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EXHIBIT 10-T
Xx. Xxxxxxx X. Xxxxxxx
Page 1
September 5, 1996
Xx. Xxxxxxx X. Xxxxxxx
c/o Xxxxxx, Xxxxxxx, Xxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Dear Xxxx:
This letter, when signed by you and us, shall confirm and constitute the
agreement between you and Advanta Information, Inc. (the "Company") relating to
your employment with the Company as follows:
1. Title and Duties. Your title will be Chief Executive Officer and
Director of the Company. In that capacity you will perform such
senior executive duties on a full-time basis consistent with your
position as the Board of Directors of the Company reasonably
determines, including oversight of the business and operations of the
Company. Advanta Corp. ("Advanta") xxxxxx agrees to vote or cause to
be voted all shares of common stock of the Company beneficially owned
by Advanta and/or its affiliates in favor of your election to the
Board of Directors of Advanta Information, Inc., during the term of
your employment with the Company.
2. Start Date. Your employment will commence on or about October 1,
1996.
3. Base Salary. Your base salary in this position will be not less than
$475,000 annually, payable in periodic installments in accordance with
the Company's regular payroll practices in effect from time to time
(but no less frequently than monthly). The Board shall have the
discretion to review your Base Salary periodically.
4. Annual Bonus. You shall be eligible to participate in Advanta's
Management Incentive Plan (AMIP). Your target bonus will be 75% of
your Base Salary each year. Your AMIP bonus for the portion of the
year in 1996 during which you are employed shall be prorated based on
the number of days you are employed, provided that your bonus for this
period shall be calculated on the basis of an annual minimum of
$525,000, also prorated based on the number of days you are employed
in 1996. Your minimum AMIP bonus for 1997 attributable to the number
of days worked by you in 1997 up to the completion of your first year
of employment shall be calculated on the basis of an annual minimum of
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$525,000, prorated based on the number of days you are employed in
1997 prior to the completion of your first year of employment.
5. Advanta Restricted Stock Award.
(a) Upon commencement of your employment with the Company, Advanta
will grant and convey to you one hundred thousand (100,000)
shares of Class B restricted stock (the "Bonus Shares"). The
Bonus Shares shall vest (i.e., become free of restrictions) at
the rate of twenty-five thousand (25,000) shares on each of
the first four anniversaries of the date of your employment,
provided you are still employed by the Company on the
anniversary date. You will receive non-preferential cash
dividends (so long as Advanta is paying dividends on Class B
Shares) on all of the Bonus Shares both before and after they
vest. While any Bonus Shares remain restricted, the
restricted Bonus Shares (and any securities received as a
dividend or distribution with respect to such restricted Bonus
Shares) may not be sold, transferred, pledged or hypothecated
by you (other than to a family member or family trust to
facilitate your estate planning goals, in which case such
restrictions will apply to the Bonus Shares held by such
family member or family trust). While Bonus Shares remain
restricted, the stock certificates for such shares shall be
held by Advanta, and copies thereof shall be delivered to you
(as is our practice with respect to all restricted shares
under the AMIP bonus plan). Such restricted shares shall bear
a restrictive legend indicating that they are subject to the
restrictions described above and, in certain circumstances (as
more fully set forth below) to forfeiture and return to
Advanta without the payment to you of any consideration
therefor. As Bonus Shares vest, certificates for the vested
shares (and for any securities received as a dividend or
distribution with respect thereto), free of the restrictive
legend described in the preceding sentences shall be delivered
to you. Upon the Company's termination of your employment for
any reason other than "Cause" as defined below prior to your
having become vested in the first 50,000 cumulative shares,
there will be accelerated vesting of your Bonus Shares to the
extent necessary to provide you with a cumulative total of
50,000 class B vested shares. In the event you terminate your
employment, or we terminate your employment for "Cause", any
Bonus Shares which have not at that time already vested shall
be forfeited by you and returned to Advanta without payment of
any consideration. In the event of your death or the
termination of your employment due to Disability occurring at
any time while you are employed by the Company, a percentage
equal to the product of 25% and the number of complete years
of service with the Company prior to such termination of all
unvested restricted stock conveyed to you pursuant to this
paragraph 5 will immediately vest, except that in the event of
your death or Disability in the first year of your employment
you shall be deemed to have completed one year of service
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for purposes of this computation. For purposes of this
agreement, a Disability shall mean any physical or mental
condition which in the Company's judgment makes you unable to
perform your essential duties hereunder, with or without
reasonable accommodation. Except in the event of a
termination for Cause, it is specifically understood that the
Bonus Shares shall vest without regard to your personal
performance or the performance of the Company during the term
of your services.
