Exhibit 10.9
EXECUTIVE AGREEMENT
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THIS EXECUTIVE AGREEMENT (this "Agreement") is made as of May 19,
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2000, by and between Ziff Xxxxx Holdings, Inc., a Delaware corporation (the
"Company"), Ziff Xxxxx Publishing, Inc., a Delaware corporation and a wholly
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owned indirect subsidiary of the Company ("Publishing"), and Xxxxxx X. Xxxxxx
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("Executive"). Certain definitions are set forth in Section 17 of this
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Agreement.
Executive desires to be employed by Publishing, and Publishing
desires to employ Executive and to be assured of its right to have the benefit
of Executive's services on the terms and conditions hereinafter set forth.
Executive desires to purchase shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock") and Series A Preferred Stock, par value $.01
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per share (the "Preferred Stock," and collectively with the Common Stock, the
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"Stock"), of the Company and the Company desires to issue such Common Stock and
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Preferred Stock to Executive. The Company, Publishing and Executive desire to
enter into this Agreement (i) setting forth the terms of Executive's purchase of
the Executive Stock (as defined below); (ii) setting forth the terms and
conditions of Executive's employment with Publishing; (iii) providing the
Company with certain rights in respect of the Executive Stock; and (iv) setting
forth the obligation of Executive to refrain from competing with the Company and
its Affiliates (as defined below) under certain circumstances as provided
herein.
NOW, THEREFORE, the parties hereto agree as follows:
A. PURCHASE AND SALE OF EXECUTIVE STOCK
1. Upon execution of this Agreement, Executive shall purchase, and
the Company shall sell, (a) 47.5 shares of Preferred Stock at a price of $1,000
per share and 10,000 shares of Common Stock at a price of $0.25 per share, which
shares shall be fully vested as of the date hereof (collectively, the "Coinvest
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Shares") and (b) 76,616.67 shares of Common Stock at a price of $0.25 per share,
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which shares shall be subject to vesting as provided herein (the "Vesting
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Shares"), for an aggregate purchase price of $69,154.17. The Company shall
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deliver to Executive stock certificates representing the Coinvest Shares, and
Executive shall deliver to the Company (x) a promissory note in the form of
Annex A attached hereto in the aggregate principal amount of $50,000.00 (the
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"Full Recourse Executive Note") and (y) a promissory note in the form of Annex B
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attached hereto in an aggregate principal amount of $19,154.17 (the "Partial
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Recourse Executive Note" and together with the Full Recourse Executive Note, the
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"Executive Notes"). Executive's obligations under the foregoing Executive Notes
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shall be secured by a pledge to the Company of all of the shares of Executive
Stock, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex C attached hereto.
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2. The Company shall hold each certificate representing the
Executive Stock until such time as the Executive Stock represented by such
certificate is released from the pledge to the Company.
3. Within 30 days after Executive purchases the Executive Stock from
the Company hereunder, Executive shall make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex D attached hereto.
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4. In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(a) The Executive Stock to be acquired by Executive pursuant to this
Agreement shall be acquired for Executive's own account and not with a view to,
or intention of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Stock shall not be disposed
of in contravention of the Securities Act or any applicable state securities
laws.
(b) Executive is an executive officer of Publishing, is sophisticated
in financial matters and is able to evaluate the risks and benefits of the
investment in the Executive Stock. Executive is an "accredited investor", as
defined in Regulation D promulgated under the Securities Act.
(c) Executive is able to bear the economic risk of Executive's
investment in the Executive Stock for an indefinite period of time because the
Executive Stock have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.
(d) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive Stock
and has had full access to such other information concerning the Company as
Executive has requested. Executive has reviewed, or has had an opportunity to
review, a copy of the Investor Rights Agreement.
(e) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive does not and
shall not conflict with, violate or cause a breach of any agreement, contract or
instrument to which Executive is a party or any judgment, order or decree to
which Executive is subject.
(f) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any person or entity
other than the Company or Publishing that would impact in any way Executive's
ability to perform fully his duties, responsibilities and obligations hereunder.
(g) Executive has consulted with independent legal counsel regarding
his rights and obligations under this Agreement and that he fully understands
the terms and conditions contained herein. Executive has obtained advice from
persons other than the Company and its counsel regarding the tax effects of the
transaction contemplated hereby.
5. Executive acknowledges and agrees that neither the issuance of
the Executive Stock to Executive nor any provision contained herein shall
entitle Executive to remain in the employment of Publishing or any of its
Affiliates.
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6. The Company, Publishing and Executive acknowledge and agree that
this Agreement has been executed and delivered, and the Executive Stock has been
issued hereunder, in connection with and as a part of the compensation and
incentive arrangements between the Company, Publishing and Executive.
B. VESTING AND REPURCHASE PROVISIONS
REGARDING CERTAIN EXECUTIVE STOCK.
7. Vesting of Common Stock; Vested Shares. The Company and Executive
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acknowledge and agree that the Vesting Shares purchased by Executive hereunder
will be subject to vesting as hereinafter provided. All Coinvest Shares held by
Executive as of the date hereof shall be considered Vested Shares (as defined
below) for all purposes hereunder. The Vesting Shares shall vest in accordance
with the following schedule, if as of each such date Executive is employed by
the Company or any of its Subsidiaries:
Cumulative Percentage of
Vesting Shares
Date Vested
First anniversary of the date hereof 20%
Second anniversary of the date hereof 40%
Third anniversary of the date hereof 60%
Fourth anniversary of the date hereof 80%
Fifth anniversary of the date hereof 100%
If Executive ceases to be employed by Publishing on any date other than any
anniversary date prior to the fifth anniversary of the date hereof, the
cumulative percentage of Vesting Shares to become vested shall be determined on
a pro rata basis according to the number of days elapsed since the prior
anniversary date (or, if prior to the first anniversary of the date hereof,
since the date hereof). Notwithstanding the foregoing, all unvested Vesting
Shares shall vest upon the consummation of a Sale of the Company. "Vested
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Shares" means any Vesting Shares which have become vested pursuant to the terms
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of this Agreement and all other Executive Shares which are not Vesting Shares.
All Vesting Shares which have not become vested are referred to herein as
"Unvested Shares."
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8. Repurchase Option.
(a) Repurchase Option. In the event that Executive is no longer
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employed by Publishing or any of its Affiliates for any reason, the Executive
Stock, whether held by Executive or one or more Permitted Transferees, will be
subject to repurchase by the Company and the Investors pursuant to the terms and
conditions set forth in this Section 8 (the "Repurchase Option").
