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Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1997, between Penton
Publishing, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxx
("Executive").
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and
Executive accepts continued employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 5 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the
chief operating officer of the Company and shall have the normal duties,
responsibilities and authority of an executive serving in such position, subject
to the power of the board of Directors of the Company (the "Board") or the
Chairman and Chief Executive Officer of the Company to expand or limit such
duties, responsibilities and authority, either generally or in specific
instances. Executive shall have the title President of the Company, subject to
the power of the Board to change such title from time to time. During the
Employment Period, Executive shall also serve as a director of the Company for
so long as the Board nominates him to that position and he is elected to it, and
as a director of any affiliate of the Company designated by the Board for so
long as the Board causes him to be elected to such position.
(b) Executive shall report to the Chairman and Chief Executive
Officer of the Company.
(c) During the Employment Period, Executive shall devote his
best efforts and his full business time and attention (except for permitted
vacation periods, reasonable periods of illness or other incapacity, and,
provided such activities do not have more than a de minimis effect on
Executive's performance of his duties under this Agreement, participation in
charitable and civic endeavors and management of Executive's personal
investments and business interests) to the business and affairs of the Company
and the business and affairs of any subsidiary or affiliate. Executive shall
perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.
(d) Executive shall perform his duties and responsibilities
principally in the Cleveland metropolitan area, and shall not be required to
travel outside that area any more extensively than he has done in the past in
the ordinary course of the business of the Company.
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3. Compensation and Benefits.
(a) Salary. The Company agrees to pay Executive a salary
during the Employment Period, in semi-monthly installments. Executive's initial
salary shall be $330,000 per annum. Executive's salary may be increased by the
Board from time to time.
(b) Bonus(es). The Board may, in its sole discretion, award a
bonus to Executive for any calendar year during the Employment Period.
(c) Expense Reimbursement. The Company shall reimburse
Executive for all reasonable expenses incurred by him in the course of
performing his duties under this Agreement which are consistent with the
Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
with respect to reporting and documentation of such expenses. Executive
acknowledges that under the company's current air travel reimbursement policy,
reimbursement is limited to coach fare (plus Executive's cost of any upgrade
certificates used to upgrade to first class) on travel within the United States
and is limited to business class fare on travel to and from foreign cities.
(d) Standard Executive Benefits Package. In addition to the
salary and any bonus(es) payable to Executive pursuant to this paragraph,
Executive shall be entitled during the Employment Period to participate, on the
same basis as other executives of the Company, in the Company's Standard
Executive Benefits Package. The Company's "Standard Executive Benefits Package"
means those benefits (including insurance, vacation, company car or car
allowance and/or other benefits) for which substantially all of the executives
of the Company are from time to time generally eligible, as determined from time
to time by the Board.
(e) Additional Benefits. In addition to participation in the
Company's Standard Executive Benefits Package pursuant to this paragraph,
Executive shall be entitled during the Employment Period to:
(i) additional term life insurance coverage in an amount
equal to Executive's salary; but only if and so long
as such additional coverage is available at standard
rates from the insurer providing term life insurance
coverage under the Standard Executive Benefits
Package or from a comparable insurer acceptable to
the Company;
(ii) supplementary long-term disability coverage in an
amount which will increase maximum covered annual
compensation to $330,000 and the maximum monthly
payments to $18,333; but only if and so long as such
supplementary coverage is available at standard rates
from the insurer providing long-term disability
coverage under the Standard Executive Benefits
Package or a comparable insurer acceptable to the
Company; and
(iii) participation in the Pittway Corporation Supplemental
Executive Retirement Plan (the "SERP"), effective
January 1, 1996, a copy of which, as currently
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in effect, is attached hereto as Exhibit A, except
that the beginning date for accrual of a benefit
shall be January 1, 1997.
(f) Indemnification. With respect to Executive's acts or
failures to act during the Employment Period in his capacity as a director,
officer, employee or agent of the Company, Executive shall be entitled to
indemnification from the Company, and to liability insurance coverage (if any),
on the same basis as other directors and officers of the Company.
4. Adjustments. Notwithstanding any other provision of this
Agreement, it is expressly understood and agreed that if there is a significant
reduction in the level of the business to which Executive's duties under this
Agreement relate, or if all or any significant part of such business is disposed
of by the Company and/or its subsidiaries or affiliates during the Employment
Period but Executive thereafter remains an employee of the Company, the Board
may make adjustments in Executive's duties, responsibility and authority, and in
Executive's compensation, as the Board deems appropriate to reflect such
reduction or disposition.
5. Employment Period.
(a) Except as hereinafter provided, the Employment Period
shall continue until, and shall end upon, the third anniversary of the date
hereof.
