Employment Agreement - SportsLine USA Inc. and Kenneth W. Sanders
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
1st day of September, 1997 (the "Effective Date"), by and between SPORTSLINE
USA, INC., a Delaware corporation (hereinafter called the "Company"), and
KENNETH W. SANDERS (hereinafter called the "Executive").
RECITALS
A. The Company desires to obtain the personal services of the Executive as
Chief Financial Officer of the Company from and after the Effective Date;
B. The Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND TERM. The Company hereby agrees to employ the Executive
and the Executive hereby agrees to serve the Company, on the terms and
conditions set forth herein, for the period of three (3) years commencing on the
Effective Date (the "Term"). The Term may be renewed by mutual written agreement
of the Executive and the Company.
1.2 DUTIES OF EXECUTIVE. The Executive shall serve as the Chief Financial
Officer of the Company shall have and exercise responsibility for overseeing and
actively participating in all aspects of the Company's financial affairs,
including, without limitation (a) the establishment and implementation of
financial policy, (b) negotiation of the terms of debt and equity financings for
the Company, (c) the supervision of the Company's auditors, (d) directing the
preparation of financial statements, budgets, forecasts and any required SEC
filings, (e) participating in discussions, meetings and other communications
with security analysts, investment bankers, lenders and other members of the
financial community, (f) the supervision of the Company's human resources
department and personnel, and (g) such other similar or related duties
customarily performed by a chief financial officer as may be assigned to the
Executive from time to time by the Chairman of the Board, President or Chief
Executive Officer of the Company or the Board of Directors of the Company (the
"Board"). The Executive shall devote substantially all his working time and
attention to the business and affairs of the Company (excluding any vacation and
sick leave to which the Executive is entitled), render such services to the best
of his ability, and use his best efforts to promote the interests of the
Company; provided, that it shall not be a violation of this Agreement for the
Executive to (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures or fulfill speaking engagements or (iii) manage personal
investments, so long as such activities do not interfere with the performance of
the Executive's responsibilities as an employee of the Company in accordance
with this Agreement. For purposes of this Agreement, references to the "Board"
include any authorized committee of the Board.
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1.3 PLACE OF PERFORMANCE. In connection with his employment by the Company,
the Executive shall be based at the Company's principal executive offices except
for travel reasonably necessary in connection with the Company's business.
2. COMPENSATION.
2.1 BASE SALARY. Commencing on the Effective Date of this Agreement, the
Executive shall receive a base salary at the annual rate of Two Hundred Ten
Thousand Dollars ($210,000) (the "Base Salary") during the Term, payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased from time to time.
2.2 INCENTIVE COMPENSATION. The Executive shall be entitled to receive such
bonus payments or incentive compensation as may be determined at any time or
from time to time by the Board in its discretion.
2.3 STOCK OPTIONS.
(a) In connection with the Executive's agreement to serve as the
Company's Chief Financial Officer pursuant to the terms hereof, on the Effective
Date the Company will grant to the Executive pursuant to the Company's 1995
Stock Option Plan, as amended (the "Plan") non-qualified stock options (the
"Options") to purchase 200,000 shares of the Company's common stock, par value
$.01 per share ("Common Stock"), at an exercise price equal to $4.00 per share.
(b) The Options shall be granted pursuant to and subject to the terms
and conditions of the Company's 1995 Stock Option Plan (the "Plan"); provided,
that notwithstanding anything in the Plan or the forms of agreements evidencing
the Options to the contrary: (i) the Options shall have a term expiring on
December 31, 2001 (the "Option Expiration Date"); (ii) subject to termination of
the Options prior to vesting as provided in clause (iii) below, the Options
shall vest and become exercisable (A) to the extent of the first 25% of the
Options, on the date that the Company's Registration Statement No. 333-25259 in
respect of its initial public offering of shares of Common Stock is declared
effective by the Securities and Exchange Commission, (B) to the extent of an
additional 25% of the Options, one year after the Effective Date, and (C) with
respect to the remaining 50% of the Options, pro rata on a monthly basis, at the
end of each month during the two-year period commencing one year after the
Effective Date (I.E., at the rate of 1/24th of the Options per month); provided,
that upon termination of the Executive's employment hereunder pursuant to
Section 4.4 hereof, all unvested Options that would have vested at any time
during the six-month period following the date of termination had the
Executive's employment hereunder not been terminated shall immediately vest and
become exercisable; and (iii) to the extent not previously vested and exercised
pursuant to their terms, the Options shall terminate upon the earlier to occur
of: (A) one year after the termination of the Executive's employment hereunder
pursuant to Section 4.3 hereof by reason of his death, (B) six months after the
termination of the Executive's employment hereunder pursuant to Section 4.2
hereof by reason of the Executive's Disability or pursuant to Section 4.4 hereof
by the Company without Cause or by the Executive for Good Reason, (C) on the
date the Executive's employment hereunder is terminated pursuant to Section 4.1
by the Company for Cause, or by the Executive other than for a Good Reason, and
(D) the Option Expiration Date.
