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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of March 11, 1999
(the "Effective Date"), by and between SOURCE MEDIA, INC., a Delaware
corporation (the "Company"), with offices at 0000 XXX Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000 and XXXXXXXX XXXXXXXX ("Executive"), residing at 000 Xxxx
00xx Xxxxxx, Xxx. 0X, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of Executive and
to enter into an agreement embodying the terms of such employment; and
WHEREAS, Executive desires to accept such employment and enter into
such agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the conditions
of this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
(b) Term of Employment. Except as provided in Paragraph 6(a), the
Company shall employ Executive for the period commencing on the Effective Date
and ending on the earlier of (i) August 10, 1999 or (ii) the closing of a
Contemplated Transaction. For purposes of the foregoing sentence, "Contemplated
Transaction" means the transactions contemplated by the Letter of Intent dated
February 11, 1999 between the Company, Prevue Ventures, Inc. and United Video
Satellite Group, Inc., or any other transaction involving the Company and/or
its subsidiaries similar in scope and significance to the Company. The period
during which Executive is to be employed hereunder, including any extension
thereof to which the parties may agree, shall be referred to as the "Employment
Period."
2. Position, Other Employment.
(a) Position. Executive shall be duly appointed by the Board of
Directors of the Company (the "Board") as an officer of the Company with the
title
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of Interim Chief Operating Officer and shall serve in that position during the
Employment Period. Executive shall be located in New York, New York, and
Executive's services hereunder shall be performed at offices to be selected by
Executive in New York, New York, subject to such reasonable travel as the
performance of Executive's duties and the business of the Company may require,
in Executive's sole judgment.
(b) Other Employment. The Company acknowledges that Executive has
clients for whom she provides consulting services, that Executive also serves
as an elected Director of BioReliance, Inc. and a principal of the Washington
Advisory Group, that Executive will devote a portion of her time, but in no
event more than, on average, one business day per week to work for her other
clients and in connection with her other responsibilities as noted above, and
that such work shall not constitute a breach of Executive's obligations
hereunder.
3. Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay
Executive a base salary ("Base Salary") at a rate of $50,000 per month, payable
in semi-monthly installments.
(b) Stock Options. As of March 29, 1999, Executive shall be awarded a
grant of Stock Options (the "Options") to purchase 100,000 shares of the Common
Stock of the Company, par value $.001 per share (the "Stock"), under the
Company's 1995 Performance Equity Plan, as amended and restated (the "Plan"),
pursuant to the Stock Option Agreement in the form annexed hereto as Exhibit A.
The Company represents and warrants that all necessary Committee approvals (as
defined in the Plan) have been obtained with respect to the grants of the
Options and the form of the Stock Option Agreement.
(c) Consulting Services. The Company acknowledges that, at the request
of the Board, Executive has been providing consulting services for the Company
since January 11, 1999. The Company agrees to pay Executive, prior to March 19,
1999, $50,000 for such consulting services. The Company further agrees to
reimburse Executive for all out-of-pocket expenses incurred in connection with
such consulting services. Such reimbursement shall be made within 14 days after
presentation of statements with respect thereto.
4. Benefits, Expenses, Indemnification and Insurance.
(a) Benefits. Executive shall be entitled to up to four weeks (i.e.,
20 business days) paid vacation annually, to be accrued at the rate of 1.7 days
per
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month, and customary holidays, in accordance with the Company's policies and
practices.
(b) Business Expenses. The Company shall pay or reimburse Executive,
within 14 days of presentation of statements with respect thereto, for all
reasonable expenses incurred or paid by Executive in the performance of
Executive's duties hereunder and all legal fees and costs incurred in
connection with the negotiating and drafting of this Agreement. The Company
acknowledges that such expenses may include, without limitation, costs
associated with travel to the Company's offices in Texas.
(c) Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss, damages, expense,
liability or cause of action (whether now pending or subsequently commenced),
including, without limitation, liability in connection with suits by
shareholders, debtholders, prospective joint venturers or strategic partners,
or current or former employees, arising from or out of Executive's performance
as an officer or employee of, or consultant to, the Company or in any other
capacity, including serving as a fiduciary, in which Executive serves or has
served at the request of the Company, to the maximum extent permitted by
applicable law and the Company's charter and bylaws. If for any reason the
foregoing indemnification is unavailable or insufficient to hold Executive
harmless, then the Company shall contribute to the amount paid or payable by
Executive as a result of such claim, loss, damages, expense, liability or cause
of action in such proportion as is equitable. If any claim is asserted
hereunder for which Executive reasonably believes in good faith she is entitled
to be indemnified, the Company shall pay Executive's legal expenses (or cause
such expenses to be paid) on a monthly basis, for Executive's chosen counsel,
within 14 days of the presentation of statements with respect to such expenses.
(d) Insurance. The Company shall provide Executive with Directors and
Officers ("D&O") liability insurance coverage, and shall reimburse Executive
for any deductible or other expenses not covered by the Company's D&O insurance
policy. The Company shall ensure that such coverage for claims against
Executive shall be maintained throughout the Employment Period, and continuing
through the period ending six years after the termination of the Employment
Period. The Company represents and warrants that:
(i) The Company's current D&O policy has a $5 million "per
incident" and "per policy period" limitation of liability
(including defense costs);
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(ii) The Company has confirmed with its D&O carrier that
Executive will be covered under the D&O policy from the
Effective Date;
(iii) The Company has confirmed with its D&O carrier that, as of
the Effective Date, no more than $500,000 of the policy
limits have been exhausted.
The Company shall increase the amount of its D&O policy coverage if,
in consultation with the Company's General Counsel, Executive determines that
the current policy limits are insufficient. However, the obligation for
maintaining sufficient coverage remains solely with the Company.
5. Confidentiality.
Executive shall not use or disclose any confidential or proprietary
information of the Company or any affiliate thereof except (i) as required in
the course of Executive's employment or (ii) as required by law (including,
without limitation, when required by any governmental agency having supervisory
authority over the business of the Company or by any administrative or
legislative body with apparent jurisdiction to order disclosure of such
information), it being understood that Executive will promptly notify the
Company of such requirement so that the Company may seek to obtain a protective
order. Upon termination of Executive's employment, Executive shall return to
the Company all confidential and/or proprietary information that exists in
written or other physical form (and all copies thereof) under Executive's
control.
6. Termination of Employment.
(a) Early Termination of the Employment Period. Notwithstanding
Paragraph l(b), the Employment Period shall end upon a termination of
Executive's employment on account of (i) Executive's death, (ii) a Termination
Due to Disability, (iii) a Termination for Cause, or (iv) a Termination for
Good Reason, all as defined in Subparagraph (c) hereof.
(b) Benefits Payable Upon Termination. As soon as practicable, but in
no event more than 30 days after the end of the Employment Period, Executive
(or in the event of her death, her estate) shall be paid any Base Salary
earned, but unpaid, for services rendered to the Company on or prior to the
date on which the Employment Period ended. If Executive's employment ends
because of a Termination for Good Reason or for any reason other than a
Termination for Cause, death, or a
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Termination Due to Disability, Executive shall also be paid one additional
month's Base Salary.
(c) Definitions. For purposes of this Paragraph 6:
"Termination Due to Disability" means a termination of Executive's
employment by the Company because Executive has been incapable of substantially
fulfilling the position set forth in this Agreement because of physical, mental
or emotional incapacity resulting from injury, sickness or disease for a period
of at least 45 consecutive days.
"Termination for Cause" means a termination of Executive's employment
by the Company due to (i) Executive's conviction of a felony, (ii) Executive's
willful malfeasance or gross misconduct in connection with her employment
hereunder which has had a material adverse effect on the business of the
Company or (iii) a substantial and continual refusal by Executive in breach of
this Agreement to perform her position, which refusal is not cured within 10
days' of the date a written notice referring to this provision and describing
such refusal is given by the Board to Executive. This definition, and not the
definition of Cause included in the Stock Option Agreement, shall govern for
purposes of Paragraph 6(a).
"Termination for Good Reason" means (i) a termination of Executive's
employment by either Executive or the Company following the appointment of a
new Chief Executive Officer whose employment commences during the Employment
Period or (ii) a termination of Executive's employment by Executive following:
(A) a material reduction in Executive's authority or responsibilities from
those Executive has performed to date or from those that are usual and
customary for a senior executive of the Company of similar title, (B) a
material breach of this Agreement by the Company or (C) a Change of Control (as
hereinafter defined) other than a Contemplated Transaction approved by the
Board. A termination under Subparagraph (i) herein shall be made upon two
weeks' written notice.
