EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
July 1, 1996 by and between AHI HOLDING CORP., a Delaware corporation (the
"Company") and Xxxxx Xxxx ("Executive").
WHEREAS, the Company has acquired, pursuant to a Merger Agreement dated as
of April 12, 1996, and currently operates certain trade exposition and
publishing businesses; and
WHEREAS, the Company wishes to employ Executive and Executive is prepared
to serve in those capacities required by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Position and Authority. The Company agrees to employ the Executive, and
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the Executive accepts such employment and agrees to serve the Company as Vice
Chairman of the Company and its respective Subsidiaries, for the compensation
and benefits detailed in Sections 3 and 4 hereof. It is understood that the
Executive will report to the Chief Executive Officer of the Company. A
"Subsidiary" shall be any company in which the Company beneficially owns more
than 50% of the voting power of such company's outstanding voting securities.
2. Duties. Executive shall devote substantially all of his business time
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(subject to four weeks of vacation, or such greater amount as is authorized by
the Board of Directors) to the affairs of the Company during the employment
term, except as may be consented to by the Board of Directors. Notwithstanding
the foregoing, to the extent that it does not materially interfere with the
performance of his duties, Executive may devote such business time as is
reasonably necessary to his duties as a director of not more than two business
corporations not affiliated with the Company, and Executive may devote business
time to any charitable or not-for-profit activities. Executive shall perform
such duties and responsibilities as the Board of Directors or Chief Executive
Officer of the Company may from time to time reasonably determine, provided that
such duties and responsibilities are consistent with Executive's position and do
not diminish Executive's authority as set forth in Section 1 hereof. Executive
will not be required to relocate his permanent residence.
3. Base Compensation and Bonus.
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(a) Base Composition. Executive will be compensated at a base salary
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rate of $300,000 per year (or such higher rate as may be set from time to time
by the Board of Directors in its discretion) during the employment term. Base
compensation will be paid in installments on the same schedule as the Company's
Subsidiaries generally
pay their employees. All compensation and benefits will be subject to reduction
by all federal, state, local and other withholdings and similar taxes and
payments required by applicable law.
(b) Bonus for the Fiscal Year Ended December 31, 1996. The Executive
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shall receive a bonus of $75,000 for the fiscal year ended December 31, 1996.
(c) Bonus for Subsequent Fiscal Years. In addition to Executive's
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base compensation, Executive will receive bonus compensation based on the
relationship between the Company's actual earnings before interest, taxes,
depreciation and amortization ("EBITDA") for each fiscal year starting with the
fiscal year ending December 31, 1997 (determined based on the Company's audited
financial statements for such fiscal year) and the EBITDA set for such year in
the Company "Adjusted Business Plan" (as defined below) as follows:
Actual EBITDA Bonus
as a Percentage (as a Percentage of Base Salary)
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of Plan
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Less than 80% No bonus
100% 50% of Base Salary
120% 100% of Base Salary
If actual EBITDA as a percentage of the Company's Adjusted Business Plan falls
between 80% and 120%, the amount of bonus shall be pro rated on a straight-line
basis. In no case shall bonus payable under this Section 3(c) exceed 100% of
Base Salary unless agreed to by the Board of Directors in its absolute
discretion.
The "Adjusted Business Plan" shall be the Company's business plan for the
fiscal year in question as approved by the Board of Directors with the consent
of the Chief Executive Officer of the Company, appropriately adjusted for
acquisitions or dispositions during the year as determined by the Board of
Directors in good faith. If the Board and the Chief Executive Officer do not
adopt a mutually satisfactory business plan prior to the beginning of any fiscal
year, the business plan for purposes of this Section 3(c) shall be the business
plan submitted to Chemical Bank and dated May, 1996, subject to adjustment as
provided above for acquisitions and dispositions occurring after May 31, 1996.
Any bonus payable under this Section 3(c) shall be paid not later than 60
days after the applicable fiscal year end.
4. Benefits.
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(a) During Executive's employment by the Company, Executive will
receive the same (or substantially similar) employee benefits to those provided
by the Company or its Subsidiaries to other members of senior management from
time to time.
(b) During and after the employment term the Company agrees that if
Executive is made a party, or compelled to testify or otherwise participate in,
any action, suit or proceeding (a "Proceeding"), by reason of the fact that he
is or was a director or officer of the Company or any of its Subsidiaries,
Executive shall be indemnified by the Company as provided in Section 145 of the
Delaware General Corporation Law or (but not to any lesser extent) as authorized
by the Company's certificate of incorporation or bylaws or resolutions of the
company's Board of Directors against all cost, expense, liability, damage and
loss reasonably incurred or suffered by Executive in connection therewith, and
such indemnification shall continue as to Executive even if he has ceased to be
a director or officer of the Company or Subsidiary for the period of any
applicable statute of limitations or, if longer, for the period in which any
such Proceeding which commenced within the period of any such statute of
limitations is pending. The Company shall advance to Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within
20 days after receipt by the Company of a written request for such advance.
