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Exhibit 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 25, 1999 by and
between Spanish Broadcasting System, Inc., a Delaware corporation, having a
place of business at 0000 Xxxxx Xxx, Xxxxx, Xxxxxxx (the "Company") and Xxxxxx
X. Xxxxxx (the "Executive").
WHEREAS, the Executive has been employed by the Company for a
number of years as its Chief Financial Officer, Executive Vice President and
Secretary; and
WHEREAS, the Company desires to assure the continued services
of the Executive and the Executive is willing to continue to serve in the employ
of the Company for the period set forth herein upon the terms and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth below, the Company and the Executive agree as follows:
1. Term. Except as otherwise provided in Section 4 hereof, the
Company agrees to employ the Executive, and the Executive agrees to serve, for a
period of three years commencing on the date the registration statement relating
to the Company's anticipated initial public offering is declared effective (the
"Effective Date") and ending on the third anniversary of the Effective Date,
provided that, unless either party otherwise elects by notice in writing to the
other at least 90 days prior to the third anniversary of the Effective Date or
any succeeding anniversary of the Effective Date, the employment term shall be
automatically renewed for successive one-year terms unless sooner terminated
pursuant to the terms of this Agreement (the "Employment Term").
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2. Positions and Duties; Place of Performance.
(a) Positions and Duties. The Executive shall be
employed as Chief Financial Officer, Executive Vice President and Secretary of
the Company and shall have the duties, responsibilities and authority as may
from time to time be assigned to him by the Company's Chief Executive Officer
(the "CEO") that are consistent with and normally associated with such
positions, and shall continue to have responsibility for those segments of the
Company's business for which he is currently responsible. The Executive shall
devote substantially all of his business time, effort and energies exclusively
to the business of the Company, and shall not serve as an active principal or a
director or officer of any other company or entity without the prior written
consent of the CEO, except that the Executive may serve as a director or officer
of any trade association, civic, religious, business, educational or charitable
organization without such consent.
(b) Place of Performance. The Executive shall be
based in Miami, Florida, except for required travel on the Company's business.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Term, the
Company shall pay the Executive a base salary at the annual rate of $300,000 per
year (the "Base Salary"), payable in accordance with the Company's normal
payroll practices for executive compensation, but not less frequently than
monthly. The Executive shall be entitled to such increases (but not decreases)
in his Base Salary as may be determined from time to time by the Company's Board
of Directors (the "Board") or pursuant to its delegation, provided that the
Executive's Base Salary will be reviewed not less often than annually. If the
Base Salary is increased, the new salary shall thereafter constitute the "Base
Salary" for purposes of this Agreement.
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(b) Bonuses. In addition to the Base Salary, the
Executive shall be entitled to receive a cash bonus each year in accordance with
Schedule A.
(c) Other Benefit Plans and Fringe Benefits. The
Executive shall be eligible (i) to participate in any and all retirement, group
health and insurance plans and in all other employee benefit plans in which he
currently participates and/or in any such plans established or maintained by the
Company during the Employment Term that are made available to its management
executives generally, (ii) to receive all fringe benefits, for which his status
and level of employment qualify him in accordance with the Company's usual
policies and arrangements and the terms of such plans, policies and arrangements
and (iii) to receive such other benefits as are specified on Schedule A.
(d) Options. The Company shall grant the Executive an
option to purchase 250,000 shares of common stock of the Company upon the
Effective Date (the "Option") at an exercise price equal to the public offering
price of the Company's initial public offering. The Options shall be incentive
stock options (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")) to the maximum extent possible, (subject to
qualification of such options or any portion thereof as incentive stock options,
and shall be nonqualified stock options to the extent they do not so qualify).
The Option for 50,000 shares shall vest effective on the closing of the
Company's initial public offering; the remaining shares shall vest over the five
years following the Effective Date (with 40,000 to vest each year on the first,
second, third, fourth and fifth anniversary of the Effective Date), provided
that the Executive is employed on each such date. Notwithstanding the foregoing,
the Executive shall be eligible to participate in any stock option or other
equity-based program established by the Company during the Employment Term.
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(e) Expenses. The Company shall reimburse the
Executive for any and all out-of-pocket expenses incurred by the Executive
during the Employment Term in connection with his duties and responsibilities
hereunder in accordance with the Company's usual policy of reimbursing senior
executives.
4. Termination.
(a) Compensation and Benefits. Except as otherwise
provided in this section or in Section 6 hereof, upon termination of the
Executive's employment hereunder, his right to any form of compensation
hereunder shall cease, except that he shall be entitled to receive any salary or
other benefits accrued but not paid up to his Date of Termination (as
hereinafter defined in Section 4(f)) or for any period required by law and any
out-of-pocket expenses reasonably incurred by the Executive prior to such date.
