
yearly base salary at a rate of Five Hundred Thousand Dollars
($500,000.00) for each full year of the Employment Term, payable in
accordance with Studio’s applicable payroll practices
(“Base Salary”).
b. Cash Incentive and
Equity-Based Compensation .
(i) You will be eligible,
while you remain employed hereunder, subject to annual approval by
the Compensation Committee, to receive an annual cash bonus award
pursuant to the terms of the Studio’s short-term incentive
plan. It is Studio’s present expectation that such annual
awards will have a value, depending on company performance, ranging
between $250,000 (bonus target) and $500,000 (in the case of
superior company performance). With respect to calendar year 2007
performance, it is Studio’s expectation that such award will
have a value, depending on company performance, ranging between
$165,000 (bonus target) and $330,000 (in the case of superior
company performance).
(ii) In addition, you will be
eligible, while you remain employed hereunder, subject to annual
approval by the Compensation Committee, to receive annual equity
incentive awards consistent with other senior executives subject to
Compensation Committee approval. It is Studio’s present
expectation that such annual awards will have an annual aggregate
grant-date value targeted at $750,000.
5. Benefits .
In addition to the foregoing, during the period of your employment
with Studio hereunder, you shall be entitled to participate in such
other, medical, dental and life insurance, 401(k), pension and
other benefit plans as Studio may have or establish from time to
time for its most senior executives. In addition, Studio shall
cover the cost of personal financial consulting services to you.
During the Employment Term, unless earlier terminated as set forth
below, you shall be entitled to coverage in accordance with
Studio’s standard leave of absence policy and shall be
entitled to vacation days and/or personal days to be taken subject
to the demands of Studio (as determined by Studio) and consistent
with the amount of days taken by other senior level executives;
provided, however, no vacation time will be accrued during the
Employment Term. The foregoing, however, shall not be construed to
require Studio to establish any such plans or to prevent the
modification or termination of such plans once established, and no
such action or failure thereof shall affect this
Agreement.
6. Business
Expenses . Studio shall reimburse you for business expenses
on a regular basis in accordance with its policy regarding the
reimbursement of such expenses for executives of like stature to
you (including travel, at Studio’s request [which, in
accordance with company policy, is currently first class], a
cellular phone and including the reimbursement or direct payment of
business phone expenses on a regular basis in accordance with
Studio’s policy regarding the reimbursement or payment of
such expenses for executives of like stature to you). During the
period of your employment with Studio hereunder, Studio will
provide you with a monthly car allowance of One Thousand Dollars
($1,000), which allowance shall be paid to you on a monthly basis
and shall be administered in accordance with Studio’s
then-current policy for similarly situated executives.
7.
Indemnification . You shall be fully indemnified and
held harmless by Studio to the fullest extent permitted by law from
any claim, liability, loss, cost or expense of any nature
(including attorney’s fees of counsel selected by you,
judgments, fines, any amounts paid or to be paid in any settlement,
and all costs of any nature) incurred by you (all such
indemnification to be on
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an “after-tax” or
“gross-up” basis) which arises, directly or indirectly,
in whole or in part out of any alleged or actual conduct, action or
inaction on your part in or in connection with or related in any
manner to your status as an employee, agent, officer, corporate
director, member, manager, shareholder, partner of, or your
provision of services to, Studio or any of its affiliated entities,
or any entity to which you are providing services on behalf of
Studio or which may be doing business with Studio. To the maximum
extent allowed by law, all amounts to be indemnified hereunder
including reasonable attorneys’ fees shall be promptly
advanced by Studio until such time, if ever, as it is determined by
final decision pursuant to Paragraph 24 below that you are not
entitled to indemnification hereunder (whereupon you shall
reimburse Studio for all sums theretofore advanced). Any tax
gross-up payments that you become entitled to receive pursuant to
this Paragraph 7 will be paid to you (or to the applicable taxing
authority on your behalf) not later than the last day of the
calendar year after the calendar year in which you remit the
related taxes.
8. Covenants
.
a. Confidential
Information . You agree that you shall not, during the
Employment Term or at any time thereafter, use for your own
purposes, or disclose to, or for any benefit of any third party,
any trade secret or other confidential information of Studio or any
of its affiliates (except as may be required by law or in the
performance of your duties hereunder consistent with Studio’s
policies) and that you will comply with any confidentiality
obligations of Studio known by you to a third party, whether under
agreement or otherwise. Notwithstanding the foregoing, confidential
information shall be deemed not to include information which
(i) is or becomes generally available to the public other than
as a result of a disclosure by you or any other person who directly
or indirectly receives such information from you or at your
direction or (ii) is or becomes available to you on a
non-confidential basis from a source which you reasonably believe
is entitled to disclose it to you.
b. Studio Ownership .
