Employment Agreement - Marvel Enterprises Inc. and F. Peter Cuneo
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 19, 1999, between
Marvel Enterprises, Inc., a Delaware corporation (the "Company") and F. Peter
Cuneo (the "Executive").
WHEREAS, the Company wishes to employ the Executive, and
the Executive wishes to accept such employment, on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties hereto agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the
Executive for the Term (as defined in Section 2.1), to render exclusive and
full-time services to the Company as its President and Chief Executive Officer.
The Executive shall report solely to the Board of Directors of the Company,
shall be the most senior person performing executive responsibilities and
possessing executive authority with respect to the operation and management of
the business of the Company and its subsidiaries and shall perform such other
duties consistent with such positions as may be assigned to the Executive by the
Chairman of the Board or the Board of Directors. All other employees of the
Company shall report, directly or indirectly, to the Executive.
1.2 Acceptance. The Executive hereby accepts such
employment and agrees to render the services described above. During the Term,
the Executive agrees to serve the Company faithfully and to the best of the
Executive's ability, to devote the Executive's entire business time, energy and
skill to such employment (other than outside business activities and service on
corporate, civic or charitable boards or committees which do not interfere with
the Executive's duties and responsibilities as an employee of the Company in
accordance with this Agreement and which, in each instance, are approved by the
Board of Directors or the Chairman of the Board) and to use the Executive's
professional efforts, skill and ability to promote the Company's interests. The
Executive further agrees to accept election, and to serve during all or any part
of the Term, as an officer or director of the Company and of any subsidiary or
affiliate of the Company, without any compensation therefor other than that
specified in this Agreement, if elected to any such position by the shareholders
or by the Board of Directors of the Company or of any subsidiary or affiliate,
as the case may be.
1.3 Board of Directors Election. Subject to the
Stockholders' Agreement, dated as of October 1, 1998, by and among Avi Arad,
Various Dickstein Entities and Individuals, Isaac Perlmutter, Isaac Perlmutter,
T.A., The Laura & Isaac Perlmutter
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Foundation Inc., Object Trading Corp., Zib Inc., Various Secured Lenders and the
Company, as that agreement may be amended from time to time (the "Stockholders'
Agreement"), the Company shall nominate the Executive for election or
re-election as a director of the Company and shall otherwise use its best
efforts to cause the Executive to be elected to the Company's Board of
Directors. The Executive acknowledges that the Stockholders' Agreement provides
that all of the seats on the Board of Directors are currently to be filled by
nominees of the parties to the Stockholders' Agreement, that none of the parties
to the Stockholders' Agreement is under any obligation to name the Executive as
its nominee to serve on the Board, that the Company does not intend to expand
the size of the Board to permit the Executive's election as a director and that
the Stockholders' Agreement is likely to preclude the Executive's election to
the Board of Directors for the foreseeable future. If the Executive is not a
director of the Company at any time during the Term, he shall have the right to
attend all meetings of the Board of Directors and to participate in such
meetings as though he was a director but shall not have the right to vote at
such meetings.
1.4 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the principal executive office of the
Company in New York City, subject to reasonable and customary travel
requirements on behalf of the Company.
2. Term of Employment
2.1 The Term. The term of the Executive's employment under
this Agreement (the "Term") shall commence on July 21, 1999 (the "Effective
Date") and shall end on July 21, 2002 (the "Scheduled Expiration Date"). The
Term shall end earlier than the Scheduled Expiration Date if sooner terminated
pursuant to Section 4 hereof. The Scheduled Expiration Date shall be
automatically postponed for one year, and the Term shall be automatically
extended by one year, unless either party hereto provides the other party with
written notice (a "Notice of Nonrenewal"), not later than sixty days prior to
the Scheduled Expiration Date, of its election not to permit the Term to be so
extended, and the Scheduled Expiration Date shall thereafter be automatically
postponed for one additional year and the Term shall thereafter be automatically
extended by one additional year, on each subsequent anniversary of the date of
this Agreement, unless either party provides the other party with written
notice, not later than sixty days prior to such subsequent anniversary of the
date of this Agreement, of its election not to permit the Term to be so
extended.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable bi-weekly in arrears, at the annual rate of
$650,000, less such deductions or amounts to be withheld as required by
applicable law and regulations and deductions authorized by the Executive in
writing. The Executive's base salary shall be reviewed no less frequently than
annually by the Board of Directors and may be increased, but not decreased, by
the Board of
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Directors. The Executive's base salary as in effect from time to time is
referred to in this Agreement as the "Base Salary".
