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Exhibit 10.48
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of February 16, 2000, by and between Spanish
Broadcasting System, Inc., a Delaware corporation (the "Company") and Juan A.
Garcia (the "Executive").
WHEREAS, the Company desires to employ the Executive as its Vice President
of Finance and Strategic Planning; and
WHEREAS, the Executive is willing 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
commencing on February 16, 2000 (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 the
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 Vice
President of Finance and Strategic Planning of the Company and shall have the
duties, responsibilities and authority as may from time to time be assigned to
him by either of Raul Alarcon, Jr., the Company's President (the "President"),
or Joseph A. Garcia, the Company's Chief Financial Officer (the "CFO"), that
are consistent with and normally associated with such position. 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 consent of the President, 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,
but shall be required to visit and work with all Company broadcast stations
wherever located on a regular and continuing basis.
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 Two Hundred Ten Thousand
Dollars ($210,000.00) 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 less than 5% annually) 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
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annually. Once the Base Salary is increased, the new salary shall thereafter
constitute the "Base Salary" for purposes of this Agreement.
(b) Bonuses. In addition to the Base Salary, the Executive shall be
entitled to receive a cash bonus (the "Bonus") each year based on the Company
meeting projected consolidated broadcast cash flow for each fiscal year. For
the purpose of determining the Bonus, projected broadcast cash flow is the
consolidated amount approved by the President to compensate for performance of
all those executives with compensation plans that include bonuses based on
meeting annual broadcast cash flow targets. The Bonus in the first year will be
One Hundred Forty Thousand Dollars ($140,000.00) and shall be increased
annually by no less than five percent (5%). To the extent that the projected
broadcast cash flow target is not achieved by the Company, the Executive will
be entitled to receive fifty percent (50%) of the Bonus if at least eighty
percent (80%) of the projected broadcast cash flow target is achieved in a
respective fiscal year. Once the Bonus is increased, the new annual bonus shall
thereafter constitute the "Bonus" for purposes of this Agreement.
(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 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, and (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.
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(d) Options. The Company shall grant the Executive options to
purchase One Hundred Thousand (100,000) shares of Class A common stock of the
Company (the "Common Stock") upon the Effective Date (the "Option") with the
exercise price of $20.8125 per share which represents the closing price on the
NASDAQ Stock Market of the Company's Common Stock on the Effective Date. The
Option shall consist of 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). A portion of the Option to
purchase Ten Thousand (10,000) shares of Common Stock shall vest on the
Effective Date and the remainder of the Option shall vest over a five year
period (i.e. 10,000 on the first anniversary of the Effective Date and 20,000
on the second, third, fourth and fifth anniversaries of the Effective Date)
provided 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.
(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 and for those
relocation expenses set forth as Exhibit 1 hereof.
4. Termination
(a) Compensation and Benefits. Except as otherwise provided in
this section or 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
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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.
(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
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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, (v) the Company fails to perform any material term or provision of
this Agreement, (vi) the Executives 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.
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(c) 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 annual
Bonus agreed to under this Agreement for the first year whether or not
projected broadcast cash flow is achieved, or paid him with respect to the year
preceding such Date of Termination, as may be applicable. 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 (such amount not to be
discounted in any way to reflect its present value).
(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
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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 Internal Revenue Code of 1986, as amended
(the "Code").
(C) The nonvested portion of the Option 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
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(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 President or CFO 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 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 competitive with the Company's radio business.
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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 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 (j)) acquires
more than thirty percent (30%) 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 and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in that State.
(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:
Juan A. Garcia
4706 Granada Blvd.
Coral Gables, Florida 33146
To the Company:
c/o Spanish Broadcasting System, Inc.
3191 Coral Way
Suite 805
Miami, Florida 33145
ATTN: Raul Alarcon, Jr.
with a copy to:
Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
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(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.
(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 provisions of this
Agreement.
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(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
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.
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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.
----------------------------------------
Name: Raul Alarcon, Jr.
Title: Chief Executive Officer and President
JUAN A. GARCIA
/s/ JUAN A. GARCIA
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EXHIBIT 1
RELOCATION EXPENSES
1. Cost of moving personal belongings from New York to Florida; and
2. Travel expenses incurred by household family members to relocate from New
York to Florida.
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(b) Solicitation or Interference. During the 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 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
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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 in 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
nonvested portion of the Option the Executive then holds which is 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.
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(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 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 Board, and any new director (other than
a director designated by a person who has entered into
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