EXHIBIT 10.28
 

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February 16, 2012
 
Mr. William B. Manning
128 Buttercup Lane
Huntington, NY  11728

Dear Mr. Manning,
 
We are delighted to confirm to you that we are offering you the position of
Controller at Function(x) Inc. (“Function(x)” or the “Company”), subject to the
terms and conditions set forth herein.  Assuming you accept our offer, you will
become an employee commencing with the start date stated in Section 1 of this
letter.  The terms and conditions of your employment with Function(x) are set
forth in this letter and our employee manual.  This offer is subject to the
satisfactory completion of the conditions set forth in Section 13(a) of this
letter.
 
1.              Start Date and Term.
 
(a) Term:  Your date of hire will be February 17, 2012.
 
(b) The term of your employment (“Initial Term”) shall continue for a period of
three (3) years from your date of hire.  With the mutual agreement of you and
the Company, in each party’s sole discretion, the term of your agreement may be
renewed for another 1-year period (the “Renewal Term”).  The Initial Term and
any Renewal Term shall collectively be referred to as the “Term”.
 
2.             Duties.  You will work in New York, New York and report to the
Chief Financial Officer or such other person that the Company may designate from
time to time.  Until such time as the Company hires a Chief Financial Officer,
you shall report to the Chief Executive Officer.  You shall devote your full
time, attention, energy, knowledge, best professional efforts and skills to the
duties assigned to you.  To the extent that the Board of Directors of
Function(x) requires you serve in capacities other than Controller, but still
relating to the finance and accounting responsibilities for the Company, you
shall accept such responsibilities.  Notwithstanding the foregoing, you may work
for Robert F.X. Sillerman on personal matters and on matters for related
companies, and you will track your time working on such matters so that the
Company may bill for such time accordingly.
 
3.              Compensation.
 
(a) Base Salary.  In consideration for the performance of your services
hereunder, you will be paid a base salary at the annual rate of Two Hundred
Fifty Thousand Dollars ($250,000.00) (“Base Salary”), payable in accordance with
the Company’s normal payroll practices and subject to applicable tax and payroll
withholdings and deductions.  Currently, the Company’s payroll is payable on the
fifteenth and the last day of each month.  As an exempt employee, you will not
be eligible for overtime pay.
 
 
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(b)  Discretionary Bonus.  You will also be eligible to receive a discretionary
bonus, the existence and amount of which is determined in the sole discretion of
the Company.  Unless expressly and specifically agreed to in writing, no bonus
compensation will be earned, paid or awarded unless you are in the continuous
employment of the Company through the date of payment.
 
(c) Equity Grants:  You shall receive the following minimum grants (the “Minimum
Grants”) of restricted stock:
 
At [the beginning of the first year of your employment], not less than One
Hundred Fifty Thousand (150,000) shares of Company common stock (such minimum
amount being subject to adjustment for stock dividends, subdivisions,
reclassifications, recapitalizations and other similar events affecting all of
the shares of Company common stock), one-third (1/3) of which shall fully vest
on the last day of each of the first, second, and third year you are employed by
the Company (or any of its subsidiaries).
 
(d) Option Grants:  If and when approved by the Company’s Compensation
Committee, you shall receive a minimum grant aggregating Two Hundred Twenty-Five
Thousand (225,000) stock options.
 
(i) This award is part of our Company-wide stock option plan.  Company-wide
consideration of additional options will be done annually and you will be
considered for additional awards as part of that process.  All additional awards
are made at the sole discretion of the Company and its Compensation Committee.

(ii) The stock options will vest 33% in arrears at the end of your first
Employment Year and thereafter vest ratably monthly over the remaining 24
months.
 
(iii) The strike price for the initial and additional options will be fixed by
the Compensation Committee, but it is likely to be based on the fair market
value of the Company’s common stock at the time of the grant.
 
(iv) For the purpose of this letter agreement, an “Employment Year” shall be a
full calendar year commencing on the date Employment begins at the Company.
 
4.             Benefits.  Subject to the eligibility requirements and other
terms and conditions of the respective plan documents, you may be eligible to
participate in benefits offered by the Company, as may be in effect or modified
from time to time.  Furthermore, you are currently eligible for three (3) weeks
of paid vacation time per calendar year (such vacation days to be prorated based
on the date you commence employment with the Company) in accordance with, and
subject to, the Company’s vacation policy, as it may change from time to time,
with the timing of any such vacation to be agreed upon with your manager.  You
will be entitled to reimbursement of travel and other business expenses in
accordance with the Company’s guidelines commensurate with your level of
compensation and responsibility.
 
