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Exhibit 10.46
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 7, 2000, by and between Spanish
Broadcasting System, Inc., a Delaware corporation, having a place of business
at 3191 Coral Way, Miami, Florida (the "Company") and Joseph A. Garcia (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 five years commencing on the date the signing of this contract and ending on
the fifth anniversary of the signing date, provided that, unless either party
otherwise elects by notice in writing to the other at least 90 days prior to
the fifth anniversary of the signing date or any succeeding anniversary of the
signing 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").
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
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duties, responsibilities and authority as may from time to time be assigned to
him by Raul Alarcon, Jr. (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 $400,000 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
Base Salary will be reviewed not less often than annually by the Company's
Compensation Committee. In addition, the Compensation Committee shall meet
annually to determine what, if any, bonus shall be provided Executive for the
fiscal year.
(b) Bonuses. In addition to the Base Salary, the Executive shall be
entitled to receive a cash bonus each year at the discretion of the Board of
Directors of the Company.
(c) Other Benefit Plan and Fringe Benefits. The Executive shall be
eligible (I) to participate in any and all retirement, family group health,
insurance plans and in all
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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 has granted 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 Company
shall grant the Executive an option to purchase 100,000 shares of common stock
of the Company upon the execution of this Employment Agreement at an exercise
price equal to the closing price (NASDAQ) at such date of execution. 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 100,000 shares shall vest
20,000 upon execution of this Employment Agreement, the remain shares shall vest
over the four (4) years following the execution of this Employment Agreement
(with 20,000 to vest each year on the first, second, third and fourth
anniversary of the execution date), provided that the Executive is employed on
each such date.
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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.
(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 4 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 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
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determination of the physician chosen in accordance with the preceding sentence
shall be final and binding on the Company and the Executive.
(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 harms
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
replaced as CFO or 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
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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, (v) the Company fails to perform any 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, (vii) the Company
fails to obtain the full assumption of this Agreement by a successor or (viii)
the Executive does not report directly to Raul Alarcon, Jr. In the event this
agreement is not assumed by a successor, then, in that event the Company shall
make a lump sum payment equal to the remaining compensation due Executive
pursuant to this agreement. Such payment shall be made at the time of
consummation of any sale of Company.
(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
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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 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 one year 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
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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 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
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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, 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
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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 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
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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 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 [thirty percent (30%)] 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
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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 (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 of 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.
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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.
(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:
Joseph A. Garcia
14021 S.W. 67 Court
Miami, Florida
(305) 971-9261
To the Company:
Spanish Broadcasting System, Inc.
2601 South Bayshore Drive
Penthouse 2
Coconut Grove, Florida 33133
with a copy to:
Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
(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.
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(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.
(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
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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 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/ RAUL ALARCON, JR.
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Raul Alarcon, Jr.
JOSEPH GARCIA
/S/ JOSEPH A. GARCIA
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SCHEDULE A
Bonus: To the extent that the projected broadcast cash flow target is
achieved by the Company, the Executive will be entitled to
receive a sum equal to two hundred thousand dollars ($200,000)
to be paid on a quarterly basis for every quarter that the
Company meets the projected cash flow target. Once the Bonus
is increased, the new annual bonus shall thereafter
constituted the "Bonus" for purposes of this Agreement.
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 S430 Mercedes Benz, renewable every four years.
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