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Exhibit 10.6
Employment Agreement
This Employment Agreement (the
“ Agreement
”), entered into on January 12,
2006 and effective as of the Effective Date (as defined in Section
2(b)), is made by and between Hallmark Entertainment, LLC, a
Delaware limited liability company which following its merger with
HEI Acquisition, LLC shall be renamed RHI Entertainment, LLC
(together with any successor thereto, the “
Company ”), and Robert Halmi, Jr. (the
“ Executive
”).
RECITALS
A. The Company desires to assure
itself of the services of the Executive by engaging the Executive
to perform services under the terms hereof;
B. The Executive desires to provide
services to the Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and of the respective covenants and agreements set
forth below the parties hereto agree as follows:
1. Certain Definitions
(a) “ Annual Base
Salary ” shall have
the meaning set forth in Section 3(a).
(b) “ Board ” shall mean the Board of Directors of the
Company.
(c) The Company shall have
“ Cause
” to terminate the
Executive’s employment hereunder upon: (i) the
Executive’s conviction of, or plea of nolo contendere to, any felony (or any other crime having a
material adverse effect on the Company); (ii) the Executive’s
unlawful use (including being under the influence) or possession of
illegal drugs on the Company’s premises or while performing
the Executive’s duties and responsibilities under this
Agreement; or (iii) the Executive’s commission of an act of
fraud, embezzlement, misappropriation, willful misconduct, or
breach of fiduciary duty against the Company.
(d) “ Company ” shall, except as otherwise provided by
Section 6(h), have the meaning set forth in the preamble
hereto.
(e) “ Date of Termination ” shall mean (i) if the Executive’s
employment is terminated by his death, the date of his death; (ii)
if the Executive’s employment is terminated due to his
Disability, the date determined pursuant to Section 4(a)(ii); or
(iii) if the Executive’s employment is terminated pursuant to
Section 4(a)(iii)-(v) either the date indicated in the Notice of
Termination or the date specified by the Company pursuant to
Section 4(b), whichever is earlier.
(f) “ Disability ” shall mean the Executive’s
incapacity due to reasonably documented physical or mental illness
that shall have prevented the Executive from performing his duties
for the Company on a full-time basis for more than six consecutive
months.
(g) “ Effective Date ” shall have the meaning set forth in
Section 2(b).
(h) “ Executive ” shall have the meaning set forth in the
preamble hereto.
(i) The Executive shall have “
Good Reason ” to resign his employment upon the
occurrence (without the Executive’s prior written consent) of
any of the following: (A) failure of the Company to make any
payment under this Agreement; (B) the Company’s material breach of this Agreement;
or (C) relocation of the Company’s principal office from the
New York metropolitan area; provided, however, that the
Executive may not resign his employment for Good Reason unless: (x)
the Executive has provided the Company with at least 30 days prior
written notice of his intent to resign for Good Reason (which
notice must be provided within three months following the
occurrence of the event(s) purported to constitute Good Reason);
and (y) the Company has not remedied the alleged violation(s)
within the 30-day period.
(j) “ HEI ” shall mean HEI Acquisition, LLC, a
Delaware limited liability company.
(k) “ LLC Agreement ” shall have the meaning set forth in
Section 21.
(1) “ Notice of Termination ” shall have the meaning set forth in
Section 4(b).
(m) “Section 409A” shall
have the meaning set forth in Section 20.
(n) “ Term ” shall have the meaning set forth in
Section 2(b).
2. Employment
(a) In General . The Company shall employ the Executive and the
Executive shall enter the employ of the Company, for the period set
forth in Section 2(b), in the position set forth in Section 2(c),
and upon the other terms and conditions herein provided.
(b) Term of Employment . The initial term of employment under this
Agreement (the “ Initial Term ”) shall be for the period beginning on
January ___, 2006 (the “ Effective Date ”) and ending on the third anniversary
thereof, unless earlier terminated as provided in Section 4. The
employment term hereunder shall automatically be extended for
successive one-year periods (“ Extension Terms ” and, collectively with the Initial Term,
the “ Term
”) unless either party gives
notice of non-extension to the other no later than 30 days prior to
the expiration of the then-applicable Term.
(c) Position and Duties
(i) During the Term, the Executive:
(A) shall serve as Chief Executive Officer of the Company, with
responsibilities, duties and authority customary for such position,
subject to direction by the Board, including, but not limited to,
the authority to hire and terminate employees of the Company and
its subsidiaries; provided,
however, that the Executive
acknowledges and agrees that he shall consult with the Board prior
to hiring or terminating the employment of any Chief Financial
Officer of the Company or Chief Operating Officer of the Company;
(B) shall report directly to the Board; (C) shall devote
substantially all his working
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time and efforts to the business and
affairs of the Company and its subsidiaries; and (D) agrees to
observe and comply with the Company’s rules and policies as
adopted by the Board from time to time.
