Exhibit 10.4
DREAMWORKS ANIMATION SKG,
INC.
1000 FLOWER STREET
GLENDALE, CA 91201
July 24, 2008
Lew Coleman
c/o Munger, Tolles & Olsen
LLP
355 South Grand Avenue
35
th
Floor
Los Angeles, CA 90071
Attn: Bob Johnson
Dear Lew:
Reference is made to that certain
executed Employment Agreement, dated as of October 25, 2007,
between DreamWorks Animation SKG, Inc., a Delaware corporation
(“Studio” or “Employer”), and you (the
“Prior Agreement”) whereby Studio agreed to employ you
and you agreed to accept such employment until December 31,
2008, upon the terms and conditions set forth therein. Studio now
wishes to continue your employment beyond December 31, 2008,
and you wish to remain employed by Studio beyond such date, in each
case, pursuant to the terms and conditions set forth below.
Therefore, the parties now hereby agree to amend and restate the
Prior Agreement in its entirety as set forth in this agreement (the
“Agreement”), effective as of the date shown
above:
1. Term . The term of
your employment commenced on December 5, 2005 (the
“Commencement Date”) and shall continue through
December 31, 2011. 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. In addition, you are currently serving as the
Chief Financial 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 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 at a rate of One Million Two Hundred Sixty-two
Thousand Dollars ($1,262,000) for each full year of the Employment
Term, payable in accordance with Studio’s applicable payroll
practices (“Base Salary”).
b. Equity-Based Compensation
.
(i) Upon the Commencement Date, you
received, pursuant to the 2004 Omnibus Incentive Compensation 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 (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 of the
Board of Directors of Studio (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 (the amount of the award for 2006 was determined in the
first quarter of 2007), subject to annual approval by the
Compensation Committee, to
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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 targeted at $1,000,000. 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. 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 grants 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), 4.b(vii), 4.b(viii), 9, 10, 11, 12, 13 and 25) 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 applicable
equity compensation plan of Studio (each such plan, a
“Plan”) or determined by the Compensation Committee
from time to time.
(vi) Following the expiration of the
Employment Term, 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-based
compensation awards granted to you during the Employment Term to
become fully vested, exercisable (if applicable) and
nonforfeitable. 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 awards that are subject
to time-based vesting criteria, the full amount of such awards will
vest on December 31, 2011. With respect to equity-based
compensation awards that are subject to performance-based vesting
criteria, such awards will continue to remain subject to the
achievement of performance goals, as provided pursuant to the Plan
and the agreements
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evidencing such awards and to such
other terms and conditions as may be determined by the Compensation
Committee at the time of the grant, provided that, in the event
that a change of control (as defined in Paragraph 25) occurs prior
to the end of the applicable performance period, unless provision
is made in connection with such change of control for assumption of
such awards or substitution for such awards in the manner described
in Paragraph 25.a, such awards shall be treated in accordance with
the proviso of Paragraph 25.a. Subject to the foregoing, all SARs
and any similar equity-based awards will remain exercisable for the
balance of the term of the grant. In the case of restricted stock
units that are subject to time-based vesting criteria, such awards
will be settled within thirty (30) days following
December 31, 2011. In the case of restricted stock units that
are subject to performance-based vesting criteria, except as
otherwise provided in Paragraph 25, such awards will be settled on
the seventieth (70th) day after the date that such awards
become vested.
(vii) Notwithstanding any provision
in this Agreement to the contrary, upon a change of control (as
defined in Paragraph 25) or upon termination of your employment as
a result of death or incapacity (as defined in Paragraph 9.a), by
Studio without cause (as defined in Paragraph 11) or by you for
good reason (as defined in Paragraph 13), any equity compensation
awards that would have become vested on December 31, 2008
pursuant to Paragraph 4.b(vi) of the Prior Agreement (such awards,
the “Prior Agreement Awards”) shall become vested to
the same extent that they would have vested on December 31,
2008 pursuant to the Prior Agreement. Furthermore, in the event
that in connection with the extension or renewal of the employment
agreement between Studio and any executive officer who is entitled
to automatic accelerated vesting of equity compensation awards upon
expiration of the term of such executive officer’s employment
agreement, such executive officer becomes entitled to vesting of
the equity compensation awards that would have vested upon
expiration of his or her prior employment agreement on terms that
are more favorable than those applicable to the Prior Agreement
Awards, then you shall be entitled to vesting of the Prior
Agreement Awards on terms that are as favorable as those applicable
to such executive officer’s awards that are subject to
vesting pursuant to his or her prior employment
agreement.
(viii) In order to avoid taxes and
penalties under Section 409A of the Code and the regulations
thereunder as in effect from time to time (collectively,
hereinafter, “Section 409A”), provided that you remain
employed by Studio until December 31, 2008, all then
outstanding restricted stock units that are subject to time-based
vesting criteria and were granted to you either (A) prior to
the date of this Agreement or (B) on or following the date of
this Agreement pursuant to the obligations set forth in Paragraph
4.b(ii), (iii) or (iv) of the Prior Agreement (such
restricted stock units, the “Prior Agreement RSUs”)
shall, in accordance with Paragraph 4.b(vi) of the Prior Agreement,
be settled within thirty (30) days following December 31,
2008; provided , however , that Studio shall withhold
from the shares of Studio’s Class A common stock
(“Shares”) to be delivered in settlement thereof a
number of Shares sufficient to satisfy applicable tax withholding
obligations and shall permit you to sell a number of additional
Shares sufficient to pay any other marginal income taxes with
respect thereto, and all other Shares delivered to you shall be
nontransferable until the earliest of (1) December 31,
2011, (2) the originally scheduled vesting date of the
applicable restricted stock units, (3) the 30th day following
the date of your death and (4) the
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date that the vesting of such
restricted stock units otherwise would have accelerated in
accordance with this Agreement (including, without limitation,
pursuant to Paragraph 4.b(vii)).
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. 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). Expenses shall be eligible for
reimbursement hereunder to the extent that they are incurred by you
during the period of your employment with Studio pursuant to this
Agreement. All reimbursable expenses shall be reimbursed to you as
promptly as practicable and in any event not later than the last
day of the calendar year after the calendar year in which the
expenses are incurred, and the amount of expenses eligible for
reimbursement during any calendar year will not affect the amount
of expenses eligible for reimbursement in any other calendar
year.
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
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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)
as promptly as practicable and in any event 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 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
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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, 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 Employment Term, 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, 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, financial counseling and other benefits
(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, 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. 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
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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 offset 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
Plan or in the agreement evidencing the grant, in each case as of
the date of the grant, after termination of employment pursuant to
Paragraph 9.a, your grants of equity-based compensation will
be determined as follows. 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. Vesting will be
determined promptly following termination of employment. 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 preceding 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 SARs 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, except as otherwise set forth in Paragraph 25,
such awards will be settled on the seventieth (70th) day after
the date that such awards become vested. In the case of 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 for the period commencing on
such date and ending twelve (12) months thereafter, but in no
event less than one (1) year thereafter, continued Base Salary
pa
