EXHIBIT 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), dated as of June 21, 2000,
is entered into by and between USA Networks, Inc., a Delaware corporation (the
"Company"), and Xxxxx Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a director and the President and Chief Operating
Officer of the Company and was recruited by the Company to serve in those
capacities principally for purposes of managing the Company's disparate business
units and bringing such business units together into a more unified, cohesive
and focused organization;
WHEREAS, the Executive has accomplished the principal purposes of his
employment by the Company and in so doing has made major contributions to its
profitability, growth and financial strength;
WHEREAS, the Company and the Executive have come to share a common view
that, in light of the Executive's accomplishment of his principal objectives,
the Company no longer needs the full-time services and attention of a Chief
Operating Officer, and that the Executive's management skills and talent would
be underdeployed were he to continue in that role with the Company;
WHEREAS, the Company and the Executive have mutually agreed that the
Executive's service as an employee, director and officer of the Company and/or
its subsidiaries should cease effective as of June 21, 2000 (the "Effective
Date"), but that the Executive should continue to provide certain consulting
services to the Company after the Effective Date, on the terms and subject to
the conditions hereinafter specified;
WHEREAS, the Company and the Executive entered into an Employment
Agreement dated February 19, 1999 (the "Employment Agreement"), which provides
for certain compensation and benefits to the Executive and for certain rights
upon the termination of the Executive's employment with the Company; and
WHEREAS, the Company and the Executive have mutually agreed upon
modifications to such compensation, benefits and rights, and are entering into
this Agreement for purposes of specifying and clarifying such matters and for
purposes of terminating the Employment Agreement, except to the extent otherwise
specified herein;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. RESIGNATION.
(a) Effective as of the close of business, New York City time, on
the Effective Date, the Executive hereby resigns as a director and as an officer
and employee of the Company, and from any director, officer or similar positions
he may hold with any subsidiary or affiliate of the Company (including, without
limitation, Ticketmaster Online-City Search, Inc.). The Executive shall
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execute and deliver to the Company any and all additional documentation
necessary to effectuate such resignations.
(b) On the Effective Date, the Company shall pay the Executive
that portion of his Base Salary (calculated at the rate of $750,000 per year)
which is accrued and unpaid with respect to the period June 1, 2000 through and
including the Effective Date.
(c) From and after the Effective Date, the Company shall reimburse
the Executive for all reasonable and necessary business expenses incurred by him
through the close of business on the Effective Date in performing his duties and
responsibilities for the Company, subject to the Executive's submission of
reasonable supporting documentation for such expenses. For purposes of this
Section 1(c) the term "reasonable and necessary business expenses" shall
specifically include, without limitation, business expenses incurred by the
Executive consistent with his past practices.
2. CONSULTING ARRANGEMENTS.
(a) During the Consulting Term (as such term is hereinafter
defined), the Executive shall serve in an advisory capacity to the Chairman and
Chief Executive Officer of the Company for the purpose of providing such
strategic consulting services as may be mutually agreed upon by the Executive
and the Company's Chairman and Chief Executive Officer, including, without
limitation, the making of strategic recommendations regarding the Company's
business and operations and such other matters as are within the Executive's
expertise. Such consulting services shall be performed at such place or places
as shall be mutually agreed upon by the Executive and the Company and shall be,
at the Company's discretion, for at least 20 hours per month. The Executive
shall perform such consulting services at such time or times as may be
convenient for the Executive and otherwise as mutually agreed upon by the
Executive and the Company; provided, however, that the Executive shall not be
required to provide any such services during the period from July 27, 2000
through and including August 31, 2000. For purposes of this Agreement, the
"Consulting Term" shall be the period from June 22, 2000, through and including
February 19, 2004.
