Exhibit 10.24
December 24, 1996
Xx. Xxxxx X. XxXxxxxxx
President
K-III Magazine Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Dear Xx. XxXxxxxxx:
The purpose of this letter is to set forth the terms and conditions of the
employment agreement (the "Agreement") between you and K-III Communications
Corporation (the "Company").
1. SERVICES.
a. The Company hereby retains you, and you agree to be employed by the
Company in a full-time capacity as the Group President of the Company's Media
Group, as the same may be constituted from time to time and which, on the date
hereof, includes Consumer Magazines, Special Interest Magazines, Intertec
Publishing, Family and Leisure Magazines and Channel One (collectively, the
"Media Group") together with such other similar or higher executive duties that
you may be requested to perform during the term of this Agreement and to serve
as Executive Vice President or other office of the Company and any of its
subsidiaries to which you may be elected. You shall report directly to Xxxxxxx
X. Xxxxxx or, if Xxxxxxx X. Xxxxxx is no longer with the Company, the Chief
Executive Officer of the Company.
b. You shall devote substantially all of your attention, business time
and efforts to the business and affairs of the Company, provided that nothing
shall prohibit you from participating in charitable or educational activities or
the Board of Directors of other companies (provided such other companies do not
compete with the Company), which do not in the aggregate materially interfere
with the provision of services by you under this Agreement.
2. TERM
The Term of this Agreement shall commence on December 24, 1996 and shall
expire on December 31, 1999, unless earlier terminated in accordance with
Section 5 or extended in accordance with Section 7. For the purposes of this
Agreement,
the "Expiration Date" shall mean December 31, 1999, unless the Term is extended
in accordance with Section 7.
3. COMPENSATION
a. Base Salary. You shall be paid in annual base salary equal to
$675,000, less applicable withholdings, payable bi-weekly in arrears, on the
Company's regular pay dates. Such base salary shall be subject to review
regarding increases from time to time during the Term and may be increased (but
not decreased) by the Company in its sole discretion.
b. Bonus. You shall continue to participate in the Short Term Senior
Executive Performance Plan and the Short Term Senior Executive Discretionary
Plan (together, the "Bonus Plans") on bases (i) at least as favorable to you as
your participation in the 1996 Bonus Plans as set forth on the bonus
participation letter previously forwarded to you, and (ii) in no event less
favorable than the bases of the participation therein of any of the Company's
executives holding positions then comparable to yours.
c. Executive Compensation Plans. You shall be eligible to participate in
the Company's Non-Qualified Stock Option Plan and Restoration Plan and such
other similar plans that may be in effect, for any of the Company's executives
holding positions comparable to yours, from time to time during the Term
(collectively, the "Executive Compensation Plans").
4. FRINGE BENEFITS AND EXPENSES
a. Fringe Benefits. During the term of this Agreement, the Company will
provide you with benefits commensurate with those provided to employees of the
Company generally and consistent with the benefits provided to you by the
Company in the past.
b. Expenses. The Company shall reimburse you for all reasonable and
customary travel (including providing you with an automobile) and entertainment
expenses incurred by you in the performance with your duties hereunder, such
expenses and reimbursements therefor to be consistent with the expenses incurred
by you and the reimbursements made to you prior to the date of this Agreement.
5. EARLY TERMINATION. This Agreement
a. shall terminate upon your death;
b. may be terminated by the Company on written notice to you upon your
"Permanent Disability";
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c. may be terminated by the Company on written notice to you for "Cause";
and
d. may be terminated by you on written notice to the Company for "Good
Reason"
e. may be terminated by the Company on written notice to you without
Cause.
f. As used herein, "Permanent Disability" shall mean a physical or mental
disability which renders you unable to perform your duties hereunder in a
reasonably professional manner provided you have failed to perform such duties
as a result of such disability for an aggregate period of six months in any 12
consecutive month period during the Term. Permanent Disability shall be
determined by the opinion of at least two of three doctors associated with major
hospitals in Manhattan practicing in the field to which the disability relates
and selected by the Company acting reasonably.
g. As used herein, "Cause" shall mean (i) any substantial breach or
non-observance of any of your material obligations as set forth herein, (after
reasonable advance written notice and a reasonable opportunity to cure such
breach or non-observance), (ii) the immoderate use of alcohol by you on a
habitual basis (after reasonable advance written notice and a reasonable
opportunity to cease such use), (iii) the illegal use of narcotics or drugs by
you on Company premises or while engaged in any business-related function or
which adversely affects your ability to perform services (after reasonable
advance written notice and a reasonable opportunity to cease such use), (iv)
willful and repeated absence from the business for any unreasonable period of
time, without leave; and (v) willful and repeated failure or refusal to perform
your duties hereunder which failure or refusal continues following reasonable
advance written notice to you specifying such failure or refusal and a
reasonable opportunity to cure such failure or refusal.