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(i) Termination Without Cause; Death or Incapacity. If Executive
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is no longer employed by Publishing or any of its Affiliates as a result of (A)
a termination by Publishing without Cause, (B) as a result of death or
Incapacity or (C) any other reason not covered by Section 8(a)(ii) below, then
(x) the Company and the Investors may elect to purchase all or any portion of
the Vested
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Shares (including all or any portion of any class thereof), at a price per Share
equal to the Fair Market Value thereof as of the date such employment was
terminated and (y) the Company and the Investors may elect to purchase all or
any portion of the Unvested Shares at a price per share equal to the lesser of
the Original Cost thereof and the Fair Market Value thereof as of the date such
employment was terminated.
(ii) Termination with Cause; Voluntary Terminations. If
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Executive is no longer employed by Publishing or any of its Affiliates as a
result of (A) a termination by Publishing with Cause or (B) a Voluntary
Termination, then the Company and the Investors may elect to purchase all or any
portion of the Executive Stock (including Vested Shares and Unvested Shares) at
a price per share equal to the lesser of the Original Cost thereof and the Fair
Market Value thereof as of the date such employment was terminated.
(b) Repurchase Procedures. After the termination of Executive's
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employment with Publishing or any of its Affiliates for any reason, the Company
may elect to exercise the right to purchase Executive Stock (in the amounts and
for the prices set forth in Sections 8(a)(i) and 8(a)(ii)) pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
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holder or holders of Executive Stock at any time prior to the end of the
six-month period commencing on the date of such termination of employment. The
Repurchase Notice will set forth the number of shares of each class and type of
Executive Stock to be acquired from such holder(s), the aggregate consideration
to be paid for such shares of Executive Stock and the time and place for the
closing of the transaction. If any shares of Executive Stock are held by
Permitted Transferees, the Company shall purchase the shares each class and type
of Executive Stock elected to be purchased from such holder(s) of Executive
Stock pro rata according to the number of shares of such class and type of
Executive Stock held by such holder(s) at the time of delivery of such
Repurchase Notice (determined as nearly as practicable to the nearest share).
The Company may elect to purchase all or any portion of the Unvested Shares
without or before purchasing any Vested Shares. If both Unvested Shares and
Vested Shares of any class are to be purchased by the Company and shares of
Executive Stock are held by Permitted Transferees of Executive, the number of
Unvested Shares and Vested Shares of such class to be purchased will be
allocated among such holders pro rata according to the total number of shares of
Executive Stock of each type and/or class to be purchased from such person.
(c) Rights of the Investors
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(i) If for any reason the Company does not elect to purchase all
of the Executive Stock pursuant to the Repurchase Option, the Investors will be
entitled to exercise the Repurchase Option, in the manner set forth in this
Section 8, for all or any portion of the shares of Executive Stock which the
Company has not elected to purchase (the "Available Shares"). As soon as
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practicable after the Company determines that there will be any Available
Shares, but in any event upon the earlier of (A) the delivery of the Repurchase
Notice and (B) six months after the termination of Executive's employment with
the Company, the Company will deliver written notice (the "Option Notice") to
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the Investors, setting forth the number of each class and type of Available
Shares and the price for each Available Share.
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(ii) the Investors will be permitted to purchase all or any
portion of the Available Shares by delivering written notice (an "Election
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Notice") to the Company within 30 days after receipt of the Option Notice from
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the Company (such 30-day period being referred to herein as the "Investor
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Election Period"); provided that if more than one Investor elects to purchase
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any or all Available Shares of any type or class and the number of Available
Shares of such type or class is less than the aggregate number of Available
Shares of such type or class elected to be purchased by such electing Investors,
each Investor shall be entitled to purchase the lesser of (i) the number of
shares of such type or class such Investor has elected to purchase as indicated
in the Election Notice or (ii) the number of shares of such type or class
obtained by multiplying the number of shares specified in the Option Notice by a
fraction, the numerator of which is the number of shares of Common Stock (on a
fully-diluted basis) held by such Investor and the denominator of which is the
aggregate number of shares of Common Stock (on a fully-diluted basis) held by
all electing Investors. If any Available Shares of such type or class remain
after giving effect to such allocation, such allocation shall be repeated until
either all of the Available Shares of such type or class requested to be
purchased by the electing Investors have been so allocated or no Available
Shares of such type or class are available for purchase.
(d) Supplemental Repurchase Notice. As soon as practicable but in any
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event within five (5) business days after the expiration of the Investor
Election Period, the Company will, if necessary, notify the holder(s) of
Executive Stock as to the number of shares of Executive Stock being purchased
from such holder(s) by the Investors (the "Supplemental Repurchase Notice"). At
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the time the Company delivers a Supplemental Repurchase Notice to the holder(s)
of Executive Stock, the Company will also deliver to the Investors written
notice setting forth the number of shares of Executive Stock the Company and the
Investors will acquire, the aggregate purchase price to be paid and the time and
place of the closing of the transaction.
(e) Closing. The closing of the transactions contemplated by this
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Section 8 will take place on the date designated by the Company in the
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than 60 days after the delivery of the later of such
notices, as the case may be. The Company and/or the Investors, as the case may
be, will pay for the shares of Executive Stock to be purchased pursuant to the
Repurchase Option by delivery of, (i) in the case of the Company, (A) a check
payable to the holder(s) of such shares of Executive Stock, (B) by offsetting
any amounts owed by Executive to Company under the Executive Notes or other bona
fide indebtedness of Executive to the Company or its Affiliates against the
price for such shares of Executive Stock or (C) any combination of (A) and (B)
in the aggregate amount of the purchase price for such shares of Executive
Stock, (ii) in the case of the Investors, a check payable to the holder(s) of
such shares of Executive Stock, or (iii) in any such case, as the holder(s) of
such shares of Executive Stock and the purchaser(s) thereof may otherwise agree;
provided however that if payment in cash by the Company pursuant to the
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preceding clause (A) is restricted by the financing or credit arrangements of
the Company and its Subsidiaries, the Company may deliver a subordinate note or
notes payable in up to three (3) equal annual installments, with the first
installment due on the first anniversary of the closing of such purchase, and
bearing interest (payable quarterly in cash or, if so required by a lender to
the Company or any of its Subsidiaries, in additional notes of the same tenor)
at a rate of 7% per annum. Any obligations of the Company under any notes issued
by the Company pursuant to this paragraph 8(c) shall be subject to any
restrictive covenants to which the Company is subject at the time of such
purchase.
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The Company and the Investors, as the case may be, will receive customary
representations and warranties from each seller of Executive Stock regarding the
sale of the Executive Stock, including but not limited to the representation
that such seller has good and marketable title to the shares of Executive Stock
to be transferred, free and clear of all liens, claims and other encumbrances.
(f) Restrictions on Repurchase. Notwithstanding anything to the
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contrary contained in this Agreement, all repurchases of Executive Stock by the
Company shall be subject to applicable restrictions contained in the Delaware
General Corporation Law and in the Company's and its Subsidiaries' debt and
equity financing agreements. If any such restrictions prohibit the repurchase of
Executive Stock hereunder which the Company is otherwise entitled to make, the
time periods in this Section 8 shall be suspended and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
(g) Termination of Repurchase Right. The right of the Company and the
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Investors to repurchase shares of Executive Stock pursuant to this Section 8
shall terminate upon of a Sale of the Company.
