Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 28th day of July, 1999, by and between NEWS
COMMUNICATIONS, INC., a Nevada corporation with offices at 174-15 Xxxxxx Xxxxxxx
Expressway, Xxxxx Xxxxxxx, Xxx Xxxx 00000 ("NCI"), and XXXXXX XXXXXXX, residing
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at Xxx Xxxxx Xxxxxx Xxxxxxx, Xx. Xxxxx, Xxx Xxxx 00000 ("Xxxxxxx").
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NCI is engaged in the business of publishing and distributing community
oriented newspapers and targeted audience publications; and
NCI is desirous of employing Xxxxxxx as the President and Chief Executive
Officer of NCI, and Xxxxxxx is desirous of serving NCI in such capacities, all
upon the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment.
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NCI agrees to employ Xxxxxxx, and Xxxxxxx agrees to be employed by
NCI, upon the terms and subject to the conditions of this Agreement.
2. Term.
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The term of this Agreement shall commence on the date Xxxxxxx informs
NCI that he is able to commence employment with NCI, which shall be no later
than the first business day after the expiration of any termination notice
period under the Prior Employment Agreement (as defined below) (such
commencement date being hereinafter referred to as the "Effective Date"), and
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end on November 30, 2004, unless sooner terminated as hereinafter provided (the
"Term").
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3. Duties; Efforts; Indemnification.
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(a) Xxxxxxx shall serve as President and Chief Executive Officer of
NCI and its subsidiaries. Subject to the general policy directions of the Board
of Directors (the "Board") and NCI's Articles of Incorporation and By-Laws,
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Xxxxxxx shall have complete supervision and control over, and sole executive
responsibility for, the business operations of NCI and its subsidiaries,
including, but not limited to, the power to hire and fire all personnel and to
establish a corporate office at a reasonable cost at a location in the New York
metropolitan area in his discretion (the "Corporate Office"). Notwithstanding
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the foregoing, Xxxxxxx shall not make decisions which materially change the
editorial direction of the publications of NCI without the approval of the
Board. Xxxxxxx shall have such other duties as customarily performed by the
President and Chief Executive Officer and also have such other powers and duties
as may be, from time to time, prescribed by the Board of NCI, provided that the
nature of Xxxxxxx'x xxxxxx and duties so prescribed shall not be inconsistent
with Xxxxxxx'x position and duties hereunder.
Xxxxxxx shall report directly and exclusively to the Board and no other
executive officer will be appointed with authority over the business operations
of NCI or its subsidiaries. During the Term, Xxxxxxx shall also be nominated to
serve as a member of the Board.
(b) Xxxxxxx shall devote, on a full time and exclusive basis, all of
his business time, attention and energies to the business and affairs of NCI,
shall use his best efforts to advance the best interests of NCI, and shall not
during the Term be engaged in any other business activities, whether or not such
business activities are pursued for gain, profit or other pecuniary advantage
without Board consent; provided, however, that, it shall not be a violation of
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this Agreement for Xxxxxxx to (i) serve on corporate, civic or charitable boards
or committees and/or (ii) manage passive personal investments, so long as any
such activities do not interfere with the performance of Xxxxxxx'x
responsibilities as an employee of NCI in accordance with this Agreement.
(c) Subject to and in accordance with the provisions of the
Certificate of Incorporation of NCI, which shall not, except as required by
applicable law, be amended in this regard without Xxxxxxx'x consent, NCI shall
indemnify Xxxxxxx to the fullest extent permitted by the Nevada General
Corporation Law, as amended from time to time, for all amounts (including,
without limitation, judgments, fines, settlement payments, expenses and
attorney's fees) incurred or paid by Xxxxxxx in connection with any action,
suit, investigation or proceeding arising out of or relating to the performance
by Xxxxxxx of services for, or the acting by Xxxxxxx as a manager, officer or
employee of, NCI, or any other Person (as such term is defined in Appendix A
hereto) or enterprise at NCI's request. NCI shall use its commercially
reasonable efforts to purchase and maintain during the Term directors' and
officers' insurance with a liability limit of not less than $10,000,000,
provided that the Board of Directors of NCI shall have the right to reduce the
amount of insurance coverage if, in its opinion, coverage in such amount is
available only on unreasonable terms but in no event shall such coverage be less
than $2,000,000.
