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Exhibit 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("AGREEMENT") made as of July 16,
1998, between Penton Media, Inc. (formerly known as Penton Publishing, Inc.), a
Delaware corporation (the "COMPANY"), and Xxxxx Xxxxxxxx ("EXECUTIVE")
WITNESSETH:
WHEREAS, Executive desires to become an executive employee of
the Company, and the Company desires to employ Executive as an executive
employee;
WHEREAS, pursuant to a Combination Agreement among the Company
and other parties, all of the outstanding capital stock of the Company will be
distributed by Pittway Corporation to the shareholders of Pittway Corporation
(the "SPINOFF");
WHEREAS, as a result of the Spinoff, the Company will become
publicly held;
WHEREAS, the Company recognizes that, as is the case with many
publicly held companies, the possibility of a Change of Control (as that term is
hereinafter defined) will exist;
WHEREAS, the Company wishes to assure itself of both present
and future continuity of management in the event of any Change of Control;
NOW, THEREFORE, 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 employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the Effective Date (as
defined in paragraph 20) 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
Group President of the Company's New York Division (the "DIVISION"), with
initial responsibility for the Company's electronics group and independent
exhibitions and shall have the normal duties, responsibilities and authority of
an executive serving in such position with such responsibilities, subject to the
power of the Board of Directors of the Company (the "BOARD") or the Chief
Executive Officer of the Company to reasonably expand or limit such duties,
responsibilities and authority, either generally or in specific instances.
Executive also shall have the title Executive Vice President of the Company.
(b) Executive shall report to the Chief Executive Officer or
the President and Chief Operating Officer of the Company.
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(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 Division. Executive shall perform his duties and responsibilities to the
best of his abilities in a diligent, trustworthy, businesslike and efficient
manner.
(d) Executive shall have offices at the Company's Xxxxxxxxx
Heights and New York City offices, and shall perform his duties and
responsibilities principally from those locations. In the event the Company and
the Executive agree at any time that the Executive should relocate to the
Cleveland, Ohio area, the Company will reimburse all the normal costs of an
executive relocation.
3. COMPENSATION AND BENEFITS.
(a) SALARY. The Company agrees to pay Executive a salary
during the Employment Period, in semi-monthly installments. Executive's annual
salary for 1998 shall be $300,000. Executive's annual salary for the 1999
calendar year shall be $345,000. The Compensation Committee of the Board (or, if
there is no such Committee, the Board) shall review Executive's salary from time
to time and in any event no less frequently than annually and may, in its sole
discretion, increase it.
(b) BONUS(ES).
(i) SIGNING BONUS. In order to mitigate any loss
Executive would incur relative to Executive's United
News & Media options as a result of the execution of
this Agreement, Executive shall receive a signing
bonus of $200,000 payable, at the Executive's
election, in either (A) cash (less applicable
withholding taxes) upon the Effective Date, (B) such
number of shares of the Company's Common Stock as is
determined by dividing $200,000 by the average
closing price per share of the Company's Common Stock
on the New York Stock Exchange for the five trading
days preceding the Effective Date, to be delivered to
Executive on the first anniversary of the Effective
Date, or (C) any combination thereof, provided that
Executive shall make appropriate tax withholding
arrangements if he elects payment in shares of the
Company's Common Stock pursuant to the foregoing (B)
or (C).
(ii) ANNUAL BONUS. Subject to approval by the Compensation
Committee of the Board (or if there is no such
Committee, the Board), beginning in the 1998 calendar
year, Executive shall be eligible for an annual bonus
based on the achievement of specified Division and
Company goals. The Division goal shall be based on
the Division's budgeted 1998 contribution profit of
$16,307,000. "Contribution profit" shall mean an
amount equal to the direct revenues of the New York
Division less direct operating expenses before any
allocation of corporate overheads as calculated by
the Company. The Company goal shall be based on the
Company's adjusted budgeted 1998
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earnings before interest, taxes, depreciation and
amortization ("EBITDA"), adjusted to take into
account the Spinoff, the related acquisition of the
operations of Xxxxxxx-Xxxxxx Publishing Company for
the remainder of 1998 following the Spinoff, the
costs associated with the changes in the Company's
structure and status resulting from the Spinoff and
the exclusion of the operations of Xxxxxx &
Xxxxx/Peneco, Inc. ("Adjusted Budgeted 1998 EBITDA").
