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EXHIBIT 10.1
October 1, 1997
Dear Scott:
We are extremely pleased that you have elected to accept our offer. We
are confident that this position will prove to be a challenging and rewarding
opportunity.
Consistent with our previous discussion, the terms of your employment
will be as follows:
1. Employment. Effective October 1, 1997, you will be employed on a
full-time basis as the Chief Executive Officer of American
Business Information, Inc. (ABI) and will serve as Vice-Chairman
of our Board of Directors. Your duties will be those which are
usual and customary for the CEO of a public company. You will
have responsibility for ABI's financial condition and operating
results. You will report to and serve at the pleasure of the
Board of Directors.
2. Compensation.
a. Base Salary. Your base salary will be $375,000 per year,
subject to discretionary increase by the Board of
Directors.
b. Bonus. Starting with the calendar year ending December
31, 1998, you will receive a bonus in the amount of
$250,000 a year for each year that the earnings per share
of ABI common stock exceeds the earnings per share for the
immediately preceding calendar year by an amount of 20
percent or more. For the purpose of this Letter, earnings
per share shall be determined by reference to earnings
from continuing operations, and excluding one-time charges
(Earnings Per Share) and shall be that figure determined
by our accounting firm each year as set forth in our
audited financial statements
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and reported to the SEC. The bonus will be paid on or
before the end of the second pay period following the
determination.
c. Signing Bonus. Upon acceptance of this Letter and
reporting for duty, ABI will pay you a bonus in the amount
of $250,000. In the event you voluntarily terminate or
are terminated by ABI for cause during the first 24 months
of employment then you agree to repay the bonus as
follows:
Months of Employment Amount of Repayment
-------------------- -------------------
Less than 6 100%
More than 6, less than 12 75
More than 12 less than 18 50
More than 18, less than 24 25
24 months or more 0
All compensation shall be subject to applicable withholding and,
unless otherwise specifically provided, paid in accordance with
ABI's usual and customary payroll practices.
3. Stock Options. Effective October 1, 1997, ABI will grant you
Incentive Stock Options for 250,000 shares of ABI's stock.
Thereafter, you will receive additional grants of Incentive Stock
Options for 150,000 shares each, effective as of December 31,
1998, December 31, 1999, and December 31, 2000, provided the
Earnings Per Share for the year then ended have increased by 20
percent or more over the Earnings Per Share for the immediately
preceding calendar year. All Incentive Stock Options shall be:
(i) granted under and pursuant to the American Business
Information, Inc. 1992 Stock Option Plan or any successor plan;
(ii) evidenced by a separate option agreement; and (iii) vest at
a rate of 25 percent a year starting with the first anniversary
of the grant. In the event your employment is terminated, any
unvested options shall be canceled. However, if you are
terminated by ABI after 12 continuous months of employment
pursuant to subparagraph 6.a. or 6.b. and without cause, or if
you resign for Good Reason (as defined in 6.d.), then all
unvested options shall vest effective as of the last day of your
employment.
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4. Benefits. You will be eligible for such group insurance plans,
stock option programs, qualified retirement plans, and/or other
leave and/or fringe benefit policies, plans, or programs of
general applicability to senior executives as ABI may from time
to time establish. Anything to the contrary notwithstanding,
however, your qualification, eligibility, participation, and
benefit entitlements, shall be governed by the express terms and
conditions of each such policy program or plan and any policies
of insurance or third party contracts which may be applicable
thereto. Further, ABI expressly reserves the right, in its sole
discretion, to amend, curtail, or terminate any such benefit,
program, plan, or policy at any time, provided that such action
is of uniform applicability. You will also be reimbursed for all
reasonable and ordinary expenses you incur in performing your
duties for ABI.
5. Relocation Expense. We will purchase your existing office
furniture and also reimburse you for all actual reasonable costs
which you incur in moving to Omaha, up to a maximum aggregate
amount of $70,000.
6. Termination. Your employment may be terminated as follows:
a. At any time by either party upon 90 days' written notice.
b. Immediately in the event of your death or in the event you
are disabled and unable to perform the essential functions
of your position for a period of at least six (6)
consecutive months as determined by a mutually accepted
physician.
c. ABI may terminate your employment at any time for "cause"
as hereinafter defined effective immediately upon delivery
of written notice to you at your last known place of
residence. "Cause" shall mean any act or omission which
is materially harmful to ABI, including but not limited to
the following:
(i) conviction of any fraud or crime of moral turpitude
or the intentional destruction or material
misappropriation of company property;
(ii) being under the influence of alcohol, illegal
drugs, or controlled substances during business
hours while in our office engaged in routine daily
business activity;
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(iii) repeated and material failure or refusal to comply
with the reasonable directions of the Board of
Directors, the terms of this Letter, or ABI's
established policies or procedures; and/or
(iv) gross negligence or repeated, material acts of
negligence in the performance of your duties.