(b) In the event of a change of control of Advanta, all of your
Bonus Shares shall immediately vest. For purposes of this
agreement, a change in control of Advanta shall be deemed to
have occurred upon the earliest to occur of the following
events: (i) the date the stockholders of Advanta (or the Board
of Directors, if stockholder action is not required) approve a
plan or other arrangement pursuant to which Advanta will be
dissolved or liquidated, or (ii) the date the stockholders of
Advanta (or the Board of Directors, if stockholder action is
not required) approve a definitive agreement to sell or
otherwise dispose of substantially all of the assets of
Advanta (other than to an affiliate of Advanta), or (iii) the
date the stockholders of Advanta (or the Board of Directors,
if stockholder action is not required) and the stockholders of
the other constituent corporation (or its board of directors
if stockholder action is not required) have approved a
definitive agreement to merge or consolidate Advanta with or
into such other corporation, other than, in either case, a
merger or consolidation of Advanta in which holders of shares
of Advanta's Class A Common Stock immediately prior to the
merger or consolidation will have, directly or indirectly, at
least a majority of the voting power of the surviving
corporation's voting securities immediately after the merger
or consolidation, which voting securities are to be held in
the same proportion as such holders' ownership of Class A
Common Stock of Advanta immediately before the merger or
consolidation, or (iv) the date any entity, person or group,
within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended, (other than
(A) Advanta or any of its subsidiaries or any employee benefit
plan (or related trust) sponsored or maintained by Advanta or
any of its subsidiaries or (B) any person who, on the date of
this agreement, shall have been the beneficial owner of or
have voting control over shares of Common Stock of Advanta
possessing more than twenty-five percent (25%) of the
aggregate voting power of Advanta's Common Stock) shall have
become the beneficial owner of, or shall have obtained voting
control over, more than twenty five percent (25%) of the
outstanding shares of Advanta's Class A Common Stock or (v)
the first day after the date of this agreement when directors
are elected such that a majority of the Board of Directors
shall have been members of the Board of Directors for less
than two (2)
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years, unless the nomination for election of each new director
who was not a director at the beginning of such two (2) year
period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of such period.
6. Advanta Information, Inc. Stock Award.
(a) Simultaneously with the commencement of your employment, the
Company will sell to you, for a purchase price of $0.01 per
share, a number of shares of common stock of the Company which
currently represents 6% of the outstanding shares of common
stock on an after-issued, fully diluted basis. If the Company
issues any shares of its common stock or options or other
securities exercisable for or convertible into shares of its
common stock after the date of this agreement and prior to the
date that a registration statement on Form S-1 (or a successor
form) with respect to shares of common stock of the Company
has been declared effective ("IPO") under the Securities Act
of 1933, as amended ("Securities Act"), such issuance will not
dilute your fully diluted equity interest in the Company at
that time in respect of the shares issued to you hereunder,
and the avoidance of dilution will be effected without the
issuance of additional shares to you. You shall have the
right to vote the shares and to receive dividends, if any,
declared with respect to the shares. However, shares which
have not vested in accordance with the vesting schedule set
forth below may not be transferred, encumbered or sold by you.