3.2 Bonus. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1 hereof, the Executive will receive a sign-on
cash bonus of $100,000 (the "Sign-On Bonus") payable in one installment of
$50,000 on the Effective Date and a second installment of $50,000 no later than
October 15, 1999, and an annual bonus (which shall not be pro rated except as
provided in Section 4) of $390,000 in cash in respect of 1999. With respect to
each subsequent fiscal year of the Term, the Executive will be eligible to
receive a cash bonus based upon the attainment of performance goals set by the
Board of Directors (the "Bonus Performance Goals"). The Executive's target
annual bonus amount in respect of each such subsequent fiscal year shall be 60%
of his base salary for the year. The bonus in respect of 1999 shall be paid to
the Executive no later than February 1, 2000. Each annual bonus in respect of
subsequent fiscal years shall be paid when annual bonuses are paid generally to
the Company's other senior executive officers but in no event later than the
ninetieth day of the next fiscal year. The annual bonus for 1999 and the Sign-On
Bonus shall be subject to reduction (and repayment by the Executive to the
extent already received by the Executive) by the lesser of (x) the amount of any
bonuses, deal fees and employee savings plan payments that the Executive
receives in respect of his employment with Cortec Group Inc. and (y) $300,000.
3.3 Business Expenses. The Company shall pay for or
reimburse the Executive for all reasonable first-class travel and other expenses
actually incurred by or paid by the Executive during the Term in the performance
of the Executive's services under this Agreement, including the cost and expense
associated with the use (including related personal use) of a cellular
telephone, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers.
3.4 Vacation. During the Term, the Executive shall be
entitled to a vacation period or periods of four (4) weeks per year taken in
accordance with the vacation policy of the Company during each year of the Term.
Vacation time not used by the end of a calendar year shall be forfeited.
3.5 Fringe Benefits. During the Term, the Executive shall
be entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its executive employees generally,
together with executive medical benefits for the Executive, as from time to time
in effect for executive employees of the Company generally.
3.6 Additional Benefits. During the Term, the Executive
shall be entitled to such other benefits as are specified in Schedule I to this
Agreement.
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4. Termination.
4.1 Death. If the Executive shall die during the Term, the
Term shall terminate immediately.
4.2 Disability. If during the Term the Executive shall
become physically or mentally disabled, whether totally or partially, such that
the Executive is unable to perform the Executive's principal services hereunder
for (i) a period of six consecutive months or (ii) for shorter periods
aggregating six months during any twelve month period, the Company may at any
time after the last day of the six consecutive months of disability or the day
on which the shorter periods of disability shall have equaled an aggregate of
six months, by written notice to the Executive (but before the Executive has
recovered from such disability), terminate the Term.
4.3 Cause. The Term may be terminated by the Company upon
notice to the Executive upon the occurrence of any event constituting "Cause" as
defined herein. As used herein, the term "Cause" means: (i) the Executive's
willful and intentional failure or refusal to perform or observe any of his
material duties, responsibilities or obligations set forth in this Agreement;
provided, however, that the Company shall not be deemed to have Cause pursuant
to this clause (i) unless the Company gives the Executive written notice that
the specified conduct has occurred and making specific reference to this Section
4.3(i), the Executive is given an opportunity to appear before the Board of
Directors to discuss the conduct alleged to constitute Cause and the Executive
fails to cure the conduct within thirty (30) days after receipt of such notice;
(ii) breach by the Executive of any of his obligations under Section 5 hereof;
(iii) any willful and intentional acts of the Executive involving fraud, theft,
misappropriation of funds, embezzlement or material dishonesty affecting the
Company or willful misconduct by the Executive which has, or could reasonably be
expected to have, a material adverse effect on the Company; or (iv) the
Executive's conviction of, or plea of guilty or nolo contendre to, an offense
which is a felony in the jurisdiction involved.
