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Exhibit 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 25, 1999, by and
between Spanish Broadcasting Systems, Inc., a Delaware corporation (the
"Company") and Luis Diaz-Albertini (the "Executive").
WHEREAS, the Executive has been employed by the Company for a
number of years as its Vice President/Group Sales; 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 commencing on the date the Company's registration statement relating to
its 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 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/Group Sales 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 position, 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, 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 $225,000 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
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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.
(b) Bonuses. In addition to the Base Salary, the
Executive shall be entitled to receive a cash bonus each year in accordance with
the formula set forth at Exhibit 1 attached hereto and made a part hereof,
and/or any bonus program or arrangement established by the Company after the
date hereof for the benefit of the Company's management executives.
(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, 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.
(d) Options. The Company shall grant the Executive
options to purchase 50,000 shares of common stock of the Company upon the
Effective Date (the "Option") with the exercise price to be 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 shall vest over the three years following the Effective
Date (i.e., 17,000 on each of the first and second anniversary of the Effective
Date and 16,000 on the third anniversary of the Effective Date, provided the
Executive is employed on each
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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.
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 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
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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 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,
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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,
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
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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 Internal Revenue Code of 1986, as amended
(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
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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 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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(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 Company, for
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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 first 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
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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 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
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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 (i)) acquires more than forty
percent (40%) 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:
Luis Diaz-Albertini
c/o Spanish Broadcasting System, Inc.
3191 Coral Way
Suite 805
Miami, Florida 33145
To the Company:
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 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.
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(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.
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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Name: Raul Alarcon, Jr.
Title: Chief Executive Officer and
President
LUIS DIAZ-ALBERTINI
/s/ Luis Diaz-Albertini
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EXHIBIT 1
COMPENSATION
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