TheStreet.com Signs 3-Year Cramer Contract (TSCM)

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Many people think of Jim Cramer as being MAD MONEY on CNBC now, but his full-time gig is still at TheStreet.com, Inc. (NASDAQ: TSCM).  The company gave an SEC filing this morning that shows the company has secured his contract ahead.  After all, he is the co-founder and chief voice of the company.  Many would argue that he IS the company.

Jim Cramer has entered into a new employment agreement with a retroactive effective date of January 1, 2008 to author articles for the ad-supported and paid publications (Action Alerts PLUS) product and to "provide reasonable promotional and other services…"

Cramer will receive an annual salary of $1,300,000, $1,560,000 and $1,872,000, respectively, for the three successive years of the agreement.  Cramer will also receive a signing bonus in the amount of $100,000 and will be eligible for an annualized target bonus equal to 75% of salary based upon achievement of company determined financial targets.

Cramer will also receive restricted stock units with respect to 300,000shares of common stock.  The units will be payable in shares of suchcommon stock and vest and become payable in equal installments onJanuary 1 of each of the next successive five years, provided that Mr.Cramer remains an employee on each date.  This is subject toaccelerated vesting following a “Change of Control” and other terms andconditions.  Cramer is also eligible to receive additional awards asdetermined by the company.

Subject to certain terms and conditions, Cramer is also entitled to acash payment equal to three-times his base following a Change ofControl, following which Mr. Cramer also has the right to terminate theEmployment Agreement.  In short, if the company is bought or if theymake a major change in ownership, he gets triple pay and can walk if hechooses.

As a non-compete, Cramer will not author articles for other onlinefinancial publications that compete with the company or act in certaincapacities  for any other start-up on-line business that competes withthe company without the company’s consent. There are exceptions forcertain print publications like his column for New York magazine andcontents of Mr. Cramer’s books appearing on the Internet. 

Cramer is permitted to pursue other journalistic and other endeavors,provided that they are not "inconsistent with the performance of hisobligations" to the company.  There is also a non-compete clauselasting for 18 months following his termination by the company for“Cause” or by his behalf without “Good Reason.”  There is also asimilar 18 months non-solicitation clause for persons employed by thecompany during six months prior to termination.

This new term is for three years, although Cramer may terminate as ofJanuary 15 of any year with 60 days notice (not more than 90 days).There are also indemnification provisions where TheStreet.com hasagreed to defend, indemnify and hold harmless provisions for Cramer.He has also agreed to terminate all Rule 10b5-1 plans with respect tothe Company’s common stock within three days of the execution of thisemployment agreement, and he has agreed to not establish a Rule 10b5-1plan before April 1, 2009.

While much of this seems lengthy and may seem excessive to many in someof the "upward revisions" and clauses, most of this is actuallystandard for a key person.  Many would argue that the value ofTheStreet.com would be a fraction of today’s valuation if he were not apart of the company.  As a reminder, he is still either the largestholder or one of the top shareholders at TheStreet.com. 

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Jon C. Ogg
April 9, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.