(b) As compensation for and in consideration of the consulting
services to be performed hereunder, the Company shall pay the Executive a fee of
$174,370.00 per month ("Monthly Consulting Fees"), with the first payment to be
due upon the execution hereof, and a like payment to be due during the first
week of each month thereafter during the remaining Consulting Term; provided,
however, that the Monthly Consulting Fee due with respect to the month of June
2000, but only that month, shall be $136,326.00. Notwithstanding the immediately
preceding sentence, at any time during the Consulting Term the Executive shall
have the right and option (the "Early Termination Option"), exercisable only
after the occurrence of a Triggering Event (as such term is hereinafter
defined), to terminate in its entirety his obligation to provide consulting
services hereunder and to receive a lump sum cash payment from the Company (the
"Final Payment") equal to the remaining Monthly Consulting Fees then due
hereunder, discounted from the dates such Monthly Consulting Fees would
otherwise have been paid had the Executive not exercised the Early Termination
Option at a discount rate of 5.0% per annum. The Executive shall exercise the
Early Termination Option by providing written notice of same to the Company,
which notice shall include confirmation that a Triggering Event has in fact
occurred. The Company shall disburse the Final Payment to the Executive not
later than 10 days after receipt of such notice and shall supply
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the Executive with reasonable supporting detail regarding the calculation of the
Final Payment. Notwithstanding anything to the contrary in this Agreement or any
other document, the Executive's ability to make the Early Termination Option
following the occurrence of a Triggering Event is expressly intended by the
Company and the Executive to be an absolute and unconditional right, and, once
exercised, to give rise to an absolute and unconditional payment obligation on
the part of the Company, regardless of any breach or alleged breach of this
Agreement by the Executive and subject to no defenses, counterclaims, offsets or
the like in favor of the Company; provided, however, that this sentence shall
not be applicable to any defenses, counterclaims, offsets or the like arising
out of any conduct by the Executive prior to the Effective Date which would have
given the Company grounds to terminate his employment for "Cause" (as such term
is defined in Section 4(c) of the Employment Agreement) had such conduct been
known by the Company. As used herein, a "Triggering Event" shall be deemed to
have occurred at such time as (i) the Executive shall have accepted either
employment or a consulting engagement with a substantial business enterprise
that was theretofore unaffiliated with the Executive (the "New Company"), and
(ii) the New Company requests in writing that the Executive discontinue the
provision of consulting services under this Agreement. The Company's obligation
to pay Monthly Consulting Fees under this Section 2(b) shall not terminate upon
the death or disability of the Executive.
(c) The Executive shall be reimbursed for all reasonable expenses
which are incurred in connection with the Executive's rendering of consulting
services under this Agreement, subject to the submission of reasonable
supporting documentation for such expenses.
(d) During the Consulting Term, the Executive shall continue to
have full rights to participate in the "VIP Program" of the Company's travel
agency as if the Executive were continuing as the Chief Operating Officer of the
Company throughout the Consulting Term. Such participation shall extend to any
and all travel arrangements that the Executive may book during the Consulting
Term, regardless of whether such arrangements are related to the Executive's
provision of consulting services under this Agreement.
(e) The Company and the Executive acknowledge and agree that the
Company shall not exercise general supervision or control over the time, place
or manner in which the Executive provides consulting services hereunder, and
that in performing consulting services pursuant to this Agreement the Executive
shall be acting and shall act at all times as an independent contractor only and
not as an employee, agent, partner or joint venturer of or with the Company and
that no such relationship shall arise or subsist between the Executive and the
Company during the Consulting Term, including any extension or renewal thereof.
3. PRESS RELEASE. The Company and the Executive shall cooperate with
one another in good faith to develop a mutually acceptable press release
announcing the Executive's change in status relative to the Company. The parties
acknowledge and agree that the general tone and content of such press release
shall be consistent with the first four recital paragraphs of this Agreement.
4. STOCK OPTIONS, RESTRICTED STOCK AND STOCK ACQUIRED THROUGH DEFERRED
COMPENSATION.
(a) The Company acknowledges and agrees that each of the options
to purchase shares of the Company's common stock, par value $.01 per share
("Common Stock"), previously
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granted to the Executive on February 8, 1999 (currently representing the right
to purchase an aggregate of 2,400,000 shares of Common Stock and herein called
the "Options") shall be, and hereby are, immediately and fully vested and shall
remain exercisable by the Executive (or any past or future permitted assignee)
until February 19, 2004. In all respects, the Options shall continue to be
governed by the terms and conditions of the applicable stock option plan and/or
agreement (including, without limitation, the exercise price and the right to
transfer the Options to certain permitted assignees). The Options (and the
shares of Common Stock underlying same) have been duly registered under a
registration statement filed under the Securities Act of 1933, as amended (the
"1933 Act").