4. Compensation and Benefits.
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(a) Base Salary. NCI shall pay to Xxxxxxx a base salary (the "Base
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Salary") of not less than $185,000, payable in accordance with NCI's payroll
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practices for its executive employees. The Base Salary shall automatically
increase at the end of each year of the Term by the annual percentage increase,
if any, in the Consumer Price Index distributed by the United States Department
of Labor and applicable to the New York metropolitan area. In addition, the
Board of NCI will review the Base Salary and other compensation not less than
annually during the Term with a view to their increase based upon Xxxxxxx'x
performance, the performance of NCI, inflation, then prevailing industry salary
scales and other relevant factors. The Base Salary provided hereunder, as
increased by the Board from time to time, shall not be reduced without Xxxxxxx'x
consent.
(b) Cash Bonus. Xxxxxxx shall be entitled to receive a performance-
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based cash bonus (the "Bonus"), in addition to and separate from Xxxxxxx'x Base
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Salary, in accordance with the bonus formula attached as Exhibit A hereto. The
Bonus shall be payable within 5 days after the delivery to the Board of NCI's
audited financial statements for the
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preceding fiscal year. Xxxxxxx may be awarded an additional cash bonus in the
sole discretion of the Board, it being acknowledged and agreed that the Board
shall be under no obligation to make any additional cash bonus.
(c) Incentive Compensation. In addition to Xxxxxxx'x Base Salary and
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Bonus, upon the execution of this Agreement, Xxxxxxx shall receive (i) a
restricted stock award of 250,000 shares of NCI's common Stock (the "Restricted
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Stock Award") pursuant to a Management Restricted Stock Agreement and (ii)
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options to purchase 830,000 shares of NCI's common stock (the "Option Grant")
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pursuant to a Stock Option Agreement. Additionally, if NCI meets certain
performance thresholds either through improvements in EBITDA (as defined in
Exhibit A) or the appreciation in the trading price of NCI's Common Stock,
Xxxxxxx may be awarded additional stock-based awards in the sole discretion of
the Board, it being acknowledged and agreed that the Board shall be under no
obligation to make any additional stock-based awards.
(d) Out-of-Pocket Expenses. NCI shall promptly pay to Xxxxxxx the
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reasonable expenses incurred by him in the performance of his duties hereunder,
including, without limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are paid directly by
Xxxxxxx, shall promptly reimburse him for such payment, provided that Xxxxxxx
properly accounts therefor in accordance with NCI's policy.
(e) Participation in Benefit Plans. Xxxxxxx shall be entitled to
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participate in or receive benefits under any pension plan, health and accident
plan or any other employee benefit plan or arrangement made available now or in
the future by NCI to its employees and key management personnel.
(f) Key Man Life Insurance. NCI shall use commercially reasonable
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efforts to purchase and maintain on Xxxxxxx key-man life insurance in such
amount and upon such terms or conditions as NCI may deem reasonable in order to
discharge NCI's obligations under this Agreement; provided that the minimum
amount of key-man life insurance to be maintained on Xxxxxxx'x life shall be
$3,000,000, of which $1,000,000 shall be payable to a beneficiary designated by
Xxxxxxx for so long as Xxxxxxx is employed by NCI. Xxxxxxx shall cooperate with
NCI in connection with obtaining and maintaining such policy, including the
submission to physical examination and blood testing.
(g) Vacation. Xxxxxxx shall be entitled to paid vacation days in each
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calendar year determined by NCI from time to time, but not less than four (4)
weeks in any calendar year. Vacation shall be prorated in any calendar year of
the Term during which Xxxxxxx is employed hereunder for less than an entire year
in accordance with the number of days in such year during which he is so
employed. Xxxxxxx shall also be entitled to all paid holidays given by NCI to
its employees and key management personnel. No vacation time shall be paid for
if not taken nor carried over into any subsequent calendar year unless NCI's
policies then permit.
(h) Automobile. NCI shall pay and/or reimburse Xxxxxxx for up to a
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maximum of $20,000 per year to lease an automobile of Xxxxxxx'x choice for
Xxxxxxx'x use, to equip such automobile with a car phone for use by Xxxxxxx in
performing his duties hereunder
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and to pay the costs of gas, garage, maintenance and up-keep of and insurance
for the automobile.