The Company's Adjusted Budgeted 1998 EBITDA is
expected to be determined on or before July 31, 1998,
and shall be used for purposes of determining 1998
annual incentive compensation of the Executive and
other comparable executive officers of the Company.
The total bonus opportunity for 1998 at budget as
adjusted is $150,000, which amount shall be
guaranteed for 1998 regardless of Division or Company
performance. Executive shall receive additional
annual bonus for 1998 as follows: two percent of all
dollar amounts of the Division's contribution profit
in excess of the target specified above; and one
percent of all dollar amounts of the Company's EBITDA
in excess of Adjusted Budgeted 1998 EBITDA. Annual
bonus opportunities for subsequent years shall be
based on principles similar to the foregoing and
shall be comparable to bonus opportunities for
similarly situated Executives of the Company, but
with a minimum bonus opportunity of $200,000 per
year.
(c) LONG TERM INCENTIVE.
Subject to approval by the Compensation Committee of
the Board (or, if there is no such Committee, the
Board), Executive will be granted an award entitling
him to earn additional long-term incentive
compensation over the 1998, 1999 and 2000 calendar
years up to $450,000 (the "PERFORMANCE AWARD"). Such
Performance Award shall become 100% vested on
December 31, 2000, if Executive remains an employee
of the Company until that date and
(A) the Division's cumulative contribution
profit for 1998, 1999 and 2000 attributable
solely to Organic Growth (as hereinafter
defined), equals or exceeds $56,627,000; or
(B) the Division, through a combination of
Organic Growth and Acquisition Growth (as
hereinafter defined), achieves $30,000,000
or more in contribution profit for the year
2000.
For purposes of this Agreement, "ORGANIC GROWTH"
shall mean business generated by employing the
current resources of the Division or Company and
further resources generated by Organic Growth,
including expansion of existing business and creation
of new businesses from the existing operations or
resources of the Division or Company.
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For purposes of this Agreement, "ACQUISITION GROWTH"
shall mean business generated by employing resources
not currently held by the Division that are purchased
or acquired by the Division from unrelated third
parties.
Executive also may become partially vested in such
Performance Award upon the termination of his
employment with the Company for Good Reason (as
hereinafter defined) or the termination of his
employment by the Company other than for Cause (as
hereinafter defined) after December 31, 1998 and
before December 31, 2000, based on the following
schedule, if the following performance targets have
been met or exceeded by the Division:
(X) if the Executive's employment is terminated
in the circumstances described in this
sentence during 1999 and the Division's 1998
contribution profit equaled or exceeded
$16,307,000, Executive shall be vested upon
such termination in 25% of such Performance
Award; and
(Y) if the Executive's employment is terminated
in the circumstances described in this
sentence during 2000 and the Division's
cumulative contribution profit for 1998 and
1999 equaled or exceeded $35,057,000,
Executive shall be vested upon such
termination in 60% of such Performance
Award.
However, if Executive's employment is terminated
prior to December 31, 2000 by the Company for Cause
or by the Executive's voluntary resignation other
than for Good Reason, the Performance Award shall be
forfeited.
Notwithstanding the foregoing, in the case of a
Change of Control (as hereinafter defined) during
1998, 1999 or 2000, if Executive's employment with
the Company is terminated by the Company other than
for Cause or by the Executive for Good Reason during
the two year period following such Change of Control,
Executive shall be 100% vested in such Performance
Award upon such termination of employment.
Any Performance Award that becomes payable shall be
paid to the Executive, at the Executive's election,
as soon as reasonably practicable after the Executive
becomes entitled to the Performance Award, in either
(A) cash (less applicable withholding taxes), or (B)
shares of the Company's Common Stock, provided that
Executive shall make appropriate tax withholding
arrangements if he elects payment in shares of the
Company's Common Stock.
(d) STOCK OPTIONS. In connection with the Spinoff, the Company
expects to adopt a plan (the "1998 STOCK OPTION PLAN") pursuant to which options
to purchase shares of the Company's Common Stock, and other equity-based
incentive compensation awards, may be granted to Executive and other officers of
the Company. In connection with or following the Spinoff, subject to approval
of the Compensation Committee of the Board (or, if there is no such Committee,
the Board),
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Executive shall receive awards under the Company's 1998 Stock Option Plan
during the Employment Period as follows:
(i) INITIAL COMPANY OPTIONS. As soon as reasonably
practicable after the Spinoff, the Executive shall be
granted an option to purchase, at an exercise price
equal to the fair market value of the Company's
Common Stock at the date of grant, such a number of
shares of the Company's Common Stock as is necessary
to generate an expected value for such grant (using
Black- Scholes methodology applied on a basis
consistent with the application of such methodology
in connection with option grants to the other
executive officers of the Company) of $200,000.