h. As used herein, "Date of Termination" shall mean the date of your
death or effective date of your termination under Sections 5(b), (c), (d), and
(e).
i. As used herein, "Good Reason" shall mean (i) diminution in position or
responsibility, authority or prestige, including, but not limited to, no longer
reporting directly to Xxxxxxx X. Xxxxxx, or, if he should leave the Company, the
Chief Executive Officer of the Company, provided that it shall not be a
diminution if (A) during 1997 any of the businesses in the Media Group discussed
with you by Xx. Xxxxxx as a divestiture possibility during November and December
1996 is sold or (B) during any twelve consecutive month period (the "Fiscal
Year In Question") after 1997 the revenues or earnings before interest, taxes
and depreciation ("EBITDA") determined on a pro forma basis, assuming all sold
operations were sold and all acquisitions made were made at the beginning of the
Fiscal Year In Question, of the businesses over which you have managerial
supervision and control, shall be 20% less than the revenues or EBITDA for the
1997 calendar year determined on the same pro forma basis,
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(ii) relocation of your workplace outside of Manhattan, (iii) uncured breach of
this Agreement by the Company, provided that if the breach is immaterial you
must give the Company written notice of the breach and a 30 day period
subsequent to such notice to cure such breach, (iv) failure of a permitted
assignee of this Agreement to assume the Agreement, (v) following a Change in
Control (as hereinafter defined), failure to give increases, during each
consecutive 12 month period thereafter during the Term, in annual base salary
equal to at least seven (7%) percent.
6. COMPENSATION UPON TERMINATION. In the event that this Agreement shall
terminate:
a. Pursuant to Section 5(a) or (b), you or your estate shall be entitled
to receive (i) all accrued and unpaid annual base salary earned through the Date
of Termination plus an amount equal to one year's annual base salary at the rate
then in effect plus (ii) your target bonuses under the Bonus Plans for the
calendar year in which the Date of Termination occurs ("Termination Year Target
Bonuses") plus an amount equal to your Termination Year Target Bonuses
multiplied by a fraction, the numerator of which is the number of days from the
start of the calendar year during which the Date of Termination occurs and the
denominator of which is 365 plus (iii) all other amounts or benefits due under
any Executive Compensation Plans or fringe benefit plans in which you then
participate in accordance with the terms thereof then in effect.
b. Pursuant to Section 5(c), you shall be entitled to receive your
accrued and unpaid annual base salary through the Date of Termination plus any
amounts or benefits payable under the Bonus Plans, Executive Compensation Plans
or fringe benefit plans in which you then participate in accordance with the
terms thereof then in effect.
c. Pursuant to Section 5(d) or (e), you shall be entitled to receive (i)
your full annual base salary through the Expiration Date at the rate in effect
on the Date of Termination, plus (ii) your Target Bonuses, under all the Bonus
Plans then in effect, for the calendar year in which the Date of Termination
occurs together with your target bonus for any other bonus plans then in effect
(collectively, the "Bonus Amount") plus an amount equal to 105% of the Bonus
Amount for each succeeding calendar year or part thereof (on a pro rated basis)
through the Expiration Date, plus (iii) continuation of your participation in
all Executive Compensation Plans and fringe benefit plans then in effect
including medical and hospitalization insurance through the Expiration Date,
(iv) plus, if the termination occurs following a Change in Control or other
event that would subject the amounts payable under this subsection (c) to excess
parachute taxes or similar excise taxes under Section 280 G
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of the Internal Revenue Code, a tax gross-up payment in a sufficient amount so
that the amounts you retain of payments under clauses (i), (ii) and (iii) above
are no less than the amounts you would have retained after the payment of all
normal withholdings including normal income taxes but before the payment of
"excess parachute taxes" and similar excise taxes under Section 280 G of the
Internal Revenue Code that may be payable as a result of the Change in Control
or other such event having occurred prior to the Date of Termination and (vi)
all of your unvested benefits under "Executive Compensation Plans" including
unvested stock options shall vest in full and you shall have 365 days from the
Date of Termination to exercise any stock options you hold; provided, however
that in no event shall the amounts payable to you under clauses (i), (ii) and
(iii) above be less than the amounts payable under subsection (a), clauses (i),
(ii) and (iii) of this Section 6.
d. All payments under Section 6(c) shall be paid in a lump sum, less
applicable withholdings, within 15 days after the Date of Termination.