(h) Additional Restrictions on Transfer.
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(i) Until the fifth anniversary of the date hereof, Executive
shall not Transfer any Executive Stock except (A) to a Permitted Transferee in
compliance with the provisions of Section 2D of the Investor Rights Agreement or
(B) the sale of Coinvest Shares in a registered public offering effected
pursuant to Section 10 of the Investor Rights Agreement. The restrictions set
forth in this Section 8(i) shall terminate upon the consummation of a Change in
Control.
(ii) All Executive Stock is subject to the additional
restrictions on Transfer set forth in the Investor Rights Agreement.
(iii) In addition to any other legend required pursuant to the
Investor Rights Agreement or otherwise, any certificates representing the
Executive Stock shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON MAY 19, 2000, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN AN EXECUTIVE AGREEMENT BETWEEN THE COMPANY AND
THE ORIGINAL HOLDER HEREOF DATED AS OF MAY 19, 2000, A COPY OF WHICH
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE."
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(iv) Opinion of Counsel. Executive may not sell, transfer or
dispose of any Executive Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel reasonably acceptable in form and substance to the Company
that registration under the Securities Act or any applicable state securities
law is not required in connection with such transfer.
C. EMPLOYMENT PROVISIONS
9. Employment. Publishing shall employ Executive, and Executive
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hereby accepts employment with Publishing, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 12 hereof (the "Employment Period").
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10. Position and Duties.
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(a) During the Employment Period, Executive shall serve as the Chief
Financial Officer and a Senior Vice President of Publishing and shall have the
normal duties, responsibilities and authority of a chief financial officer and
senior vice president. Any failure of Publishing to assign to Executive duties,
responsibilities and authority which are the normal duties, responsibilities and
authority of a chief financial officer and senior vice president shall
constitute a material breach of this Agreement by Publishing.
(b) Executive shall report to the Chief Executive Officer of
Publishing, and Executive shall devote Executive's best efforts and Executive's
full business time and attention (except for permitted vacation periods, periods
of illness or other incapacity, reasonable time spent with respect to civic and
charitable activities and serving on the boards of directors of other companies
(provided that none of such activities shall interfere with Executive's duties
to Publishing), and other permitted absences for which senior executive
employees of Publishing are generally eligible from time to time under
Publishing's policies) to the business and affairs of Publishing and its
Affiliates. Executive shall perform Executive's duties and responsibilities to
the best of Executive's abilities in a diligent, trustworthy, businesslike and
efficient manner. In connection with Executive's employment by Publishing,
Executive shall not be required to relocate from the greater New York, New York
area without Executive's prior consent and any failure of Publishing to comply
with this sentence shall constitute a material breach of this Agreement.
11. Base Salary; Benefits and Bonuses.
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(a) During the Employment Period, Executive's base salary shall be
not less than $250,000 per annum, subject to an annual cost of living increase
at the beginning of each fiscal year beginning April 1, 2001 at a rate equal to
the increase in the Consumer Price Index-All Urban for the New York area during
the prior year, or such higher rate as the Board of Publishing may designate
from time to time (the "Base Salary"), which salary shall be payable in regular
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installments in accordance with Publishing's general payroll practices and shall
be subject to customary withholding. If the Board and the Chief Executive
Officer of Publishing are satisfied with
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Executive's performance during Publishing's fiscal year ending March 30, 2001,
the Board will increase Executive's Base Salary to $300,000 per annum and
Executive's annual Bonus opportunity (as described in Paragraph 11(b) below) to
$300,000 for Publishing's fiscal year ending March 31, 2002.
(b) In addition to the Base Salary, during the Employment Period,
Executive shall be eligible to receive an annual bonus (the "Bonus") of
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$250,000, payable at the discretion of the Board of the Company based on
performance targets as described in the next sentence. Executive's Bonus
opportunity shall be based on performance targets set forth by the Chief
Executive Officer and the Board of the Company. The principal performance target
for the Company's fiscal year ending March 30, 2001 will be that Publishing
achieve EBITDA of at least $130 million for such fiscal year. Any such Bonus, if
determined by the Board of the Company to be payable, shall be payable within 90
days following the end of each fiscal year (provided that the first fiscal year
for which the Bonus will be payable will be that beginning April 1, 2000 and
Executive's Bonus for such fiscal year shall not be prorated for a partial
fiscal year but shall be payable assuming Executive is employed for the full
fiscal year) during the Employment Period. The Bonus paid to Executive in
respect of the first fiscal year shall be not less than $50,000 and such $50,000
minimum Bonus shall be paid in prorated regular installments during the fiscal
year concurrent with payments of Executive's Base Salary.
(c) During the Employment Period, Executive shall be entitled to
participate in all of Publishing's employee benefit plans and programs for which
senior executive employees of Publishing are generally eligible, which shall
include, but shall not be limited to, health insurance, dental insurance, life
insurance, disability insurance and participation in Publishing's 401(k) plan.
Executive's right to participate in any employee benefit plans or programs of
Publishing shall be subject to Publishing's right to amend, modify or terminate
any such plan or program in accordance with its terms and applicable law and
subject in each case to any applicable waiting periods or other restrictions
contained in such benefit plans or programs. During the Employment Period,
Executive shall be eligible for paid vacation in accordance with the policies of
Publishing which shall be for a minimum of three weeks per calendar year.
(d) Publishing shall reimburse Executive for all reasonable business
expenses incurred by Executive in the course of performing Executive's duties
under this Agreement which are consistent with Publishing's policies in effect
from time to time with respect to travel, entertainment and other business
expenses, subject to Publishing's requirements with respect to reporting and
documentation of such expenses.
12. Term; Termination; Severance.
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(a) The Employment Period shall be for a period of five years from
the date hereof; provided that (i) the Employment Period shall terminate prior
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to such date upon Executive's death or Incapacity; (ii) the Employment Period
may be terminated by Publishing at any time prior to such date with Cause or
without Cause; and (iii) the Employment Period may be terminated by Executive at
any time for any reason (a "Voluntary Termination"), except that a termination
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by Executive as a result of material breach of this Agreement by Publishing
which is not cured within 20 days after written notice thereof by Executive to
Publishing and the Company shall not be deemed a Voluntary Termination. Any
termination of the Executive's employment with Publishing shall be a
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"Termination." The date of any termination of Executive's employment with
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Publishing shall be the "Termination Date."
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(b) Upon any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through Executive's Termination Date, prorated on
a daily basis together with all accrued but unpaid vacation time earned by
Executive during the fiscal year in which such Termination occurs. Except as set
forth in Section 12(d), Executive shall not be entitled to receive Executive's
Base Salary or any bonuses or other benefits from Publishing for any period
after the Termination Date.