(ii) 1999 COMPANY OPTIONS. In 1999, the Executive shall be
granted options to purchase, at an exercise price
equal to the fair market value of the Company's
Common Stock at the date of grant, such a number of
shares of the Company's Common Stock as is necessary
to generate an expected value for such grant (using
Black-Scholes methodology applied on a basis
consistent with the application of such methodology
in connection with option grants to the other
executive officers of the Company) of $100,000, but
in any event, for 1999, for at least the same number
of shares of the Company's Common Stock for which
options are granted to such other executive officer
or officers of the Company who is granted options on
the third highest number of shares of the Company's
Common Stock for such year.
(iii) SUBSEQUENT COMPANY OPTIONS. Annually thereafter,
commencing in 2000, the Executive shall be granted
options to purchase, at an exercise price equal to
the fair market value of the Company's Common Stock
at the date of grant, such a number of shares of the
Company's Common Stock as is necessary to generate an
expected value per annual grant (using Black-Scholes
methodology applied on a basis consistent with the
application of such methodology in connection with
option grants to the other executive officers of the
Company) of $100,000, but in any event, for each
year, for at least the same number of shares of the
Company's Common Stock for which options are granted
to such other executive officer or officers of the
Company who is granted options on the third highest
number of shares of the Company's Common Stock for
such year.
(iv) If for any year subsequent to 1999, the Compensation
Committee of the Board (or, if there is no such
Committee, the Board) elects to grant Executive
options to purchase the Company's Common Stock with
an expected value less than $100,000, or if the
Compensation Committee of the Board (or, if there is
no such Committee, the Board) elects not to grant
options to the Executive, the Company shall provide
the Executive with any combination of cash,
performance shares, or restricted shares in the equal
to the difference between the expected value of the
options granted and $100,000.
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(v) The terms of each stock option (such as length and
exercisability) shall be as set forth in a stock
option agreement between the Company and the
Executive, provided that such agreement shall provide
(A) that each such option shall become exercisable as
to one-third of the shares subject to such option on
each of the first three anniversaries of the date of
grant of each such option if the Executive remains
employed on such anniversary, (B) that each such
option shall become exercisable as to all shares
subject thereto upon a Change of Control and (C) that
each such option that is otherwise exercisable in
accordance with its terms may be exercised by the
Executive for the one- year period following any
termination of the Executive's employment by the
Company not for Cause or by the Executive for Good
Reason.
(vi) If, at the time of the grant of any option pursuant
to this paragraph (d), the issuance of shares upon
exercise thereof has not been registered under the
Securities Act of 1933, as amended, it shall be a
condition to such grant that Executive execute and
deliver to the Company a certificate confirming that
Executive is an accredited investor (as such term is
used in Regulation D under such Act) and including
transfer restrictions and other provisions customary
in connection with grants under such circumstances.
(e) EXPENSE REIMBURSEMENT. The Company shall reimburse
Executive for all reasonable expenses incurred by him during the Employment
Period 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 applicable generally 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.
(f) STANDARD EXECUTIVE BENEFITS PACKAGE. In addition to the
salary, bonus(es), long-term incentive, stock options and expense reimbursements
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.
On the date on which the Employment Period begins, Executive shall be credited
with the number of years of his employment with his prior employer for purposes
of vacation benefits included in the Standard Executive Benefits Package, and
Executive shall be entitled to a minimum of four weeks vacation per year.
(g) 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:
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(i) additional term life insurance coverage in an amount
equal to Executive's annual 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; and
(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.
(h) 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
Compensation Committee of the Board (or, if there is no such Committee, the
Board) may make adjustments in Executive's duties, responsibility and authority,
and in Executive's compensation, as the Compensation Committee of the Board (or,
if there is no such Committee, 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 second anniversary of the date on
which the Employment Period begins.
(b) On each anniversary of the date on which the Employment
Period begins which precedes Executive's sixty-fifth birthday by more than one
year, 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 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;
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(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");
(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 of such termination identifying such
termination as a Termination by Executive for Good
Reason and identifying the 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 (A) 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 and
(B) if the Good Reason identified in such notice is
the Good Reason set forth in paragraph 5(e)(iv)
hereof, Executive must give the written notice
described in this paragraph no later than the second
anniversary of the Change of Control, and such Change
of Control shall cease to be a Good Reason if such
notice is not given by such second anniversary; 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;
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(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 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 (or if more than thirty (30) days is absolutely
necessary to cure such breach, within such period of
time, not in excess of sixty (60) days, as is
absolutely necessary to cure such breach) 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; or
(iv) a Change of Control.