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3. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
3.1 EXPENSE REIMBURSEMENT. During the Term, the Company, in accordance with
its expense reimbursement policies and procedures in effect for senior
management employees from time to time, shall reimburse the Executive for all
reasonable expenses actually paid or incurred by the Executive in the course of
and pursuant to the business of the Company.
3.2 OTHER BENEFITS. During the Term, the Company shall make available to
the Executive such benefits and perquisites as are generally provided by the
Company to its other senior management employees, including but not limited to
eligibility for participation in any group life, medical, health, dental,
disability or accident insurance, pension plan, 401(k) savings and investment
plan, profit-sharing plan, employee stock purchase plan, incentive compensation
plan or other such benefit plan or policy, if any, which may presently be in
effect or which may hereafter be adopted by the Company for the benefit of its
employees generally, in each case subject to and on a basis consistent with the
terms, conditions and overall administration of such plan or arrangement. The
Company shall also provide the Executive such coverage under any directors and
officers liability policies it maintains as is provided to its other senior
management employees and shall enter into an indemnification agreement with the
Executive on terms and conditions as similar agreements entered into with other
senior management employees.
3.3 VACATION. During the Term, the Executive shall be entitled to paid
vacation in accordance with the policies, programs and practices of the Company
generally applicable to its other senior management employees, but in no event
shall the Executive be entitled to fewer than two weeks paid vacation per year.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE. Notwithstanding anything contained to the
contrary in this Agreement, this Agreement and the Executive's employment
hereunder may be terminated by the Company for Cause. As used in this Agreement,
"Cause" shall mean (i i) subject to the following sentences, any action or
omission of the Executive which constitutes (A) a willful breach of this
Agreement, (B) a breach by the Executive of his fiduciary duties and obligations
to the Company, or (C) the failure or refusal to follow any lawful directive of
the Chairman, the Chief Executive Officer, the President or the Board, in each
case which act or omission is not cured (if capable of being cured) within
thirty (30) days after written notice of same from the Company to the Executive,
or (ii) conduct constituting fraud, embezzlement, misappropriation or gross
dishonesty by the Executive in connection with the performance of his duties
under this Agreement, or a formal charge or indictment of the Executive for, or
conviction of the Executive of, a felony (other than a traffic violation) or, if
it shall damage or bring into disrepute the business, reputation or goodwill of
the Company or impair the Executive's ability to perform his duties with the
Company, any crime involving moral turpitude. Upon any determination by the
Board that Cause exists under clause (i) of the preceding sentence, the Company
shall cause a special meeting of the Board to be called and held at a time
mutually convenient to the Board and the Executive, but in no event later than
ten (10) business days after Executive's receipt of the notice contemplated by
clause (i). The Executive shall have the right to appear before such special
meeting with legal counsel of his choosing to refute any determination of Cause
specified in such notice, and any termination of the Executive's employment by
reason of such Cause determination shall not be effective until Executive is
afforded such opportunity to appear. Any termination for Cause pursuant to this
Section 4.1 shall be made in writing to Executive, which notice shall set forth
in reasonable detail all acts or omissions upon which the
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Company is relying for such termination. Upon any termination pursuant to this
Section 4.1, the Executive shall be entitled to be paid his Base Salary through
the date of termination. Upon making such payment, the Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination.
4.2 DISABILITY. Notwithstanding anything contained in this Agreement to the
contrary, the Company, by written notice to the Executive, shall at all times
have the right to terminate this Agreement and the Executive's employment
hereunder if the Executive shall, as the result of mental or physical
incapacity, illness or disability, fail or be unable to perform his duties and
responsibilities provided for herein for a period of more than one hundred
twenty (120) consecutive days in any 12-month period. Upon any termination
pursuant to this Section 4.2, the Executive shall be entitled to be paid his
Base Salary to the date of termination and, upon making such payment, the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination);
provided, that the Executive shall be entitled to receive any amounts then
payable pursuant to any pension or employee benefit plan, life insurance policy
or other plan, program or policy then maintained or provided by the Company to
the Executive in accordance with the terms thereof.