4.4 Permitted Termination by the Executive. (a) The Term
may be terminated by the Executive upon notice to the Company of any event
constituting "Good Reason" as defined herein. As used herein, the term "Good
Reason" means the occurrence of any of the following, without the prior written
consent of the Executive: (i) assignment of the Executive to duties materially
inconsistent with the Executive's positions as described in Section 1.1 hereof,
or any significant diminution in the Executive's duties or responsibilities,
other than in connection with the termination of the Executive's employment for
Cause or disability or by the Executive other than for Good Reason; (ii) breach
by the Company of its obligations under Section 1.3 hereof or any other material
breach of this Agreement by the Company which is continuing;(iii) a change in
the location of the Executive's principal place of employment to a location
other than as specified in Section 1.4 hereof; or (iv) the occurrence of a Third
Party Change in Control (as defined in Section 4.5(d)), provided, however, that
the Executive shall not be deemed to have Good Reason pursuant to clauses (i)
and (ii) above
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unless the Executive gives the Company written notice that the specified conduct
or event has occurred and the Company fails to cure such conduct or event within
thirty (30) days of receipt of such notice.
(b) The Term may be terminated by the Executive at any time
by giving the Company a notice of termination specifying a termination date no
less than sixty (60) days after the date the notice is given.
4.5 Severance. (a) If the Term is terminated pursuant to
Section 4.1, 4.2 or 4.3 hereof, or by the Executive other than pursuant to
Section 4.4(a), the Executive shall be entitled to receive his Base Salary,
bonus and any additional benefits provided hereunder at the rates provided in
Sections 3.1, 3.5 and 3.6 hereof to the date on which such termination shall
take effect. If the Term is terminated by the Executive pursuant to Section
4.4(b), the Executive shall also be entitled to receive a pro rata portion
(based on time) of the annual bonus for the year in which the termination date
occurs (a "Pro Rata Bonus"). The pro rata bonus to which the Executive is
entitled, if any, for each year other than 1999 shall be determined by reference
to the attainment of the performance goals referred to in Section 3.2 as of the
end of the fiscal year in which termination of employment occurs and shall be
paid when bonuses in respect of that year are generally paid to the Company's
other executives but in no event later than the ninetieth day of the next fiscal
year. If the Term is terminated prior to the first anniversary of the Effective
Date pursuant to Section 4.3 or by the Executive other than pursuant to Section
4.4(a), the Executive shall promptly repay to the Company any portion of the
Sign-On Bonus and the amount by which the annual bonus received by him in
respect of 1999 exceeds $190,000.