(c) In the event Executive's employment is terminated by Publishing
with Cause, upon a Voluntary Termination or upon Executive's death or
Incapacity, Publishing shall have no obligation to make any severance or other
similar payment to or on behalf of Executive.
(d) In the event that Executive's employment is terminated by
Publishing without Cause, following such Termination and upon execution by
Executive of a general release in favor of Publishing and its Affiliates, in
form satisfactory to Publishing, releasing any and all claims for payments
(other than those payments due under Section 11(c)), due to Executive arising
under or pursuant to this Agreement against Publishing and its Affiliates as of
the Termination Date, Publishing shall pay Executive his annual Base Salary (as
in effect on the Termination Date) until the one-year anniversary of the
Termination Date. Each severance payment hereunder shall be payable in
accordance with Publishing's normal payroll procedures and cycles and shall be
subject to withholding of applicable taxes and governmental charges in
accordance with federal and state law. After payment of the severance amounts
described in this Section 12(d), Publishing shall have no obligation to make any
further severance or other payment to or on behalf of Executive except as
otherwise expressly contemplated hereby. Notwithstanding the foregoing, in the
event that Executive shall breach any of Executive's obligations under Sections
13, 14 or 15 of this Agreement, then, in addition to any other rights that
Publishing may have under this Agreement or otherwise, Publishing shall be
relieved from and shall have no further obligation to pay Executive any amounts
to which Executive would otherwise be entitled pursuant to this Section 12.
D. ADDITIONAL AGREEMENTS
13. Confidential Information. Executive acknowledges that by reason
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of Executive's duties to and association with the Publishing and its Affiliates,
as well as Publishing's predecessor, Executive has had and will have access to
and has and will become informed of Confidential Information (as defined in
Section 17 below) which is a competitive asset of Publishing and/or its
Affiliates. Executive agrees to keep in strict confidence and not, directly or
indirectly, make known, disclose, furnish, make available or use, any
Confidential Information, except for use in Executive's regular authorized
duties on behalf of Publishing and its Affiliates (including their
predecessors). Executive acknowledges that all documents and other property
including or reflecting Confidential Information furnished to Executive by
Publishing or any of its Affiliates or otherwise acquired or developed by
Publishing or any of its Affiliates or Executive or known by Executive shall at
all times be the property of the Publishing and its Affiliates. Executive shall
take all necessary and appropriate steps to safeguard Confidential Information
and protect it against disclosure, misappropriation, misuse, loss and theft.
Executive shall deliver to Publishing at the termination of the Employment
Period, or at any other time Publishing may request, all memoranda, notes,
plans,
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records, reports, computer tapes, printouts and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
(as defined in Section 17 below) or the business of Publishing or any of its
Affiliates which Executive may then possess or have under Executive's control.
14. Inventions and Patents.
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(a) Executive acknowledges that all Work Product (as defined in
Section 17 below) is the exclusive property of Publishing. Executive hereby
assigns all right, title and interest in and to all Work Product to Publishing.
Any copyrightable works that fall within the Work Product will be deemed "works
made for hire" under Section 201(b) of the 1976 Copyright Act, and Publishing
shall own all of the rights comprised in the copyright therein; provided,
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however, that to the extent such works may not, by operation of law, constitute
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"works made for hire," Executive hereby assigns to Publishing all right, title
and interest therein.
(b) Executive shall promptly and fully disclose all Work Product to
Publishing and shall cooperate and perform all actions reasonably requested by
Publishing (whether during or after the Employment Period) to establish, confirm
and protect Publishing's right, title and interest in such Work Product. Without
limiting the generality of the foregoing, Executive agrees to assist Publishing,
at Publishing's expense, to secure Publishing's rights in the Work Product in
any and all countries, including the execution of all applications and all other
instruments and documents which Publishing shall deem necessary in order to
apply for and obtain rights in such Work Product and in order to assign and
convey to Publishing the sole and exclusive right, title and interest in and to
such Work Product. If Publishing is unable because of Executive's mental or
physical incapacity or for any other reason (including Executive's refusal to do
so after request therefor is made by Publishing) to secure Executive's signature
to apply for or to pursue any application for any United States or foreign
patents or copyright registrations covering Work Product belonging to or
assigned to Publishing pursuant to paragraph 14(a) above, then Executive hereby
irrevocably designates and appoints Publishing and its duly authorized officers
and agents as Executive's agent and attorney-in-fact to act for and in
Executive's behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
patents or copyright registrations thereon with the same legal force and effect
as if executed by Executive. Executive agrees not to apply for or pursue any
application for any United States or foreign patents or copyright registrations
covering any Work Product other than pursuant to this paragraph in circumstances
where such patents or copyright registrations are or have been or are required
to be assigned to Publishing.
15. Non-Compete, Non-Solicitation.
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(a) In further consideration of the compensation to be paid to
Executive hereunder and the Executive Stock made available for Executive's
purchase hereunder, Executive acknowledges that in the course of Executive's
employment with the Publishing and its Affiliates, and Publishing's predecessor,
he has prior to the date of this Agreement, and will during the Employment
Period, become familiar with Publishing's and its Affiliates' (and their
predecessors') trade secrets, business plans and business strategies and with
other Confidential Information concerning Publishing and its predecessors and
its Affiliates and that Executive's services have been and shall be of special,
unique
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and extraordinary value to the Publishing and its Affiliates. Therefore,
Executive agrees that, during the Employment Period and for one (1) year
thereafter (such period, the "Noncompete Period"), Executive shall not directly
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or indirectly own any interest in, manage, control, participate in (whether as
an officer, director, employee, partner, agent, representative or otherwise),
consult with, render services for, or in any other manner engage in any business
which is directly competitive with any business that Publishing or its
Affiliates engages in or, to the knowledge of Executive, proposes to engage in
during the Employment Period, including the business of publishing technology-
related magazines, and developing content for use on the Internet and in other
electronic media, relating to computers, the Internet, gaming or other
technology-related topics, anywhere in the United States. Nothing herein shall
prohibit Executive from being an owner, indirectly through a mutual fund or
other similar pooled investment vehicle, of a passive investment in the stock of
a corporation which is publicly traded, so long as Executive has no other
participation in the business of any such corporation.
(b) During the Employment Period and for one (1) year thereafter,
Executive shall not directly or indirectly through another Person (i) induce or
attempt to induce any employee of Publishing or any Affiliate to leave the
employ of Publishing or such Affiliate, or in any way interfere with the
relationship between Publishing or any Affiliate and any employee thereof, (ii)
hire any person who was an employee of Publishing or any Affiliate at any time
during the one year period prior to the termination of the Employment Period,
(iii) call on, solicit or service any customer, supplier, licensee, licensor,
franchisee or other business relation of Publishing or any Affiliate in order to
induce or attempt to induce such Person to cease or reduce doing business with
Publishing or such Affiliate, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and
Publishing or any Affiliate (including, without limitation, making any negative
statements or communications about Publishing or its Affiliates) or (iv)
directly or indirectly acquire or attempt to acquire any business in the United
States of America to which Publishing or any of its Affiliates has made an
acquisition proposal prior to the Termination Date relating to the possible
acquisition of such business (an "Acquisition Target") by Publishing or any of
------------------
its Affiliates, or take any action to induce or attempt to induce any
Acquisition Target to consummate any acquisition, investment or other similar
transaction with any Person other than Publishing or any of its Affiliates.