(b) On the day before each yearly anniversary of the commencement
of your employment with the Company, twenty five percent (25%)
of the shares of common stock of the Company issued to you
pursuant to paragraph (a) above shall vest, provided that you
are employed by the Company on such date. In the event of (i)
an IPO, (ii) a sale by the Company of all or substantially all
of the assets of the Company or by Advanta of all or
substantially all of its equity ownership of the Company to an
entity not affiliated with Advanta, (iii) a change in control
of Advanta or the Company (as defined in paragraph 5(b) as to
Advanta and, as to the Company, applying the same definition,
with "the Company" substituted for "Advanta" wherever it
appears), or (iv) a termination of your employment by the
Company other than for Cause (as defined in paragraph 9), all
of your shares shall immediately vest. In addition, upon
termination of your employment with the Company due to your
death or Disability (as defined in paragraph 5(a)) occurring
at any time while you are employed by the Company after the
first anniversary of the commencement of your employment with
the Company, a percentage equal to the product of 25% and the
number of complete years of service with the Company prior to
such termination of all unvested stock
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purchased by you pursuant to this paragraph 6 will immediately
vest. Except as set forth in the immediately preceding
sentence, any shares which have not vested prior to the
termination of your employment with the Company for any reason
shall no longer be eligible for vesting and shall be
repurchased by the Company for $0.01 per share. Upon tender
of the purchase price by the Company, the purchase of such
shares shall be deemed to have been consummated. You agree to
take all actions as may be reasonably necessary to effect the
transfer of such shares to the Company upon the tender of the
purchase price therefor.
(c) The parties acknowledge and agree that Advanta will receive
$1.00 nominal value of a preferred stock of the Company for
each dollar invested in the Company (although the preferred
stock shall be issued with a nominal value of $1,000 per
share). It is further agreed that if Great Expectations
International, Inc. (or its successor in interest) ("G/E") is
acquired from Advanta Partners LP by Advanta or any of its
subsidiaries, G/E will be included in the Company at its cost.
The preferred stock shall be non-participating, non-voting and
non-convertible and shall have a cumulative 8% cash dividend.
Advanta will not seek to amend the certificate of designations
of the preferred stock in respect of the conversion feature
other than in connection with an IPO in which event Advanta
could elect to convert the preferred stock into common stock
of the Company at the IPO price.
The parties acknowledge and agree that Xxxxxxx's interpersonal
relationship services businesses (other than G/E which is
dealt with above) will be conducted by the Company and its
subsidiaries, including future development of "Connections
Calendar" which will be performed by the Company or a
subsidiary of the Company, whether or not G/E is acquired from
Advanta Partners LP.
(d) At any time after an IPO and prior to the date that all of the
shares of common stock of the Company which are owned by you
may be sold at one time without registration under the
Securities Act (whether pursuant to Rule 144 thereunder or
otherwise), you shall have the right, subject to standard
restrictions, to participate in any registered offering by the
Company or selling stockholders (other than an offering
registered on Form S-8 or a successor form) of shares of the
Company's common stock. In addition, before any sale by
Advanta and/or its affiliates in one or a series of related
transactions of 10% or more of the Company's common stock to
an unaffiliated party, you shall be given an opportunity to
participate in such a sale on a proportionate basis with
Advanta and/or its affiliates.
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(e) The parties acknowledge and agree that you intend to make a
Section 83(b) election under the Internal Revenue Code of
1986, as amended, with respect to the shares of Company common
stock issued to you pursuant to the terms of this agreement
and the Company hereby agrees to assist you in making such
election to the extent reasonably requested by you.
7. Stock Options. After you have become vested in 50,000 of your Bonus
Shares you shall become eligible to participate in the Advanta Corp.
Stock Option Plan and to receive such grants as are made by the
applicable committee of Advanta's Board on an annual basis.
8. Expense Reimbursement. The Company will pay for all of your
reasonable and necessary business expenses in accordance with
Xxxxxxx's expense reimbursement policies.
9. Term; Termination for Cause. Although you and we are entering into
this agreement with the hope and expectation that this will be a
multi-year partnership, either you or we may terminate your services
at any time upon thirty (30) days prior written notice to the other,
provided however that you may not voluntarily terminate your
employment for any reason for one (1) year after your start date. We
may, by notice to you, terminate your employment for "Cause" or
without cause. As used herein, "Cause" shall mean: (a) your willful
refusal or failure to perform a material and substantial part of your
duties hereunder, it being understood that "Cause" shall not exist
unless and until you have received written notice from us detailing
the alleged willful refusal or failure, and you have been accorded at
least thirty (30) days to cure; or (b) your commission of a felony, or
of any act of fraud, inappropriation or criminal conduct involving or
relating in any material way to the Company, or of personal dishonesty
materially injurious to the Company. If we terminate your employment
for "Cause," you shall be entitled to receive your Base Salary until
the date of termination and your AMIP Bonus, pro-rated through the
date of termination, which AMIP Bonus shall be subject to the
discretion of the Board. This agreement shall terminate immediately
in the event of your death, whereupon your estate shall be entitled to
receive an amount equal to your salary and accrued benefits for any
days which you spent in the employ of the Company prior to your death,
together with the proceeds of all life insurance and any vested shares
pursuant to this agreement.