 
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5.              Severance.
 
(a) In the event your employment is terminated due to your death, Disability (as
defined in Section 5(e) below) or is terminated by the Company without Cause (as
defined in Section 5(c) below), or in the event there is a Change of Control (as
defined in Section 5(d) below):
 
(i) You shall receive the Termination Payments (as defined in Section 5(b)
below);
 
(ii) You shall also be paid a lump sum by the Company, which shall be paid as
soon as practicable but not later than thirty (30) days following such
termination date, equal to the Base Salary in effect on the date of termination
for a three (3) month period following such termination (the “Post Termination
Salary Payment”);
 
(iii) You shall also be paid a pro-rated annual bonus based on the prior year’s
bonus;
 
(iv) Any restricted shares or stock options previously granted under Section
3(d) and Section 3(e) of this letter agreement shall vest as follows:
 
(1) If at the end of the Initial Term, an agreement is not signed for the
Renewal Term, all restricted stock and options granted shall vest.
 
(2) If there is a Change of Control, all granted options shall vest;
 
(3) If termination is by the Company without Cause or due to Death or
Disability, all restricted stock and options granted shall vest;
 
(4) If termination is due to Cause, then you shall only be entitled to retain
that restricted stock and options which have vested as of the date of
termination.
 
(b) In the event you voluntarily terminate your employment or your employment is
terminated by the Company for Cause (as defined in Section 5(c) below), you
shall be paid, as soon as practicable but no later than thirty (30) days
following such termination, (i) all earned but unpaid Base Salary through the
date of termination; (ii) any previously awarded and unpaid bonus; and (iii) all
unpaid reimbursable expenses incurred by you through the date of termination
(the “Termination Payments”). In the event your employment is terminated for
Cause, you shall have no further obligation or liability to the Company in
connection with the performance of this agreement (except the continuing
obligations specified in Section 7 and Section 8 and Section 9 of this letter
agreement).
 
 
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(c) For the purposes of this letter agreement, “Cause” shall mean that you have:
 
(i) falsified or omitted information as required by Section 10 of this letter
agreement;
 
(ii) committed an act which, as set forth in any employment handbook promulgated
by the Company, may lead to termination of employment;
 
(iii) engaged in any intentional act of fraud against the Company;
 
(iv) engaged in willful malfeasance or gross negligence in the performance of
this letter agreement or capacity as an employee of the Company;
 
(v) refused to perform the duties required or requested consistent with your
obligations under this letter agreement and under law, which refusal continues
for more than five (5) days following the Company’s written notice of such
refusal;
 
(vi) been convicted of a felony or entering a plea of nolo contendre to a felony
charge;
 
(vii) materially breached this letter agreement; or
 
(viii) engaged in an act which leads to a finding by the Securities and Exchange
Commission, which, in the opinion of independent counsel selected by the
Company, could reasonably be expected to impair or impede the Company’s ability
to register, list, or otherwise offer its stock to the public, or to maintain
itself as a publicly-traded company in good standing with the Securities and
Exchange Commission.
 
(d) For the purposes of this letter agreement, “Change of Control” shall mean
the occurrence, in a single transaction or in a series of related transactions,
of any one or more of the following events:
 
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (an “Exchange
Act Person”) becomes the “beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
more than thirty-five percent (35%) of the combined voting power of the Company,
then outstanding securities other than by virtue of a merger, consolidation or
similar transaction, provided that, notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (i) if Robert F.X. Sillerman or affiliates
of his (a “Sillerman Controlled Entity”) beneficially own more than such
thirty-five percent (35%) at any time; or (ii) solely because the level of
ownership held by any Exchange Act Person (the “Subject Person”) exceeds the
designated percentage threshold of the outstanding voting securities as a result
of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided further that if a Change in
Control would occur (but for the operation of this proviso) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, any such Subject Person (so long as not a Sillerman Controlled
Entity) becomes the owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities owned by such Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;
 
 
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(ii) there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company if, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving entity in such merger, consolidation or similar transaction;
 
(iii) there is consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its subsidiaries
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportion as their ownership of the Company immediately
prior to such sale, lease, license or other disposition; or
 
(iv) during any period of 12 consecutive months, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by stockholders, of each new director was approved by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of the period.
 
(e) For the purposes of this letter agreement, “Disability” shall mean your
inability, or failure, to perform the essential functions of your position, with
or without reasonable accommodation, for any period of six (6) consecutive
months or more, by reason of any medically determinable physical or mental
impairment.
 
