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4.

5.

6.

million options vesting in equal parts in the third, fourth and fifth years of

the employment agreement. The second tranche consisted of two million

options that would vest immediately if Ovitz and the Company renewed

his employment.

The employment agreement sought to protect both parties in the event that

Ovitz’s employment ended prematurely and provided that absent certain

defined causes, neither party could terminate the agreement without

penalty. If Ovitz left the Company for any reason not permitted by the

employment agreement, he would forfeit any benefits remaining under the

employment agreement and could be enjoined from working for a

competitor.

If

Disney

fired

Ovitz

for

any

reason

other

than

gross

negligence or malfeasance, Ovitz would be entitled to a non-fault

termination (“NFT”) payment which consisted of his remaining salary,

$7.5 million a year for any unaccrued bonuses, the immediate vesting of

his first tranche of options and a $10 million cash payment. Disney IV,

slip op. at 16-17.

Within a year of his hiring, it became apparent that the Ovitz-Eisner

combination would not enjoy the success that Wells and Eisner had shared

at the Company.

Eisner inquired of the Company’s General Counsel as to whether there

was cause to terminate Ovitz, and thereby avoid the substantial NFT

payout

to

Ovitz.

Sanford

Litvack,

the

Company’s

General

Counsel,

6

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