(ii) As of the Effective Date, HEI and
its affiliates shall cause the Executive to be appointed or elected
to the Board. During the Term, the Board shall propose the
Executive for re-election to the Board and HEI and its affiliates
shall vote in favor of such re-election. In addition, the Executive
shall also serve as a director of any of the Company’s
subsidiaries and/or in one or more executive offices of any
entities owned by the Company.
3. Compensation and Related
Matters
(a) Annual Base Salary . During the Term, the Executive shall receive a
base salary (the “ Annual Base Salary ”) at a rate of $2,000,000 per annum, which
amount shall be increased by 5% per annum on a cumulative basis on
each anniversary of the Effective Date. The Annual Base Salary
shall be payable in accordance with the customary payroll practices
of the Company.
(b) Benefits .
The Executive shall be entitled to participate in employee benefit
plans, programs and arrangements of the Company now (or, to the
extent determined by the Board, hereafter) in effect which are
applicable to the senior officers of the Company.
(c) Vacation .
During the Term, the Executive shall be entitled to not less than
six weeks paid vacation in accordance with the Company’s
applicable policies and procedures.
(d) Expenses .
The Company shall reimburse the Executive for all reasonable travel
and other business expenses incurred by him in the performance of
his duties to the Company in accordance with the Company’s
applicable expense reimbursement policies and procedures and
consistent with past practices as applied to the
Executive.
(e) Profits Interest Award . As of the Effective Date, the Executive shall be
awarded profits interests and other rights with respect thereto of
the Company pursuant to the terms and conditions described
on Exhibit A
hereto.
(f) Discretionary Bonuses . The Board, in its sole discretion, may award the
Executive additional annual or other bonuses during the
Term.
4. Termination . The
Executive’s employment hereunder may be terminated by the
Company or the Executive, as applicable, without any breach of this
Agreement only under the following circumstances:
(a) Circumstances
(i) Death .
The Executive’s employment hereunder shall terminate upon his
death.
(ii) Disability . If the Executive incurs a Disability, the
Company may give the Executive written notice of its intention to
terminate the Executive’s
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employment. In that event, the
Executive’s employment with the Company shall terminate
effective on the later of the 30 th day after receipt of
such notice by the Executive or the date specified in such
notice, provided
that within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of his duties.
(iii) Termination for Cause . The Company may terminate the Executive’s
employment for Cause.
(iv) Termination without Cause . The Company may terminate the Executive’s
employment without Cause.
(v) Resignation with or without Good Reason
. The Executive may resign his
employment with or without Good Reason.
(b) Notice of Termination . Any termination of the Executive’s
employment by the Company or by the Executive under this Section 4
(other than termination pursuant to paragraph (a)(i)) shall be
communicated by a written notice to the other party hereto
indicating (i) the specific termination provision in this Agreement
relied upon, (ii) except with respect to a termination pursuant to
Section 4(a)(iv), setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
(iii) specifying a Date of Termination which, if submitted by the
Executive (or, in the case of a termination described in Section
4(a)(ii), by the Company), shall be at least 30 days following the
date of such notice (a “ Notice of Termination ”); provided, however, that a Notice of Termination delivered by the
Company pursuant to Section 4(a)(ii) shall not be required to
specify a Date of Termination, in which case the Date of
Termination shall be determined pursuant to Section 4(a)(ii);
and provided,
farther, that in the event
that the Executive delivers a Notice of Termination to the Company,
the Company may, in its sole discretion, change the Date of
Termination to any date that occurs during the period beginning on
the date of Company’s receipt of such Notice of Termination
and ending on the date specified in such Notice of Termination. A
Notice of Termination submitted by the Company may provide for a
Date of Termination on the date the Executive receives the Notice
of Termination, or any date within 180 days thereafter. The failure
by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Cause or Good Reason shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
5. Company Obligations Upon Termination of
Employment
(a) In General . Upon a termination of the Executive’s employment for any reason, the
Executive (or the Executive’s estate) shall be entitled to
receive the sum of the Executive’s Annual Base Salary through
the Date of Termination not theretofore paid; any expenses owed to
the Executive under Section 3(d); any accrued vacation pay owed to
the Executive pursuant to Section 3(c); and any amount arising from
the Executive’s participation in, or benefits under, any
employee benefit plans, programs or arrangements under Section
3(b), which amounts shall be payable in accordance with the terms
and conditions of such employee benefit plans, programs or
arrangements.