5. Termination.
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Xxxxxxx'x employment hereunder shall be terminated upon Xxxxxxx'x
death or Xxxxxxx'x voluntarily leaving the employ of NCI (other than for "Good
Reason"), and may be terminated as follows:
(a) For Cause. NCI shall have the right to terminate Xxxxxxx'x
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employment for "Cause." A termination for "Cause" is a termination evidenced by
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a resolution adopted by a vote of a majority of the members of the entire Board
finding that Xxxxxxx has:
(i) breached or failed to comply with any of the material terms
of Section 2, 7, 8, 9 or 12 of this Agreement;
(ii) continually failed in bad faith to perform his material
duties under this Agreement;
(iii) engaged in gross negligence or willful misconduct in connection
with or arising out of the performance of his duties hereunder, including,
without limitation, the misappropriation of funds;
(iv) been repeatedly under the influence of drugs or alcohol (other
than prescription medicine or other medically-related drugs to the extent that
they are taken in accordance with their directions) during the performance of
his duties under this Agreement, or while under the influence of such drugs or
alcohol, engages in grossly inappropriate conduct during the performance of his
duties under this Agreement;
(v) engaged in behavior that would constitute grounds for liability
for sexual harassment (as proscribed by the U.S. Equal Employment Opportunity
Commission Guidelines, the New York State Division of Human Rights and or any
other applicable state regulatory body) or other egregious conduct violative of
laws governing the workplace; or
(vi) committed any act of fraud, larceny, misappropriation of funds or
embezzlement or been convicted of a felony or a crime of moral depravity;
provided, however, that (A) in the case of clauses (i), (ii) and (iii) above,
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Xxxxxxx shall receive thirty (30) days' advance written notice that the Board
intends to meet to consider Xxxxxxx'x termination for Cause and specifying the
actions constituting Cause, Xxxxxxx shall have the opportunity to cure the
conduct constituting Cause during such thirty (30) day period and/or Xxxxxxx
shall be given a reasonable opportunity to be heard by the Board on the issue
prior to the Board's vote on the matter, (B) any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for NCI shall be conclusively presumed to be done, or
omitted to be done, by Xxxxxxx in good faith and in the best interests of NCI,
(C) in the case of clauses (i) or (ii), failure to achieve a qualitative level
of
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performance shall not be grounds for termination for Cause and (D) in the case
of clause (i), a breach of subsection 8(a)(iv) without demonstrable harm shall
not constitute Cause.
(b) For Disability NCI shall have the right to terminate Xxxxxxx'x
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Employment as a result of Xxxxxxx'x "Disability." For purposes of this
Agreement, a termination for "Disability" shall occur:
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(i) upon the thirtieth (30th) day after the Board has provided a
written termination notice to Xxxxxxx supported by a written statement from a
reputable independent physician mutually selected by the parties hereto to the
effect that Xxxxxxx shall have become so incapacitated as to be unable to
resume, within 120 days, his employment hereunder by reason of physical or
mental illness or injury, or
(ii) upon rendering of a written termination notice by NCI after
Xxxxxxx has been unable to substantially perform his duties hereunder for 180
consecutive days (exclusive of any vacation permitted under Section 4(g) hereof)
or for 180 days in any 360 day period by reason of any physical or mental
illness or injury.
If the Board determines, in good faith, that the Disability of Xxxxxxx
has occurred based upon such determination by such physician or by such
absences, it may give to Xxxxxxx written notice of its intention to terminate
Xxxxxxx'x employment. In such event, Xxxxxxx'x employment with NCI shall
terminate effective on the 30th day after receipt of such notice by Xxxxxxx;
provided that, within the 30 days after such receipt, Xxxxxxx shall not have
returned to full-time performance of his duties and indicated an ability to
continue to perform such duties on a full-time basis. For purposes of this
Section 5(b), Xxxxxxx agrees to make himself available and to cooperate in any
reasonable examination by a reputable independent physician mutually selected by
the parties.