16. Enforcement. If, at the time of enforcement of Sections 13, 14 or 15
-----------
of this Agreement, a court shall hold that the duration, scope, or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed and directed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. Because Executive's services are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, Publishing or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition, in the event of a breach or violation by
Executive of Section 15, the Period set forth in such Section shall be tolled
until such breach or
-11-
violation has been duly cured. Executive agrees that the restrictions contained
in Section 15 are reasonable and that Executive has received consideration in
exchange therefor.
17. Definitions.
-----------
"Affiliate" of a Person means any other person, entity or investment
---------
fund controlling, controlled by or under common control with the Person and, in
the case of a Person which is a partnership, any partner of the Person.
"Board" means the board of directors of the specified Person.
-----
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to Publishing, any of its Affiliates or any of
their customers or suppliers, (ii) intentional or willful conduct which conduct
brings Publishing or any of its Affiliates into public disgrace or disrepute in
any material respect, (iii) substantial failure to perform (other than due to
Incapacity) duties of the office held by Executive as reasonably directed by the
Chief Executive Officer or Board of Publishing which is not cured within 15 days
after notice thereof to Executive or which is incapable of cure, (iv) gross
negligence or willful misconduct with respect to Publishing or any of its
Affiliates, or (v) any breach of this Agreement which is not cured within 15
days after notice thereof to Executive or which is incapable of cure.
"Certificate of Incorporation" means the Company's certificate of
----------------------------
incorporation in effect at the time as of which any determination is being made.
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Confidential Information" means all information of a confidential or
------------------------
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that is or was disclosed to, or
developed or learned by, Executive in connection with Executive's relationship
with the Company or any of its Affiliates prior to the date hereof or during the
Employment Period and that relates to the business, products, services,
financing, research or development of the Company or any of its Affiliates or
their respective suppliers, distributors or customers. Confidential Information
includes, but is not limited to, the following: (i) internal business
information (including information relating to strategic and staffing plans and
practices, business, training, marketing, promotional and sales plans and
practices, cost, rate and pricing structures, accounting and business methods);
(ii) identities of, individual requirements of, specific contractual
arrangements with, and information about, any of the Company' or any of its
Affiliates' suppliers, distributors and customers and their confidential
information; (iii) trade secrets, knowhow, compilations of data and analyses,
techniques, systems, formulae, research, records, reports, manuals,
documentation, models, data and data bases relating thereto; (iv) inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable); and
(v) Acquisition Targets and potential acquisition candidates. Confidential
Information shall not include information that Executive can demonstrate:
-12-
(a) is or becomes publicly known through no wrongful act or breach of obligation
of confidentiality; (b) was rightfully received by Executive from a third party
(other than ZD, Inc. or any of its Affiliates) without a breach of any
obligation of confidentiality by such third party; (c) was known to Executive
prior to his employment with the Publishing and its Affiliates and prior to his
employment with ZD, Inc. or any of it Affiliates; or (d) is required to be
disclosed pursuant to any applicable law or court order; provided, however, that
-------- -------
Executive provides Publishing with prior written notice of the requirement for
disclosure that details the Confidential Information to be disclosed and
cooperates with Publishing to preserve the confidentiality of such information
to the extent possible.
"Executive Stock" means, collectively, the Coinvest Shares, the
---------------
Vesting Shares and any other Stock or equity securities hereafter acquired by
Executive. Such Stock shall continue to be Executive Stock in the hands of any
holder (except for the Company, the Investors and transferees in a Public Sale
consummated in accordance with this Agreement and the Investor Rights
Agreement), and except as otherwise provided herein, each such other holder of
Executive Stock shall succeed to all rights and obligations attributable to
Executive as a holder of Executive Stock hereunder. Executive Stock shall
include both vested and unvested Executive Stock and shall include interests in
the Company issued with respect to Executive Stock including, without
limitation, by way of any recapitalization.
"Fair Market Value" shall mean:
-----------------
(a) with respect to each share of Executive Stock which is listed on
any stock exchange or quoted in the NASDAQ System or the over-the-counter
market, the average of the closing prices of the sale of any such share on all
stock exchanges on which such security may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic over-the-
counter market as reported by the National Quotation Bureau Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which the Fair Market Value is being determined
and the 20 consecutive business days prior to such day; and
(b) with respect to each share of Executive Stock which is not, as of
the date of determination, listed on any stock exchange or quoted in the NASDAQ
System or the over-the-counter market, the Fair Market Value thereof shall be
the amount which each such share of Executive Stock would receive upon a
liquidating distribution, in accordance with the Certificate of Incorporation,
of the proceeds of a sale of the Company and its Subsidiaries as a going concern
at market value as determined in good faith mutually by the Board of the Company
and Executive and in accordance with the Certificate of Incorporation and
determined (x) as of the Termination Date, if any Repurchase Notice or
Supplemental Repurchase Notice has been delivered within three months after the
Termination Date, or (y) as of a date determined by the Board of the Company
within thirty (30) days prior to the delivery of the earlier of any Repurchase
Notice or Supplemental Repurchase Notice, if any Repurchase Notice or
Supplemental Repurchase Notice is delivered after
-13-
the third month following the Termination Date; provided that if the parties
--------
cannot agree on Fair Market Value within 30 days after the delivery of the
earlier of such notices, the Fair Market Value will be decided by a mutually
acceptable independent investment bank and if the parties are unable to agree on
such an investment bank, one shall be chosen by lot from four nationally
recognized investment banks, two of which shall be designated by the Company and
two of which shall be designated by Executive. The determination of the
investment bank pursuant hereto will be final and binding and the fees and
expenses of such investment bank shall be shared equally by the Company and
Executive. Any determination of Fair Market Value of any Share of Executive
Stock shall take into account, in the event of any Voluntary Termination, any
diminution in the value of the Company as a result of the loss of Executive's
services to Publishing and its Affiliates.
"Incapacity" means the disability of Executive caused by any physical
or mental injury, illness or incapacity as a result of which Executive is unable
to effectively perform the essential functions of Executive's duties as
determined by the Board of Publishing in good faith, for a period of 90
consecutive days or a period of 120 days during any 180-day period; provided
--------
that any determination of Incapacity shall be made in compliance with the
----
provisions of the Family Medical Leave Act.
"Independent Third Party" means any Person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Company'
Common Stock on a fully diluted basis (a "5% Owner"), who is not controlling,
-----------
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"Investors" has the meaning given such term in the Investor Rights
---------
Agreement.
