EXHIBIT 10.24
EMPLOYMENT AGREEMENT
dated as of November 6, 1998
The parties to this agreement are Xxxxxxx X. Xxxxxx, who resides at 00 Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 (the "Executive"), and Xxxx-Xxxxx Inc., a
Delaware corporation, with its principal office at Xxx Xxxx Xxxxxx, Xxx Xxxx, XX
00000 (the "Company").
The Executive has been employed in the magazine publishing business for a
number of years and the Company desires to continue to obtain the benefit of the
Executive's services with respect to its business. The Executive wishes to be
employed by the Company.
It is therefore agreed as follows:
1. Employment. During the term of the Executive's employment under this
----------
agreement, the Company shall employ the Executive, and the Executive shall serve
the Company as President of the Company's ZD Publishing division with the duties
and responsibilities associated with that position or in such other high level
executive management position of the Company and with such duties and
responsibilities as he may be assigned. The position of President shall be the
senior executive position in the ZD Publishing division, reporting directly to
the Chief Executive Officer of the Company. The position will be based in the
Company's New York offices; the Executive acknowledges that the position will
entail extensive travel. The Executive shall devote his full business time and
his best efforts to the performance of his duties under this agreement and shall
perform them faithfully, diligently and competently, and shall comply with and
be bound by the Company's operating policies, directives and procedures in
effect from time to time during the period of employment. Nothing in the
foregoing shall prevent the Executive from serving on the boards of appropriate
industry associations or other similar not-for-profit organizations or from
serving with
the Company's consent on the board of one or more affiliates of the Company.
2. Term of Employment. The term of the Executive's employment under this
------------------
agreement shall be for an initial period commencing on November 6, 1998 and
ending December 31, 2001, subject to earlier termination as provided in section
5. The term shall continue after December 31, 2001 until terminated by the
Company or the Executive at any time on not less than thirty (30) days notice.
3. Compensation. As full consideration for his services under this
------------
agreement, the Executive shall be entitled to the following compensation:
3.1 Base Salary. The Executive shall be entitled to an initial base
-----------
salary at the annual rate of $650,000, which shall be reviewed each year for any
increase on the anniversary date of his last increase in accordance with normal
Company policies and guidelines. The Executive's base salary shall be payable in
equal installments (but no less frequently than monthly) in accordance with the
Company's customary payroll practice for its senior employees (which currently
is semi-monthly).
3.2 Incentive Compensation. Commencing with 1999, the Executive shall be
----------------------
entitled to an incentive bonus for each full calendar year of his employment
under this agreement equal to 5% of the EBITDA of the ZD Publishing division
above a base for that year. The base for 1999 shall be $134,000,000. The base
for each subsequent year shall be the amount of the previous year's EBITDA (but
not less than $134,000,000 for any year.) The base shall be adjusted
appropriately in the event of (x) any acquisitions or divestiture of properties
within the ZD Publishing division or (y) any extraordinary changes in the
General and Administrative charges or other charges allocated to the ZD
Publishing division, not resulting from its business activities. New start-ups
(i.e.,
2
start-ups begun after the date of this agreement), shall not be charged against
EBITDA for a period of 24 months after the commencement of publication. Earnings
from new start-ups shall only be included to the extent those earnings exceed
any losses excluded by the preceding sentence. For 1999, the Executive
shall be guaranteed a minimum incentive compensation of $50,000.
3.3 Options. In addition to the foregoing, the Executive shall be
-------
eligible to receive stock options to purchase shares of the Company's common
stock in such amounts as may be determined by the Company from time to time (the
"Xxxx-Xxxxx Options"). The first award of Xxxx-Xxxxx Options was made on October
16, 1998 in the amount of 175,000 shares with an exercise price of $6 per share
pursuant to a Stock Option Agreement dated October 16, 1998 (the "Stock Option
Agreement"). A second grant of 75,000 at $6.50 per share was made on November 9,
1998. The Stock Option Agreements provide for vesting over the period ending
November 30, 2003, with the first 20% vesting on, November 30, 1999 and the
remainder vesting in the incremental amount of 5% at the end of each subsequent
calendar quarter so that he shall be 100% vested on November 30, 2003. The Stock
Option Agreements also provide for an immediate acceleration in the vesting of
those options if the ZD Publishing division achieves EBITDA of $190,000,000 in
any calendar year. The $190,000,000 shall be subject to the adjustments
described in Section 3.2 for the base target for incentive compensation. The
Stock Option Agreements also provide that the Executive may exercise his vested
ZD Options for up to a year following the Executive's resignation after December
31, 2001.