(b) The Company acknowledges and agrees that all 280,000 shares
(the "Restricted Shares") of Common Stock previously granted to the Executive
pursuant to the Company's 1999 Bonus Stock Purchase Program (the "Restricted
Share Program"), shall be immediately and fully vested effective as of June 26,
2000, and all restrictions thereon shall lapse effective as of June 26, 2000.
The Restricted Shares have been duly registered under the 1933 Act.
(c) The Company shall honor the Executive's previous deferral of
$245,000 of his 1999 bonus under the Company's 1999 Bonus Stock Purchase Program
and shall promptly issue (or cause its transfer agent to issue) an appropriate
number of shares of Common Stock in accordance with the terms and conditions of
such Program (including, without limitation, the 20% discount on the purchase
price of such shares). Such shares have been duly registered under the 1933 Act.
(d) The Executive agrees with respect to the shares of Common
Stock acquired by him under the Options, the Restricted Share Program and the
1999 Bonus Stock Purchase Program not to sell, on any single trading day, more
than that number of shares of Common Stock which shall be equal to 20% of the
average daily trading volume of the Common Stock on the NASDAQ Stock Market over
the 10 trading days immediately preceding the date of any proposed sale of such
shares of Common Stock by the Executive, without first obtaining the Company's
prior written consent.
5. CONTINUATION OF BENEFITS. During the period from June 22, 2000
through and including February 19, 2004, the Company shall maintain, at its
expense (provided that the Executive continues to make all required employee
contributions consistent with past practice), all insurance coverages
(including, without limitation, life insurance coverage equal to $11,000,000,
which life insurance coverage shall be without any cost to the Executive;
provided, however, that the Executive shall be entitled to designate the
beneficiary or beneficiaries of such life insurance only with respect to 50% of
the proceeds of such life insurance, with the Company entitled to the balance of
such proceeds) and medical and health benefits in respect of the Executive and
his family that were in effect immediately prior to the Effective Date.
6. COMPUTERS AND RELATED EQUIPMENT. The Company hereby transfers and
assigns to the Executive all right, title and interest of the Company in and to
all cellular telephones, personal computers, printers, fax machines and similar
items (together with all off-the-shelf software residing therein) heretofore
provided by the Company to the Executive for use in any of the Executive's
personal residences or automobiles. For a reasonable period after the Effective
Date (not to exceed 90 days), the Company will make available to the Executive
the services of members of the Company's information services or information
technology staff in order that they may assist the Executive in
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migrating the aforementioned computers (and any related peripheral equipment)
off of the Company's network and related systems, and in connection with any
tasks that may be necessary to enable such computers (and related peripheral
equipment) to function and operate properly on a standalone basis.
7. OFFICE SPACE AND CLERICAL ASSISTANCE.
(a) During a reasonable period of time from and after the
Effective Date, the exact length of which shall be agreed upon by the Executive
and the Chairman and Chief Executive Officer of the Company (the "Office
Period"), the Company shall continue to provide the Executive with office space,
office furnishings and related office support (e.g., telephone, personal
computer, network connectivity, fax machine, mail service, etc.) in the
Company's offices on the forty-third floor of 000 Xxxx 00xx Xxxxxx in New York
City, such office space, furnishings and support to remain unchanged from that
provided to the Executive immediately prior to the Effective Date for a period
of 30 days after the Effective Date, and thereafter such office space,
furnishings and support to be appropriate in view of the Executive's reduced
role at the Company. Notwithstanding the foregoing sentence, the Company may at
any time, upon not less than 30 days prior written notice to the Executive,
terminate the Office Period and the Company's obligation to provide office
space, office furnishings and related office support to the Executive.
(b) During the Office Period, the Company shall continue to
provide the Executive with a level of administrative and clerical support which
is reasonably comparable to that enjoyed by the Executive immediately prior to
the Effective Date, including, without limitation, the same number of
administrative and clerical personnel.
8. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling; provided, however, that the consulting fees (including, without
limitation, any Final Payment) paid to the Executive under Section 2 hereof
shall not be subject to any such withholding. The payments (or issuances of
shares of Common Stock) under Sections 4(b) and (c) hereof will be made net of
applicable withholding taxes unless the Executive has made other arrangements,
reasonably satisfactory to the Company, to provide for such withholding.
9. SUCCESSORS AND BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken place. This
Agreement will be binding upon and inure to the benefit of the Company and any
successor to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or assets of the
Company whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will not otherwise be assignable, transferable or delegable
by the Company.
(b) This Agreement will inure to the benefit of and be enforceable
by the Executive and the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and legatees.
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(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 9(a) and 9(b). Without limiting the generality or
effect of the foregoing, the Executive's right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by Executive's
will or by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 9(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
10. NOTICES. For all purposes of this Agreement (except as otherwise
expressly provided in this Agreement with respect to notice periods), all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
ten business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or five business days
after having been sent by a nationally recognized overnight courier service such
as Federal Express, UPS, or Purolator, to the parties in accordance with the
following:
If to the Company: USA Networks, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Office of the Chairman
If to the Executive: Xxxxx Xxxxx
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
11. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of New York, without giving effect to the
principles of conflict of laws of such State.
12. VALIDITY. If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
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13. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and such writing is signed by the Executive and the Company. Failure
to insist upon strict compliance with any of the terms, covenants or conditions
in this Agreement shall not be deemed a waiver of such term, covenant or
condition. No waiver by either party hereto at any time of any breach by the
other party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, expressed or implied
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. References to Sections are to
references to Sections of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
15. TERMINATION OF EMPLOYMENT AGREEMENT. The Employment Agreement
between the Executive and the Company, dated February 19, 1999, as amended to
the date hereof, shall terminate automatically upon the execution and delivery
of this Agreement by the parties hereto and shall thereafter be of no further
force or effect; provided, however, that:
(a) the provisions set forth in Section 4(e) of the Employment
Agreement shall survive until February 19, 2004; provided, however, that (i) the
reference in the first sentence of such Section 4(e) to "any payment provided to
Executive pursuant to Section 4 hereof" shall be deemed amended to mean
compensation paid under Sections 4(a), (b) and (c) of this Agreement, and (ii)
the reference in the penultimate sentence of such Section 4(e) to "cash
compensation paid pursuant to this Section 4" shall be deemed amended to mean
cash amounts paid pursuant to this Agreement;
(b) the provisions set forth in Section 5(a) of the Employment
Agreement shall survive in accordance with their terms;
(c) the provisions set forth in Section 5(b) of the Employment
Agreement shall survive in accordance with their terms;
(d) the provisions set forth in Section 14 of the Employment
Agreement shall survive until the applicable statutes of limitation with respect
to any claims or causes of action that could give rise to a claim by the
Executive for indemnification under said Section 14 shall have expired; and
(e) any related definitions of terms shall survive as necessary to
give effect to the foregoing.
If it is determined by a court of competent jurisdiction in any state that any
restriction in or referred to in this Section 15 is excessive in duration or
scope or is unreasonable or unenforceable under the laws of that state, it is
the intention of the parties that such restriction may be modified or amended by
such court to render it enforceable to the maximum extent permitted by the law
of that state. Except as otherwise specified in this Section 15, this Agreement
supersedes all prior agreements, arrangements and understandings with respect to
the subject matter hereof, and the Executive shall not be entitled to
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any additional benefits from the Company, except to the extent otherwise
provided by applicable law or the specific terms of the Company's benefit plans
for similarly situated employees.
16. INFORMATION REQUESTS; COOPERATION. For a period of two years after
the Effective Date, the Executive agrees to make himself reasonably available to
the Company to respond to requests by the Company's executive officers for
information concerning matters involving facts or events relating to the Company
that arose during the period of the Executive's employment with the Company and
that may be within the Executive's knowledge, and to assist the Company as
reasonably requested with respect to pending and future litigation, arbitrations
or other dispute resolutions concerning matters involving facts or events
relating to the Company that arose during the period of the Executive's
employment with the Company.
[Remainder of page intentionally left blank - signature page follows.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
USA NETWORKS, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
Xxxxx Xxxxx
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