4.3 DEATH. In the event of the death of the Executive during the term of
his employment hereunder, the Company shall pay to the estate of the deceased
any unpaid amounts of his Base Salary to the date of his death. Upon making such
payment, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of the
Executive's death); provided, that the Executive's spouse, beneficiaries or
estate, as the case may be, shall be entitled to receive any amounts then
payable pursuant to any pension or employee benefit plan, life insurance policy
or other plan, program or policy then maintained or provided by the Company to
the Executive in accordance with the terms thereof.
4.4 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.
(a) At any time the Company shall have the right to terminate this
Agreement and the Executive's employment hereunder by written notice to the
Executive; provided, that (i) within thirty (30) days after the date of
termination, the Company shall pay the Executive any unpaid amounts of his Base
Salary accrued prior to the date of termination, (ii) in lieu of any further
Base Salary, incentive compensation or other payments to the Executive for
periods subsequent to the date of termination, and as a severance benefit to the
Executive, the Company shall continue to pay the Executive for a period of six
months following the date of termination an amount equal to the installments of
his Base Salary (at the rate in effect at the date of termination) that would
have been paid to him had this Agreement and his employment hereunder not been
terminated, and (iii) if this Agreement and the Executive's employment hereunder
is terminated pursuant to this Section 4.4(a) at any time following the
expiration of six months after the Effective Date, the Company shall pay the
Executive the Additional Amount, if any, determined and payable in accordance
with Section 4.4(c) hereof. Upon making such payment, the Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination); provided, that the
Executive shall be entitled to receive any amounts then payable pursuant to any
pension or employee benefit plan, life insurance policy or other plan, program
or policy then maintained or provided by the Company to the Executive in
accordance with the terms thereof. The Company shall be deemed to have
terminated the Executive's employment pursuant to this Section 4.4 if such
employment is terminated by the Company without Cause or by reason of the
Executive's death or disability, or by the Executive for Good Reason (as defined
in Section 4.4(b) hereof).
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(b) For purposes of this Agreement, "Good Reason" means a material
breach by the Company of this Agreement, including any material reduction in the
Executive's authority, duties or responsibilities as contemplated by Section 1.2
of this Agreement, in each case which is not cured (if capable of being cured)
by the Company within thirty (30) days after written notice of same from the
Executive to the Company. Any termination by the Executive for Good Reason
pursuant to this Section 4.4 shall be made in writing to the Company, which
notice shall set forth in reasonable detail the breach or breaches upon which
the Executive is relying for such termination.
(c) If the Option Value (as hereinafter defined) does not equal or
exceed $105,000 at any time during the six-month period following the date of
termination of this Agreement and the Executive's employment hereunder pursuant
to Section 4.4(a), then the Company shall pay the Executive, within thirty (30)
days following the end of such six-month period, an amount (the "Additional
Amount") equal to the difference between (i) $105,000 MINUS (ii) the Option
Value on the date six months following such date of termination. For purposes of
this Section 4.4(c), the term "Option Value" means, as of any date of
determination, the sum of (A) with respect to unexercised vested Options held by
the Executive, the difference between the Closing Price (as hereinafter defined)
of the shares of Common Stock or other securities subject to such vested Options
LESS the exercise price of such Options, PLUS (B) with respect to Options
previously exercised by the Executive, if the shares of Common Stock or other
securities issued upon exercise of the Option are then held by the Executive,
the difference between the Closing Price of such shares of Common Stock or other
securities LESS the exercise price of such Options, PLUS (C) with respect to
shares of Common Stock or other securities issued to the Executive upon exercise
of the Option that are sold by the Executive after the date of termination, the
difference between the price at which the Executive sold such shares LESS the
exercise price of such Options. For purposes of this Section 4.4(c), the term
"Closing Price" means the closing sales price of the Common Stock or other
securities issuable or issued upon exercise of the Options on the date of
determination, as reported by Nasdaq or any similar system of automated
dissemination of quotations of securities prices then in common use or, if the
Common Stock or other securities issuable or issued upon exercise of the Options
are not publicly traded at the time any determination of Closing Price is to be
made hereunder, the Closing Price of the Common Stock or other securities shall
be the amount determined in good faith by the Board. For purposes of
illustration, if on the determination date of Option Value (1) the Executive
held Options to purchase 10,000 shares of Common Stock at an exercise price of
$4.00 per share, (2) the Executive had previously exercised Options to purchase
40,000 shares of Common Stock at an exercised price of $4.00 per share, sold
20,000 of such shares after the date of termination for $8.00 per share and
continued to hold 20,000 of such shares, and (3) the Closing Price on the
determination date was $6.00 per share, then for purposes of this Section 4.4(c)
the Option Value on such date would be $130,000, calculated as follows:
Unexercised Vested Options = [10,000 X ($6.00 - $4.00)] = $ 10,000
Exercised Options:
Shares Held = [20,000 X ($6.00 - $4.00)] = 40,000
Shares Sold = [20,000 X ($8.00 - $4.00)] = 80,000
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Option Value................................ = $ 130,000
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4.5 VOLUNTARY RESIGNATION. In the event the Executive resigns as an
employee of the Company other than as a result of a termination for Good Reason,
he shall be entitled to receive only such payment(s) as he would have received
had he been terminated pursuant to Section 4.1 hereof.