"Investor Rights Agreement" means that certain Investor Rights
-------------------------
Agreement, dated as of the date hereof, by and among the Company, the Executive
and other holders of Stockholder Shares, as such agreement may be amended from
time to time in accordance with its terms.
"Original Cost" of any share of Executive Stock means the price paid
-------------
by Executive for such share of Executive Stock.
"Permitted Transferee" means any permitted transferee of Stock
--------------------
pursuant to a transfer in accordance with Section 2D of the Investor Rights
Agreement.
"Person" means an individual or a corporation, partnership, limited
------
liability company, trust, unincorporated organization, association or other
entity.
"Public Sale" means any sale of Stockholder Shares to the public
-----------
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Sale of the Company" means the sale of the Company to an Independent
-------------------
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
to elect a majority of the Board (whether by
-14-
merger, consolidation or sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the assets of the Company determined on a
consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Stockholder Shares" has the meaning given such term in the Investor
------------------
Rights Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity (other than
a corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity. For purposes hereof, references to a
"Subsidiary" of the Company shall be given effect only at such times that the
Company has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
"Transfer" has the meaning given such term in the Investor Rights
--------
Agreement.
"Work Product" means all inventions, innovations, improvements,
------------
developments, methods, processes, designs, analyses, drawings, reports and all
similar or related information (whether or not patentable or reduced to practice
or comprising Confidential Information) and any copyrightable work, trade xxxx,
trade secret or other intellectual property rights (whether or not comprising
Confidential Information) and any other form of Confidential Information, any of
which relate to Publishing's or any of its Affiliates' actual or anticipated
business, research and development or existing or future products or services
and which were or are conceived, reduced to practice, contributed to, developed,
made or acquired by Executive (whether alone or jointly with others) while
employed (both before and after the date hereof) by Publishing (or its
predecessors, successors or assigns) and its Affiliates.
"WS" has the meaning given such term in the Investor Rights Agreement.
--
18 Notices. Any notice provided for in this Agreement must be in writing
-------
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipients at the address indicated below:
-15-
If to Executive: Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
with a copy to: Xxxx Xxxxx
00 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company: Ziff Xxxxx Holdings, Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
with a copy to: Xxxxxx, Xxxxx & Partners II, L.P.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
and Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
If to WS or the Investors: Xxxxxx, Xxxxx & Partners II, L.P.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
with a copy to Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
19 General Provisions.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or attempted
-----------------------------------
Transfer of any Stock in violation of any provision of this Agreement shall be
void, and the Company shall not record such Transfer on its books or treat any
purported transferee of such Stock as the owner of such Stock for any purpose.
-16-
(b) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly referred
------------------
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, any employment agreement or similar agreement
assumed by Publishing or its Affiliates and Executive, which is hereby
terminated).
(d) Counterparts. This Agreement may be executed in separate counterparts,
------------
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
----------------------
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, Publishing the Investors and their respective successors
and assigns; provided that the rights and obligations of Executive under this
--------
Agreement shall not be assignable except in connection with a permitted transfer
of Stock hereunder.
(f) Governing Law. The corporate law of the State of Delaware will govern
-------------
all issues concerning the relative rights of the Company and its stockholders.
All other issues concerning this Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the law of
any jurisdiction other than the State of New York.
(g) Remedies. Each of the parties to this Agreement shall be entitled to
--------
enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(h) Survival. The provisions set forth in Section 4, Section 8 and
--------
Sections 13 through 19 shall survive and continue in full force and effect in
accordance with their terms notwithstanding any termination of the Employment
Period.
-17-
(i) Amendment and Waiver. The provisions of this Agreement may be amended
--------------------
and waived only with the prior written consent of the Company, Publishing,
Executive and WS.
(j) Third-Party Beneficiaries. The parties hereto acknowledge and agree
-------------------------
that the Investors are third party beneficiaries of this Agreement. This
Agreement will inure to the benefit of and be enforceable by the Investors and
their respective successors and assigns, subject to amendment or waiver as
provided in subparagraph (i) foregoing.
* * * *
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement on the date first written above.
ZIFF XXXXX HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
--------------------------------
Its: _______________________________
ZIFF XXXXX PUBLISHING, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
--------------------------------
Its: _______________________________
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx
------------------------------------
[Signature Page to Executive Agreement]
Annex A
-------
PROMISSORY NOTE
$50,000.00
May 19, 2000
For value received, Xxxxxx X. Xxxxxx ("Executive") promises to pay to
---------
Ziff Xxxxx Holdings, Inc., a Delaware corporation (the "Company"), the aggregate
-------
principal sum of $50,000.00 together with interest thereon calculated from the
date hereof (the "Date of Issuance") in accordance with the provisions of this
----------------
Promissory Note (this "Note"). This Note was issued pursuant to and is subject
----
to the terms of that certain Executive Agreement (the "Executive Agreement"),
-------------------
dated as of the date hereof, by and between the Company and Executive. Any
capitalized terms used herein and not defined shall have the meaning assigned to
them in the Executive Agreement.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 7.0% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the Maturity Date.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note, plus all accrued and unpaid interest, on August 19, 2000
(the "Maturity Date").
-------------
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with Executive's ownership of the Executive
Stock, Executive shall prepay an amount of this Note equivalent to the
amount of all such cash proceeds received up to the amount of principal
and unpaid interest due hereunder.
(ii) Upon the consummation of a Sale of the Company prior
to the Maturity Date, this Note shall be immediately due and payable
and Executive shall prepay all of the outstanding principal amount of
this Note, plus all accrued and unpaid interest thereon, as of the date
of the consummation of such Sale of the Company.
(iii) If Executive's employment by Publishing terminates
for any reason, this Note shall be immediately due and payable and
Executive shall prepay all of the outstanding principal amount of this
Note, plus all accrued and unpaid interest thereon, as of the date of
such termination.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of the Executive Stock, pursuant to a certain Stock Pledge Agreement,
dated as of the date hereof, by and between Executive and Company (the "Pledge
------
Agreement").
---------
4. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due
hereunder when due, Executive shall pay to the holder hereof, in addition to
such amounts due, all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the
laws of conflicts, of the State of Delaware.
* * * * *
-2-
IN WITNESS WHEREOF, Executive has executed and delivered this
Executive Promissory Note as of the date first written above.