10. Confidentiality Agreement. You agree to execute a Confidentiality and
Non-competition Agreement in the form attached hereto as Exhibit A,
the execution of which is in consideration of your employment by the
Company.
11. Benefits; Relocation. The Company will provide you with such group
life, health and disability plans and programs, if any, as are
available generally to employees of Advanta, provided that the Company
will at its expense and provided you are insurable, purchase a term
life insurance policy providing a death benefit of
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$1,000,000 for a beneficiary of your designation for as long as you
are employed. You shall not be required to relocate to Pennsylvania
until the second anniversary of your employment. If you do relocate
sooner, you shall be entitled to a relocation bonus of $350,000 for
each year earlier than the two-year period, prorated for each full
month after you have completed your move. Prior to your relocation,
your reasonable expenses in traveling to Horsham and staying here
shall be reimbursed in accordance with Xxxxxxx's reimbursement
policies.
12. Indemnification. During and after the term of your employment with
the Company, you shall be entitled to the full indemnification
benefits provided under the Company's by-laws which shall be
substantially similar to those set forth in Article VII of Advanta's
by-laws, a copy of which has been provided to you. Any permissive
provision therein relating to rights of indemnification shall be
deemed mandatory to the maximum extent permitted by law. If the
Company fails to make any payments due to you under the terms of such
indemnification, Xxxxxxx hereby agrees to promptly make payment
thereof on behalf of the Company.
13. Miscellaneous.
(a) The Company may deduct and withhold from your compensation,
and from any option or stock awards hereunder, any taxes
required to be deducted or withheld under any applicable law.
(b) The Company has the right to obtain key-man insurance on your
life, at the Company's sole cost and expense. You agree to
cooperate with the Company in obtaining any such insurance and
to submit to the usual and customary medical and other
examinations and to sign all requisite applications therefor.
(c) You represent and warrant to the Company that there are no
restrictions, agreements or understandings whatsoever to which
you are a party that would prevent or make unlawful your
execution or performance of this agreement.
(d) You understand that the services to be rendered and the duties
to be performed by you hereunder are of a special, unique and
personal nature and that you may not assign your rights or
delegate your obligations under this agreement.
(e) You shall be considered an employee of the Company within the
meaning of all federal, state, and local laws and regulations
governing unemployment, insurance, workers' compensation,
industrial accident, labor and taxes.
(f) This agreement and the Confidentiality and Non-competition
Agreement to be executed represent the entire understanding
between the parties with
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respect to this relationship and supersede all prior oral and
written agreements and negotiations relating to the subject
matter of this agreement.
(g) All clauses and covenants contained in this agreement are
severable, and in the event any of them shall be held to be
invalid by any court, such clauses or covenants shall be
limited as permitted under applicable law or, if they are not
susceptible to such limitation, this agreement shall be
interpreted as if such invalid clauses or covenants were not
contained herein.
(h) This agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of conflicts of law.
(i) All notice of any kind which either party may be required or
may desire to serve upon the other party hereunder shall be in
writing and sent by hand delivery or nationally recognized
overnight courier service providing receipt of delivery, or by
certified or registered mail, return receipt requested,
postage prepaid. Notice to the Company shall be sent to the
above address or any address, as may be provided hereafter.
(j) Nothing in this agreement shall preclude the Company from
consolidating or merging into or with, or transferring all or
substantially all of its assets to another entity that assumes
this agreement and all obligations of the Company hereunder,
subject to your rights hereunder if such a transaction is
consummated. Thereafter, the term "Company" shall mean such
other entity and this agreement shall continue in full force
and effect.
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Xxxx, assuming the foregoing accurately reflects our understanding, please
indicate your acceptance of its terms below. We both agree that we intend to
be legally bound by this agreement.
Very truly yours,
ADVANTA INFORMATION, INC.
By: /s/
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Accepted and agreed this
5th day of September 1996
ADVANTA CORP.
By: /s/
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Accepted and agreed this
6th day of September 1996
/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
