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Exhibit 10.3
N2K INC.
EMPLOYMENT AGREEMENT
OF
XXXXXX XXXXX XXXXXX
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TABLE OF CONTENTS
Page
1. POSITION AND RESPONSIBILITIES..................................... 1
2. TERM.............................................................. 1
3. COMPENSATION AND REIMBURSEMENT.................................... 2
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION................ 3
5. CHANGE IN CONTROL................................................. 5
6. TERMINATION UPON RETIREMENT, DEATH, AND DISABILITY................ 6
7. TERMINATION FOR CAUSE............................................. 6
8. NOTICE............................................................ 7
9. CONFIDENTIALITY................................................... 7
10. NON-COMPETITION................................................... 8
11. SOURCE OF PAYMENTS................................................ 8
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS............ 9
13. NO ATTACHMENT..................................................... 9
14. MODIFICATION AND WAIVER........................................... 9
15. SEVERABILITY...................................................... 9
16. HEADINGS FOR REFERENCE ONLY....................................... 10
17. GOVERNING LAW..................................................... 10
18. PAYMENT OF LEGAL FEES............................................. 10
19. INDEMNIFICATION................................................... 10
20. SUCCESSOR TO THE COMPANY.......................................... 10
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EMPLOYMENT AGREEMENT
This AGREEMENT is made effective as of February 13, 1996 by and between
N2K Inc. (the "Company"), a corporation organized under the laws of
Pennsylvania, with its principal administrative office at 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and Xxxxxx Xxxxx Xxxxxx (the "Executive").
WHEREAS, the Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Company
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to
serve as Vice Chairman of the Company. Executive shall report to the Chief
Executive Officer of the Company. The Executive shall serve as an employee of
the Company to perform such duties as the Company may from time to time
reasonably direct. The Executive's responsibilities will include, among other
things, promoting the good will of the Company, and establishing business
relationships to assist in the development of the Company's products in
furtherance of the business objectives of the Company as established by the
Board of Directors of the Company (the"Board") and the Chief Executive Officer
from time to time. During said period, Executive also agrees to serve, if
elected, as an officer and director of any subsidiary of the Company.
Notwithstanding the above, the parties recognize that Executive is not being
employed on a full-time basis. Accordingly, this Agreement shall not be
exclusive and Executive may accept or continue employment with, or serve as a
director of, other companies, subject to the provisions of Section 10 hereof.
2. TERM.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date hereof, and shall continue for a period
of forty-eight (48) full calendar months thereafter (the "Expiration Date").
Unless written notice shall have been delivered by the party desiring to
terminate this Agreement, which written notice shall have been delivered not
later than 120 days prior to the Expiration Date (including the Expiration Date
with respect to any
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renewed term), this Agreement shall be renewed for consecutive one (1) year
periods.
(b) Executive shall be permitted to perform services at such places and
locations as Executive shall reasonably determine; provided that Executive shall
physically meet with the Chief Executive Officer at the Company's corporate
headquarters at least quarter-annually and shall report to the Chief Executive
Officer at least monthly.
(c) Notwithstanding anything herein contained to the contrary: (i)
Executive's employment with the Company may be terminated by the Company or
Executive during the term of this Agreement, subject to the terms and conditions
of this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit
a continuation of Executive's employment following the expiration of the term of
this Agreement upon such terms and conditions as the Board and Executive may
mutually agree.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
the salary and benefits paid for the duties described in Section 1. The Company
shall pay Executive as compensation a salary of not less than $100,000 per year
("Base Salary"). Such Base Salary shall be payable in accordance with the
Company's payroll practice in effect from time to time. During the period of
this Agreement, Executive's Base Salary shall be reviewed at least annually; the
first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase Executive's Base Salary. An increase shall
become the "Base Salary" for purposes of this Agreement. In addition to the Base
Salary provided in this Section 3(a), the Company shall also provide Executive
at no cost to Executive with all such other benefits as are provided uniformly
to permanent full-time employees of the Company.
(b) Executive may receive an annual bonus ("Annual Bonus") in an amount
to be determined by the Board in its sole discretion. The Executive shall only
be eligible for an Annual Bonus as long as the Executive remains an employee of
the Company.
(c) The Executive will be entitled to participate in or receive
benefits under any employee benefit plans including, but not limited to,
retirement plans (i.e., 401(k) plans), supplemental retirement plans, pension
plans, profit-sharing plans, health-and-accident plan, medical coverage or any
other employee benefit plan or arrangement made available by the Company
currently or in the future to its senior executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.
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Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which Executive is eligible to participate. Nothing
paid to the Executive under any such plan or arrangement will be deemed to be in
lieu of other compensation to which the Executive is entitled under this
Agreement. In addition the Company shall obtain term life insurance, naming the
Executive's designee as beneficiary, in the face amount, at all times, equal to
the maximum allowable amount under the Company's existing insurance policy.
(d) In addition to the Base Salary provided for by paragraph (a) of
this Section 3 and other compensation provided for by paragraphs (b) and (c) of
this Section 3, the Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred by Executive performing his
obligations under this Agreement.
