Exhibit 10.1
DREAMWORKS ANIMATION SKG,
INC.
1000 FLOWER STREET
GLENDALE, CA 91201
As of December 5, 2005
Lew Coleman
c/o Munger, Tolles & Olsen
LLP
355 South Grand Avenue
35 th Floor
Los Angeles, CA 90071
Attn: Bob Johnson
Dear Lew:
On December 5, 2005,
(“Effective Date”) DreamWorks Animation SKG, Inc.
(“Studio”) agrees to employ you and you agree to accept
such employment upon the terms and conditions set forth
below:
1. Term . The term of
your employment hereunder shall commence on the Effective Date and
shall continue through December 31, 2008. This period shall
hereinafter be referred to as the “Employment
Term”.
2.
Duties/Responsibilities/Reporting .
a. General . Your title shall
be “President” of Studio. You shall have such duties
and responsibilities as are consistent with the traditional
position of President of publicly traded major entertainment and
media corporations.
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 Chief Executive Officer (“CEO”) of Studio, all as
hereinafter set forth.
c. Reporting . You shall
report only to Jeffrey Katzenberg (“Katzenberg”);
provided that if Katzenberg is not actively involved in the
business of Studio or otherwise incapable of involvement in the
day-to-day business of Studio, including by reason of death or
disability, then you shall report to the individual (who will be
Katzenberg’s successor) designated by the Board of Directors
of Studio to assume such duties. All other employees (other than
the CEO and the Chairman) of Studio and such affiliates and
subsidiaries as may hereafter be established shall report solely
and directly to you or to you through such other personnel as you
may designate.
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 your 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
(i) 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 or (ii) serving on the Board of Directors
of the companies listed on Exhibit A attached hereto.
4. Compensation
.
a. Base Salary . For all
services rendered under this Agreement, Studio will pay you a
yearly base salary rate of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) for each full year of the Employment Term,
payable in accordance with Studio’s applicable payroll
practices (“Base Salary”).
b. Equity-Based Compensation
.
(i) It is Studio’s present
expectation, subject to the approval of the Compensation Committee,
that, upon the Effective Date, you will receive, pursuant to the
2004 Omnibus Incentive Compensation Plan (the “Plan”),
stock appreciation rights with respect to Studio’s
Class A common stock (“SARs”) having a grant-date
value of $687,500 and restricted shares of Studio’s
Class A common stock (“Restricted Stock”) having a
grant-date value of $2,062,500 (or, in lieu of SARs and Restricted
Stock, such other form of equity-based compensation as the
Compensation Committee may determine) (the “Initial
Grants”).
(ii) While you remain employed
hereunder, commencing at the end of 2006, in lieu of receiving a
larger base salary than the amount set forth in paragraph 4.a. of
this Agreement, you will be entitled to receive annual equity
awards of SARs and Restricted Stock (or such other form of
equity-based compensation as the Compensation Committee may
determine) having an aggregate grant-date value of $500,000. For
the avoidance of doubt, the initial grant of such annual awards
shall be guaranteed and not subject to further approval by the
Compensation Committee, but the vesting of such SARs and Restricted
Stock (or such other form of equity-based compensation as the
Compensation Committee may determine) shall be subject to vesting
conditions.
(iii) You will also be eligible,
while you remain employed hereunder, commencing at the end of the
year 2006 (with the amount of the award for 2006 anticipated to be
determined in the first quarter of 2007), subject to annual
approval by the Compensation Committee, to receive annual awards of
SARs and Restricted Stock (or such other form of equity-based
compensation as the Compensation Committee may determine). It is
Studio’s present expectation that such annual awards will
have an aggregate grant-date value, depending on company
performance, ranging between $1,000,000 (bonus target) and
$1,750,000 (in the case of superior company performance). In the
event that such awards consist of SARs and Restricted Stock, they
shall be divided, as determined by the
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Compensation Committee, between SARs
and Restricted Stock. These annual awards shall be in lieu of
annual cash bonuses in the event the Compensation Committee does
not pay cash bonuses to Studio’s most senior executives;
provided that if the Compensation Committee does elect to pay such
cash bonuses in addition to such annual awards, such awards shall
also be in addition to any cash bonuses granted by the Compensation
Committee.
(iv) In addition, you will be
eligible, while you remain employed hereunder, commencing at the
end of 2006, subject to annual approval by the Compensation
Committee, to receive annual equity incentive awards of SARS and
Restricted Stock (or such other form of equity-based compensation
as the Compensation Committee may determine). It is Studio’s
present expectation that such annual awards will have an annual
aggregate grant-date value targeted at $2,750,000. In the event
that such awards consist of SARs and Restricted Stock, they shall
be divided, as determined by the Compensation Committee, between
SARs and Restricted Stock.
(v) All SARs and Restricted Stock
(and any other equity-based awards) referred to in this Paragraph
4.b will (x) be valued using a method or methods (including
where appropriate a Black-Scholes or other fair value method) as
determined by the Compensation Committee from time to time,
(y) (a) for the grants under Paragraph 4.b.(ii) and
(iii) become vested, exercisable (if applicable) and
nonforteitable twenty-five percent (25%) per year for a period
of four (4) years and (b) for the grant under Paragraph
4.b (iv) become fully vested, exercisable (if applicable) and
nonforfeitable within a period not to exceed four (4) years
from the date of any grant in a manner determined by the
Compensation Committee, and will be contingent on both the
continuing performance of services to Studio (subject to Paragraphs
4.b(vi), 9, 10, 11, 12 and 13) and the achievement of performance
goals as established by the Compensation Committee from time to
time, and (z) otherwise be subject to such terms and
conditions as may be set forth in the Plan or determined by the
Compensation Committee from time to time.
(vi) Following the expiration of the
Employment Term (i.e. three (3) years after the Effective
Date), but only if your employment hereunder has not been
terminated earlier, you will not be required to perform any
additional services to Studio in order for all of the equity
compensation awards granted to you during the Employment Term to be
fully vested, exercisable (if applicable) and nonforfeitable;
provided that such awards will continue to remain subject to the
achievement of performance goals as provided pursuant to the Plan
and the agreements evidencing such awards and to such other terms
and conditions as may be determined by the Compensation Committee
at the time of the grant; and provided further that, subject to the
foregoing, all SARs and any similar equity-based awards will remain
exercisable for the balance of the term of the grant.
c. Relocation . During the
employment Term, in connection with Employee’s relocation
from San Francisco, California to Los Angeles, California to
perform the services required hereunder, Employee shall be entitled
to relocation benefits in accordance with Employer’s standard
policies and procedures. The relocation package applicable to
Employee is attached hereto as Schedule A.
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5. Benefits . In
addition to the foregoing, 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. During the Employment Term,
unless earlier terminated as set forth below, you shall be entitled
to utilize the Studio corporate jet for business-related air travel
(subject to Studio policy), you shall be entitled to coverage in
accordance with Studio’s standard leave of absence policy and
you 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 car and/or 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). Studio will provide you with a
monthly car allowance of One Thousand Dollars ($1,000), which 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 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 entities 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).
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 required by law or in the performance of your
duties
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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 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, 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) day
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.
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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) 50% of the specified
Base Salary for the remainder of the then current Employment Term,
but not to exceed two (2) years, 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, 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 and other 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). Whenever compensation is payable to you
hereunder, during or with respect 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