(f) For purposes of this Agreement, "CHANGE OF CONTROL" shall
mean the occurrence of any of the following events during the Employment Period:
(i) the Company is merged, consolidated or reorganized
into or with another corporation or other legal
person, and as a result of such merger, consolidation
or reorganization less than a majority of the
combined voting
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power of the then-outstanding securities entitled to
vote generally in the election of directors ("VOTING
STOCK") of such corporation or person immediately
after such transaction is held in the aggregate by
the holders of Voting Stock of the Company
immediately prior to such transaction;
(ii) the Company sells or otherwise transfers all or
substantially all of its assets to another
corporation or other legal person, and as a result of
such sale or transfer less than a majority of the
combined voting power of the then-outstanding Voting
Stock of such corporation or person immediately after
such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Company immediately
prior to such sale or transfer;
(iii) there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) (a "PERSON") has become
the beneficial owner (as the term "beneficial owner"
is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of
securities representing 20% or more of the combined
voting power of the then-outstanding Voting Stock of
the Company;
(iv) the Company files a report or proxy statement with
the Securities and Exchange Commission pursuant to
the Exchange Act disclosing in response to Form 8-K
or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of
the Company has occurred or will occur in the future
pursuant to any then-existing contract or
transaction; or
(v) if, during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the directors of the Company cease for any
reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause
(v) each director who is first elected, or first
nominated for election by the Company's stockholders,
by a vote of at least two-thirds of the directors of
the Company (or a nominating committee thereof) then
still in office who were directors of the Company at
the beginning of any such period will be deemed to
have been a director of the Company at the beginning
of such period, but excluding, for this purpose, any
such director whose initial assumption of office
occurs as a result of an
actual or threatened election contest (within the
meaning of Rule 14a-1 of the Exchange Act) with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the
Board.
Notwithstanding the foregoing provisions of paragraph
5(f)(iii) or 5(f)(iv), unless otherwise determined in a specific case by
majority vote of the Board, a Change of Control shall not be deemed to have
occurred for purposes of paragraph 5(f)(iii) or 5(f)(iv) solely because (A) the
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Company, (B) a subsidiary of the Company, (C) the Xxxxxx Group or (D) any
Company-sponsored employee stock ownership plan or any other employee benefit
plan of the Company or any subsidiary either files or becomes obligated to file
a report or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act disclosing beneficial ownership by it of
shares of Voting Stock, whether in excess of 20% or otherwise, or because the
Company reports that a change in control of the Company has occurred or will
occur in the future by reason of such beneficial ownership. For purposes of the
preceding sentence, the "XXXXXX GROUP" shall mean Messrs. Xxxxxx X. Xxxxxx,
Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxxx, and their
respective spouses, descendants and spouses of descendants, trustees of trusts
established for the benefit of such persons (acting in their capacity as
trustees of such trusts), and executors of estates of such persons (acting in
their capacity as executors of such estates), and each person of which any of
the foregoing owns (i) more than fifty percent (50%) of the voting stock or
other voting interests and (ii) stock or other interests representing more than
fifty percent (50%) of the total value of the stock or other interests of such
person.
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), options, expense reimbursements or other benefits other than:
(i) any salary which has accrued but is unpaid, 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 any option
theretofore granted to Executive or any benefit plan in which Executive has
participated as an employee of the Company) any option rights or plan benefits
which by their terms extend beyond termination of Executive's employment, (iii)
any benefits to which Executive is entitled under Part 6 of Subtitle B of Title
I of the Employee Retirement Income Security Act of 1974, 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 amount 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. The Company shall make no further payments to
Executive except as contemplated in (a)(i), (ii) and (iii) above.
(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
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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), plus, for the year in which such
termination occurs and the following year, the amount the Executive would have
received as an annual bonus if the Division and the Company performed at bonus
target for the year in which such termination occurs, such amount payable first
at the time the annual bonus normally would be paid for the year in which such
termination occurs and again at the time the annual bonus normally would be paid
for the following year; PROVIDED, HOWEVER, that in the event of Executive's
death during the payment period, the Company shall pay any subsequent such
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, shall pay to such payee(s) a lump sum amount equivalent to the discounted
present value of such amounts, discounted at the publicly announced reference
rate for commercial lending of the Company's principal lending bank in effect at
the date of notice to the 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. The Company shall make no further payments to Executive except as
contemplated in (a)(i), (ii) and (iii) above. It is expressly understood that
the Company's payment obligations under this (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
(a)(i), (ii) and (iii) above.