(e) Simultaneously with the execution of this Agreement, the Company
shall grant to the Executive, pursuant to a stock option agreement satisfactory
to the Executive, incentive stock options to purchase 500,000 shares of common
stock and additional non-qualified options to purchase 421,098 shares of common
stock of the Company at an exercise price of $.80 per share (being the present
fair market value of such stock). In the event Executive is a holder of more
than ten percent (10%) of the combined voting power of the Company at the time
of the grant, the exercise price of any incentive stock option shall be $.88 per
share in accordance with the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended; provided, however, that in such event, upon each
exercise of all or a portion of such incentive stock options, Executive shall
receive a bonus at the time of exercise equal to (A) an amount which is equal to
$.08 per share, net of the maximum combined federal, state and local tax rates
then applicable to Executive, multiplied by (B) the number of shares with
respect to which the incentive stock option is then exercised. Such options will
vest equally over a four (4) year period commencing on the date hereof, subject
to Sections 4(e) and 5 (e) hereof.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 7 and 14.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section 4 shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Company of Executive's employment hereunder for any reason,
including, without limitation, the Company's failure to renew this Agreement,
other than a Change in Control (as defined in Section 5(a) hereof), upon
Retirement (as defined in Section 6 hereof), death or Disability (as defined in
Section 6 hereof), or for Cause (as defined in Section 7 hereof); (ii)
Executive's resignation from the Company's employ, upon
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any (A) failure to elect or reelect or to appoint or reappoint Executive as Vice
Chairman, (B) unless consented to by the Executive, a material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal requisite place of
employment as set forth in Section 2(b) hereof, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
effective date of this Agreement or (D) material breach of this Agreement by the
Company. Upon the occurrence of any event described in clauses (A), (B), (C) or
(D), above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon not less than thirty (30) days prior
written notice given within a reasonable period of time not to exceed, except in
case of a continuing breach, three (3) calendar months after the event giving
rise to said right to elect.
(b) Subject to Section 10 hereof, upon the occurrence of an Event of
Termination, the Company shall be obligated to pay Executive, or, as severance
pay or liquidated damages, or both, an amount equal to the sum of (i) eighteen
(18) months of the Executive's Base Salary at the time of the occurrence of the
Event of Termination plus (ii) the average of the Annual Bonus amount for the
three (3) prior years (or such lesser time number of years, in the event that
the Executive has been employed by the Company for less than three (3) years)
multiplied by 1.5. Such payment shall be made in equal monthly installments
during the eighteen (18) months following Executive's termination.
(c) Upon the occurrence of an Event of Termination, the Company will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Company for Executive
prior to his termination for eighteen (18) months.
(d) Upon the occurrence of an Event of Termination, the Executive will
be entitled to receive vested benefits due him under or contributed by the
Company on his behalf pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability (to the extent available) or other employee
benefit plan maintained by the Company on the Executive's behalf to the extent
that such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(e) Upon the occurrence of an Event of Termination, any unexercised
stock options granted to the Executive pursuant to Section 3(d) of this
Agreement shall immediately vest and be immediately exercisable upon the
Executive's receipt of the Notice of Termination relating to such Event of
Termination for a period of ninety (90) days thereafter.
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5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless there shall
have been a Change in Control of the Company as set forth below. For purposes of
this Agreement, a "Change in Control" of the Company shall mean an event of a
nature that: (i) would be required to be reported in response to Item 1 (a) of
the current report on Form 8-K pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") if the Company were (or is) required
to file reports pursuant to the Exchange Act; or (ii) without limitation such a
Change in Control shall be deemed to have occurred at such time as (A)
individuals who constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least a majority of the directors comprising the
Incumbent Board, shall be, for purposes of this clause (A), considered as though
he were a member of the Incumbent Board; or (B) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the
Company or similar transaction occurs in which the Company is not the resulting
entity; or (C) a proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Company shall be distributed; or (D) a tender offer is made
for 20% or more of the voting securities of the Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting
a Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c) and (d) of this Section 5 upon his subsequent termination of
employment at any time during the term of this Agreement (regardless of whether
such termination results from his dismissal or his resignation at any time
during the term of this Agreement following any demotion, loss of title, office
or significant authority or responsibility, reduction in the annual compensation
or benefits or relocation of his requisite place of employment immediately prior
to the change in control), unless such termination is because of his death, or
Termination for Cause.
(c) Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Company shall pay Executive, or in
the event of his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or liquidated damages, or both, an
amount equal to the sum of (x) eighteen (18) months of the Executive's Base
Salary at the time of the occurrence of the Change in Control plus (y) the
average of the Annual Bonus amount for the prior three (3) years (or such lesser
number of years, in the event that the Executive has been employed by the
Company for less than (3) three years) multiplied by 1.5. At the election of the
Executive, which election is to be made within thirty (30) days of
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the Date of Termination following a Change in Control, such payment may be made
in a lump sum or paid in equal monthly installments during the eighteen (18)
months following the Executive's termination. In the event that no election is
made, payment to the Executive will be made on a monthly basis during the
remaining term of the Agreement.