3.4 Other Executive Plans. In addition to the grant of Xxxx-Xxxxx
---------------------
Options referred to in Section 3.3, the Company may establish one or more
executive compensation plans for the benefit of its executives and key
employees. Such plans may
3
include deferred compensation plans, long-term incentive plans, or other similar
plans (those special plans are hereafter referred to as the "Executive Plans").
The Executive shall be entitled to participate in all such plans offered
generally to other executives at his level.
4. Reimbursement of Expenses; Fringe Benefits, etc.
-----------------------------------------------
4.1 Expenses. The Company shall reimburse the Executive, in accordance
--------
with the Company's general policy in effect from time to time, for all
reasonable expenses incurred by the Executive in connection with the performance
of his duties under this agreement, upon presentation of appropriate
documentation covering the expenses.
4.2 Fringe Benefits. The Executive shall be entitled to participate, to
---------------
extent eligible pursuant to the provisions of the respective plans, in medical
and dental insurance, disability insurance, life insurance and other fringe
benefits provided by the Company generally to its other Executives.
5. Termination Upon Disability or Death; Other Early Termination.
-------------------------------------------------------------
5.1 Disability; Death.
-----------------
(a) If, as the result of any disability the Executive shall have been
unable to perform his material duties for a period of 180 consecutive days, the
Company may, by notice to the Executive, terminate his employment under this
agreement as of the date of the notice. If the Executive's employment is
terminated pursuant to this section 5.1(a), the Executive shall be entitled to
receive, in full discharge of all obligations of the Company to the Executive
under this agreement, (i) the Executive's unpaid salary under section 3.1
through the date of termination, (ii) payment as soon as such amount may be
determined of a pro rata part of his incentive compensation under section 3.2
for the year of termination based on the number of months the Executive
4
was employed during that year, (iii) any amounts in the Executive Plans in which
Executive is vested at the date of termination, (iv) any benefits to which
Executive is entitled or continues to be entitled pursuant to the policies,
programs or plans comprising the fringe benefits referenced to in section 4.2
and (v) immediate vesting of the Xxxx-Xxxxx options that would have vested
within one year of the date of termination (all other unvested options shall
terminate).
(b) The Executive's employment shall automatically terminate upon the
date of his death. If the Executive's employment is terminated by reason of his
death, the Executive's estate shall be entitled to receive, in full discharge of
all obligations of the Company to the Executive under this agreement, (i) the
Executive's unpaid salary under section 3.1 through the date of termination,
(ii) payment as soon as that amount may be determined of a pro rata portion of
his incentive compensation under section 3.2 for the year of termination based
on the number of months the Executive was employed during that year, (iii) any
amounts in the Executive Plans in which the Executive is vested at the date of
termination; and (iv) immediate vesting of the Xxxx-Xxxxx options that would
have vested within one year of the date of termination(all other unvested
options shall terminate).
5.2 Termination for Cause. Notwithstanding anything to the contrary in
---------------------
this agreement, the Company may at any time terminate the Executive's employment
under this agreement for Cause upon notice to the Executive. For purposes of
this agreement, the term "Cause" shall mean: (i) gross misconduct of the
Executive relating to the Company's business or otherwise injurious to the
business or reputation of the Company; (ii) the Executive's commission of a
crime involving financial impropriety or that would otherwise interfere with his
ability to perform his
5
duties or be injurious to the reputation or the business of the Company; (iii)
any willful breach by the Executive of his fiduciary duties as an executive and
employee of the Company; (iv) the failure of the Executive to perform in a
material respect any material obligation under this agreement after written
notice and, to the extent such failure can be cured, a period of twenty (20)
days to cure; or (v) the failure of the Executive to perform his obligations
under sections 6.1, 6.2 and 6.3 of this agreement. If the Executive's employment
is terminated by the Company pursuant to this section 5.2, the Executive shall
be entitled to receive, in full discharge of all obligations of the Company to
the Executive under this agreement, his unpaid salary under section 3.1 through
the date of termination and any amounts in the Executive Plans in which
Executive is then vested and which are not forfeited by such termination
pursuant to the provisions of those Plans.
5.3 Resignation. If the Executive's employment is terminated by his
-----------
resignation (on not less than sixty (60) days notice), the Executive shall be
entitled to receive, in full discharge of all obligations of the Company to the
Executive under this agreement: (i) his unpaid salary under section 3.1 through
the date of termination, (ii) provided that the Executive shall have served at
least six months within such year, payment as soon as such amount may be
determined of a pro rata part (based on the number of months the Executive was
employed during that year) of his incentive compensation under section 3.2 for
the year of termination determined on the Company's results for that entire
year against his target, and (iii) any amounts in the Executive Plans in which
Executive is then vested and which are not forfeited by such termination
pursuant to the provisions of those Plans.