(c) By Xxxxxxx for Good Reason. Xxxxxxx shall have the right to
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terminate his employment with NCI for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean:
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(i) Removal from, or failure to be reappointed, elected or reelected
to, his position as President and Chief Executive Officer or member of the Board
(other than for Cause or by reason of Xxxxxxx'x death or disability); or
(ii) Material diminution in Xxxxxxx'x title, position, duties or
responsibilities, or the assignment to Xxxxxxx of duties that are inconsistent,
in a material respect, with the scope of duties and responsibilities associated
with the positions specified in this Agreement, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith; or
(iii) Reduction in Xxxxxxx'x Base Salary or Bonus opportunity or any
failure by the Board to implement any compensation (including equity)
arrangements contemplated by this Agreement; or
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(iv) The continuous failure of NCI in bad faith to comply with any of
its material obligations under this Agreement, the Restricted Stock Agreement
dated as of the date hereof between NCI and Xxxxxxx (the "Restricted Stock
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Agreement"), the Stock Option Agreement dated as of the date hereof between NCI
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and Xxxxxxx (the "Option Agreement"), the Stockholders' Agreement dated as of
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the date hereof among NCI, Xxxxxxx and certain other stockholders of NCI (the
"Stockholders' Agreement"), the Subscription Agreement dated as of the date
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hereof among NCI, Xxxxxx X. Xxxx ("Xxxx"), J. Xxxxxx Xxxxx ("Xxxxx") and Xxxxxx
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X. Xxxxx ("Xxxxx") (the "Subscription Agreement") and any other documents
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relating to the retirement of the $2.5 million debt (collectively, the "Debt
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Documents") and any other benefit plans of NCI pursuant to which NCI may have an
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obligation to Xxxxxxx (the "Benefit Plans," and together with the Debt
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Documents, this Agreement, the Restricted Stock Agreement and the Option
Agreement, the "Xxxxxxx Agreements"), in any case other than an isolated,
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insubstantial and inadvertent failure and which is remedied by NCI promptly
after receipt of notice thereof given by Xxxxxxx; or
(v) Failure of NCI to comply with any material regulatory requirement
applicable to it including, without limitation, the rules and regulations of the
SEC, which failure persists following an objection by Xxxxxxx to the compliance
status of NCI, unless such failure is caused by Xxxxxxx'x acts or his failure to
act by virtue of his position as a director and/or officer of NCI; or
(vi) Relocation without consent of Xxxxxxx to an office other than the
Corporate Office or relocation of the Corporate Office to a location outside the
New York metropolitan area;
(vii) Any reason during the 90-day period subsequent to the
expiration of 6 months following a Change of Control (as such term is defined in
Appendix A hereto);
(viii) Failure by NCI to pay amounts due under this Agreement which
continues for 30 business days following notice;
(ix) The failure of any of Xxxx, Xxxxx or Xxxxx to perform his
obligations under the Subscription Agreement or the failure of the Board to
permit Xxxxxxx to cause NCI to utilize the proceeds from the Subscription
Agreement to retire NCI's $2.5 million indebtedness to X.X. Xxxxx Investment
Banking Corp. and Rothschild Recovery Fund L.P.;
(x) The failure of NCI to reduce the size of the Board of NCI from 16
to 9 members within 30 days of the date hereof or the failure of the Board to be
constituted in the manner set forth in Section 3(b) of the Stockholders'
Agreement.
Xxxxxxx shall not terminate his employment for Good Reason unless and
until he has delivered to the Board not less than 15 days notice that he intends
to terminate his employment for Good Reason, which notice shall specify the
reasons for termination, and the Board fails to remedy the circumstances giving
rise to Xxxxxxx'x notice within such 15 day period.
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6. Effect of Termination.
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(a) Death or Disability. In the event of the termination of Xxxxxxx'x
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employment as a result of his death or Disability, NCI shall:
(i) pay to Xxxxxxx or his estate, as the case may be, the Base Salary
through the date of his death or Disability (pro rated for any partial month);
(ii) pay to Xxxxxxx or his estate, as the case may be, any accrued and
unpaid Bonus in accordance with Section 4(b);
(iii) reimburse Xxxxxxx, or his estate, as the case may be, for any
expenses pursuant to Section 4(d) (the amounts payable pursuant to the foregoing
clauses (i), (ii) and (iii) are hereafter referred to as the "Accrued
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Obligations");
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(iv) pay to Xxxxxxx or his estate in a lump sum an amount equal to his
annual Base Salary then in effect; provided, however, that no such payment shall
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be made in the case of Xxxxxxx'x death if the life insurance described in
Section 4(f) shall have been maintained at the time of his death; and
(v) provide to Xxxxxxx and/or his family, as the case may be, (A) for
the first year after Xxxxxxx'x death or Disability (or such longer period as is
required under COBRA), continued coverage under all welfare benefit plans
including medical, accident, life or other disability plans and programs in
which Xxxxxxx and his family participated immediately prior to his death or
Disability, and sharing in the cost of such benefit coverage in the same
proportion as was in effect for Xxxxxxx immediately prior to his death or
Disability and (B) after such 1 year period, Xxxxxxx or his estate, as the case
may be, shall be responsible for the full cost of Xxxxxxx'x COBRA payments.