Such request shall include an itemized list of the costs and expenses and an
undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined, in a final judgment for which the time to appeal has
expired, that, pursuant to applicable law, he is not entitled to be indemnified
against such costs and expenses.
(c) The Company will reimburse Executive for his reasonable and
customary business expenses, including travel, accommodations and meals. Such
reimbursement shall include the reasonable cost of travel to and from Boston,
Cleveland and other Company offices and accommodations and meals when outside of
his residence location.
5. [Reserved]
6. Term. This Agreement shall have a term of four (4) years, provided
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that Sections 9 and 10 shall survive such expiration in accordance with their
terms.
7. Termination.
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(a) This Agreement may be terminated by the Company at any time for
Cause upon written notice to Executive, which notice shall specify the reason
for termination. Such notice shall be given at any time prior to termination in
the case of matters described in clauses (B) or (C), and shall be given not less
than 30 days prior to
the date of termination, in the case of matters described in clauses (A), (D) or
(E), and in the case of matters described in clauses (A), (D) or (E) shall be
rescinded if the Executive cures any misconduct, negligent act, breach or
failure giving rise to such notice to the reasonable satisfaction of the Board
of Directors, including curing any damage suffered by the Company as a result
thereof. As used herein, "Cause" shall mean (A) willful misconduct or gross
negligence by Executive in respect of his material obligations under this
Agreement, (B) conviction of a felony involving moral turpitude, (C) theft of
Company property or other disloyal or dishonest conduct of the Executive that
materially xxxxx the Company or its business or (in the case of dishonest
conduct) undermines the confidence of the Board in the Executive, (D) willful
breach of this Agreement, or (E) willful failure to observe Company policies or
carry out the directives of the Board of Directors that are not inconsistent
with the position of Executive as provided in Section 1 hereof.
(b) Executive may terminate this Agreement for Good Reason by giving
thirty (30) days prior written notice to the Company. Good Reason shall exist
only if (i) Executive is removed or is not re-appointed as the Company's Vice
Chairman, except in connection with termination of this Agreement by the Company
for Cause or due to death or Disability (as defined below), (ii) Executive is
assigned duties, or authority is withdrawn from Executive, inconsistent with
Executive's authority pursuant to Section 1, without Executive's express written
consent, (iii) breach by the Company of any material obligation of the Company
under this Agreement (iv) Xxxxxxx & Xxxxxxxx (as defined in the operating
agreement of LLC) shall cease to beneficially own at least 50% of the membership
interests in LLC or, following dissolution of LLC, at least 50% of the voting
securities of the Company and, in either such case, another person or group (as
defined in Section 13 of the Securities Exchange Act) beneficially owns a
greater percentage of such membership interests or voting securities or (v)
Xxxxxx Xxxxxxx ceases to be the Chief Executive Officer of the Company and
Executive is not appointed Chief Executive Officer of the Company.
(c) Should the Executive terminate this Agreement for Good Reason, or
should the Company terminate this Agreement without Cause, then the Executive
shall be entitled to receive, for a period of one year, the salary and the
benefits provided for in Sections 3 and 4 hereof (provided, that any bonus under
Section 3(c) will be payable only with respect to that portion of the fiscal
year in which Executive's employment was terminated (or any prior fiscal year
for which bonus remains unpaid)); bonus for any partial fiscal year shall be
determined by multiplying the bonus Executive would have received had he
continued to work for the Company during the entire fiscal year by a fraction,
the numerator of which is the number of days in the fiscal year during which
Executive was employed by the Company, and the denominator of which is 365 (such
amount the "Pro Rata Bonus Amount"). If any such benefits cannot be legally
provided, or the provision thereof would disqualify any plan for favorable tax
treatment under the
Internal Revenue Code, a financially equivalent substitute shall be provided.
The Company shall have no obligation to Executive under this Section 8(c) if
Executive breaches the provisions of the letter agreement referred to in Section
9. This clause (c) shall not apply to a termination under clause (d) below.
(d) This Agreement shall terminate automatically upon Executive's
death. This Agreement may be terminated by the Company upon written notice to
Executive, or by Executive upon written notice to the Company, upon Executive's
Disability. For purposes of this Agreement, "Disability" means the Executive's
suffering of a disability which shall have prevented him from performing his
obligations hereunder for a period of at least 120 consecutive days or 180 non-
consecutive days in any 365 day period. In the event of termination of this
Agreement due to Executive's death or Disability, in addition to any salary due
to Executive as of the date of death or Disability and remaining unpaid,
Executive shall be entitled to receive, at such time as Executive would
otherwise would have received such sum, the Pro Rata Bonus Amount for the
portion of the fiscal year in which Executive's death or Disability occurred
during which Executive was employed by the Company.
