SONY PICTURES TELEVISION INC.
As of September 1, 2013
Zackary A. Van Amburg
500 S. Arden Blvd.
Los Angeles, California 90020
Copy to:
Hansen, Jacobson, Teller, Hoberman,
Newman, Warren, Richman, Rush & Kaller, L.L.P.
450 North Roxbury Drive, 8th Floor
Beverly Hills, California 90210
Attention: Craig Jacobson, Esq.
Dear Mr. Van Amburg:
Reference is made to the employment agreement (the "Agreement") dated as of September 1, 2011, between you and Sony Pictures Television Inc. (the "Company"). All capitalized terms used herein without definition shall have the meanings ascribed to them in the Agreement.
The parties hereby amend the Agreement as follows:
1.Section 1 of the Agreement shall be deleted in its entirety and the following new Section 1 shall be substituted therefor:
"1.TERM OF EMPLOYMENT. The Company hereby employs Employee, and Employee hereby accepts employment, on the terms and subject to the conditions set forth in this Agreement, for a term (the "Employment Period") commencing on September 1, 2011 (“Commencement Date”) and continuing until August 31, 2017 (the "Scheduled Expiration Date"). Not later than April 30, 2017, the Company shall notify Employee in writing as to whether or not it is interested in negotiating an extension of the term of this Agreement beyond August 31, 2017, provided that (i) the failure of the Company to give such notice shall not be deemed to be a breach of this Agreement by the Company or give rise to any right to Employee or any obligation of the Company, and (ii) no such notice shall obligate or commit the Company to extend the term of this Agreement, which extension may only be accomplished by the Company and Employee entering into an amendment to this Agreement or a new employment agreement."
2.Section 3(a) of the Agreement shall be deleted in its entirety and the following new Section 3(a) shall be substituted therefor:
"(a)The Company shall pay to Employee a salary at the rate of $900,000 per year during the period September 1, 2011 through August 31, 2012; $936,000 per year during the period September 1, 2012 through August 31, 2013; and $1,500,000 per year during the period September 1, 2013 through the remainder of the Employment Period."
3.Section 3(c) of the Agreement shall be deleted in its entirety and the following new Section 3(c) shall be substituted therefor:
"(c)Effective September 1, 2011, Employee may be eligible to receive, in the sole and absolute discretion of the Company (considering such factors as the Company deems appropriate in its sole, subjective judgment), a discretionary annual bonus (a “Discretionary Bonus”). All Discretionary Bonuses are determined and awarded by the Company in accordance with its discretionary bonus program as from time to time in effect (currently known as “ASPIRE”) (and no amendment, change, modification, or termination to such Discretionary Bonus Program shall occur if the purpose is to deprive only Employee of a Discretionary Bonus). Employee’s discretionary bonus target under such program is currently 65%. This is a target only and the Company's determination whether or not to pay to Employee a Discretionary Bonus, the criteria therefore and the amount and timing of such bonus, if any, shall be final and binding (provided that the Company will pay any Discretionary Bonus payment due Employee at the same time it generally pays such bonus payments to other similarly situated Company executives). Effective September 1, 2013, Employee may be eligible to receive, in the sole and absolute discretion of the Company (considering such factors as the Company deems appropriate in its sole, subjective judgment), a discretionary annual bonus (a “Discretionary Bonus”). All Discretionary Bonuses are determined and awarded by the Company in accordance with its discretionary bonus program as from time to time in effect (currently known as “ASPIRE”) (and no amendment, change, modification, or termination to such Discretionary Bonus Program shall occur if the purpose is to deprive Employee of a Discretionary Bonus). Employee’s discretionary bonus target under such program is currently 75%. This is a target only and the Company's determination whether or not to pay to Employee a Discretionary Bonus, the criteria therefore and the amount and timing of such bonus, if any, shall be final and binding (provided that the Company will pay any Discretionary Bonus payment due Employee at the same time it generally pays such bonus payments to other similarly situated Company executives)."
4.Section 3(e) of the Agreement shall be deleted in its entirety and the following new Section 3(e) shall be substituted therefor:
"(e)Employee shall be eligible to participate in the Company's Long Term Executive Compensation Plan, as such plan is in effect from time to time (the "LTEC"), with the calculation and payment of any and all amounts payable under the LTEC (including, but not limited to, any determinations with respect to pro rated payments) to be made in accordance with, and subject to the terms and conditions of, the LTEC, if any, as amended from time to time. Employee's target award under the LTEC shall be as set forth in the table below. Employee and the Company each hereby acknowledge and agree that Employee’s target award will be in the form of cash and the amount of such award will be determined by the Company in its sole and absolute discretion:
Three Year Performance CycleTarget Award
April 1, 2009 - March 31, 2012$229,167
April 1, 2010 - March 31, 2013$279,167
April 1, 2011 – March 31, 2014$329,167
April 1, 2012 - March 31, 2015$350,000
and each subsequent three year cycle$350,000
Effective September 1, 2013, Employee shall be eligible to continue to participate in the Company's Long Term Incentive Plan, as such plan is in effect from time to time (the "LTIP"), with the calculation and cash payment of any and all amounts payable under the LTIP to be made in accordance with, and subject to the terms and conditions of, the LTIP as amended from time to time. Effective April 1, 2013 Employee's target award under the LTIP shall be $750,000.”