EXECUTIVE:
___________________________________
[Signature Page to Promissory Note]
Annex B
-------
PROMISSORY NOTE
$19,154.17
May 19, 2000
For value received, Xxxxxx X. Xxxxxx ("Executive") promises to pay to
---------
Ziff Xxxxx Holdings, Inc., a Delaware corporation (the "Company"), the aggregate
-------
principal sum of $19,154.17 together with interest thereon calculated from the
date hereof (the "Date of Issuance") in accordance with the provisions of this
----------------
Promissory Note (this "Note"). This Note was issued pursuant to and is subject
----
to the terms of that certain Executive Agreement (the "Executive Agreement"),
-------------------
dated as of the date hereof, by and between the Company and Executive. Any
capitalized terms used herein and not defined shall have the meaning assigned to
them in the Executive Agreement.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 7.0% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid. Notwithstanding the foregoing, in the
event that Executive is required to prepay this Note pursuant to paragraph
2(c)(iii) below, no additional interest shall accrue on this Note during the
period from the date on which Executive's employment with Publishing is
terminated through the date on which Executive is required to prepay this Note
pursuant to such paragraph 2(c)(iii).
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on the seventh anniversary of
the Date of Issuance (the "Maturity Date").
-------------
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with Executive's ownership of the Executive Stock,
Executive shall prepay an amount of this Note equivalent to the amount of
all such cash proceeds received up to the amount of principal and unpaid
interest due hereunder.
(ii) Upon the consummation of a Sale of the Company prior to
the Maturity Date, this Note shall be immediately due and payable and
Executive shall prepay all of the outstanding principal amount of this
Note, plus all accrued and unpaid interest thereon, as of the date of the
consummation of such Sale of the Company.
(iii) If Executive's employment by Publishing terminates for any
reason, this Note shall be immediately due and payable and Executive shall
prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, on the earlier of (A) the closing date
of any repurchase of Executive Stock by the Company and/or the Investors
(as the case may be) pursuant to a Repurchase Notice and (B) the six-month
anniversary of the date on which Executive's employment with Publishing was
terminated.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of the Executive Stock, pursuant to a certain Stock Pledge Agreement,
dated as of the date hereof, by and between Executive and Company (the "Pledge
------
Agreement").
---------
4. Limited Recourse as to Principal. Executive shall have full
--------------------------------
personal liability for all accrued and unpaid interest under this Note.
Notwithstanding anything to the contrary herein, the Company hereby agrees that
Executive shall not have personal liability with respect to any principal
amounts owed under this Note, except as set forth in this paragraph and except
for the Company's rights of set off as set forth in Section 8(e) of the
Executive Agreement. Executive shall have personal liability under this Note for
the principal amount of this Note, but in no event shall such liability exceed
the Aggregate Recourse Amount determined as of the time of the Company's claim.
"Aggregate Recourse Amount" means as of any time an amount equal to (A) 60% of
-------------------------
the aggregate original principal amount of this Note, minus (B) the aggregate
amount of all principal and interest payments made under this Note from the Date
of Issuance of this Note through such time, including payments incident to
Executive's declaring bankruptcy. Nothing in this paragraph 4, however, shall
affect any of the Company's rights under the Pledge Agreement.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder
when due, Executive shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to
-2-
time and that the holder hereof may accept security for this Note or release
security for this Note, all without in any way affecting the liability of
Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Delaware.
* * * * *
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IN WITNESS WHEREOF, Executive has executed and delivered this
Executive Promissory Note as of the date first written above.
EXECUTIVE:
________________________________________
[Signature Page to Promissory Note]
Annex C
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STOCK PLEDGE AGREEMENT
----------------------
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of May 19,
---------
2000, by and between Xxxxxx X. Xxxxxx ("Pledgor") and Ziff Xxxxx Holdings, Inc.,
-------
a Delaware corporation (the "Company"). Any capitalized terms used herein but
-------
not defined shall have the meanings assigned to them in the Executive Agreement.
The Company and Pledgor are parties to an Executive Agreement (the
--------- ---------
"Executive Agreement"), dated as of the date hereof, pursuant to which the
Company sold to Pledgor 86,616.67 shares of the Company's Common Stock and 47.5
shares of the Company's Series A Preferred Stock (collectively, the "Pledged
-------
Interests"), all of which are pledged pursuant to this Agreement, and the
---------
Company has permitted the Pledgor to pay the purchase price therefor in part by
delivery to the Company of a promissory note (the "Full Recourse Promissory
------------------------
Note") in the aggregate principal amount of $50,000 and a promissory note (the
----
"Partial Recourse Promissory Note" and together with the Full Recourse
--------------------------------
Promissory Note, the "Notes") in the aggregate principal amount of $19,154.17.
-----
This Agreement provides the terms and conditions upon which the Notes are
secured by a pledge to the Company of the Collateral (as defined below).
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Notes as
payment for the Pledged Interests, Pledgor and the Company hereby agree as
follows:
1 Pledge. Pledgor hereby pledges to the Company, and grants to the
------
Company a security interest in, the Pledged Interests and any related rights to
payment, profits, distributions thereon, as the case may be, and all proceeds
thereof, including any securities and moneys received (collectively the
"Collateral"), whether now existing or acquired, as security for the prompt and
----------
complete payment when due of the unpaid principal of and interest on the Notes
and full payment and performance of the obligations and liabilities of Pledgor
hereunder (including costs and attorneys fees associated with enforcement
hereunder).
2 Delivery of Pledged Interests. Pledgor agrees to deliver to the
-----------------------------
Company any certificates or instruments representing the Pledged Interests or
other Collateral, duly endorsed in blank or accompanied by undated stock powers
duly executed in blank by such Pledgor or such other instruments of transfer as
are acceptable to the Company.
3 Voting Rights; Cash Distribution. Notwithstanding anything to the
--------------------------------
contrary contained herein, during the term of this Agreement until such time as
there exists a default in the payment of principal or interest on the Notes or
any other default under the Notes or hereunder, Pledgor shall be entitled to all
voting rights with respect to the Pledged Interests and shall be entitled to
receive all cash distributions paid in respect of the Pledged Interests. Upon
the occurrence of and during the continuance of any such default, at the option
of the Company and upon notice by the
Company to the Pledgor, Pledgor shall not be able to vote the Pledged Interests,
such voting rights with respect thereto shall be exercisable by the Company and
the Company shall retain all such cash distributions payable on the Pledged
Interests as additional security hereunder. In furtherance of the Company's
rights under this Section, the Pledgor shall execute and deliver to the Company,
or cause to be executed and delivered to the Company, all such proxies, powers
of attorney, and other instruments as the Company may reasonably request for the
purpose of enabling the Company to exercise the voting rights which it is
entitled to exercise or refrain from exercising pursuant to this Section 3.
4 Other Distributions, etc. If, while this Agreement is in effect,
------------------------
Pledgor becomes entitled to receive or receives any securities or other property
in addition to, in substitution of, or in exchange for any of the Pledged
Interests (whether as a distribution in connection with any recapitalization,
reorganization or reclassification), Pledgor shall accept such securities or
other property on behalf of and for the benefit of the Company as additional
security for Pledgor's obligations under the Notes and shall promptly deliver
such additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Interests hereunder.