(b) Except as provided in Section 4.5(c), if the Term is
terminated by the Executive pursuant to clauses (i), (ii) or (iii) of Section
4.4(a) or by the Company other than pursuant to Section 4.1, 4.2 or 4.3, or if
the Term expires on the Scheduled Expiration Date as a result of the Company
giving a Notice of Nonrenewal, and, in such event, such termination occurs prior
to, and other than in contemplation of, the occurrence of a Third Party Change
in Control (as defined in Section 4.5(d)), the Company shall continue thereafter
to provide the Executive (i) payments of Base Salary in the manner and amounts
specified in Section 3.1 until the later of the third anniversary of the
Effective Date or the second anniversary of the date of termination (the
"Severance Period"), (ii) any unpaid portion of the Sign-On Bonus plus if
termination occurs at any time after a bonus has been awarded under Section 3.2
and prior to the time that the bonus has been paid, the amount of that bonus,
(iii) if termination occurs prior to the time that the bonus for 1999 is paid, a
bonus in the amount of $390,000 and if termination occurs after 1999, a bonus
equal to the average of (x) the annual bonus for the year in which termination
occurs determined by reference to the attainment of the performance goals
referred to in Section 3.2 as of the end of that fiscal year and (y) the annual
bonus in respect of the fiscal year immediately preceding the year in which
termination occurs, (iv) an annual bonus for each subsequent fiscal year (or pro
rata bonus, based on time, for any portion of a fiscal year) during the
Severance Period but after the fiscal year in which termination occurs at
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the same annual rate as the annual bonus paid pursuant to clause (iii) of this
Section 4.5(b), (v) fringe benefits in the manner and amounts specified in
Section 3.5 until the earlier of (x) the period ending on the date the Executive
begins work as an employee or consultant for any other entity or (y) the end of
the Severance Period. In addition, all unvested equity arrangements provided to
the Executive hereunder or under any employee benefit plan of the Company shall
continue to vest until the end of the Severance Period unless vesting is
accelerated upon the occurrence of the Third Party Change in Control as
described in Schedule I and shall remain exercisable for ninety days after the
end of the Severance Period. All annual bonus amounts payable pursuant to this
Section 4.5(b), shall be payable in cash within 90 days after each fiscal year
end occurring during the Severance Period and 90 days after the expiration of
the Severance Period. The Executive shall have no duty or obligation to mitigate
the amounts or benefits required to be provided pursuant to this Section 4.5(b),
nor shall any such amounts or benefits be reduced or offset by any other amounts
to which Executive may become entitled; provided, that if the Executive becomes
employed by a new employer or self-employed prior to the end of the Severance
Period, up to one-half of the Base Salary and bonuses payable to the Executive
pursuant to this Section 4.5(b) shall be reduced by an amount equal to the
amount earned from such employment with respect to that period (and the
Executive shall be required to return to the Company, without interest, any
amount by which such payments pursuant to Section this 4.5(b) exceed the Base
Salary and bonuses to which the Executive is entitled after giving effect to
that reduction) and, if the Executive becomes eligible to receive medical or
other welfare benefits under another employer provided plan, the corresponding
medical and other welfare benefits provided under this Section 4.5(b) shall be
terminated. As a condition to the Executive receiving the payments under Section
4.5(b), the Executive agrees to permit verification of his employment records
and Federal income tax returns by an independent attorney or accountant,
selected by the Company but reasonably acceptable to the Executive, who agrees
to preserve the confidentiality of the information disclosed by the Executive
except to the extent required to permit the Company to verify the amount
received by Executive from other active employment.
(c) If the Term is terminated by the Executive pursuant to
Section 4.4(a), or by the Company other than pursuant to Section 4.1, 4.2 or
4.3, or if the Term expires on the Scheduled Expiration Date as a result of the
Company giving a Notice of Nonrenewal and, in any such event, such termination
occurs upon or following the occurrence of a Third Party Change in Control or in
contemplation of a Third Party Change in Control, the Company shall thereafter
provide the Executive (i) an amount equal to two (2) times the sum of (x) the
then current Base Salary and (y) the average of the two most recent annual
bonuses paid (treating any annual bonus which is not paid as a result of the
Executive's failure to attain the Bonus Performance Goals as having been paid in
an amount equal to zero) to the Executive during the Term (or if only one annual
bonus has been paid, the amount of that annual bonus, and if that termination
occurs prior to the time at which the bonus for 1999 is paid,$390,000), to be
paid in a lump sum within 30 days after the date of termination, and (ii) fringe
benefits in the manner and amounts specified in Section 3.5 until the later of
the third anniversary of the Effective Date or the second anniversary of the
date of termination or, with respect to medical
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and other welfare benefits, when the Executive becomes eligible to receive
medical or other welfare benefits under another employer provided plan if sooner
than the later of the third anniversary of the Effective Date or the second
anniversary of the date of termination. In addition, all equity arrangements
provided to the Executive hereunder or under any employee benefit plan of the
Company shall vest immediately on the date of termination unless vesting is
accelerated to an earlier date upon the occurrence of the Third Party Change in
Control as described in Schedule I.