(b) For Cause by NCI, by Xxxxxxx Voluntarily (other than for Good
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Reason) or upon expiration of this Agreement. In the event that Xxxxxxx'x
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employment is terminated by NCI for Cause, by Xxxxxxx voluntarily (other than
for Good Reason) or upon expiration of this Agreement, NCI shall pay to Xxxxxxx
the Accrued Obligations, and Xxxxxxx shall have no further entitlement to any
other compensation or benefits from NCI, except as set forth herein or in the
Xxxxxxx Agreements (other than this Agreement).
(c) Other than as a result of Xxxxxxx'x death, by NCI for Cause or as
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a result of Xxxxxxx'x Disability or by Xxxxxxx for Good Reason. In the event
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that Xxxxxxx'x employment is terminated by NCI other than for Cause, death or
Disability or is terminated by Xxxxxxx for Good Reason, then in any such event,
subject to receipt of a release of NCI and its directors, officers and employees
and their respective successors and assigns of claims of Xxxxxxx against them
solely by reason of his termination of employment hereunder:
(i) NCI shall pay to Xxxxxxx the Accrued Obligations;
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(ii) NCI shall pay to Xxxxxxx in a lump sum an amount equal to (A) the
sum of (x) the Base Salary then in effect and (y) the greater of the Bonus for
the year preceding his termination or the Bonus that he would have received had
he completed the year in which his termination occurred multiplied by (B) the
lesser of (x) two (2) or (y) the number of years remaining in the Term
(including fractional portions of a year), but in no event shall the multiplier
be less than one (1); and
(iii) NCI shall, provide to Xxxxxxx, (A) for the first year after
Xxxxxxx'x termination (or such longer period as is required under COBRA),
continued coverage under all welfare benefit plans including medical, accident,
life or other disability plans and programs in which Xxxxxxx participated
immediately prior to his termination, and sharing in the cost of such benefit
coverage in the same proportion as was in effect for Xxxxxxx immediately prior
to his termination and (B) after such 1 year period, Xxxxxxx or his estate, as
the case may be, shall be responsible for the full cost of Xxxxxxx'x COBRA
payments.
(d) This Section 6 and Section 4(f) and the Xxxxxxx Agreements (other
than this Agreement) set forth the only obligations of NCI with respect to the
termination of Xxxxxxx'x employment with NCI, and Xxxxxxx acknowledges that upon
the termination of his employment, he shall not be entitled to any payments or
benefits which are not explicitly provided herein, in Section 4(f) or in the
Xxxxxxx Agreements (other than this Agreement). Any an all accrued obligations
shall be paid within fifteen (15) days of the termination of Xxxxxxx'x
employment.
(e) In no event shall Xxxxxxx be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Xxxxxxx
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not Xxxxxxx obtains other employment.
7. Covenant Regarding Inventions and Copyrights.
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Xxxxxxx shall disclose promptly to NCI any and all inventions,
discoveries, improvements and patentable or copyrightable works developed,
initiated, conceived or made by him, either alone or in conjunction with others,
during the Term hereof and related to the business or activities of NCI, and he
assigns and shall assign, without additional consideration, all of his interest
therein to NCI or its nominee; whenever requested to do so by NCI, Xxxxxxx shall
execute any and all applications, assignments or other instruments which NCI
shall deem necessary to apply for and obtain letters patent, trademarks or
copyrights of the United States or any foreign country, or otherwise protect
NCI's interest therein. These obligations shall continue beyond the conclusion
of the Term with respect to inventions, discoveries, improvements or
copyrightable works initiated, conceived or made by Xxxxxxx during the Term and
shall be binding upon Xxxxxxx'x assigns, executors, administrators and other
legal representatives.