(f) The Company will provide the following post-termination health and dental
benefits under the circumstances outlined below:
 
(i) The Company agrees that in the event of the your death during the Term, the
Company will pay to your estate the following, which shall be distributed in
accordance with the your will or testamentary plan, as directed by any court
having jurisdiction over such estate, or as directed by any duly appointed
administrator or executor of your estate, the full costs relating to the
continuation of any group health and dental plan provided through the Company in
which you participated at the time of your death, and through which coverage was
provided to any of your dependent(s) at the date of your death, for a period of
two (2) months following your death, without regard to the availability or
expiration of any continuation option or feature provided by the plan(s), or as
otherwise provided to a lesser extent by applicable law at the time of your
death.
 
(ii) In the event the Company terminates your employment without Cause or upon
Change of Control, other than due to Disability or death, a continuation of the
health and dental benefits provided to you and your covered dependents under the
Company’s health and dental plans as in effect from time to time (except that if
providing any such benefit under the terms of a plan would cause an adverse tax
effect, the Company may provide you with equivalent cash payments outside of the
plan at the same time the benefits would otherwise have been taxable to you) for
a period of two (2) months following such termination, with no additional cost
or charge payable by you.
 
 
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(g) Notwithstanding the foregoing, if at the time of your Separation from
Service (as defined in Treasury Regulation 1.409A-1(h)) you are a “specified
employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or
benefits that constitutes “nonqualified deferred compensation” within the
meaning of Code Section 409A that becomes payable to you on account of your
Separation from Service will not be paid until after the earlier of (i) first
business day of the seventh month following your Separation from Service, or
(ii) the date of your death (the “ 409A Suspension Period ”). Within fourteen
(14) calendar days after the end of the 409A Suspension Period, you shall be
paid a cash lump sum payment equal to any payments (including interest on any
such payments), and benefits that the Company would otherwise have been required
to provide under this Section 5 but for the imposition of the 409A Suspension
Period delayed because of the preceding sentence. Thereafter, you shall receive
any remaining payments and benefits due under this agreement in accordance with
the terms of this Section (as if there had not been any Suspension Period
beforehand).
 
(h) The Company may provide (in its sole discretion) that you may continue to
participate in any benefits delayed, provided that you shall bear the full cost
of such benefits during such delay period.  Upon the date such benefits would
otherwise commence pursuant to this Section 6 hereof, the Company shall
reimburse you the Company’s share of the cost of such benefits, to the extent
that such costs otherwise would have been paid by the Company or to the extent
that such benefits otherwise would have been provided by the Company at no cost
to you, in each case had such benefits commenced immediately upon the
termination of your employment.  Any remaining benefits shall be reimbursed or
provided by the Company in accordance with the schedule and procedures specified
herein.
 
(i) Impact of Section 409A.  It is the intention of both the Company and you
that the benefits and rights to which you could be entitled pursuant to this
Agreement comply with Code Section 409A and the Treasury Regulations and other
guidance promulgated or issued thereunder (“Section 409A”), to the extent that
the requirements of Section 409A are applicable thereto, and the provisions of
this Agreement shall be construed in a manner consistent with that
intention.  If you or Function(x) believes, at any time, that any such benefit
or right that is subject to Section 409A does not so comply, each of us shall
promptly advise the other and shall negotiate reasonably and in good faith to
amend the terms of such benefits and rights such that they comply with Section
409A (with the most limited possible economic effect on you and on the Company).
 
(i) Distributions on Account of Separation from Service.  If and to the extent
required to comply with Section 409A, no payment or benefit required to be paid
under this Agreement on account of termination of your employment shall be made
unless and until you incur a “separation from service” within the meaning of
Section 409A.
 
(ii) No Acceleration of Payments. Neither the Company nor you, individually or
in combination, may accelerate any payment or benefit that is subject to Section
409A, except in compliance with Section 409A and the provisions of this
Agreement, and no amount that is subject to Section 409A shall be paid prior to
the earliest date on which it may be paid without violating Section 409A.
 
 
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(iii) Treatment of Each Installment as a Separate Payment and Timing of
Payments. For purposes of applying the provisions of Section 409A to this
Agreement, each separately identified amount to which you are entitled under
this Agreement shall be treated as a separate payment.  In addition, to the
extent permissible under Section 409A, any series of installment payments under
this Agreement shall be treated as a right to a series of separate
payments.  Whenever a payment under this Agreement specifies a payment period
with reference to a number of days, the actual date of payment within the
specified period shall be within the sole discretion of the Company.
 