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5. RESTRICTIVE COVENANTS.
5.1 NONDISCLOSURE. Contemporaneous herewith, the Executive shall execute
the Company's standard form of Employee Invention Assignment and Confidentiality
Agreement. Without limiting in any manner the Executive's obligations under such
agreement, the Executive agrees that he shall not divulge, communicate, use to
the detriment of the Company or for the benefit of any other person or persons,
or misuse in any way, any Confidential Information (as hereinafter defined)
pertaining to the business of the Company. Any Confidential Information or data
now or hereafter acquired by the Executive with respect to the business of the
Company (which shall include, but not be limited to, information concerning the
Company's financial condition, prospects, technology, customers, methods of
doing business and marketing and promotion of the Company's services) shall be
deemed a valuable, special and unique asset of the Company that is received by
the Executive in confidence and as a fiduciary, and the Executive shall remain a
fiduciary to the Company with respect to all of such information. For purposes
of this Agreement, "Confidential Information" means information disclosed to the
Executive or known by the Executive as a consequence of or through his
employment by the Company (including information conceived, originated,
discovered or developed by the Executive), and not generally known or available,
about the Company or its business. Notwithstanding the foregoing, nothing herein
shall be deemed to restrict the Executive from disclosing Confidential
Information to the extent required by law.
5.2 NONSOLICITATION OF EMPLOYEES. While employed by the Company and for a
period of twenty-four (24) months thereafter, Executive shall not directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period of
more than twelve (12) months.
5.3 NONCOMPETITION. While employed by the Company and for a period of
twenty-four (24) months thereafter, the Executive shall not, directly or
indirectly, engage in, operate, have any investment or interest or otherwise
participate in any manner (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) in any sole
proprietorship, partnership, corporation or business or any other person or
entity that engages, directly or indirectly, in a Competing Business; provided,
that the Executive may continue to hold Company securities and/or acquire,
solely as an investment, shares of capital stock or other equity securities of
any company which are publicly traded, so long as the Executive does not
control, acquire a controlling interest in, or become a member of a group which
exercises direct or indirect control of, more than five percent (5%) of any
class of capital stock of such corporation. For purposes of this Agreement, the
term "Competing Business" means any sole proprietorship, partnership,
corporation or business or any other person or entity that owns, operates,
manages or distributes an on-line service that provides sports news, information
and content, whether such service is accessed through the Internet, a commercial
on-line service or otherwise.
5.4 INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 5.1, 5.2 or 5.3 of this Agreement will cause irreparable harm and damage
to the Company, the monetary amount of which may be virtually impossible to
ascertain. As a result, the Executive recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in Section 5 of this Agreement by the Executive or any of
his affiliates, associates, partners or agents,
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either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other remedies the Company may possess.
6. NO CONFLICTS WITH EXISTING ARRANGEMENTS. The Executive represents and
warrants to the Company that he has reviewed any existing employment or
non-competition covenants with his prior employer, and that his employment by
the Company hereunder does not and will not conflict with or constitute a breach
or default under any of the terms or provisions thereof.
7. NOTICES: Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or when deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: SportsLine USA, Inc.
6340 N.W. 5th Way
Fort Lauderdale, Florida 33309
Attention: Chief Executive Officer
If to the Executive: Kenneth W. Sanders
1500 Coryell Court
Southlake, Texas 76092
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
8. SUCCESSORS AND ASSIGNS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company and any successor to
its business and/or assets which assumes and agrees to perform this Agreement by
operation of law or otherwise.
9. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or
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both, the otherwise invalid provision will be considered to be reduced to a
period or area which would cure such invalidity.
10. WAIVERS. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
11. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement, except that the payment required to be made by
the Company to the Executive pursuant to Section 4.4 shall be the Executive's
exclusive remedy for any termination of this Agreement pursuant to such section.
12. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
(other than the parties hereto and, in the case of Executive, his heirs,
personal representative(s) and/or legal representative) any rights or remedies
under or by reason of this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
SPORTSLINE USA, INC.
By:/s/ MICHAEL LEVY,
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Michael Levy,
Chairman and Chief Executive Officer
By:/s/ KENNETH W. SANDERS
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Kenneth W. Sanders