7. CHANGE IN CONTROL.
a. In the event of a Change in Control during the Term after December 31,
1996 and prior to January 1, 2000, the Term of this Agreement and your
employment hereunder shall be extended to a date which is the third anniversary
of the date on which the Change in Control occurs. In such event, the
Expiration Date shall be extended to the date upon which such third anniversary
occurs.
b. Notwithstanding anything contained herein to the contrary, on a Change
in Control, all then unvested stock options granted under any Executive
Compensation Plan shall vest.
c. For purposes hereof, "Change in Control" shall mean such time as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934 (the "Act"), other than Kohlberg Kravis Xxxxxxx
& Co. ("KKR") and its affiliates (as that term in defined in the Act
("Affiliates"), becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act) of more than (A) 35 percent (35%) of the total voting power of the then
outstanding voting stock of the Company and (B) the total voting power of the
then outstanding stock of the Company beneficially owned by KKR and its
Affiliates or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Company's Board
of Directors (together with any new directors whose election by the Company's
Board of Directors or whose nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the Directors then
still in office who either were Directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Directors then in office.
8. AGREEMENT NOT TO COMPETE
Through the earlier of (i) the Expiration Date or (ii) the Date of
Termination in the event this Agreement and your employment hereunder is
terminated under Section 5(d) or (e), you agree not to (A) accept employment
with or provide services to any person, firm or corporation that competes with
the Company or any of its subsidiaries
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in any of the Company's businesses over which you have had managerial
supervision and control during the term of your employment with the Company, or
(B) yourself or for and on behalf of any person, firm or corporation for which
you provide services, solicit for employment or hire any employee employed by
the Company or any of its subsidiaries during your last month of employment with
the Company in any of the Company's businesses over which you have had
managerial supervision and control during the term of your employment with the
Company. Nothing contained in this Section 8 shall prohibit you from owning
less than 5% of the equity securities of any company as a passive investor.
9. GOVERNING LAW. This Agreement shall be governed and interpreted and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed in the State of New York.
10. ARBITRATION. Both parties agree that any disputes under this
Agreement or in any way related to your employment with or separation from the
Company shall be heard and determined by an arbitrator selected in accordance
with the rules and procedures of the American Arbitration Association ("AAA") in
New York City and that the arbitrator's findings shall be final and binding on
both parties hereto. Both parties agree that punitive damages shall not be an
available remedy to a prevailing party in any arbitration hereunder. The party
that does not prevail in the arbitration shall pay all of the costs and fees of
AAA.
11. NOTICES. Any notice required or desired to be served, given or
delivered hereunder shall be in writing, and shall be deemed to have been
validly served, given or delivered (i) five business days after deposit in the
United States mails, with proper postage prepaid, whether by air, first class,
registered or certified mail, (ii) one business day after being deposited with
an overnight courier with all charges prepaid, or (iii) when delivered, if
hand-delivered by messenger, all of which shall be properly addressed to the
party to be notified and sent to the address indicated as follows:
If to the Company: K-III Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to you: To address first above written
or to such other address as such party may specify to the other in writing in
accordance with the provisions hereof.
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12. MISCELLANEOUS.
a. Waiver by either party of a breach of any provision of this Agreement
by the other party shall not operate or be construed as a waiver of any
subsequent breach by such waiving party.
b. This Agreement shall not be assignable by either party except that the
Company may assign its rights and obligations hereunder to any of its
subsidiaries, provided that such assignment shall not result in any change in
the terms of this Agreement and Company shall remain secondarily liable for its
obligations hereunder.
c. This instrument contains the entire agreement and understanding of the
parties hereto except for such further provisions as may be set forth in the
By-laws or Certificate of Incorporation of the Company. It may not be changed
except by an agreement in writing signed by you and the Company.
d. If any term, condition or provision of this Agreement shall be
declared, to any extent, invalid or unenforceable, the remainder if the
Agreement, other than the term, condition or provision held invalid or
unenforceable, shall not be affected thereby and shall be considered in full
force and effect and shall be valid and be enforced to the fullest extent
permitted by law.
e. The captions set forth in this Agreement are used solely for
convenience or reference and shall not control or affect the meaning or
interpretation of any of the provisions.
f. This Agreement may be signed in any number of counterparts each of
which shall be deemed an original.
If you are in agreement with the foregoing, please sign the enclosed
copy of this Agreement and return a copy to the undersigned.
K-III COMMUNICATIONS CORPORATION
By:
--------------------------------
Title: Chairman
AGREED TO AND ACCEPTED:
-----------------------------------
Xxxxx X. XxXxxxxxx
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