(b) On each anniversary of the date hereof which precedes
Executive's sixty-fifth birthday by more than two years, unless the Employment
Period shall have ended early pursuant to (c) below or either party shall have
given the other party written notice that the extension provision in this
sentence shall no longer apply, the employment period shall be extended for an
additional calendar year (unless Executive's sixty-fifth birthday occurs during
such additional calendar year, in which event the Employment Period shall be
extended only until such birthday). In no event shall the Employment Period be
extended beyond the Executive's sixty-fifth birthday except by mutual written
agreement of the Company and Executive.
(c) Notwithstanding (a) and (b) above, the Employment Period
shall end early upon the first to occur of any of the following events:
(i) Executive's death;
(ii) Executive's retirement upon or after reaching age 65
("Retirement");
(iii) the Company's termination of Executive's employment
on account of Executive's having become unable (as
determined by the Board in good faith) to regularly
perform his duties hereunder by reason of illness or
incapacity for a period of more than six (6)
consecutive months ("Termination for Disability");
(iv) the Company's termination of Executive's employment
for Cause ("Termination for Cause");
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(v) the Company's termination of Executive's employment
other than a Termination for Disability or a
Termination for Cause ("Termination without Cause");
(vi) Executive's termination of Executive's employment for
Good Reason, by means of advance written notice to
the Company at least thirty (30) days prior to the
effective date such termination identifying such
termination as a Termination by Executive for Good
Reason ("Termination by Executive for Good Reason")
(it being expressly understood that Executive's
giving notice that the extension provision in the
first sentence of paragraph 5(b) hereof shall no
longer apply shall not constitute a "Termination by
Executive for Good Reason"); provided that if the
Good Reason identified in such notice is the Good
Reason set forth in paragraph 5(e)(ii) hereof, the
Company may, at its option, defer the effective date
of such termination for up to ninety (90) additional
days; or
(vii) Executive's termination of Executive's employment for
any reason other than Good Reason, by means of
advance written notice to the Company at least one
hundred twenty (120) days prior to the effective date
of such termination identifying such termination as a
Termination by Executive with Advance Notice
("Termination by Executive with Advance Notice") (it
being expressly understood that Executive's giving
notice that the extension provision in the first
sentence of paragraph 5(b) hereof shall no longer
apply shall not constitute a "Termination by
Executive with Advance Notice").
(d) For purposes of this Agreement, "Cause" shall mean:
(i) the commission by Executive of a felony or a crime
involving moral turpitude;
(ii) the commission by Executive of a fraud;
(iii) the commission by Executive of any act involving
dishonesty or disloyalty with respect to the Company
or any of its subsidiaries or affiliates which xxxxx
or damages any of them to any extent;
(iv) conduct by Executive that brings the Company or any
of its subsidiaries or affiliates into substantial
public disgrace or disrepute;
(v) gross negligence or willful misconduct by Executive
with respect to the Company or any of its
subsidiaries or affiliates;
(vi) repudiation of this Agreement by Executive or
Executive's abandonment of his employment with the
Company (it being expressly understood that a
Termination by Executive for Good Reason or a
Termination by Executive
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with Advance Notice shall not constitute such a
repudiation or abandonment);
(vii) breach by Executive of any of the agreements in
paragraph 8 hereof; or
(viii) any other breach by Executive of this Agreement which
is material and which is not cured within thirty (30)
days after written notice thereof to Executive from
the Company.
(e) For purposes of this Agreement, "Good Reason" shall
mean:
(i) a reduction by the Company in Executive's salary to
an amount less than "Executive's Reference Salary"
(i.e., Executive's initial salary or, in the event
the Employment Period has been extended pursuant to
paragraph 5(b) hereof, Executive's salary on the date
on which the most recent such extension occurred); or
(ii) the Company's giving notice that the extension
provision in the first sentence of paragraph 5(b)
hereof shall no longer apply; or
(iii) any breach by the Company of this Agreement which is
material and which is not cured within thirty (30)
days after written notice thereof to the Company from
Executive.
6. Post-Employment Period Payments.
(a) If the Employment Period ends on the date on which
(without any extension thereof) it is then scheduled to end pursuant to
paragraph 5 hereof, or if the Employment Period ends early pursuant to paragraph
5 hereof for any reason, Executive shall cease to have any rights to salary,
bonus (if any), expense reimbursements or benefits other than: (i) any salary
which has accrued but is unpaid, and any reimbursable expenses which have been
incurred but are unpaid, and any unexpired vacation days which have accrued
under the Company's vacation policy, but are unused as of the end of the
Employment Period, (ii) (but only to the extent provided in the SERP or any
other benefit plan in which Executive has participated as an employee of the
Company) any plan benefits which by their terms extend beyond termination of
Executive's employment, (iii) any benefits to which Executive is entitled under
the Consolidated Omnibus Reconciliation Act of 1985, as amended ("COBRA") and
(iv) any other amount(s) payable pursuant to the succeeding provisions of this
paragraph 6.