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(b) Termination without Cause or due to Resignation
with or without Good Reason . If the Executive’s employment shall be
terminated by the Company without Cause or by the Executive due to
his resignation with or without Good Reason, but not by reason of
the Executive’s death, Disability, or termination by the
Company for Cause, then, in addition to the payments described in
Section 5(a), the Company shall:
(i) Continue to pay to the Executive,
in accordance with the Company’s regular payroll practice
following the Date of Termination, the Executive’s Annual
Base Salary until the earlier of (A) the second anniversary of the
Date of Termination or (B) the date the Executive first violates
any of the restrictive covenants set forth in Section 6;
and
(ii) Continue coverage for the
Executive and any eligible dependents under all Company group
health benefit plans in which the Executive and any dependents were
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder and subject to any
cost-sharing or similar provisions in effect thereunder as of the
Date of Termination, until earlier of (A) the second anniversary of
the Date of Termination or (B) the date the Executive first
violates any of the restrictive covenants set forth in Section 6.
As of the date that the Executive ceases to receive coverage under
any group health plan pursuant to this Section 5(b)(ii), the
Executive shall be eligible to elect to receive “COBRA”
continuation coverage to the extent permitted by Section 601
et seq. of the Executive Retirement Income Security Act of
1974, as amended. If such benefits cannot be provided under the
Company’s group health benefit plans, such benefits will be
provided on an individual basis to the Executive such that his
after-tax costs will be no greater than the costs for such benefits
under the Company’s plans.
(c) Termination due to Death or Disability
. If the Executive’s employment
with the Company is terminated by reason of his death or
Disability, then the Executive or, as applicable, his estate or
other legal representative, shall be entitled to receive the
amounts described in Section 5(a), including any amount arising
from the Executive’s participation in, or benefits under, any
employee benefit plans, programs or arrangements described in
Section 3(b) (including without limitation any disability or life
insurance benefit plans, programs or arrangements), which amounts
shall be payable in accordance with the terms and conditions of
such employee benefit plans, programs or arrangements.
6. Restrictive Covenants
.
(a) Confidentiality . The Executive agrees that he will not during the
Term or thereafter divulge to anyone (other than the Company or any
persons designated by the Company) any knowledge or information of
any type whatsoever of a confidential nature relating to the
business of the Company, including, without limitation, all types
of trade secrets, business strategies, marketing and distribution
plans as well as ideas, proposals, plans, scripts, treatments and
formats described in Section 6(b) below. The Executive further
agrees that he will not disclose, publish or make use of any such
knowledge or information of a confidential nature (other than in
the performance of the Executive’s duties hereunder) without
the prior written consent of the Company. This provision does not
apply to information which becomes available publicly without the
fault of the Executive or information which the Executive
is
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required to disclose in legal
proceedings, provided the Executive gives advance notice to the
Chairman of the Board and an opportunity to for the Company to
resist such disclosure.
(b) Intellectual Property . During the Term, the Executive will disclose to
the Company all ideas, proposals, plans, scripts, treatments, and
formats invented or developed by the Executive which relate
directly or indirectly to the business of the Company or any of its
subsidiaries or affiliates including, without limitation, any
ideas, proposals and plans which may be copyrightable,
trademarkable, patentable or otherwise exploitable. The Executive
agrees that all such ideas, proposals, plans, scripts, treatments,
and formats are and will be the property of the Company. The
Executive further agrees, at the Company’s request, to do
whatever is necessary or desirable to secure for the Company the
rights to said ideas, proposals, plans, scripts, treatments, and
formats, whether by copyright, trademark, patent or otherwise and
to assign, transfer and convey the rights thereto to the
Company.
(c) Name and Likeness . The Company shall have the right in perpetuity
to use the Executive’s name, image, and likeness in
connection with credits, advertising and publicity for product for
which the Executive performs any development and/or production
services, and during the Term otherwise in connection with the
Company and its business.
(d) Competitive Business Restrictions
. During the Term, the Executive shall
not engage directly or indirectly, whether as an employee,
independent contractor, consultant, partner, shareholder or
otherwise, in a business or other endeavor which would or might
interfere with any of his duties or obligations hereunder or which
is competitive with or similar to the business of the Company or
any of its subsidiaries or affiliates, including but not limited to
any business related to the production, distribution or other
exploitation of made for television movies or miniseries or the
ownership, management, production, distr
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