(e) If the Company terminates this Agreement with Cause or if the
Executive terminates this Agreement without Good Reason, or if this Agreement is
terminated under clause (d) above, then the Executive shall, from the date of
such termination, no longer be entitled to any compensation under Sections 3 or
4 (other than, in the case of termination for Disability, disability benefits as
provided pursuant to Section 4 and, in the case of termination for death or
Disability, any bonus payable pursuant to clause (d) above.). Nothing in this
clause (e) shall affect Executive's rights under Company health and disability
plans in which Executive participates to the extent such plans provide for
benefits to be paid following the termination of employment.
(f) Termination of this Agreement shall not discharge any liability
existing at the date of termination. Further, notwithholding any termination,
the provisions of Sections 9 and 10 shall survive in accordance with their
terms.
8. Effective Date. This Agreement shall take effect as of July 1, 1996.
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9. Non-Competition and Confidentiality. Executive shall execute and
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deliver a letter agreement in the form of Exhibit A hereto.
10. Arbitration. Any claim arising out of or relating to this Agreement
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(including disputes regarding the presence or absence of "Cause" or "Good
Reason" in the event of a termination), or otherwise arising out of or relating
to the Executive's employment by the Company, will be subject to arbitration in
San Francisco, California (if brought by Executive) or Boston, Massachusetts (if
brought by the Company), in
accordance with the Federal Arbitration Act and the rules of the American
Arbitration Association relating to commercial disputes. The prevailing party in
any such arbitration shall be entitled to recover from the other party its
reasonable expenses incurred in connection with such arbitration, including the
reasonable fees and expenses of counsel.
11. Severability. If any provision of this Agreement is determined to be
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invalid or unenforceable, it shall be adjusted rather than voided, to achieve
the intent of the parties to the extent possible, and the remainder of the
Agreement shall be enforced to the maximum extent possible.
12. Entire Agreement. This Agreement constitutes the entire agreement
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between Executive and the Company with respect to the terms and conditions of
the employment of Executive by the Company, and supersedes all prior or
concurrent arrangements, discussions, agreements or understandings with respect
to your employment.
13. Governing Law. This Agreement shall be governed by the laws of
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California without regard to principles of conflicts of law.
14. Expenses. The Company shall pay, or reimburse Executive for, the
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reasonable out-of-pocket expenses incurred by Executive in negotiating,
executing and delivering this Agreement and the related agreements executed and
delivered in connection herewith (including the reasonable fees and expenses of
legal counsel), up to a maximum of $50,000 less any amount (which may be up to
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$50,000) that the Company pays to Xxxxxx X. Xxxxxxx as reimbursement for his
expenses under Section 14 of his employment agreement with the Company.
15. Notice. Any notice, or other written communication to be given
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pursuant to this Agreement for whatever reason shall be deemed duly given and
received (a) if delivered personally, from the date of delivery, or (b) by
certified mail, postage pre-paid, return receipt requested, three (3) days after
the date of mailing, addressed to the above parties as follows:
If to the Company:
AHI HOLDING CORP.
c/o Hellman & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
with a copy to:
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to Executive:
Xxxxx Xxxx
6 Snowflake Lane
Westport, Conn. 06880
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: F. Xxxxxx Xxxxxx, Esq.
16. Certain Definitions. Capitalized terms not otherwise defined herein
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shall have the meaning ascribed to such terms in the Stockholders Agreement of
even date herewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
AHI HOLDING CORP.
By: /s/ Xxxxxxxx X. Xxxxx
__________________________
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
/s/ Xxxxx Xxxx
_____________________________
Xxxxx Xxxx
EMPLOYMENT AGREEMENT
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EXHIBIT A
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AHI Holding Corp.
July 1, 1996
Xxxxx Xxxx
6 Snowflake Lane
Westport, Conn. 06880
Dear Xx. Xxxx:
You are to be employed by AHI Holding Corp. (the "Company" and, together
with Advanstar Holdings, Inc. and its subsidiaries "Advanstar"). In
consideration of your employment with the Company, you and the Company agree as
follows:
1. Non-Competition. You agree that you will not, during the course of
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your employment with the Company or for the Non-Compete Period following the
termination of such employment, compete with Advanstar, as defined in paragraph
4 below. As used herein "Non-Compete Period" means (a) if your employment is
terminated by the Company without Cause (as defined therein) or by you for Good
Reason (as defined therein), six months or (b) if your employment is terminated
for any other reason, one year.