(b) If the Employment Period ends pursuant to paragraph 5
hereof on Executive's sixty-fifth birthday, or if the Employment Period ends
early pursuant to paragraph 5 hereof on account of Executive's death, Retirement
or Termination for Disability, the Company shall make no further payments to
Executive except as contemplated in (a)(i), (ii) and (iii) above.
(c) If the Employment Period ends early pursuant to paragraph
5 hereof on account of Termination for Cause, the Company shall pay Executive an
amount equal to that
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Executive would have received as salary (based on Executive's salary then in
effect) had the Employment Period remained in effect until the later of the
effective date of the Company's termination of Executive's employment or the
date thirty days after the Company's notice to Executive of such termination.
(d) If the Employment Period ends early pursuant to paragraph
5 hereof on account of a Termination without Cause or a Termination by Executive
for Good Reason, the Company shall pay to Executive amounts equal to the amounts
Executive would have received as salary (based on Executive's salary then in
effect or, if greater, Executive's Reference Salary) had the Employment Period
remained in effect for a period of twenty-four (24) months after the last day of
the month in which the Employment Period ends, at the times such amounts would
have been paid (in the event Executive is entitled during the payment period to
any payments under any disability benefit plan or the like in which Executive
has participated as an employee of the Company, less such payments); provided,
however, that in the event of Executive's death during the payment period, the
Company shall pay any such subsequent amounts to Executive's estate (or such
person or persons as Executive may designate in a written instrument signed by
him and delivered to the Company prior to his death) or, if so elected by the
payee(s) by written notice to the Company within the period of sixty (60) days
after the date of Executive's death, a lump sum amount equivalent to the
discounted present value of such amounts, discounted at the publicly announced
reference rate for commercial lending of Bank of America Illinois in effect at
the date of notice to Company of such election, with said amount to be paid on a
date no later than thirty (30) days following the date of notice to the Company
of such election. In addition, the Company shall reimburse Executive (net after
taxes on the receipt of such reimbursement) for any premiums paid by Executive
for health insurance provided to Executive (for Executive and his dependents) by
the Company subsequent to the end of the Employment Period pursuant to the
requirements of COBRA as in effect on the date of this Agreement. It is
expressly understood that the Company's payment obligations under this
subparagraph (d) shall cease in the event Executive breaches any of his
agreements in paragraph 7 or 8 hereof.
(e) If the Employment Period ends early pursuant to paragraph
5 hereof on account of a Termination by Executive with Advance Notice, the
Company shall make no further payments to Executive except as contemplated in
subparagraph (a), clauses (i), (ii) and (iii) above.
7. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
pursuant to this Agreement, as well as those obtained by him while employed by
the Company or any of its subsidiaries or affiliates or any predecessor thereof
prior to the date of this Agreement, concerning the business or affairs of the
Company or any of its subsidiaries or affiliates or any predecessor thereof
(unless and except to the extent the foregoing become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act, "Confidential Information") are the property of the Company or
such subsidiary or affiliate. Therefore, Executive agrees that he shall not
disclose any Confidential Information without the prior written consent of the
Chairman and Chief Executive Officer of the Company unless and except to the
extent that such disclosure is (i) made in the ordinary course of Executive's
performance of his duties under this Agreement or (ii) required by any subpoena
or other legal process (in which event Executive will give the Company prompt
notice of such subpoena or other legal process in order to permit the Company to
seek
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appropriate protective orders), and that he shall not use any Confidential
Information for his own account without the prior written consent of the
Chairman and Chief Executive Officer of the Company. Executive shall deliver to
the Company at the termination of the Employment Period, or at any other time
the Company may request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies thereof) relating to
the Confidential Information, work product or the business of the Company or any
of its subsidiaries or affiliates which he may then possess or have under his
control.
8. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his
employment with the Company pursuant to this Agreement he will become familiar,
and during the course of his employment by the Company or any of its
subsidiaries or affiliates or any predecessor thereof prior to the date of this
Agreement he has become familiar, with trade secrets and customer lists of and
other confidential information concerning the Company and its subsidiaries and
affiliates and predecessors thereof and that his services have been and will be
of special, unique and extraordinary value to the Company.