5.Effective September 1, 2013, Section 3(f) of the Agreement shallbe deleted in its entirety and the following new Section 3(f) is substituted therefore:
“(f)Employee shall receive a one-time recognition payment for “BREAKING BAD” in the amount of $700,000, payable within 30 days following the execution of this Amendment.”
6.Effective as of April 1, 2013,Section 3(h) of the Agreement is hereby deleted in its entirety, and the following new Section 3(h) is substituted therefor:
“(h)Series/MOW/Mini-Series/Syndication Incentive Plan. Employee shall be eligible to receive the various incentive payments described in this Section 3(h) (collectively the “Incentive Payments”), which Incentive Payments, if any, shall be determined and payable as provided herein.
(i)Series/MOW/Mini-Series/Syndication Incentive Plan Definitions.
“Financial Statements” means the Company’s final annual financial statements for the applicable fiscal year.
“Full Season” means for a Season (i) with respect to a particular weekly series Produced for exhibition on an Included Medium, the group of a minimum of 6 episodes of such series that are Produced, and (ii) with respect to a particular strip series Produced for exhibition on an Included Medium, the group of a minimum, of 10 weeks (5 episodes per week if Produced for first-run Syndication) of original episodes of such series that are Produced.
“Earnings After Overhead” means, with respect to a particular series (i.e., all episodes produced of such series), the cumulative EBIT recorded in the Company’s Financial Statements in accordance with GAAP, or any other accounting policy adopted by the Company (e.g., IFRS).
“Included Medium” means Network television, first-run Syndication, cable television, SVOD and pay television. In the event Company (whether directly or through any subsidiary or division of the Company or any co-production) produces programs for exhibition on other forms of television which are not Included Mediums, the parties will discuss in good faith whether and to what extent the provisions of this Section 3(h) shall apply.
“License Fee Surplus” means with respect to a Scripted Series, the excess, if any, of the initial license fees and any adjustments to such license fees including, for example, breakage, received by or credited to Company with respect to the United States and other territories covered by the initial United States License agreement over the cost of production expressed as a percentage and measured for each Season upon the estimated final cost (“EFC”) of production being determined by the Company not later than one hundred and twenty (120) days after delivery of the final episode of each Season.
“MOW/Mini-Series” means (i) a motion picture Produced for initial exhibition on an Included Medium or (ii) a mini-series consisting of at least two (2) parts of at least two (2) hours per part Produced for exhibition on an Included Medium.
“Network” means ABC, CBS, FBC, NBC and the CW.
“Produced” means the applicable production company has completed production of the applicable episode(s) of a particular series, MOW or Mini-Series.
“Pro-Rata Portion” shall be computed as follows: the numerator of such computation shall be the number of episodes of the Scripted Series ordered during the Employment Period and the denominator shall be either 40, 50, 65 or 88, as applicable in subsection (ii)(B) below, provided that in no event shall the numerator be larger than the denominator. For example, in the event ten (10) episodes of a Network Scripted Series are ordered during the Employment Period and said Scripted Series ultimately consists of 65 Produced episodes, then the amount of the incentive payment payable to Employee shall be 10/65ths of $500,000. Notwithstanding the foregoing, Employee shall also receive credit for additional episodes ordered within one (1) year following the end of the Employment Period (the “Tail Period). Using the example set forth in the immediately preceding sentence, if ten (10) additional episodes are ordered during the Tail Period, then the payment to Employee would be in the amount of 20/65ths of $500,000.
“Scripted Series” means any episodic series Produced for an Included Medium by the Company (or any subsidiary or division of the Company) or any co-production, the episodes of which are filmed, videotaped or otherwise recorded based upon scripted materials and which episodes are intended for initial exhibition in the United States.
“Season” means the television season, as such term is commonly understood as of the applicable date in the entertainment industry in Los Angeles, California as being customary in the applicable Included Medium (e.g., the period from approximately September 1 through August 31 for first run Network or syndication broadcast and/or any other appropriate period for cable, SVOD or pay television as may be established on a show-by-show or network-by-network basis).
“Syndication” means the sale or license or similar arrangement on a market by market basis for telecast in the United States.
“Unscripted Series” means any episodic unscripted, reality or game show series Produced for an Included Medium by the Company (or any subsidiary or division of the Company) or any co-production, which is intended for initial exhibition in the United States.
(ii)Series/MOW/Mini-Series/Syndication Incentive Plan
(A)Employee shall be entitled to an incentive payment for each Full Season of a Scripted Series for which Company receives a non-contingent order during the Employment Period for initial exhibition on an Included Medium, commencing with the second Full Season in the gross amount of $100,000, or $125,000 commencing with the fourth Full Season (in each case, less applicable withholding and deductions), payable within 90 days of Company’s fiscal year end following the completion of production of the applicable Full Season whether or not such completion of production occurs during the Employment Period.