The results and proceeds of your services hereunder, including,
without limitation, any works of authorship resulting from your
services during your employment and any works in progress, shall be
works-made-for-hire and Studio shall be deemed the sole owner
throughout the universe of any and all rights of whatsoever nature
therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, with the right to use the
same in perpetuity in any manner Studio determines in its sole
discretion without any further payment to you whatsoever. If, for
any reason, any of such results and proceeds shall not legally be a
work-for-hire and/or there are any rights which do not accrue to
Studio under the preceding sentence, then you hereby irrevocably
assign and agree to assign any and all of your right, title and
interest thereto, including, without limitation, any and all
copyrights, patents, trade secrets, trademarks and/or other rights
of whatsoever nature therein, whether or not now or hereafter
known, existing, contemplated, recognized or developed by Studio,
and Studio shall have the right to use the same in perpetuity
throughout the universe in any manner Studio may deem useful or
desirable to establish or document Studio’s exclusive
ownership of any and all rights in any such results and proceeds,
including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent
that you have any rights in the results and proceeds of your
services that cannot be assigned in the manner described above, you
unconditionally and irrevocably waive the enforcement of such
rights. This Paragraph 8.b is subject to, and shall not be deemed
to limit, restrict, or constitute any waiver by Studio of any
rights of ownership to which Studio may be entitled by operation of
law by virtue of Studio or any of its affiliates being your
employer.
c. Return of Property
. All documents, data, recordings, or other property, whether
tangible or intangible, including all information stored in
electronic form, obtained or prepared by or for you and utilized by
you in the course of your employment with Studio or any of its
affiliates shall
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remain the exclusive property of Studio.
In the event of the termination of your employment for any reason,
and subject to any other provisions hereof, Studio reserves the
right, subject to Paragraph 27.b, to the extent required by law,
and in addition to any other remedy Studio may have, to deduct from
any monies otherwise payable to you the following: (i) the
full amount of any specifically determined debt you owe to Studio
or any of its affiliates at the time of or subsequent to the
termination of your employment with Studio, and (ii) the value
of Studio property which you retain in your possession after the
termination of your employment with Studio following Studio’s
written request for such item(s) return and your failure to return
such items within thirty (30) days of receiving such notice.
In the event that the law of any state or other jurisdiction
requires the consent of an employee for such deductions, this
Agreement shall serve as such consent.
d. Promise Not To
Solicit . You will not, during the period of the Employment
Term or for the period ending one (1) year after the earlier
of expiration of the Employment Term or your termination hereunder,
induce or attempt to induce any employees, exclusive consultants,
exclusive contractors or exclusive representatives of Studio (or
those of any of its affiliates) to stop working for, contracting
with or representing Studio or any of its affiliates or to work
for, contract with or represent any of Studio’s (or its
affiliates’) competitors.
9. Incapacity
.
a. In the event you are
unable to perform the services required of you hereunder as a
result of a physical or mental disability and such disability shall
continue for a period of ninety (90) or more consecutive days
or an aggregate of four (4) or more months during any twelve
(12) month period during the term hereof, Studio shall have
the right, at its option and subject to applicable state and
federal law, to terminate your employment hereunder, and Studio
shall only be obligated to pay you (a) for a period commencing
on the termination of your employment by Studio and ending on the
earlier of the expiration of the Employment Term and the second
anniversary of the termination of your employment, payments at a
rate equal to 50% of your rate of Base Salary, and, except as
otherwise provided in this Paragraph 9.a, such payments will be
payable in accordance with Studio’s regular payroll practices
applicable to similarly situated active employees, and (b) any
additional compensation (including, without limitation, any grants
of equity-based compensation made to you on or prior to the date of
termination (it being understood you will not be entitled to
receive any grants of equity-based compensation thereafter) as
determined pursuant to Paragraph 9.b below, car allowance which has
accrued prior to your termination, and expense reimbursement for
expenses incurred prior to your termination) earned by you prior to
the termination of your employment. Notwithstanding the foregoing
sentence, you further will be entitled to continuation of medical,
dental, life insurance, car allowance, and financial counseling
benefits (collectively, the “Continued Benefits”) for a
period of twelve (12) months after termination of your
employment pursuant to this paragraph (but not to exceed the end of
the then current Employment Term). Except as specifically permitted
by Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations thereunder as
in effect from time to time (collectively, hereinafter,
“Section 409A”), the Continued Benefits provided to you
during any calendar year will not affect the Continued Benefits to
be provided to you in any other calendar year. In the case of car
allowance payments, such payments will be equal to your monthly car
allowance at the time of termination of your employment and will be
made to you in equal monthly payments during such period in
accordance with Studio’s regular practice of paying a monthly
car allowance to similarly situated active employees. With respect
to any Continued Benefits for which you may become eligible under
this Paragraph 9.a or otherwise under this Agreement, if requested
by Studio during any continuation period you shall elect to treat
such Continued Benefits as being provided pursuant to the
applicable provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1986 (“COBRA”) or any similar
applicable federal or state statute. Whenever compensation is
payable to you hereunder, during or with respect
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to a time when you are partially or
totally disabled and such disability (except for the provisions
hereof) would entitle you to disability income or to salary
continuation payments from Studio according to the terms of any
plan now or hereafter provided by Studio or according to any policy
of Studio in effect at the time of such disability, the
compensation payable to you hereunder shall be reduced on a
dollar-for-dollar basis by any such disability income or salary
continuation and shall not be in addition thereto. If disability
income is payable directly to you by an insurance company under an
insurance policy paid for by Studio, the compensation payable to
you hereunder shall be reduced on a dollar-for-dollar basis by the
amounts paid to you by said insurance company and shall not be in
addition thereto.