8. Protection of Confidential Information.
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(a) As a significant inducement to NCI to enter into and perform its
obligations under this Agreement and to deliver to Xxxxxxx the Restricted Stock
Award and the
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Option Grant, Xxxxxxx acknowledges that he has been and will be provided with
information about, and his employment by NCI will, throughout the Term, bring
him into close contact with, many confidential affairs of NCI, including
proprietary information about costs, profits, markets, sales, customers,
advertisers, vendors, products, key personnel, pricing policies, operational
methods, technical processes and other business affairs and methods, plans for
future developments and other information not readily available to the public,
all of which are highly confidential and proprietary and all of which were
developed by NCI at great effort and expense. Xxxxxxx further acknowledges that
the services to be performed by him under this Agreement are of a special
unique, unusual, extraordinary and intellectual character and that the nature of
the relationship of Xxxxxxx with NCI is such that Xxxxxxx is capable of
competing with NCI. In recognition of the foregoing, Xxxxxxx covenants and
agrees during the Term and thereafter he will:
(i) keep secret all confidential matters of NCI and not disclose them
to anyone outside of NCI, either during or after the Term, except with NCI's
prior written consent;
(ii) not make use of any of such confidential matters for his own
purposes or the benefit of anyone other than NCI, provided that the confidential
matters referred to in clauses (i) and (ii) of this Section 8(a) shall not apply
to information which is generally known to the public other than as a result of
Xxxxxxx'x breach of this Section 8(a); and
(iii) deliver promptly to NCI on termination of this Agreement, or at
any time NCI may so request, all confidential memoranda, notes, records, reports
and other confidential documents (and all copies thereof) relating to the
business of NCI, which he may then possess or have under his control, except
that he may retain personal notes, notebooks, journals and diaries provided that
such materials do not contain confidential information; and
(iv) not disparage NCI, any Affiliate (as such term is defined in
Appendix A hereto) of NCI, any Board member, officer or employee of NCI, or any
Affiliate of any such Board member, officer or employee of NCI by making any
oral or written negative statements or representations about any of them.
(b) As an inducement to Xxxxxxx to enter into and perform his
obligations under this Agreement , NCI acknowledges that it has been and will be
provided with information about Xxxxxxx which is confidential. In recognition
of the foregoing, NCI covenants and agrees during the Term and thereafter it
will:
(i) keep secret all confidential matters of Xxxxxxx and not disclose
them to anyone other than Xxxxxxx, either during or after the Term, except with
Xxxxxxx'x prior written consent;
(ii) not make use of any of such confidential matters for its own
purposes or the benefit of anyone other than Xxxxxxx, provided that the
confidential matters referred to in clauses (i) and (ii) of this Section 8(b)
shall not apply to information which is generally known to the public other than
as a result of NCI's breach of this Section 8(b); and
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(iii) not disparage Xxxxxxx or any Affiliate of Xxxxxxx by making any
oral or written negative statements or representations about any of them.
9. Restriction of Competition; Interference; and Non-Solicitation.
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As a significant inducement to NCI to enter into and perform its
obligations under this Agreement and to deliver to Xxxxxxx the Restricted Stock
Award and the Option Grant, Xxxxxxx covenants and agrees that, during the Term
and for a period of (x) two (2) years after the termination of his employment by
NCI for Cause or by Xxxxxxx without Good Reason or (y) one (1) year after the
termination of Xxxxxxx'x employment by NCI without Cause, by Xxxxxxx for Good
Reason or as a result of Xxxxxxx'x Disability, (the "Restricted Period"),
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Xxxxxxx will not, and shall not cause any person, partnership, corporation,
limited liability company or other Affiliate of Xxxxxxx to, directly or
indirectly or by action in concert with others:
(a) enter into the employ of, or render any services to, any person or
entity engaged in (i) the publication of community oriented newspapers in the
specific local geographic communities to which such publications of NCI are
directed or to which NCI is actively and demonstrably planning to direct
publications at the expiration of the Term, (ii) the publication of any other
newspaper, magazine or periodical the content of which is similar to or
competitive with any publication of NCI (e.g., The Hill) having circulation that
is directed to a specific demographic group to whom publications of NCI are
directed or to which NCI is actively and demonstrably planning to direct
publications at the expiration of the Term (iii) a line or lines of business
that directly competes within the same geographic market in which a line or
lines of business of NCI accounting for more than 5% of NCI's gross revenues
operates at the expiration of the Term or (iv) a line or lines of business that