The applicable incentive payable set forth in this subsection (A) shall not be payable for a particular Full Season if the original episodic order accepted by Company for such Full Season is subsequently reduced by the licensee. At such time that the total compensation paid to Employee for each of the last four (4) years of the Employment Period pursuant to this Agreement exceeds $5,000,000, then one-half (1/2) of the amounts paid to Employee with respect to a particular Scripted Series pursuant to this subsection (A) shall be recouped against the amounts for the same Scripted Series payable to Employee pursuant to subsection (B) below commencing with Company’s 2014 fiscal year. At the end of the Employment Period, if the total compensation paid to Employee pursuant to this section 3(h) over the last four (4) years of the Employment Period does not total at least $20,000,000, then any amounts recouped pursuant to this subsection (A) shall be refunded to Employee within 90 days of Company’s fiscal year end until Employee’s total compensation for such four (4) year period pursuant to this Agreement equals $20,000,000. For the avoidance of doubt, the $700,000 ($350,000 with respect to each of Company’s 2014 and 2015 fiscal years) to be paid to Employee within thirty (30) days following the execution of this Agreement with respect to “BREAKING BAD” is part of Employee’s total compensation.
(B)For each Scripted Series described in subsection (A) above for which Company receives a non-contingent order for the first Full Season during the Employment Period, which is sold (whether during or after the Employment Period) during what is accepted within the custom and practice of Company as the off-network syndication window in Syndication, to a basic cable network, or to an SVOD service (e.g., Netflix), which sale covers at least 40 Produced episodes of such Scripted Series (whether or not all such 40 episodes are Produced during or after the Employment Period), Employee shall be entitled to a one-time only incentive payment in the Pro-Rata Portion of the gross amount of $500,000 (less applicable withholding and deductions), payable within 90 days of Company’s fiscal year end following the commencement of the Season for which such series is first sold as previously described in this sentence. For each Scripted Series described in subsection (A) above for which Company receives a non-contingent order for the first Full Season during the Employment Period, which is sold (whether during or after the Employment Period) during what is accepted within the custom and practice of Company as the off-network syndication window, in Syndication, to a basic cable network, or to an SVOD service (e.g., Netflix), which sale covers at least 50 Produced episodes of such Scripted Series (whether or not all such 50 episodes are Produced during or after the Employment Period),Employee shall be entitled to an additional (i.e., such amount shall be in addition to the one-time bonus of $500,000 payable immediately above for such Scripted Series, for a total bonus for such Scripted Series of $1,000,000 gross) one-time only incentive payment in the Pro-Rata Portion of the gross amount of $500,000 (less applicable withholdings and deductions), payable within 90 days of Company’s fiscal year end, following the commencement of the Season for which such Series is first sold as previously described in this sentence. Furthermore, in the event that the Scripted Series in question is originally Produced for a Network, then the applicable number of episodes referred to in the immediately preceding sentences shall be deemed to be 88 in lieu of 50 and 65 in lieu of 40, respectively. In no event shall Employee be entitled to receive more than $1,000,000 pursuant to this subsection (B) for a particular Scripted Series.
(C)Employee shall be entitled to an incentive payment for each Full Season of an Unscripted Series for which Company receives a non-contingent order during the Employment Period for initial exhibition on an Included Medium commencing with the first Full Season, in the gross amount of $25,000, or $50,000 commencing with the third Full Season (less applicable withholding and deductions), payable within 90 days of Company’s fiscal year end following the completion of production of the applicable Full Season whether or not such completion of production occurs during the Employment Period.
Notwithstanding the foregoing, the applicable incentive payment set forth in this subsection (C) shall be paid only for a season of an Unscripted Series where the initial license fee received by Company with respect to the United States and any other territories covered by the initial United States license agreement is equal to or more than the aggregate production costs of the Unscripted Series inclusive of a 5% or more executive producer fee, which shall be computed based upon the greenlight (license fee plus breakage less the aggregate cost of production net of any tax credits or rebates). Such computation will be remeasured upon determination of the EFC by Company not later than one hundred and twenty (120) days after delivery of the final episodes of each Season and if within the greater of (i) 5% of the greenlight deficit/surplus number and (ii) an amount equal to aggregate of $5,000 per episode for such Season, the applicable incentive payment will be payable.
(D)As to each Series produced for first-run Syndication which consists of at least thirteen (13) weeks of five (5) episodes per week Produced during the Employment Period for initial exhibition in the United States, Employee shall be entitled to receive incentive payments in the following amounts (less applicable withholding and deductions) payable within ninety (90) days of when Company’s Financial Statements become available with respect to the fiscal years during which such Series (as an aggregate and not on a fiscal year by fiscal year basis) exceeds the amount of Earnings After Overhead set forth below based upon estimates used to close the Company’s books: