Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is being made as of the 7th day
of October 1999 between DATA BROADCASTING CORPORATION, a Delaware corporation
(the "Company"), having its principal offices at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000, and XXXX X. XXXXXXXXX (the "Executive"), an
individual residing at 00 Xxxx Xxxx, Xxxx Xxxxxx, Xxx Xxxxxx 00000.
WITNESSETH:
WHEREAS, the Company desires to continue the employment of the
Executive and the Executive desires to be employed by the Company upon the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual premises and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Nature of Employment; Term of Employment. The Company hereby
----------------------------------------
employs the Executive and the Executive agrees to serve the Company as its
President and Chief Executive Officer, upon the terms and conditions contained
herein, for a term commencing effective as of October 1, 1999 and continuing
until October 31, 2003 (the "Employment Term"); provided, however, that unless
either the Company or the Executive gives notice that it or he desires to
terminate this Agreement at least sixty (60) days prior to the date of its
termination, this Agreement (including this Section 1) shall automatically be
renewed for additional successive periods of one (1) year.
2. Duties and Powers as Employee. During the Employment Term, the
-----------------------------
Executive shall be employed by the Company as its President. Upon the
appointment by the Company of a new Chief Financial Officer, but no later than
December 31, 1999, the Executive shall, in addition to the position of
President, be appointed the Chief Executive Officer of the Company. The
Executive agrees to devote his full time and efforts to the performance of his
duties under this Agreement. In the performance of his duties, the Executive
shall be subject to the direction of the Board of Directors of the Company.
The Executive shall be available to travel as the needs of the business
require.
3. Compensation.
------------
(a) As compensation for his services hereunder, the Company shall
pay the Executive, during the Employment Term, a base salary (the "Base
Salary") payable in equal semi-monthly installments at the minimal annual rate
of $600,000 for the period ending October 31, 2000, $625,000 for the period
ending October 31, 2001, $650,000 for the period ending October 31, 2002, and
$675,000 for the period ending October 31, 2003 and for each year thereafter.
Such payments shall be subject to withholding of all taxes payable with
respect thereto and deductions for insurance contributions and the like.
Additionally, the Executive shall participate in the present or future
employee benefit plans of the Company provided that he meets the eligibility
requirements therefor.
(b) In addition to the Base Salary provided herein, the Company
shall (i) provide the Executive with a personal plan of disability insurance
in the amount of up to $25,000 per month, which the Executive shall maintain
for his own benefit, and (ii) provide the Executive with term life insurance
in an amount of three million dollars ($3,000,000) and the Executive shall
arrange for such transfer of ownership and designation of Beneficiary with
respect to such life insurance and any policies related thereto as he deems
appropriate. The payments made under this subparagraph (b) shall be "grossed-
up" to compensate the Executive for the tax consequences associated with such
payment.
(c) In addition to the Base Salary provided herein, the Company,
in its sole and absolute discretion, may pay the Executive a performance bonus
payment (the "Bonus"), on an annual basis, in a sum equal to up to 100% of the
Executive's Base Salary for the fiscal year then ended. The exact percentage
of the Bonus shall be determined in the absolute and sole discretion of the
Compensation Committee of the Board of Directors of the Company based upon an
evaluation of the performance of the Executive and the Company during the
previous fiscal year. To the extent that the Company determines to pay the
Bonus to the Executive, the Bonus shall be paid to the Executive within ninety
(90) days after the end of the Company's fiscal year notwithstanding that such
date may be after the expiration of the Employment Term.
(d) In addition, the Company shall request that the Stock Option
Committee of the Board of Directors of the Company issue the Executive
incentive stock options ("Options") to acquire 600,000 shares of common stock
of the Company. The Executive acknowledges that 300,000 of the Options (the
"Conditional Options") may need to be issued subject to approval by the
stockholders of the Company of an increase in the Company authorized shares
under its option plan. In the event the Company does not obtain such
approval, it shall be obligated to pay to Executive an additional bonus equal
to the phantom appreciation of such options, such appreciation right to be
based upon the upside on such number of shares as shall be subject to such
stockholder approval at the exercise price of the Options, which amount will
be set forth in a phantom rights agreement to be issued to the Executive if
such stockholder approval is not obtained before April 30, 2000. If the
Company forms an entity which it intends (by virtue of a sale, spin off,
public offering or otherwise) to separate from the Company, it shall provide
the Executive with an appropriate number of options with respect to the future
appreciation of such entity as are commensurate with the level of the
Executive's position and the standard in the industry in which such entity is
engaged.
(e) In addition to the Base Salary provided herein, if requested
by the Executive during the Employment Term, the Company shall lend (the
"Loan") funds to be used only towards the purchase of Company Common Stock by
the Executive, in accordance with a promissory note (the "Note") in a form and
substance satisfactory to the Company, an amount of up to $1,000,000 (but no
greater than one half of the purchase price). The Loan will be nonrecourse
and secured by the Company common stock purchased thereby. The Note shall
accrue interest at prime rate and shall be due and payable five (5) years from
the date of the Note.
4. Expenses; Vacations. The Executive shall be entitled to
-------------------
reimbursement for reasonable travel and other out-of-pocket expenses
necessarily incurred in the performance of his duties hereunder, upon
submission and approval of written statements and bills in accordance with the
then regular procedures of the Company. The Executive shall be entitled to
reasonable vacation time in accordance with then regular procedures of the
Company governing executives as determined from time to time by the Company's
Board of Directors but in no event less than twenty-five days per year.
5. Representations and Warranties of Employee. The Executive
------------------------------------------
represents and warrants to the Company that (a) he is under no contractual or
other restriction or obligation which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder, or the other rights
of the Company hereunder; and (b) he is under no physical or mental disability
that, with or without reasonable accommodation, would hinder his performance
of duties under this Agreement.
6. Non-Competition. The Executive agrees that he will not (a)
---------------
during the period he is employed under this Agreement engage in, or otherwise
directly or indirectly be employed by, or act as a consultant or lender to, or
be a director, officer, employee, owner, or partner of, any other business or
organization that is or shall then be competing with the Company, and (b) for
a period of two (2) years after he ceases to be employed by the Company under
this Agreement, directly or indirectly compete with or be engaged in the same
business as the Company, or be employed by, or act as consultant or lender to,
or be a director, officer, employee, owner, or partner of, any business or
organization which, at the time of such cessation, competes with or is engaged
in the same business as the Company, except that in each case the provisions
of this Section 6 will not be deemed breached merely because the Executive
owns not more than five percent (5.0%) of the outstanding common stock of a
corporation, if, at the time of its acquisition by the Executive, such stock
is listed on a national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange.
7. Confidential Information. All confidential information which
------------------------
the Executive may now possess, may obtain during the Employment Term, or may
create prior to the end of the period he is employed by the Company under this
Agreement, relating to the business of the Company or of any customer or
supplier of the Company shall not be published, disclosed, or made accessible
by him to any other person, firm, or corporation during the Employment Term or
any time thereafter without the prior written consent of the Company. The
Executive shall return all tangible evidence of such confidential information
to the Company prior to or at the termination of his employment.
8. Termination; Effect of Termination.
----------------------------------
(a) Termination for Cause. Notwithstanding anything herein
----------------------
contained, if on or after the date hereof and prior to the end of the
Employment Term, the Executive is terminated "For Cause" (as defined below)
then the Company shall have the right to give notice of termination of
Employee's services hereunder as of a date to be specified in such notice, and
this Agreement shall terminate on the date so specified. Termination "For
Cause" shall mean the Executive shall (i) be convicted of a felony crime, (ii)
commit any act or omit to take any action in bad faith and to the detriment of
the Company, (iii) commit an act of moral turpitude, (iv) commit an act of
fraud against the Company, or (v) materially breach any term of this Agreement
and fail to correct such breach within thirty (30) days after commission
thereof.
(b) Disability. In the event that the Executive shall be
----------
physically or mentally incapacitated or disabled or otherwise unable fully to
discharge his duties hereunder, with or without reasonable accommodation, for
a period of six months, then this Agreement shall terminate upon 90 days'
written notice to the Executive.
(c) Death. In the event that the Executive shall die, then this
-----
Agreement shall terminate on the date of the Executive's death.
(d) Termination by the Executive for Good Reason; Change in
-------------------------------------------------------
Control.
-------
(i) Executive may terminate his employment hereunder for
"Good Reason." For purposes of this Agreement, Executive shall have "Good
Reason" to terminate his employment hereunder (A) upon a failure by the
Company to comply with any material provision of this Agreement that has not
been cured within ten business days after notice of such noncompliance has
been given by Executive to the Company, (B) upon action by the Company
resulting in a diminution of Executive's title or authority, (C) upon a
request by the Company that Executive relocate outside of the New York
metropolitan area, or (D) for any reason within six (6) months following the
occurrence of a Change in Control.
(ii) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if:
(A) any "person," as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than (1) Xxxx X. Xxxxxxxxxxx or Xxxxx X. Xxxxxxx; (2)
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or (3) any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportion as their
ownership of Shares), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 35% or more of the combined voting power of the Company's
then outstanding voting securities;
(B) individuals who at the Effective Date constitute
the Board, and any new director whose election by the Board or nomination for
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than (1) a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving or parent entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effect to implement a
recapitalization of the Company (or similar transaction) in which no "person"
as hereinabove defined) acquires 35% or more of the combined voting power of
the Company's then outstanding securities;
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
(or any transaction having a similar effect).
(e) Effect of Termination.
---------------------
(i) In the event that this Agreement is terminated pursuant
to Section 8(a), then the Executive shall be entitled to receive only his Base
Salary at the rate provided in Section 3 to the date on which termination
shall take effect.
(ii) In the event that this Agreement is terminated by the
Company pursuant to Section 8(b) or 8(c), then the Executive, or the
Executive's beneficiary (as the case may be), shall be entitled to receive his
Base Salary at the rate provided in Section 3 to the date on which termination
shall take effect together with a lump sum distribution (with no present value
adjustment) equal to the Base Salary at the rate provided in Section 3 for a
period of one (1) year, notwithstanding that such one-year period might extend
beyond the Employment Term. In such event then the Executive's issued but
unvested options (including the Options) shall vest immediately upon such
termination. The Executive, or the Executive's beneficiary (as the case may
be), shall have the right to exercise any stock option for a period of three
years following the date of termination, but in no event beyond the expiration
date of any such option.
(iii) In the event this Agreement is terminated by the
Company (other than for the reasons set forth in Sections 8(a), 8(b) or 8(c),
then the Executive shall be entitled to receive severance pay consisting of a
lump sum distribution (with no present value adjustment) equal to the Base
Salary at the rate provided in Section 3 plus the Bonus (fixed at the rate of
50% of such Base Salary) for the greater of (a) three (3) years,
notwithstanding that such three-year period might extend beyond the Employment
Term or (b) the remainder of the Employment Term. In such case any of the
Executive's issued but unvested options (including the Options provided in
this Agreement) shall vest immediately upon such termination. The Executive,
or the Executive's beneficiary (as the case may be), shall have the right to
exercise any stock option (including the Options) for a period of three years
following the date of termination, but in no event beyond the expiration date
of any such option. In addition, in such case the two (2) year period
described in Section 6(b) of this Agreement shall be reduced to one (1) year.
(iv) In the event that this Agreement is terminated by the
Executive pursuant to Section 8(d), then the Executive shall be entitled to
receive severance pay consisting of a lump sum distribution (with no present
adjustment) equal to the Base Salary at the rate provided in Section 3 plus
the Bonus (fixed at the rate of 100% of such Base Salary) for a period of one
year, notwithstanding that such one-year period might extend beyond the
Employment Term. In such event then the Executive's issued but unvested
options shall vest immediately upon such termination; except that the
Conditional Options provided in this Agreement shall not be subject to such
accelerated vesting. The Executive, or the Executive's beneficiary (as the
case may be), shall have the right to exercise any stock option, to the extent
then exercisable, for a period of three years following the date of
termination, but in no event beyond the expiration date of any such option.
In addition, in such case the two (2) year period described in Section 6(b) of
this Agreement shall be reduced to one (1) year.
(f) Nothing contained in this Section 8 shall be deemed to limit
any other right the Company may have to terminate Employee's employment
hereunder upon any ground permitted by law.
9. Change of Control.
-----------------
In the event of a future disposition of (or including) the
properties and business of the Company, substantially as an entirety, by
merger, consolidation, sale of assets, or otherwise, the Company shall assign
this letter and all of its rights and obligations hereunder to the acquiring
or surviving corporation, such corporation shall assume in writing all of the
obligations of the Company, and the Company (in the event and so long as it
remains in business as an independent going enterprise) shall remain liable
for the performance of its obligations hereunder in the event of an
unjustified failure of the acquiring corporation to perform its obligations
under this Agreement.
10. Additional Payments. In the event that any payment or
-------------------
benefit received or to be received by the Executive, whether or not such
payments or benefits are received pursuant to the terms of this Agreement
(such payments and benefits being hereinafter called "Total Payments"), would
be subject (in whole or part), to the tax (the "Excise Tax") imposed under
section 4999 of the Code, the Company shall pay to the Executive such
additional amounts (the "Gross-Up Payment") as may be necessary to place the
Executive in the same after-tax position as if no portion of the Total
Payments had been subject to the Excise Tax. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder, the Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by the Executive to
the extent that such repayment results in a reduction in Excise and/or a
federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is finally
determined. The Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Total Payments.
11. Survival. The covenants, agreements, representations, and
--------
warranties contained in or made pursuant to this Agreement shall survive the
Executive's termination of employment, irrespective of any investigation made
by or on behalf of any party.
12. Modification. This Agreement sets forth the entire
------------
understanding of the parties with respect to the subject matter hereof,
terminates and supersedes all existing agreements between them concerning such
subject matter, and may be modified only by a written instrument duly executed
by each party. The Executive acknowledges that no other representations, oral
or written, have been made regarding the subject matter hereof, other than
those explicitly provided herein. The Executive further acknowledges that he
has not relied on any oral or written representations not explicitly contained
herein in executing this Agreement.
13. Notices. Any notice or other communication required or
-------
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 13).
In the case of a notice to the Company, a copy of such notice (which copy
shall not constitute notice) shall be delivered to Camhy Karlinsky & Xxxxx
LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn. Xxxx X. Annex, Esq.
Notice to the estate of the Executive shall be sufficient if addressed to the
Executive as provided in this Section 13. Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof.
14. Waiver. Any waiver by either party of a breach of any
------
provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
15. Binding Effect. The Executive's rights and obligations under
--------------
this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to encumbrance or the claims of the Executive's
creditors, and any attempt to do any of the foregoing shall be void. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the Executive and his heirs and personal representatives, and shall be binding
upon and inure to the benefit of the Company and its successors and those who
are its assigns under Section 9.
16. Headings. The headings in this Agreement are solely for the
--------
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
17. Counterparts; Governing Law. This Agreement may be executed
---------------------------
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It shall
be governed by, and construed in accordance with, the laws of the State of
Wyoming, without giving effect to the rules governing the conflicts of laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first written above.
DATA BROADCASTING CORPORATION
By: /s/ XXXXX X. XXXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Co-Chairman
/s/ XXXX X. XXXXXXXXX
-----------------------------------
XXXX X. XXXXXXXXX