2. Confidentiality. You acknowledge that your association with Advanstar
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will bring you into close contact with many confidential affairs of Advanstar,
including information about costs, profits, markets, sales, publications, key
personnel, pricing policies, operational methods, other business affairs,
methods and other information not readily available to the public, and plans for
future development. In recognition of the foregoing, you covenant and agree
that you will keep confidential all material confidential to Advanstar that is
not otherwise in the public domain and that you will not intentionally disclose
any such information to anyone outside Advanstar or make any use thereof for
your own benefit or for any purpose other than the advancement of the business
of Advanstar at any time except with the prior written consent of Advanstar as
evidenced by a certified resolution of the Board of Directors of the Company.
For purposes of this Agreement, the following information shall be deemed not to
constitute confidential information of Advanstar:
(a) Any information developed independently by you;
(b) Information that was received by you from a third-party, which,
to your knowledge, is not bound by an agreement of
confidentiality with Advanstar; or
(c) Any information that is in the public domain or generally
available to the public.
3. No Solicitation of Employees. You covenant that during the Non-
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Compete Period you will not, and no person, corporation, partnership, or other
entity over which you exercise control (whether as an officer, director, sole
proprietor, holder, debt or equity securities, consultant, partner, or
otherwise) will, directly or indirectly (a) enter into any written or oral
agreement or understanding relating to the services of any person who is then
employed by Advanstar or, in the case of any employee other than secretaries,
clerks and similar employees fulfilling merely clerical functions, who has been
so employed within the preceding six months, or (b) solicit, or bid against
Advanstar in an attempt to be awarded, any trade show or exposition business, or
any publishing contract, from any party sponsoring or arranging any trade show
or exposition, or publishing or sponsoring any publication, in either case with
which Advanstar then has such a relationship or contract.
4. Certain Definitions. For purposes of this Letter Agreement,
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competition with Advanstar shall include carrying on any business that is
competitive with the business of Advanstar, in the United States or in any other
country in which Advanstar conducts business as of the termination of your
employment. For purposes of this Letter Agreement, (a) the business of
Advanstar will be deemed to include (without limitation) the organization of
trade shows and expositions of the type and with respect to the industries held
by Advanstar as of the termination of your employment (it being understood that
industry shall be analogized to the categories of the category system of the
Standard Rate Data Service) and the publication (including electronic
publication) of trade journals and other magazines aimed at the particular
businesses, industries or professions (as defined by category according to the
category system of the Standard Rate Data Service) at which Advanstar's
operations are aimed, and (b) each of the following activities (without
limitation) will be deemed to constitute to carrying on business: to engage in,
work with, have interest in, advise, lend money to, guarantee the debts or
obligations of, or permit one's name or any part thereof to be used in
connection with, an enterprise or endeavor either individually, in partnership,
or in conjunction with any person, firm, association, company, or corporation,
whether as principal, agent, shareholder (other than holding of less than 1% of
the voting securities of any public company or 5% of the voting securities of
any private company), employee, director, consultant, or in any other capacity
or manner whatsoever.
5. Severability. The scope and effect of the terms and provisions
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contained in this Letter Agreement (including the noncompetition covenant
contained in Section 1) will be as broad in time (but not beyond the time
periods specified herein), geography, and all other respects as is permitted by
applicable law. If arbitrators, a court, or another body of competent
jurisdiction determine that any term or provision of this Agreement is excessive
in scope, then if possible such term or provision will be adjusted (rather than
voided) in accordance with the purpose stated in the preceding sentence and with
applicable law, but in such a manner as to minimize the change in the provision.
If such term or provision cannot be so adjusted, then it will be struck. All
other terms and provisions of this Letter Agreement will be deemed valid and
enforceable to the full extent possible.
6. Remedies. If any of the covenants or agreements in Sections 1, 2 or 3
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are violated or threatened to be violated, you agree and acknowledge that such
violation or threatened violation will cause irreparable injury to Advanstar,
and that the remedy at law of Advanstar for any such violation or threatened
violation will be inadequate and that Advanstar will be entitled to obtain any
injunction prohibiting a continuance or occurrence of such violations or
threatened violations in addition to (not in limitation of) any other rights or
remedies available at law or in equity. Your services hereunder are of a
special, unique, unusual, extraordinary character which gives them peculiar
value, the loss of which cannot be reasonably or adequately computed in damages.
The provisions of this Letter Agreement will be binding upon and inure to
the benefit of our respective heirs, executives, administrators, successors and
assigns. This Letter Agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
Very truly yours,
AHI HOLDING CORP.
By: /s/ Xxxxxxxx X. Xxxxx
______________________
ACCEPTED AND AGREED:
/s/ Xxxxx Xxxx
______________________
Xxxxx Xxxx