(d) Upon the occurrence of a Change in Control followed by the
Executive's termination of employment, the Company will cause to be continued
life, medical, dental and disability coverage (if coverage is available under
the Company's current policy) substantially identical to the coverage maintained
by the Company for Executive prior to his severance for eighteen (18) months
following termination.
(e) Upon the occurrence of a Change of Control, any unexercised stock
options granted to the Executive pursuant to Section 3(d) of this Agreement
shall immediately vest and be immediately exercisable.
6. TERMINATION UPON RETIREMENT, DEATH, AND DISABILITY.
(a) Termination by the Company of the Executive based on "Retirement"
shall mean termination in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, Executive shall be entitled to all benefits under any retirement
plan of the Company and other plans to which Executive is a party.
(b) This Agreement shall automatically terminate upon the death of the
Executive.
(c) If the Executive is Disabled (as defined below) for a continuous
period of six (6) months, the Company may terminate this Agreement upon written
notice to the Executive. If the Company terminates the Executive due to the
Disability of the Executive, the Company shall, for a period of one (1) year
from the date of termination, provide the Executive with the term life insurance
and medical insurance as are in effect at the time of termination. The
Executive, for purposes hereof, shall be deemed to be "Disabled" when, as a
result of bodily injury or disease or mental disorder he is so disabled that he
is prevented from performing the principal duties of his employment and is under
the regular care of a currently licensed physician or surgeon for such bodily
injury, disease or mental disorder.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of (i)
any act, or failure to act, by the Executive involving fraud or willful
malfeasance in the performance of his duties under this Agreement, or (iii) the
conviction of the Executive of a felony under federal or state law. For purposes
of this Section, no
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act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
Terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of a majority of the members of the Board at a meeting of
the Board called and held for that purpose (after reasonable notice to Executive
and an opportunity for him, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Executive was
guilty of conduct justifying Termination for Cause and specifying the
particulars thereof in detail. The Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Cause. Any
unexercised stock options granted pursuant to Section 3(d) of this Agreement
shall become null and void effective upon Executive's receipt of Notice of
Termination for Cause pursuant to Section 8 hereof, and such options shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Company or by the Executive shall
be communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, ten (10) days after a Notice of Termination is given
(provided that he shall not have returned to the performance of his duties on a
full-time basis during such ten (10) day period), and (B) if his employment is
terminated for any other reason, the date specified in the Notice of
Termination.
9. CONFIDENTIALITY
Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the Company thereof to any person, firm, corporation, or other
entity for any reason or purpose whatsoever which is not otherwise publicly
available. In the event of a breach or threatened breach by the Executive of the
provisions of this Section 9, the Company will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Company, or from
rendering any services to any person, firm, corporation, other entity to whom
such knowledge, in whole or in part, has been
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disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from Executive.
10. NON-COMPETITION.
During the term of this Agreement and upon any termination of
Executive's employment hereunder pursuant to Section 4 hereof, Executive agrees
not to promote or own an interest in any entity that directly competes with the
business of the Company, for a period of eighteen (18) months following such
termination in those states within the United States and those countries outside
the United States in which the Company conducts business (the "Restricted
Area"); provided Executive may continue to engage in: (i) any and all activity
directly relating to his vocation as a composer, recording artist, music
producer and music publisher (including without limitation, any promotional
work, advertising or product endorsements); and (ii) any and all other
activities with respect to which Executive does not exercise management control.
The ownership by the Executive of less than five percent (5%) or less of a
publicly-traded class of securities shall not be deemed a violation of this
Section 10. The parties hereto, recognizing that irreparable injury will result
to the Company, its business and property in the event of Executive's breach of
this Section 10 agree that in the event of any such breach by Executive, the
Company will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive.
Executive represents and admits that in the event of the termination of his
employment pursuant to Section 7 hereof, Executive's experience and capabilities
are such that Executive can obtain employment in a business engaged in other
lines and/or of a different nature than the Company, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Company from
pursuing any other remedies available to the Company for such breach or
threatened breach, including the recovery of damages from Executive.
Notwithstanding the foregoing, in the case of an Event of Termination, Executive
shall not be subject to the non-compete provisions of this Section 10 if
Executive elects not to receive the payments he is entitled to pursuant to
Section 4(b) hereof.
11. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Company. The Company may use insurance
proceeds especially obtained therefore as partial payment in the event of
disability.
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12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Company or any
predecessor of the Company and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
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16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York
without regard to conflicts of laws principles, unless otherwise specified
herein.
18. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Company, if Executive is successful pursuant to a legal
judgment, arbitration or settlement.
19. INDEMNIFICATION.
The Company shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Company (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
20. SUCCESSOR TO THE COMPANY.
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, ______________________ has caused this Agreement to
be executed and its seal to be affixed hereunto by its duly authorized officer
and its directors, and Executive has signed this Agreement, on the 13th day of
February, 1996.
N2K INC.
By:
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Name:
Title:
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XXXXXX XXXXX XXXXXX, Executive
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