(d) For purposes of this Agreement, a Third Party Change in
Control shall be deemed to have occurred if (i) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than an Excluded Person or
Excluded Group (as defined below) (hereinafter, a "Third Party"), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities entitled to vote in the election of directors of the
Company, (ii) the Company is a party to any merger, consolidation or similar
transaction as a result of which either (x) the Company's common stock ceases to
be listed on a national securities exchange or on NASDAQ or (y) the shareholders
of the Company immediately prior to such transaction beneficially own securities
of the surviving entity representing less than fifty percent (50%) of the
combined voting power of the surviving entity's outstanding securities entitled
to vote in the election of directors of the surviving entity, or (iii) all or
substantially all of the assets of the Company are acquired by a Third Party.
"Excluded Group" means a "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) that (i) includes one or more Excluded Persons;
provided that the voting power of the voting stock of the Company "beneficially
owned" (as such term is used in Rule 13d-3 promulgated under the Exchange Act)
by such Excluded Persons (without attribution to such Excluded Persons of the
ownership by other members of the "group") represents a majority of the voting
power of the voting stock "beneficially owned" (as such term is used in Rule
13d-3 promulgated under the Exchange Act) by such group or (ii) exists solely by
virtue of the fact that the members of such group are parties to the
Stockholders' Agreement. "Excluded Person" means (i) while the Stockholders
Agreement is in effect in substantially its current form, any person or entity
who or which is a party to the Stockholders Agreement as of the Effective Date
and any affiliate of such a party to the Stockholders Agreement who becomes a
party to the Stockholders Agreement, and (ii) Isaac Perlmutter and Avi Arad or
any of their affiliates.
(e)(i) If any payment or benefit (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")), to the Executive or for the Executive's benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, the Executive's employment with
the Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Parachute Payment" or "Parachute
Payments"), would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the
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Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive will be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties, other than interest
and penalties imposed by reason of the Executive's failure to file timely a tax
return or pay taxes shown to be due on the Executive's return), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Parachute
Payments.
(ii) An initial determination as to whether a Gross-Up
Payment is required pursuant to this Agreement and the amount of such Gross-Up
Payment shall be made at the Company's expense by the Company's regular outside
auditors (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation to the Company and the Executive within ten days
of the Termination Date if applicable, or promptly upon request by the Company
or by the Executive (provided the Executive reasonably believes that any of the
Parachute Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to a
Parachute Payment or Parachute Payments, it shall furnish the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to any such Parachute Payment or Parachute Payments. Within
ten days of the delivery of the Determination to the Executive, the Executive
shall have the right to dispute the Determination (the "Dispute"). The Gross-Up
Payment, if any, as determined pursuant to this Section 4.5(e)(ii) shall be paid
by the Company to the Executive within ten days of the receipt of the Accounting
Firm's determination notwithstanding the existence of any Dispute. If there is
no Dispute, the Determination shall be binding, final and conclusive upon the
Company and the Executive subject to the application of Section 4.5(e)(iii)
below. The Company and the Executive shall resolve any Dispute in accordance
with the terms of this Agreement.