(b) Death and Disability. The Executive's employment
hereunder shall terminate upon his death, and may be terminated by the Company
due to Disability. For purposes of this Agreement, "Disability" shall mean the
determination by the Board that the Executive is physically or mentally
incapacitated and has been unable for a period of six consecutive months, or for
shorter periods aggregating six months in any period of twelve (12) consecutive
months, to perform the duties for which he was responsible immediately before
the onset of his incapacity. In order to assist the Board in making such a
determination, the Executive shall, as reasonably requested by the Board, make
himself available for medical examinations by a physician chosen by the Board
and approved by the Executive. The determination of the physician chosen in
accordance with the preceding sentence shall be final and binding on the Company
and the Executive.
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(c) Termination By the Company For Cause. The
Executive's employment hereunder may be terminated by the Company for Cause at
any time. For purposes of this Agreement, the term "Cause" shall mean the
Executive's (i) commission of an illegal act or acts that was intended to and
did defraud the Company or any of its affiliates, (ii) gross negligence or
willful misconduct in the management of the Company's affairs which materially
xxxxx the Company and which is not remedied within 30 days of receiving notice
of same, or (iii) breach of the provisions of Section 5(a) or (b) hereof. In any
case described in this section, the Executive shall be given written notice, in
accordance with Section 4(f), that the Company intends to terminate his
employment for Cause. Such written notice shall specify the particular act or
acts, or failure to act, that is or are the basis for the decision to so
terminate the Executive's employment for Cause, and shall give the Executive the
right to cure any breach so specified for a period of thirty (30) days.
(d) Termination By the Executive For Good Reason. The
Executive may terminate his employment hereunder for Good Reason. For purposes
of this Agreement, the term "Good Reason" shall mean and shall be deemed to
exist if, without the prior written consent of the Executive, (i) the Executive
is assigned duties or responsibilities that are inconsistent in any material
respect with the scope of the duties or responsibilities associated with his
titles or positions, as set forth in this Agreement (or to which he is
promoted), (ii) the Executive's duties or responsibilities are significantly
reduced, (iii) benefits to which the Executive is entitled under the employee
benefit plans of the Company are in the aggregate materially decreased, unless
such decrease is required by law or is applicable to all employees of the
Company eligible to participate in any plan so affected, not just those covered
by employment agreements with the Company, (iv) the Executive's Base Salary is
reduced or his annual bonus is reduced or eliminated, (v) the Company fails to
perform any
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material term or provision of this Agreement, (vi) the Executive's office
location is relocated to one that is more than fifty (50) miles from the
location at which the Executive was based immediately prior to the relocation,
or (vii) the Company fails to obtain the full assumption of this Agreement by a
successor.
(e) Compensation Upon Termination Without Cause or
for Death or Disability.
(i) If the Company terminates the
Executive's employment hereunder other than for Cause or other than in
accordance with Section 4(b), or the Executive terminates his employment for
Good Reason, notwithstanding any other provision of this Agreement to the
contrary:
(A) In addition to the amounts paid to the Executive
pursuant to Section 4(a), in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the Company shall
pay the Executive an amount equal to two times the Executive's annual Base
Salary rate in effect as of the Date of Termination, plus two times the bonus
paid him with respect to the year preceding such Date of Termination. Except as
provided in Section 6(a)(i), this amount shall be paid in [substantially equal
monthly payments during the two years following the Executive's Date of
Termination, provided, however, that the Company may determine, in its sole
discretion, to pay such amount (or any portion remaining during such period if
periodic payments have commenced) in a single lump sum in cash.
(B) The Company shall continue to provide the
Executive (and his eligible dependents, if any) with group health and life
insurance benefits and long-term disability insurance coverage (or the economic
equivalent thereof) at the level (including, if applicable, the portion of
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the premium paid by the Company for such coverage) in effect on the Date of
Termination for the one-year period following such date, provided that such
coverage shall cease to be provided if the Executive is employed by another
employer within such one-year period, and further provided that, the date of the
expiration of the extended period of coverage provided under this clause (i)(B)
shall be treated as the date of the termination of the Executive's employment
solely for the purpose of determining the rights of the Executive (and his
eligible dependents, if any) to the continuation coverage provided under Section
4980B of the Code.
(C) All nonvested Options previously granted to
Executive shall immediately vest and remain exercisable until the earlier of (i)
two years from the Executive's Date of Termination and (ii) the remaining term
of the Option.