b. Unless otherwise specified
in the applicable equity compensation plan of Studio (each such
plan, a “Plan”) or in the agreement evidencing the
grant, in each case as of the date of the grant, after termination
of employment your grants of equity-based compensation will be
determined as follows. For purposes of this Agreement, an award
will be deemed to have vested when it is no longer subject to a
substantial risk of forfeiture (within the meaning of Treasury
Regulation Section 1.409A-1(d)).With respect to grants having
performance-based vesting criteria, the amount of such award that
is eligible to vest will be determined after the end of the
performance period specified in the grant, or satisfaction of such
other criteria pursuant to the Plan, subject to the applicable
performance or other criteria, as if you had continued to remain
employed with Studio throughout such performance period. With
respect to grants having time-based vesting criteria,the full
amount of such award will be eligible to vest. A ratable portion of
the amount of each award that is eligible to vest will become
vested by multiplying such amount by a fraction, the numerator of
which is the sum of (i) your actual period of service in
months through the date of termination plus (ii) the lesser of
(A) twelve (12) months or (B) 50% of the remaining
Employment Term in months determined as of the date of termination
(but in no event will the numerator exceed the denominator), and
the denominator of which is the total performance period in months
(for grants having performance-based vesting criteria) or the total
vesting period in months (for grants having time-based vesting
criteria) specified in the grant. To avoid any double-counting, any
part of any equity-based compensation award that has vested in
accordance with the terms of the applicable award agreement shall
be credited against any part of such award that you shall be
entitled to receive or exercise pursuant to the determination set
forth in the proceeding sentence. The balance of such awards will
be forfeited. Subject to this Paragraph 9.b and to the other
terms and conditions of the grants, all stock options and any
similar equity-based awards will remain exercisable for the
remaining term of the grant. In the case of restricted stock units
that are subject to performance-based vesting criteria, such awards
will be settled on the seventieth (70 th ) day after the date that such awards become vested. With
respect to restricted stock units that are subject to time-based
vesting criteria, such awards will be settled within thirty
(30) days following your termination of
employment.
10. Death . If
you die prior to the end of the Employment Term, this Agreement
shall be terminated as of the date of death and your beneficiary or
estate shall be entitled to receive (a) your Base Salary
accrued up to and including the date of death and, thereafter, for
a period commencing on such date and ending on the earlier of the
expiration of the Employment Term and the first anniversary of such
date, continued Base Salary payable in accordance with
Studio’s regular payroll practices applicable to similarly
situated active employees, (b) equity-based compensation to be
determined in the same manner and at the same time as provided in
Paragraph 9.b, under and in accordance with any Plan, and
(c) all other benefits pro-rated up to the date on which the
death occurs.
11. Termination for
Cause . Studio shall have the right to terminate this
Agreement at any time for cause. As used herein, the term
“cause” shall mean (i) misappropriation of any
material funds or property of Studio or any of its related
companies; (ii) failure to obey reasonable and
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material orders given by the President
of Studio or by the board of directors of Studio (iii) any
material breach of this Agreement by you; (iv) conviction of
or entry of a plea of guilty or nolo contendre to a felony
or a crime involving moral turpitude; (v) any willful act, or
failure to act, by you in bad faith to the material detriment of
Studio; or (vi) material non-compliance with established
Studio policies and guidelines (after which you have been informed
in writing of such policies and guidelines and you have failed to
cure such non-compliance); provided that in each such case (other
than (i) or (iv) or a will
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