(f) Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise.
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 during the
Employment Period and for three years thereafter he shall not disclose any
Confidential Information without the prior written consent of the 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
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13
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 appropriate protective
orders), and that he shall not use any Confidential Information for his own
account without the prior written consent of the 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 reasonably request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, or to the 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 that during the Employment Period and for
any period following the Employment Period during which the Executive continues
to receive payments pursuant to this Agreement, 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, or assist any other person, firm, corporation or enterprise in
engaging or being engaged in, any business then actively being conducted by the
Company or any of its subsidiaries or affiliates, including, without limitation,
the publication or production of any magazine, special issue, catalogue,
directory, newsletter, card deck, electronic/internet product, trade show,
exhibition or ancillary product. Notwithstanding the foregoing, the restrictions
of this subparagraph 8(b) shall not apply if Executive's employment with the
Company is terminated by the Executive for Good Reason during the two year
period following a Change of Control.
(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 of 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 5% of the outstanding equity securities of
any class of a corporation or other entity which is publicly traded, so long as
Executive has no active participation in the business of such corporation or
other entity.
(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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14
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). In the
event that the Company initiates legal proceedings to remedy an alleged
violation of paragraph 8 by Executive but fails to obtain injunctive or other
relief in such action, Executive shall be entitled to reimbursement by the
Company for any costs incurred by Executive in defending such legal proceeding.
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 other than an
agreement dated __________ between Xxxxxx Xxxxxxx, Inc. and Executive, 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. Subject to any limits on applicability contained
therein, 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, sent by reputable
overnight carrier or mailed by first class mail, return receipt requested, to
the recipient at the address below indicated:
NOTICES TO EXECUTIVE:
Mr. Xxxxx Xxxxxxxx
0 Xxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000
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15
with a copy to:
Xxxxx Xxxxxxxxx, Esq.
Jaspan, Schlesinger, Xxxxxxxxx & Xxxxxxx LLP
Attorneys at Law
000 Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000-0000
NOTICES TO THE COMPANY:
Xx. Xxxxxx X. Xxxx
Chief Executive Officer
Penton Media, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 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,
sent or mailed.
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 RELATING TO A CHANGE
OF CONTROL OF THE COMPANY. 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 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 the Company's principal lending bank in effect from time
to time.
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16
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
understandings, 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 any successor to the Company by merger or
consolidation or purchase of all or substantially all of the Company's assets,
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.
20. COMPANY OPTION. Executive has advised the Company that,
under the terms of the agreement referred to in paragraph 10, unless Xxxxxx
Xxxxxxx, Inc. agrees otherwise, Executive must give Xxxxxx Xxxxxxx, Inc. ninety
days' notice in order to terminate his employment thereunder. Executive agrees
to give Xxxxxx Xxxxxxx, Inc. such notice within seven days of the date hereof.
Such notice shall request that Xxxxxx Xxxxxxx, Inc. waive the requirement of the
ninety day notice period. Executive shall deliver a copy of such notice to the
Company. In the event Executive shall not have provided the Company with the
copy of such notice within seven days of the date hereof, the Company may, at
its option, declare this Agreement null and void. The Executive shall use his
best efforts to obtain the written agreement of Xxxxxx Xxxxxxx, Inc. to the
termination of his employment under such agreement at the earliest possible date
after the Executive gives such notice. Executive's employment hereunder shall
commence on the first day after the date on which Xxxxxx Xxxxxxx, Inc. agrees to
the termination of Executive's employment with Xxxxxx Xxxxxxx, Inc., or, if
Xxxxxx Xxxxxxx, Inc. does not so agree, on the first day after the expiration of
the ninety day notice period (the first day of Executive's employment hereunder
being referred to herein as the "EFFECTIVE DATE").
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17
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
PENTON MEDIA, INC.
Date: July 16, 1998 By /s/ Xxxxxx X. Xxxx
-------------------
Xxxxxx X. Xxxx
Chief Executive Officer
Date: July 19, 1998 /s/ Xxxxx Xxxxxxxx
-------------------
Xxxxx Xxxxxxxx
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