(D) If the Executive's employment hereunder is
terminated as a result of Death or Disability, he shall be paid a single lump
sum in cash within thirty (30) days of his Date of Termination in an amount
equal to fifty percent (50%) of his Base Salary.
(f) Notice of Termination; Date of Termination. Any
termination of the Executive's employment, other than by reason of his death,
shall be communicated by the terminating party by a written notice of
termination (the "Notice of Termination"). The Notice of Termination shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specify the date on which the Executive's employment is to be
terminated (which date shall not be earlier than the date on which such notice
is actually received, or in the case of a termination for Disability, the
sixtieth (60th) day
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after such notice is received). In the case of a termination by the Company for
Cause, the Notice of Termination shall be given within one hundred and eighty
(180) business days after the Company's CEO has actual knowledge of the events
justifying the purported termination, and in the case of a termination by the
Executive for Good Reason, the notice shall be given within one hundred and
eighty (180) days of the Executive's having actual knowledge of the events
justifying such termination. For purposes of this Agreement, "Date of
Termination" shall mean (i) if the Executive's employment is terminated by his
death, the date of his death, and (ii) in all other cases, the later of the date
of actual receipt of the Notice of Termination, or the date specified in such
notice.
(g) No Mitigation; No Offset. In the event of any
termination of the Executive's employment under this Section 4, the Executive
shall be under no obligation to seek other employment and there shall be no
offset against any amounts due the Executive under this Agreement on account of
any remuneration that the Executive may obtain from any subsequent employment.
Any amounts due under this Section 4 are in the nature of liquidated damages,
and not in the nature of a penalty.
5. Covenants.
(a) Competitive Activity. During the Employment Term,
and for a period of twelve (12) months after the Executive's Date of
Termination, the Executive agrees that, without the prior written consent of the
Board, he shall not render services in any capacity for a radio station
competitive with the Company's radio business, nor shall he be directly or
indirectly involved in any radio business or radio network competitive with the
Company's radio business.
(b) Solicitation or Interference. During the
Employment Term and for a period of twelve (12) months after the Executive's
Date of Termination, the Executive shall not,
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either for himself or on behalf of any third party: (i) in any manner induce any
employee, agent, representative, customer, former customer, or any other person
or concern, dealing with or in some other way associated with the Company, to
terminate such dealings or association; or (ii) do anything, directly or
indirectly, to interfere with the relationship between the Company and any such
person or concern.
(c) Non-Disclosure of Proprietary Information. The
Executive agrees that he will not disclose the trade secrets or confidential and
proprietary information of the Company during the Employment Term or thereafter.
The parties understand and agree that nothing contained herein shall prevent the
Executive from disclosing: (1) information required to be disclosed pursuant to
compulsory legal process, provided that he shall give the Company prompt notice
of such process prior to disclosure; (2) information which was in his lawful
possession at the time of or prior to its submission to him by the Company; or
(3) information which is in the public domain.
(d) Remedy for Breach. If any provision of this
Section 4 is deemed invalid or unenforceable, such provision shall be deemed
modified and limited to the extent necessary to make it valid and enforceable.
The Executive acknowledges and agrees that the provisions of this section are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such provisions are not specifically enforced.
Accordingly, money damages from the Executive for a breach of this section would
be difficult, if not impossible, to calculate and the most appropriate relief in
the event of the Executive's breach would be injunctive relief. Nothing
contained herein shall be deemed to prohibit the Company, for any such breach,
from instituting or prosecuting any other proceeding in any court of competent
jurisdiction, in either law or equity, to obtain damages for any breach of this
Agreement. All
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remedies given to the Company by this Agreement shall be construed as cumulative
remedies and shall not be alternative or exclusive remedies.
6. Change in Control Provisions.
(a) Impact of Event. In the event of a "Change in
Control" of the Company, as defined in Section 6(b), the following provisions
shall apply in addition to the other provisions of this Agreement:
(i) If, on or before the second anniversary
of the Change in Control, the Executive's employment hereunder is terminated by
the Company for any reason other than for Cause or by the Executive for Good
Reason, (A) Section 5(a) shall not be applicable to the Executive from and after
his Date of Termination, (B) the Executive shall be entitled to receive the
amount determined under Section 4(e)(i)(A) in a single lump sum in cash within
thirty (30) days of the Executive's Date of Termination, and such amount shall
not be discounted in any way to reflect its present value, (C) any and all
Options the Executive then holds which are not exercisable shall vest and be
exercisable immediately, and (D) notwithstanding Section 4(e)(B) hereof, at the
Company's expense, the Executive shall continue to be a participant in any group
health plan (which may be provided by payment of COBRA continuation coverage
premiums) maintained by the Company (or the economic equivalent in cash) at the
level in effect on the Executive's Date of Termination for a period of eighteen
(18) months following his Date of Termination.