(iii) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, the parties acknowledge that it is possible
that a Gross-Up Payment (or a portion thereof) will be paid which should not
have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion
thereof) which should have been paid will not have been paid (an
"Underpayment"). An Underpayment shall be deemed to have occurred (i) upon
notice (formal or informal) to the Executive from any governmental taxing
authority that the Executive's tax liability (whether in respect of the
Executive's current taxable year or in respect of any prior taxable year) may be
increased by reason of the imposition of the Excise Tax on a Parachute Payment
or Parachute Payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by
reason of determination by the Company (which shall include the position taken
by the Company, together with its consolidated group, on its federal income tax
return) or (iv) upon the resolution of the Dispute to the Executive's
satisfaction. If an Underpayment occurs, the Executive shall promptly notify the
Company and the Company shall promptly, but in any
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event, at least five days prior to the date on which the applicable government
taxing authority has requested payment, pay to the Executive an additional
Gross-Up Payment equal to the amount of the Underpayment plus any interest and
penalties (other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown to be due on
the Executive's return) imposed on the Underpayment. An Excess Payment shall be
deemed to have occurred upon a "Final Determination" (as hereinafter defined)
that the Excise Tax shall not be imposed upon a Parachute Payment or Parachute
Payments (or portion thereof) with respect to which the Executive had previously
received a Gross-Up Payment. A "Final Determination" shall be deemed to have
occurred when the Executive has received from the applicable government taxing
authority a refund of taxes or other reduction in the Executive's tax liability
by reason of the Excise Payment and upon either (x) the date a determination is
made by, or an agreement is entered into with, the applicable governmental
taxing authority which finally and conclusively binds the Executive and such
taxing authority, or in the event that a claim is brought before a court of
competent jurisdiction, the date upon which a final determination has been made
by such court and either all appeals have been taken and finally resolved or the
time for all appeals has expired or (y) the statute of limitations with respect
to the Executive's applicable tax return has expired. If an Excess Payment is
determined to have been made, the amount of the Excess Payment shall be treated
as a loan by the Company to the Executive and the Executive shall pay to the
Company on demand (but not less than 10 days after the determination of such
Excess Payment and written notice has been delivered to the Executive) the
amount of the Excess Payment plus interest at an annual rate equal to the
Applicable Federal Rate provided for in Section 1274(d) of the Code from the
date the Gross- Up Payment (to which the Excess Payment relates) was paid to the
Executive until the date of repayment to the Company.
(iv) Notwithstanding anything contained in this Agreement
to the contrary, in the event that, according to the Determination, an Excise
Tax will be imposed on any Parachute Payment or Parachute Payments, the Company
shall pay to the applicable government taxing authorities as Excise Tax
withholding, the amount of the Excise Tax that the Company has actually withheld
from the Parachute Payment or Parachute Payments or the Gross Up Payment.
5. Protection of Confidential Information; Non-Competition
5.1 In view of the fact that the Executive's work for the
Company will bring the Executive into close contact with many confidential
affairs of the Company not readily available to the public, as well as plans for
future developments by the Company, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know how",
trade secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, and other business
affairs of the Company ("Confidential Information"),
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learned by the Executive heretofore or hereafter, and not to use or disclose
them to anyone outside of the Company, either during or after the Executive's
employment with the Company, except in the course of performing the Executive's
duties hereunder or with the Company's express written consent; provided,
however, that the restrictions of this Section 5.1.1 shall not apply to that
part of the Confidential Information that the Executive demonstrates is or
becomes generally available to the public other than as a result of a disclosure
by the Executive or is available, or becomes available, to the Executive on a
non-confidential basis, but only if the source of such information is not
prohibited from transmitting the information to the Executive by a contractual,
legal, fiduciary, or other obligation; and
5.1.2 To deliver promptly to the Company on termination of
the Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2 For a period of one (1) year after he ceases to be
employed by the Company under this Agreement or otherwise, if such cessation
arises pursuant to Section 4.3, or as a result of termination by the Executive
which is not pursuant to Section 4.4 or is otherwise in breach of this
Agreement, the Executive shall not, directly or indirectly, enter the employ of,
or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity; provided, however, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation or during such one (1) year
period, taking a position with a business the main business of which is the sale
of retail products to customers.
5.3 If the Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the
Company shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as the result of any
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transactions constituting a breach of any of the provisions of Section 5.2
hereof, and the Executive hereby agrees to account for and pay over such
Benefits to the Company. Each of the rights and remedies enumerated above shall
be independent of the other, and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or
5.2 hereof, or any part thereof, hereafter are construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect, without regard to the invalid
portions.