6
5.4 Termination by the Company Other Than For Cause or by the Executive
-------------------------------------------------------------------
For Good Reason. The Company may terminate the Executive's employment at any
---------------
time without cause upon thirty days notice to Executive including prior to the
expiration of the initial period specified in Section 2 above and Executive may
terminate his employment at any time for Good Reason. In such event, the
Executive shall be entitled to receive, in full discharge of all obligations of
the Company to the Executive under this agreement and upon executing a release
of claims by Executive in a form reasonably satisfactory to the Company, (i) his
unpaid salary under section 3.1 through the date of termination; plus (ii) a pro
rata portion of the annual incentive bonus compensation under section 3.2 for
the year of termination based on the number of months the Executive was employed
by the Company during that year, to be paid promptly after such incentive amount
is determined by the Company; (iii) any amounts in the Executive Plans in which
the Executive may then be vested; and (iv) severance equal to the sum of his
then current base salary and his annual incentive compensation (using the amount
earned the most recent completed year or in the event no such full year exists,
the amount of $100,000). The severance shall be paid in two installments, half
at the date of termination and the remainder at six months after termination.
The Company's obligation to pay such severance shall immediately end if the
Executive breaches any of his obligations under Section 6. In addition, the
Company shall immediately vest that part of the Executive's Xxxx-Xxxxx Options
which would have vested had the Executive remained employed throughout the
remaining vesting period of those options, provided, however, the Executive
shall not be able to exercise such options until the date such options would
otherwise have vested and provided that at the time of any such exercise the
Executive is not competing with the business of the Company
7
(whether or not that time is beyond the period of non-compete specified in
Section 6.2). In the event the Executive competes with the Company or otherwise
violates any provision of Section 6, then all vested Xxxx-Xxxxx options shall be
immediately terminated. For purposes of this agreement, "Good Reason" shall mean
termination by the Executive following a material breach of this agreement by
the Company (without Executive's written consent) that is not corrected within
twenty 20 days of Executive notifying the Company in writing of such breach.
8
6. Confidentiality; Non-Competition.
--------------------------------
6.1 Confidentiality. The Executive shall not, directly or indirectly,
---------------
during the term of his employment under this agreement or at any time
thereafter, disclose to anyone or use in any manner any confidential or
proprietary information related to the Company or any confidential or
proprietary information of any affiliate of the Company, including SOFTBANK, of
which he may become aware or have become aware pursuant to his employment other
than as requested by the Company pursuant to his duties under this agreement or,
as may be required by law, but then only after giving the Company prior notice.
Nothing herein shall cover information which becomes generally known to the
public through the actions of any third party unrelated to the Executive.
6.2 Non-Competition. The Executive acknowledges that because of his
---------------
position he will have access to extremely confidential information of the
Company including trade secret, marketing plans, long term strategic plans, and
other information which would cause the Company irreparable harm if it were
available or his services were available after termination of his employment
with the Company to a competitor of the Company. Therefore, during the period of
the Executive's employment under this agreement (including the term of any leave
of absence) and for a period after termination of employment equal to the
greater of (x) six months and (y) the number of months of severance for which
the Executive shall be eligible (but not more than twelve months), the Executive
shall not, directly or indirectly, engage or be interested in any business which
engages in the United States , or in other geographic areas in which the Company
has done business, in a business directly competitive with the business of the
ZD Publishing division at such date or as may be planned at such date. The
Executive shall be deemed to be directly
9
or indirectly interested in a business if he is engaged or interested in that
business as a stockholder, director, officer, employee, salesman, sales
representative, agent, broker, partner, individual proprietor, lender, licensor
or consultant, but not if his interest is limited solely to ownership of 5% or
less of the equity or debt securities of any class of a corporation whose shares
are listed for trading on a national securities exchange or in the over-the-
counter market. Nothing in this section shall prohibit the Executive from
working for a company in a non-competing area although that Company may in
another part of its business compete with the business of the Company so long as
the Executive shall not be involved or assist in the competitive part of that
business. (For example, the Executive may work for Advance Publications or Conde
Nast in non-competitive areas but may not be involved in the activities of Wired
Magazine.)