(ii) All expenses (including, without
limitation, legal fees and expenses) incurred by the Executive in connection
with, or in prosecuting or defending, any claim or controversy arising out of or
relating to this Agreement shall be paid by the Company, unless the Executive
fails to prevail at least in part in any such claim or controversy and the
Company receives
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a written opinion of independent legal counsel, selected by the Board, to the
effect that such expenses were not incurred by the Executive in good faith.
Pending any such determination, such expenses shall be paid by the Company in
advance on a monthly basis, upon an undertaking by the Executive to repay such
advanced amounts if the Executive fails to prevail in any such claim or
controversy and it should thus be determined that the expenses were not incurred
by the Executive in good faith.
(b) Definition of Change in Control. A Change in
Control shall mean the happening of any of the following:
(i) any "person," as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") (other than the Company or any subsidiary of the Company, or any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities;
(ii) during any period of two consecutive
years beginning on or after the Effective Date hereof, individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii) or (iv)) whose
election by the Board or nomination for election by the Company's shareholders
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
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(unless the approval of the election or nomination for election of such new
directors was in connection with an actual or threatened election or proxy
contest), cease for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than (x) a merger or consolidation which 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 entity) more than eighty percent (80%) of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (y) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as defined above in clause (i))
acquires more than fifty percent (50%) of the combined voting power of the
Company's then outstanding securities; or
(iv) the shareholders of the Company
approve 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, or the Company, directly or indirectly, begins proceedings to effect a
complete liquidation.
7. Miscellaneous.
(a) Governing Law. This Agreement shall be governed
by the laws of the State of New York, without regard to any conflicts of laws
principles thereof that would call for the application of the laws of any other
jurisdiction.
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(b) Notice. Any notice, consent, request or other
communication made or given in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
registered or certified mail, return receipt requested, to those listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Executive:
Xxxxxx X. Xxxxxx
0000 XX 000 Xx.
Xxxxx, Xxxxxxx 00000
(000) 000-0000
To the Company:
Spanish Broadcasting System, Inc.
0000 Xxxxx Xxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(c) Entire Agreement; Amendment. This Agreement shall
supersede any and all existing agreements between the Executive and the Company
or any of its affiliates relating to the terms of the Executive's employment
during the Employment Term. It may not be amended except by a written agreement
signed by both parties.
(d) Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
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(e) Assignment. Except as otherwise provided in this
Section 9(e), this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, representatives, successors and
assigns. This Agreement shall not be assignable by the Executive, and shall be
assignable by the Company only to any corporation or other entity resulting from
the reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
(f) Headings. Section headings are used herein for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
(g) Rules of Construction. Whenever the context so
requires, the use of the masculine gender shall be deemed to include the
feminine and vice versa, and the use of the singular shall be deemed to include
the plural and vice versa.
(h) Arbitration. Any dispute or controversy arising
out of, or relating to this Agreement, shall be resolved by arbitration at the
American Arbitration Association ("AAA") at its New York City office before a
panel of three arbitrators under the then existing rules and regulations of the
AAA. The determination of the arbitrators shall be final and binding on the
parties hereto and judgment on it may be entered in any court of competent
jurisdiction. In the event the Executive prevails in such proceedings, as
determined by the arbitration panel, the Company shall reimburse the Executive
for all expenses (including, without limitation, reasonable legal fees and
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expenses) he incurred in connection with any such proceeding. All such amounts
shall be paid promptly but in any event within ten (10) business days after the
Executive provides the Company with a statement of the amounts to be reimbursed.
In all other cases, each party shall be responsible for their own expenses
incurred in connection with such proceedings.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/Xxxx Xxxxxxx, Xx.
--------------------------------
XXXXXX X. XXXXXX
/s/Xxxxxx X. Xxxxxx
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SCHEDULE A
Bonus: $200,000. Based on the Company meeting projected
Consolidated Broadcast Cash Flow for the next fiscal
year. For the purpose of this bonus, projected
broadcast cash flow is the consolidated amount
approved by the CEO to compensate for performance all
those executives with compensation plans that include
bonuses based on meeting broadcast cash flow targets.
Health Insurance: Health and dental insurance for the executive and
family under the current Company's plan.
Allowance: $5,040 payable in monthly installments.
Car: Lease for a 300E Mercedes Benz, renewable every four
years.
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