(j) Payment Following a Change in Control.  In the event that the aggregate of
all payments or benefits made or provided to you under this Agreement and under
all other plans and programs of the Company (the “Aggregate Payment”) is
determined to constitute a Parachute Payment, as such term is defined in
Section 280G(b)(2) of the Code, the Company shall pay you, prior to the time any
excise tax imposed by Section 4999 of the Code (“Excise Tax ”) is payable with
respect to such Aggregate Payment, an amount (the “Gross-Up Payment”) which,
after the imposition of all excise, federal, state and local income taxes on the
Aggregate Payment and the Gross-Up Payment, enables you to retain a total amount
equal to the Aggregate Payment. The determination of whether the Aggregate
Payment constitutes a Parachute Payment and, if so, the amount to be paid to you
and the time of payment pursuant to this subsection shall be made not later than
sixty (60) days following each Change in Control by an independent auditor (the
“Auditor”) jointly selected by you and the Company and paid by the Company . The
Auditor shall be a nationally recognized United States public accounting firm
which has not, during the two years preceding the date of its selection, acted
in any way on behalf of the Company or any affiliate thereof. If you and the
Company cannot agree on the firm to serve as the Auditor, then we shall each
select one accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor.]
 
6.              Compliance with Policies and Procedures.  You agree to be bound
by and to comply fully with all Company policies and procedures for employees.
 
7.              Confidentiality.
 
(a) You acknowledge that, as a result of your employment with the Company, you
will be in possession of trade secrets and confidential and proprietary
information (the "Confidential Information") of the Company.  You agree to keep
secret all Confidential Information and not to disclose Confidential Information
to anyone outside of the Company (other than to the Company's advisors, agents,
consultants, financing sources and other representatives), except in connection
with the performance of your duties under this letter, provided that: (i) you
shall have no such obligation to the extent Confidential Information is or
becomes publicly known, other than as a result of your breach of your
obligations hereunder; and (ii) you may disclose such information pursuant to a
court or similar order, but you agree to use reasonable efforts to provide the
Company with prompt notice of such request so that the Company may seek an
appropriate protective order.  You agree to deliver promptly to the Company at
the termination of your employment, or at any other time the Company may so
request, all memoranda, notes, records, reports, and other documents (including
electronically stored information) relating to the Company's business which you
obtained while employed by, or otherwise serving or acting on behalf of, the
Company and which you may then possess or have under your control. You
acknowledge that the disclosure of Confidential Information would have a
material adverse effect on the operations and development of the business of the
Company. Therefore, you agree that in the event of your failure to comply with
the provisions of this Section 7(a) the Company shall be entitled to the entry
of an injunction or other equitable relief and you shall not object to such
injunction or equitable relief on the basis of an adequate remedy at law or
other reason. This remedy shall be in addition to any other remedies available
to the Company.
 
 
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(b) You agree not to disclose the terms of this letter to anyone except your
immediate family and your tax advisors or legal counsel, prospective employers
(but with disclosure limited to terms relating to your post-employment
restrictions under this letter), pursuant to a court or similar order, or in
connection with any proceeding to enforce your rights under this letter or any
other agreement between you and the Company, except as otherwise required by
law.
 
8.             Company Work Product. You acknowledge and agree that all of the
ideas, concepts, inventions and work product rendered or provided by you during
the term of your employment which directly or indirectly relate to the Company's
business, whether alone or in conjunction with others (collectively, and without
limitation, the "Company Work Product"), whether created at home or at the
office and whether or not created during normal business hours, shall (a) be the
sole and exclusive property of the Company and you shall not have any right,
title or interest therein and (b) constitute "works made for hire" under all
applicable copyright, trademark, and similar or related statutes, regulations,
or decisional law.  In furtherance of the foregoing, you hereby assign to the
Company all of your rights, title, and interest, whether choate or inchoate or
whole or partial, in any Company Work Product created, developed, or discovered
by you during the term of your employment.  You further agree to cooperate fully
and promptly with, and otherwise facilitate, any efforts by the Company to vest
in the Company all rights, title and interest in and to the Company Work Product
and to register, preserve, and protect the Company Work Product from use by
others, or from dilution or diminution.  You agree to execute and deliver any
and all documents, agreements and instruments to evidence the rights of the
Company in the Company Work Product as provided in this Section 8. You hereby
irrevocably name the Company as your attorney-in­-fact, and irrevocably grant to
the Company a power of attorney to execute and deliver any and all documents,
agreements and instruments in your name as may be reasonably required to give
effect to this Section 8; provided, that this power of attorney shall be
exercised only with respect to any document, agreement or instrument that you
fail to execute and deliver after five days written request by the Company.  The
rights granted to the Company in this Section 8 shall continue in effect after
the termination or expiration of your employment term to the extent necessary
for the Company's full enjoyment of such rights.
 