"Change of Control" means any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or
as a consequence of which, any of the following events shall occur: (i) any
person that is not an owner of 50% of the shares of capital stock of the
Company on the Effective Date shall acquire, directly or indirectly, beneficial
ownership (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of more than 50% of the voting stock of the Company, (ii) any sale of
all or substantially all of the assets of the Company or (iii) a proxy contest
for the election of directors of the Company results in the persons
constituting the Board immediately prior to the initiation of such
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proxy contest ceasing to constitute a majority of the Board upon the conclusion
of such proxy contest.
(d) Survival. The provisions of Subparagraphs 4(c) and 4(d) and of
Paragraphs 5, 6, 7 and 8(f) shall survive the termination of this Agreement.
7. Governing Law; Arbitration; Costs; Jurisdiction. This Agreement shall
be governed by the laws of the State of New York without regard to conflict of
law rules. Any dispute or controversy between the Company and Executive,
arising out of or relating to this Agreement, the breach of this Agreement, or
otherwise, shall be settled by arbitration in New York, New York administered
by the American Arbitration Association in accordance with its Commercial Rules
then in effect. The Company shall reimburse Executive, upon demand, for all
costs and expenses (including without limitation attorneys' fees) reasonably
incurred by Executive in connection with any arbitration initiated pursuant to
this paragraph for compensation or amounts owing to Executive hereunder, as
well as for all such costs and expenses reasonably incurred by Executive in
connection with entering, confirming, or enforcing the award rendered by the
arbitrator. In the event that the Company commences an arbitration or other
proceeding against Executive in which Executive prevails, the Company shall
reimburse Executive, upon demand, for all costs and expenses (including without
limitation attorneys' fees) reasonably incurred in connection therewith. The
Company and Executive acknowledge that this Agreement evidences a transaction
involving interstate commerce. Notwithstanding any choice of law provision
included in this Agreement, the Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The parties agree
to submit to the exclusive jurisdiction of the federal and state courts within
the State of New York in connection with any suit arising out of the
confirmation or enforcement of any award rendered by the arbitrator, and waive
any defense based on forum non conveniens or improper venue.
8. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on the Company and
any person or entity which succeeds to the interest of the Company (regardless
of whether such succession occurs by operation of law) by reason of the sale of
all or a portion the Company's securities or assets, or by a merger,
consolidation, or reorganization involving the Company. This Agreement shall
inure to the benefit of Executive's heirs, executors, administrators and legal
representatives.
(b) Assignment. Except as provided under the preceding subparagraph
(relating to binding effect), neither this Agreement nor any of the rights
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or obligations hereunder shall be assigned or delegated by any party hereto
without the prior written consent of the other party.
(c) Entire Agreement. This Agreement, together with the Stock Option
Agreement annexed as Exhibit A, constitutes the entire agreement between the
parties hereto with respect to the matters referred to herein and supersedes
all agreements between the parties (written or oral), and no amendment or
modification of this Agreement, oral or otherwise, shall be binding between the
parties unless it is in writing and signed by the party against whom
enforcement is sought.
(d) Severability. In the event that one or more of the provisions of
this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
(e) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or her rights hereunder on any
occasion or series of occasions.
(f) Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally, by courier
service or by certified mail, return receipt requested, and shall be effective
upon actual receipt by the party to which such notice shall be directed, and
shall be addressed as follows (or to such other address as the party entitled
to notice shall hereafter designate in accordance with the terms hereof):
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If to the Company:
Board of Directors
Source Media, Inc.
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Executive:
Xxxxxxxx Xxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx Xxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
(g) Headings. Headings to paragraphs and subparagraphs in this
Agreement are for the convenience of the parties only and are not intended to
be part of or to affect the meaning or interpretation of the Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunto set her
hand, as of the day and year first above written.
SOURCE MEDIA, INC.
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Chairman of the Board
XXXXXXXX XXXXXXXX
/s/ XXXXXXXX XXXXXXXX
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