5 Default. If Pledgor (a) defaults in the payment of the principal
-------
under either of the Notes when either of them becomes due (whether upon demand,
acceleration or otherwise) or any other event of default under either of the
Notes or this Agreement occurs (including, without limitation, the bankruptcy or
insolvency of Pledgor) or (b) defaults in the payment of interest or any other
amount related to either of the Notes, the Company may (following five (5) days
notice to Executive, during which the default is not cured) exercise any and all
the rights, powers and remedies of any owner of the Pledged Interests (including
the right to vote the Pledged Interests and receive any distributions with
respect to such Pledged Interests) and shall have and may exercise without
demand any and all the rights and remedies granted to a secured party upon
default under the Uniform Commercial Code of Delaware or otherwise available to
the Company under applicable law. Without limiting the foregoing, after the
occurrence of and during the continuance of a default, the Company is authorized
to sell, assign and deliver at its discretion, from time to time, all or any
part of the Collateral at any private sale or public auction, on not less than
ten days written notice to Pledgor, at such price or prices and upon such terms
as the Company may deem advisable. Pledgor shall have no right to redeem the
Collateral after any such sale or assignment. At any such sale or auction, the
Company may bid for, and become the purchaser of, the whole or any part of the
Pledged Interests offered for sale. In case of any such sale, after deducting
the costs, attorneys' fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the principal of and accrued
interest on the Notes and other amounts related thereto (including costs,
attorneys' fees associated with enforcement hereof); provided that after payment
--------
in full of the indebtedness evidenced by both of the Notes, the balance of the
proceeds of sale then remaining shall be paid to Pledgor and Pledgor shall be
entitled to the return of any of the Pledged Interests remaining in the hands of
the Company. Pledgor shall be liable for any deficiency (to the extent liable
therefor under the Notes) if the remaining proceeds are insufficient to pay the
indebtedness under the Notes in full, including the fees of any attorneys
employed by the Company to collect such deficiency.
6 Costs and Attorneys' Fees. All costs and expenses (including
-------------------------
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Agreement or in enforcement thereof, shall become part of the
indebtedness secured hereunder and shall be paid by Pledgor or repaid from the
proceeds of the sale of the Pledged Interests hereunder.
7 Payment of Indebtedness and Release of Pledged Interests. Upon
--------------------------------------------------------
payment in full of the indebtedness evidenced by the Notes and any amounts owed
hereunder, the Company shall take all necessary action required to release any
security interests the Company has with respect to the Collateral.
8 No Other Liens; No Sales or Transfers. Pledgor hereby represents
-------------------------------------
and warrants that Pledgor has good and valid title to all of the Collateral,
free and clear of all liens, security interests and other encumbrances (other
than pursuant to the Investor Rights Agreement or the Executive Agreement ), and
Pledgor hereby covenants that, until such time as all of the outstanding
principal of and interest on the Notes and amounts due and owing hereunder have
been repaid, Pledgor shall not (i) create, incur, assume or suffer to exist any
pledge, security interest, encumbrance, lien or charge of any kind against the
Collateral or Pledgor's rights or a holder thereof, other than pursuant to the
Executive Agreement or this Agreement, or (ii) sell or otherwise transfer any of
the Collateral or any interest therein (other than pursuant to the Executive
Agreement or the Investor Rights Agreement).
9 Further Assurances. Pledgor agrees that at any time and from time
------------------
to time upon the written request of the Company, Pledgor shall execute and
deliver such further documents (including UCC financing statements) and do such
further acts and things as the Company may reasonably request to effect the
purposes of this Agreement.
10 Severability. Any provision of this Agreement which is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11 No Waiver; Cumulative Remedies. The Company shall not by any act,
------------------------------
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12 Waivers, Amendments; Applicable Law. None of the terms or
-----------------------------------
provisions of this Agreement may be waived, altered, modified or amended except
by an instrument in writing, duly executed by the parties hereto. This Agreement
and all obligations of the Pledgor hereunder
shall together with the rights and remedies of the Company hereunder, inure to
the benefit of the Company and its successors and assigns. This Agreement shall
be governed by, and be construed and interpreted in accordance with, the laws of
the State of Delaware, without giving effect to any applicable principles of
conflicts of laws.
* * * * *
-4-
IN WITNESS WHEREOF, this Stock Pledge Agreement has been executed as
of the date first above written.
EXECUTIVE:
_____________________________________
ZIFF XXXXX HOLDINGS, INC.
By: _________________________________
Its:_________________________________
[Signature Page to Stock Pledge Agreement]
Annex D
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May 19, 2000
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
On May 19, 2000 (the "Effective Date"), the undersigned purchased from
--------------
Ziff Xxxxx Holdings, a Delaware corporation (the "Company"), 76,616.67 shares of
-------
Common Stock of the Company, par value $.01 per share ("Executive Securities").
--------------------
Under certain circumstances, the Company and/or certain of the Company's
stockholders (the "Investors") have the right to repurchase the Executive
---------
Securities at cost from the undersigned (or from the holder of the Executive
Securities, if different from the undersigned) should the undersigned cease to
be employed by Ziff Xxxxx Publishing Inc. ("Publishing") and its subsidiaries.
----------
Hence, the Executive Securities are subject to a substantial risk of forfeiture
and are nontransferable. The undersigned desires to make an election to have the
Executive Securities taxed under the provision of Code (S)83(b) at the time the
undersigned purchased the Executive Securities.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election with respect to
the Executive Securities (as described in paragraph 2 below), to report as
-----------
taxable income for calendar year 2000 the excess (if any) of the Executive
Securities' fair market value on May 19, 2000 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1 The name, address and social security number of the undersigned:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (___) ___-___
Phone: (__) ___-____
SS#: ______ -- ___ -- ____
2 A description of the property with respect to which the election
is being made: 76,616.67 shares of Common Stock of the Company, par value $.01
per share.
3 The date on which the property was transferred: May 19, 2000. The
taxable year for which such election is made: calendar year 2000.
4 The restrictions to which the property is subject: If at any time
prior to May 19, 2005, the undersigned ceases to be employed by Publishing or
any of its subsidiaries, the unvested portion of the Executive Securities shall
be subject to repurchase by the Company and/or the Investor at their original
cost. The Executive Securities shall become vested ratably, on a daily basis,
over the five year period commencing May 19, 2000, as long as Executive remains
employed by Publishing or any of its subsidiaries, and shall be deemed to be
unvested to the extent not vested as of termination of such employment; provided
that all Executive Securities shall become fully vested if Executive remains
employed by Publishing or any of its subsidiaries through the time of certain
that certain events occur. Notwithstanding the foregoing, in the event the
Executive ceases to be employed by Publishing or any of its subsidiaries for
cause, all of the Executive Securities shall be subject to repurchase by the
Company and/or the Investors at their original cost.
5 The fair market value on May 19, 2000 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $19,154.17.
6 The amount paid for such property: $19,154.17.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated: May 19, 2000
_______________________________________
Xxxxxx X. Xxxxxx
-2-