(b) Executive agrees (i) that during the Employment Period he
shall not in any manner, directly or indirectly, through any person, firm or
corporation, alone or as a member of a partnership or as an officer, director,
stockholder, investor or employee of or in any other corporation or enterprise
or otherwise, engage in or be engaged in, the business-to-business publishing
business or any other business then actively being conducted by the Company or
any of its subsidiaries or affiliates, and (ii) that for two years after the
Employment Period he shall not in any manner, directly or indirectly, through
any person, firm or corporation, alone or as a member of a partnership or as an
officer, director, stockholder, investor or employee of or in any other
corporation or enterprise or otherwise, assist Xxxx-Elsevier PLC, Xxxxxxx
Company (a division of Capital Cities/ABC, Inc.), CMP Publications, Inc. or any
subsidiary or affiliate of any of them or any successor or assignee of any of
them, in engaging or being engaged in the business activity of publishing a
magazine or electronic media product that directly competes with any magazine or
electronic media product then being published by, conducting a trade show that
directly competes with any trade show then being conducted by, or creating or
disseminating any other product that competes directly with any product then
being created or disseminated by, the Company or any of its subsidiaries or
affiliates.
(c) Executive further agrees that during the Employment Period
and for two years thereafter he shall not in any manner, directly or indirectly,
induce or attempt to induce any employee of the Company or any of its
subsidiaries or affiliates to quit or abandon his employ.
(d) Nothing in this paragraph 8 shall prohibit Executive from
being: (i) a stockholder in a mutual fund or a diversified investment company or
(ii) a passive owner of not more than 2% of the outstanding stock of any class
of a corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.
(e) If, at the time of enforcement of this paragraph, a court
holds that the 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
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substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
9. Enforcement. Because Executive's services are unique and
because Executive has access to Confidential Information and work product, the
parties hereto agree that the Company would be damaged irreparably in the event
any of the provisions of paragraph 8 hereof were not performed in accordance
with their specific terms or were otherwise breached and that money damages
would be an inadequate remedy for any such non-performance or breach. Therefore,
the Company or its successors or assigns shall be entitled, in addition to other
rights and remedies existing in their favor, to an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to enforce
such provisions specifically (without posting a bond or other security).
10. Executive Representations. Executive represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
11. Survival. Paragraphs 7 and 8 hereof shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
12. Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
Xx. Xxxxxx X. Xxxxxxx
0000 Xxxx'x Xxx Xxxx
Xxxxxxxx, XX 00000
Notices to the Company:
Xx. Xxxxxx X. Xxxx
Chairman and Chief Executive Officer
Penton Publishing, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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 will be deemed to have been given when so delivered
or mailed.
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13. 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.
14. Payment of Certain Costs and Expenses.
(a) Prevailing Party's Litigation Expenses. In the event of
litigation between the Company and Executive related to this Agreement, the
non-prevailing party shall reimburse the prevailing party for any costs and
expenses (including without limitation attorneys' fees) reasonably incurred by
the prevailing party in connection therewith.
(b) Change of Control of Company. Without limiting the
generality of subparagraph (a) above, in the event that there is a Change of
Control of the Company, if the Company thereafter wrongfully withholds from
Executive any amount payable to Executive pursuant to this Agreement or the SERP
and Executive obtains a final judgment against the Company for such amount, the
Company shall reimburse Executive for any costs and expenses (including without
limitation attorneys' fees) reasonably incurred by Executive in obtaining such
judgment and shall pay Executive interest on the amount of each such cost or
expense from the date of payment thereof by Executive to the date of
reimbursement by the Company at a floating rate per annum equal to the publicly
announced reference rate for commercial lending of Bank of America Illinois in
effect from time to time. For purposes of the foregoing, a "Change of Control of
the Company" will be deemed to have occurred if, for purposes of Section 13(d)
of the Securities Exchange Act of 1934, as amended, a person or group other than
(i) Pittway or (ii) one or more members of the Xxxxxx Group (as currently
defined in Pittway Corporation's Restated Certificate of Incorporation, as
amended) becomes the beneficial owner of stock of Pittway Corporation possessing
a majority of the voting power under ordinary circumstances with respect to the
election of directors.
15. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understanding, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and both of which
taken together shall constitute one and the same agreement.
17. Successors and Assigns. This Agreement shall bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, executors, personal representatives, successors and assigns,
except that neither party may assign any of his or its rights or delegate any of
his or its obligations hereunder without the prior written consent of the other
party. Executive hereby consents to the assignment by the Company of all of its
rights and obligations hereunder to: (i) Pittway or any subsidiary or affiliate
thereof in the event all or any substantial part
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of the business to which Executive's duties under this Agreement relate are
transferred thereto and (ii) any successor to the Company by merger or
consolidation or purchase of all or substantially all of the Company's assets;
in each case provided such transferee or successor assumes the liabilities of
the Company hereunder.
18. Choice of Law. This Agreement shall be governed by the
internal law, and not the laws of conflicts, of the State of Ohio.
19. Amendment and Waiver. The provisions of this Agreement may
be amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
PENTON PUBLISHING, INC.
By /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Chairman and CEO
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
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