6.3 No Solicitation. The Executive shall not during the term of this
---------------
agreement or for a period of twelve (12) months after the termination or
expiration of his employment, directly or indirectly, solicit for employment or
consulting, or employ or hire as an employee or as a consultant, on his own
behalf or on behalf of any other person or enterprise, or otherwise encourage
the resignation of, any individual who was an employee of or consultant to the
Company at any time subsequent to the date of this agreement and within the
twelve (12) months preceding the termination of the Executive's employment.
6.4 Remedies. The Executive's covenants under this section 6 are
--------
intended to extend beyond the termination or expiration of the Executive's
employment and shall apply whether the Executive's term of employment expires at
the end of its stated term or is terminated earlier for any reason. The
Executive acknowledges that the remedy at law for breach of the provisions of
this section 6 will be inadequate and that, in addition to any
10
other remedy the Company may have, it shall be entitled to an injunction
restraining any breach or threatened breach, without any bond or other security
being required or without having to show irreparable harm.
7. Miscellaneous.
-------------
7.1 Headings. The section headings of this agreement are for reference
--------
purposes only and are to be given no effect in the construction or
interpretation of this agreement.
7.2 Notices. All notices and other communications under this agreement
-------
shall be in writing and shall be deemed given when delivered personally, mailed
by registered mail, return receipt requested, or sent by reputable overnight
delivery service to the parties at their respective addresses set forth above
(or to such other address as a party may have specified by notice given to the
other party pursuant to this provision). Any notice to the Company shall be sent
to the attention of the Chairman and Chief Executive Officer with a copy to the
Company's Legal Department at Xxxx-Xxxxx Inc., Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attn: Legal Department.
7.3 Severability. The invalidity or unenforceability of any provision of
------------
this agreement shall not affect the validity or enforceability of any other
provision of this agreement, which shall remain in full force and effect.
7.4 Waiver. Either party may waive compliance by the other party with any
------
provision of this agreement. The failure of a party to insist on strict
adherence to any term of this agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this agreement. No waiver of any
provision shall be construed as a waiver of any other provision. Any waiver
must be in writing.
11
7.5 No Third Party Beneficiaries; Assignment. Any affiliate of the
----------------------------------------
Company, including SOFTBANK, which discloses confidential information to the
Executive in connection with his employment hereunder shall be a third party
beneficiary of sections 6.1 and 6.4 of this agreement, and each shall be
entitled to enforce such sections as if it were a party hereto. Except as
expressly set forth in the preceding sentence, nothing in this agreement shall
create or be deemed to create any third party beneficiary rights in any person
or entity. Neither party may assign any of its rights or delegate any of its
duties under this agreement without the written consent of the other party,
except that the Company may assign its rights and delegate its duties under this
agreement to an affiliate or to a corporation or other entity that has succeeded
to substantially all the business and assets of the Company, and assumed the
Company's obligations under this agreement; provided, however, that the Company
shall continue to guarantee the obligations assumed by any such assignee.
7.6 Entire Agreement. This agreement, the Stock Option Agreement, the
----------------
1998 Incentive Compensation Plan and any agreements relating to Executive Plans
contain and are intended as, a complete statement of all of the terms of the
arrangements between the parties with respect to the matters provided for,
supersedes any previous agreements and understandings between the parties with
respect to those matters, and cannot be changed or terminated orally.
7.7 Governing Law. This agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in New York and the courts of New York, New
York shall have exclusive jurisdiction over any actions arising out of the
enforcement or any other dispute concerning the terms of this Agreement. Each
party submits to the personal jurisdiction of the courts of New
12
York and acknowledges that service of process shall be deemed properly made by
registered or certified mail of a complaint or other similar document to the
Executive's address.
7.8 Counterparts. This agreement may be executed in counterparts, each
------------
of which shall be considered an original, but all of which together shall
constitute the same instrument.
7.9 Resolution of Disputes. Any controversy or claim arising out of or
----------------------
relating to this agreement or any breach or asserted breach hereof or
questioning the validity and binding effect hereof arising under or in
connection with this agreement, shall be resolved by binding arbitration to be
held in New York, in accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators
may be entered into any court having jurisdiction thereof. Nothing herein shall
prevent either party from seeking injunctive relief in any court of competent
jurisdiction. All costs and expenses of any arbitration proceeding (including
fees and disbursements of counsel) shall be borne by the respective party
incurring such costs and expenses, but the Company shall reimburse Executive for
such reasonable costs and expenses in the event he substantially prevails in
such arbitration proceeding.
XXXX-XXXXX INC.
By: /s/ Xxxx-Xxxxx Inc.
____________________________
Name:
Title:
/s/ Xxxxxxx X. Xxxxxx
__________________________
Name: Xxxxxxx X. Xxxxxx
13