Upon termination you will receive that portion of your Base
Salary and prorated portion of your Bonus which shall be deemed
earned, up to and including the date of termination. In the
event your employment with ABI is terminated, pursuant to 6(b),
or without cause pursuant to 6(a), or in the event you resign for
Good Reason, then you shall be entitled to have your Base Salary
continue for a period of 24 months from the date your employment
is terminated.
d. Good Reason. "Good Reason" shall mean the occurrence of
any of the following:
(i) ABI's material breach of any of the provisions of
this Agreement; or
(ii) Any material, adverse alteration in your titles,
positions, status, duties or responsibilities as
set forth in paragraph 1 or in your annual long-
term aggregate benefits and/or compensation with
ABI or its successors as set forth in paragraphs 2,
3 and 4.
7. Ownership and Disclosure of Information. In consideration for
your employment and ABI's willingness to grant you access to and
the right to use such information, you agree that all
Confidential Information as hereinafter defined, which you may
obtain or have access to in the course of your employment, shall
be and at all times remain the sole exclusive property of ABI.
You further agree, both during the term of your employment with
ABI and for 36 months thereafter, to keep and maintain all such
Confidential Information in strict confidence, to not disclose
the same in any form to any person, firm, or entity, and to not
use the same for any purpose, whatsoever, except as may be
necessary to perform your job with ABI or as may otherwise be
required by law. Confidential Information shall mean all trade
secrets and all nonpublic information pertaining to or in any way
connected with the
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business and/or financial affairs of ABI or any of its affiliates
and any and all information provided by or generated for or on
behalf of any customer, client, account, or prospect,
specifically including, but not limited to, any and all
information relating to current or prospective products or
services or any component parts thereof, all information relating
to past, present, or prospective customers, clients, or accounts,
vendors, suppliers, and/or subcontractors and their respective
needs, preferences, or requirements; all information relating to
business product or market research, pricing, discounts,
marketing, sales, purchasing, ABI's systems, designs, routines,
standards, procedures, protocols, and all data, research,
developments, discoveries, improvements, applications,
enhancements, techniques, apparatus, methods, systems,
information and/or data compilation or retrieval systems,
computer programs, designs, formulas, processes, and other
creations or inventions, whether or not the same are patented or
copyrighted, undertaken, or made in connection therewith; and all
files, documents, contracts, materials, listings, computer
programs, printouts, source codes, drawings, specifications,
processes, applications, techniques, routines, formulas, and
information of any name, nature, or description, whether or not
the same are reduced to writing or in machine-readable form which
pertains thereto or is, in any way, connected therewith.
During the course of your employment, you agree to follow all
policies and procedures in regard to the handling, storage, and
safekeeping of all Confidential Information. Upon termination of
your employment, you agree to promptly return to ABI, any and all
Confidential Information and all abstracts, notes, memos,
summaries, compilations, or other data, documents, or records in
any way pertaining thereto.
The provisions of this Section 7 shall not apply to information
(a) that is known or available to the public (other than as a
result of unauthorized disclosure by you); (b) that you received
from a third party not in violation of a secrecy obligation with
ABI; or (c) whose disclosure is required by law.
8. Restrictive Covenants. As a material inducement to ABI to
employ you and in consideration for your access to Confidential
Information and ABI's employees, vendors, customers, clients, and
accounts, the adequacy of which is hereby acknowledged, you
hereby covenant and agree that during the term of your
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employment by ABI and upon termination of that employment, for
any reason whatsoever, for an additional period of three (3)
years thereafter, you will not either directly or indirectly,
whether as an officer, shareholder, director, agent, employee,
independent contractor, consultant, joint venturer, partner,
trustee, beneficiary of any person, firm, corporation, trust, or
other entity, or as an individual or otherwise, enter into or
undertake the following without the express prior written consent
of ABI:
a. Establish or enter into any business or enterprise which
offers products or services of the type or nature provided
by ABI in competition with ABI.