9.              Restrictive Covenants.
 
(a) During the Term and for a period of one (1) year after termination of your
employment hereunder, you shall not engage, whether directly or indirectly,
through a sole proprietorship, or as an employee, officer, consultant, director,
manager, managing member, stockholder, limited partner, general partner, trustee
or member of any corporation, general partnership, limited partnership, trust,
limited liability company or any other entity, in any business which is directly
competitive with the Company’s Business. For purposes of this Section 9, the
term “Business” shall mean (x) any business in which the Company is actually
engaged as of the termination date of your employment or (y) any business in
which, as of the termination date of your employment, the Company, with your
knowledge and/or participation, is actively planning on becoming engaged during
within the ensuing twelve (12) months from the termination date of your
employment.
 
(b) During the Term and for a period of one (1) year after termination of your
employment hereunder, you shall not:
 
(i) Request, induce or attempt to influence any person or entity who is or was a
client, customer, contractor or supplier of the Company to limit, curtail or
cancel its business with the Company; or
 
(ii) Request, induce, or attempt to influence any current or future officer,
director, employee, consultant, agent or representative of the Company to: (A)
terminate his, her, or its employment or business relationship with the Company;
or (B) commit any act that, if committed by you, would constitute a breach of
any term or provision of this Section 9.
 
10.            Background Information.  As more fully described on the following
pages, the Company may conduct a background check, which may include a “consumer
report” and/or an “investigative consumer report” prepared by Function(x) or by
a third party.  These reports may be obtained at any time after receipt of your
authorization and, if you are hired, throughout your employment.  Falsification
or omission of any information previously provided to the Company or provided to
the Company on the attached release may disqualify you for employment or result
in your immediate dismissal, if hired.  Your rights relating to this background
check are more fully set forth on the attached release.
 
 
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11.           Representations.  You represent, warrant and covenant to the
Company that you are free to execute this letter and provide the services
contemplated hereunder and the engagement hereunder does not conflict with or
violate, and will not be restricted by any pre-existing business relationship or
agreement to which you are a party or are otherwise bound.  Without limiting the
foregoing, you further represent, warrant and covenant to the Company that you
are under no contractual commitments, including without limitation, any
confidentiality, proprietary rights, non-solicitation, non-competition agreement
or similar type of restrictive covenant agreement, inconsistent with your
obligations to the Company and that you will not at any time during the course
of your employment by the Company violate and/or breach any obligation or
contractual/common law commitment that you may have to a third party or prior
employer.
 
12.           Superseding of Prior Understandings or Agreements; No Employment
or Compensation Guarantees or Other Modifications Except as Provided
Herein.  You acknowledge that you have not relied on any oral or written
representations or understandings not explicitly contained herein in executing
this letter.  This document supersedes any and all oral or written
understandings or agreements regarding your employment with the Company or any
of its affiliates.  No employee or representative of the Company, other than in
a writing signed by an authorized officer of the Company, may enter into any
agreement or understanding (a) guaranteeing you employment with the Company for
any specific duration, (b) providing you with a guaranteed level of compensation
with the Company, whether incentive compensation, severance pay or otherwise, or
(c) otherwise modifying the terms of this letter.
 
13.            Miscellaneous.
 
(a) This offer is subject to the satisfactory completion of the Company’s
standard drug, background and reference screening, authorization of your right
to work in the United States, and the absence of any non-competition agreement
or other restrictions that would prohibit or interfere with your working for the
Company.
 
(b) If any provision of this letter is or becomes invalid, illegal or
unenforceable in any respect under the law, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired.
 
(c) This letter shall be governed by and construed in accordance with the laws
of the State of New York, without giving reference to the principles of
conflicts of laws or where the parties are located at the time a dispute arises.
 
 
 
Signatures on following page
 
 
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We look forward to you joining the Company.  If the terms of this letter are
acceptable to you and you are ready, willing and able to abide by all the
conditions enumerated herein, please sign and date this letter below and return
it to me by the deadline provided above.
 

      Sincerely,                
 
 
By:
Janet Scardino           Chief Executive Officer               Acknowledged and
Agreed to:                     Name:           Date:          

 
 
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