5.5 If any of the covenants contained in Sections 5.1 or
5.2 hereof, or any part thereof, are held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties hereto agree
that the court making such determination shall have the power to reduce the
duration and/or area of such provision and, in its reduced form, said provision
shall then be enforceable.
5.6 The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 5.1 and 5.2 hereof
upon the courts of any state within the geographical scope of such covenants. In
the event that the courts of any one or more of such states shall hold such
covenants wholly unenforceable by reason of the breadth of such covenants or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other states within the geographical scope of such covenants as to
breaches of such covenants in such other respective jurisdictions, the above
covenants as they relate to each state being for this purpose severable into
diverse and independent covenants.
5.7 In the event that any action, suit or other proceeding
in law or in equity is brought to enforce the covenants contained in Sections
5.1 and 5.2 hereof or to obtain money damages for the breach thereof, and such
action results in the award of a judgment for money damages or in the granting
of any injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding shall
(on demand of the Company) be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.
6. Inventions and Patents.
The Executive agrees that all processes, technologies and
inventions, including new contributions, improvements, ideas and discoveries,
whether patentable or not, conceived, developed, invented or made by him during
his employment by the Company or for one year thereafter (collectively,
"Inventions") shall belong to the Company, provided that such
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Inventions grew out of the Executive's work with the Company or any of its
subsidiaries or affiliates, are related to the business (commercial or
experimental) of the Company or any of its subsidiaries or affiliates or are
conceived or made on the Company's time or with the use of the Company's
facilities or materials. The Executive shall promptly disclose such Inventions
to the Company and shall, subject to reimbursement by the Company for all
reasonable expenses incurred by the Executive in connection therewith, (a)
assign to the Company, without additional compensation, all patent and other
rights to such Inventions for the United States and foreign countries; (b) sign
all papers necessary to carry out the foregoing; and (c) give testimony in
support of the Executive's inventorship.
7. Intellectual Property.
The Company shall be the sole owner of all the products and
proceeds of the Executive's services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Executive may acquire, obtain, develop or create in connection with and during
his employment, free and clear of any claims by the Executive (or anyone
claiming under the Executive) of any kind or character whatsoever (other than
the Executive's right to receive payments hereunder). The Executive shall, at
the request of the Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary or desirable to
evidence, establish, maintain, perfect, protect, enforce or defend its right,
title or interest in or to any such properties.
8. Indemnification.
To the fullest extent permitted by applicable law,
Executive shall be indemnified and held harmless for any action or failure to
act in his capacity as an officer or employee of the Company or any of its
affiliates or subsidiaries. In furtherance of the foregoing and not by way of
limitation, if Executive is a party or is threatened to be made a party to any
suit because he is an officer or employee of the Company or such affiliate or
subsidiary, he shall be indemnified against expenses, including reasonable
attorney's fees, judgments, fines and amounts paid in settlement if he acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interest of the Company, and with respect to any criminal action or
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Indemnification under this Section 8 shall be in addition to any other
indemnification by the Company of its officers and directors. Expenses incurred
by Executive in defending an action, suit or proceeding for which he claims the
right to be indemnified pursuant to this Section 8 shall be paid by the Company
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of Executive to repay such amount in
the event that it shall ultimately be determined that he is not entitled to
indemnification by the Company. Such undertaking shall be accepted without
reference to the financial ability of Executive to make repayment. The
provisions of this Section 8 shall apply as well to the
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Executive's actions and omissions as a trustee of any employee benefit plan of
the Company, its affiliates or subsidiaries.
9. Arbitration; Legal Fees
Except with respect to injunctive relief under Section 5 of
this Agreement, any dispute or controversy arising out of or relating to this
Agreement shall be resolved exclusively by arbitration in New York City in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. Judgment on the award may be entered in any court
having jurisdiction thereof. The Company shall reimburse the Executive's
reasonable costs and expenses incurred in connection with any arbitration
proceeding pursuant to this Section 9 if the Executive is the substantially
prevailing party in that proceeding.
10. Notices.
All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, sent by overnight
courier or mailed first class, postage prepaid, by registered or certified mail
(notices mailed shall be deemed to have been given on the date mailed), as
follows (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company, to:
Marvel Enterprises, Inc.
387 Park Avenue South
New York, New York 10016
Attention: General Counsel
If to the Executive, to:
F. Peter Cuneo
27 Old Hattertown Road
Redding, Connecticut 06896
11. General.
11.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York, without regard to the
conflict of law principles of such state.
11.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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11.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth. This Agreement expressly supersedes all
agreements and understandings between the parties regarding the subject matter
hereof and any such agreement is terminated as of the date first above written.
11.4 This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations, hereunder (i) to any affiliate
or (ii) to third parties in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any event
the obligations of the Company hereunder shall be binding on its successors or
assigns, whether by merger, consolidation or acquisition of all or substantially
all of its business or assets.
11.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11.6 This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
12. Subsidiaries and Affiliates.
As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by the
Company or other business entity in question, and the term "affiliate" shall
mean and include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the Company or other
business entity in question.
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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
COMPANY:
MARVEL ENTERPRISES, INC.
By: /s/ MORTON HANDEL
--------------------------------------
Morton Handel
Chairman of the Board
EXECUTIVE:
/s/ F. PETER CUNEO
--------------------------------------
F. Peter Cuneo
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SCHEDULE I
Additional Benefits:
--------------------
1. Automobile Allowance. The Executive shall be eligible
for an automobile allowance in the amount of $1,500 per month in accordance with
the Company's policy.
2. Stock Option Plan. The Executive will be granted, as
of the Effective Date, 750,000 options to purchase shares (the "Shares") of the
common stock, par value $.01 per share, of the Company pursuant to the terms of
the Marvel Enterprises, Inc. Stock Option Plan (the "Stock Option Plan")and
related Stock Option Agreement subject to the terms and conditions approved by
the committee of the Board of Directors of the Company which administers the
Stock Option Plan. The options shall be scheduled to vest as to one-quarter of
the Shares on the Effective Date and on each of the first, second and third
anniversaries of the Effective Date, shall vest as to all of the Shares upon a
Third Party Change in Control and shall be subject to all other terms and
conditions of the Stock Option Plan and the related Stock Option Agreement
between the Company and the Executive. The Executive's participation in the
Stock Option Plan shall not be, or be deemed to be, a fringe benefit or
additional benefit for purposes of Section 4.5(b)(iv) of this Agreement, and the
Executive's stock option rights shall be governed strictly in accordance with
the Stock Option Plan and the related Stock Option Agreement. In the event of
any conflict between this Agreement and the Stock Option Plan and the related
Stock Option Agreement, or any ambiguity in any such agreements, the Stock
Option Plan and the related Stock Option Agreement shall control.
3. Relocation Expenses. The Company shall provide the
Executive with a suitable one-bedroom apartment in Manhattan until the earlier
of the first anniversary of the Effective Date or the date the Executive
relocates his primary residence to a location in the New York City metropolitan
area. The Executive shall be reimbursed for real estate brokerage commissions of
up to five percent (5%) of the sale price of his current primary residence and
shall receive a $25,000 relocation allowance if the Executive relocates his
primary residence to a location in the New York City metropolitan area during
the Term. Reimbursement of real estate brokerage commissions shall be paid
promptly upon submission of documentation reasonably requested by the Company
and shall be "grossed-up" for any tax liability incurred by the Executive on
that reimbursement (or on the gross-up itself). Payment of the relocation
allowance shall be made promptly after the Executive's relocation.
4. Reimbursement of Legal Fees. The Executive shall be
reimbursed for his reasonable legal fees and expenses incurred in connection
with the review and negotiation of this Agreement.
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