b. Canvass or solicit any customer, client, account, or
prospect of ABI with which you have had personal contact
or an established business relationship in the course of
your employment with ABI to the extent such canvassing or
solicitation is for the purpose or with the intent of
marketing, offering, or providing products or services of
the type or nature provided or sold by ABI.
c. Directly or indirectly accept or receive any payment or
other compensation for any product or service of the type
or nature provided by ABI at your date of termination from
any customer, client, account, or prospect of ABI with
which you had personal contact or an established business
relationship in the course of your employment with ABI.
d. Authorize, aid or assist any person, firm or corporation,
other than ABI, to market, offer or provide any products
or services of the type or nature of the products or
services provided by ABI to any customer, client, or
account of ABI with which you have had personal contact or
an established business relationship in the course of your
employment with ABI.
e. Directly or indirectly request, advise, or in any way
encourage or solicit any client, customer, or account with
which ABI has an established business relationship and
with whom you have had personal contact or an established
business relationship in the course of your employment
with ABI to cancel, terminate, or otherwise modify or
curtail any such contract, agreement or relationship.
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f. Directly or indirectly induce or attempt to influence any
employee or independent contractor of ABI with whom you
have had personal contact or an established business
relationship in the course of your employment with ABI, to
terminate their employment or contract relationship with
ABI.
9. Remedies in the Event of Breach/Specific Performance.
The parties acknowledge that ABI's remedies at law for breach of
the covenants contained in Sections 7 and 8 are inadequate, that
irreparable harm is likely to result in the event of a breach of
such covenants and that monetary damage alone will not compensate
for such damage. Therefore, you waive any and all defenses that
an adequate remedy at law exist in the event of any action by ABI
to enforce any one or more of said covenants and agrees that ABI
shall be entitled to injunctive relief, as well as such other
relief as may be available at law or in equity.
10. Change in Control.
a. A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) a merger, consolidation or other combination of ABI
with or into any other corporation if ABI is not a
surviving entity; or
(ii) the stockholders of ABI approve (a) a plan of
complete liquidation by ABI or (b) an agreement for
the sale or disposition by ABI of all or
substantially all ABI's assets; or
(iii) the acquisition, subsequent to the date of this
Agreement, directly or indirectly, by any person,
entity or group of persons of ownership of the
power to vote in excess of fifty percent (50%) of
the voting securities of ABI; or
(iv) any other event, including, but not limited to, the
matters set forth in (i) through (iii) above which
shall
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have the effect of vesting effective control of the
business and affairs of ABI in a person, entity or
group of persons other or different than the
present stockholders of ABI, or which shall have
the effect of causing a change in management of ABI
or in a majority of its Board of Directors.
b. If a "Change of Control" is deemed to have occurred, then
and in that event, if you are not employed by ABI or any
successor company or acquirer for any reason after a
period of twelve (12) months after any of the events
described in (i), (ii), (iii), or (iv) of this Paragraph,
then you shall be entitled to receive the following:
(i) direct severance pay equal to a minimum of an
amount equal to two (2) times the sum of (x) your
annual Base Salary plus (y) your highest annual
Bonus in the three (3) year period immediately
preceding the Change in Control; and
(ii) all outstanding equity incentive awards including
stock options shall immediately vest and shall
remain exercisable for a period of ninety (90) days
from the date of the separation from ABI or its
successor or acquirer or, if earlier, until the end
of the option term; and
(iii) all other compensation to which you are owed at the
time of the termination of your employment.
11. Entire Agreement. This Letter supersedes and replaces all prior
agreements or understandings and constitutes the entire agreement
between the parties with respect to your employment by ABI.
There are no other agreements, understandings, or representations
whether written or oral between the parties, except to the extent
the same are set forth herein.
12. Severability. Invalidity of any provision of this Letter
including, but not limited to any provision of Sections 7 or 8 or
any of the separately enumerated subparts of Section 8 shall not
render invalid any of the other provisions of this Letter,
including any of the other provisions of said sections and/or
their specifically enumerated subparts.
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13. Survival. The provisions of this Letter, which by their terms
contemplate action, performance, or obligations which are to
occur after or extend beyond termination of your employment shall
survive termination of your employment and be enforceable in
accordance with their terms.
14. Nebraska Law. The parties agree that the employment relationship
created by this Letter of Understanding shall be governed by and
construed according to the laws of the State of Nebraska.
15. Amendment. This Agreement may be amended by written agreement
between the parties.
Very truly yours,
Vinod Gupta
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Chairman of the Board of Directors
Accepted this 1st day of
October, 1997.
By:
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Scott A. Dahnke