directly competes within the same geographic market in which a line or lines of
business of NCI operates or NCI is actively and demonstrably proposing to
operate at the expiration of the Term and which line or lines of business are
projected by NCI's then current business plan to represent more than 5% of NCI's
gross revenues within two years following the expiration of the Term (each, a
"Competitive Business");
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(b) become interested in or engage in a Competitive Business for his
own account or as an individual, partner, stockholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor, franchisee or
in any other relationship or capacity; or
(c) interfere with NCI's relationship with, or endeavor to entice away
from NCI, or otherwise induce any Person or entity who or which is or was an
employee, customer or supplier of, or maintained a business relationship with,
NCI at the time of, or within six months prior to, the expiration of the Term or
which NCI has solicited or has definitively prepared to solicit at the time of
termination to terminate or otherwise refrain from renewing or entering into an
employment or other relationship with NCI;
provided, however, that (i) the provisions of clause (a) shall not be deemed to
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preclude Xxxxxxx from engagement by a corporation or entity some of the
activities of which are competitive with the Competitive Business if Xxxxxxx'x
engagement does not, directly or indirectly, relate to, and Xxxxxxx is
segregated completely from, such Competitive Business and (ii) nothing contained
in
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this Section 9 shall be deemed to prohibit Xxxxxxx from directly acquiring or
holding, solely for investment, securities of any corporation or entity some of
the activities of which constitute a Competitive Business so long as such
securities do not, in the aggregate, constitute more than five percent (5%) of
any class or series of outstanding securities of such corporation or entity.
10. Specific Remedies.
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For the purposes of Sections 7, 8 and 9 of this Agreement, references
to NCI shall include all current and future majority-owned subsidiaries of NCI
and all current and future joint ventures in which NCI may from time to time be
involved. It is understood by Xxxxxxx and NCI that the covenants contained in
this Section 10 and Sections 7, 8 and 9 are essential elements of this Agreement
and that, but for the agreement of Xxxxxxx to comply with such covenants, NCI
would not have agreed to enter into this Agreement. NCI and Xxxxxxx have
independently consulted with their respective counsel and have been advised
concerning the reasonableness and propriety of such covenants with specific
regard to the nature of the business conducted by NCI and all interests of NCI
and its stockholders. Xxxxxxx agrees that the covenants of Sections 7, 8 and 9
are reasonable and valid. If Xxxxxxx commits a breach of any of the provisions
of Sections 7, 8 or 9 hereof, such breach shall be deemed to be grounds for
termination for Cause. In addition, Xxxxxxx acknowledges that NCI may have no
adequate remedy at law if he violates any of the terms hereof. Xxxxxxx
therefore understands and agrees that NCI shall have without prejudice as to any
other remedies:
(a) the right upon application to any court of proper jurisdiction and
without posting of any bond or other security whatsoever, to a temporary
restraining order, preliminary injunction, injunction, specific performance or
other equitable relief, it being acknowledged and agreed that any such breach
will cause irreparable injury to NCI and that money damages will not provide an
adequate remedy to NCI; and
(b) the right to apply to any court of proper jurisdiction, to require
Xxxxxxx to account for and pay over all compensation, profits, monies, accruals,
increments and other benefits (collectively the "Benefits") derived or received
--------
by Xxxxxxx as a result of any transaction constituting a breach of any of the
provisions of Sections 7, 8 or 9, and, if a court so orders, Xxxxxxx hereby
agrees to account for and pay over such Benefits to NCI.
11. Independence; Severability and Non-Exclusivity.
----------------------------------------------
Each of the rights enumerated in Sections 7, 8 or 9 hereof and the
remedies enumerated in Section 10 hereof shall be independent of the others and
shall be in addition to and not in lieu of any other rights and remedies
available to NCI at law or in equity. If any provision of this Agreement, or
any part of any of them, is hereafter construed or adjudicated to be invalid or
unenforceable, the same shall not affect the remainder of the covenants or
rights or remedies which shall be given full effect without regard to the
invalid portions. If any of the covenants set forth herein is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form said provision shall then be enforceable. No such holding of
invalidity or unenforceability in one
11
jurisdiction shall bar or in any way affect NCI's right to the relief provided
in Section 10 or otherwise in the court of any other state or jurisdiction
within the geographical scope of such covenants as to breaches of such covenants
in such other respective states or jurisdictions, such covenants being, for this
purpose, severable into diverse and independent covenants.
12. Acknowledgements of Xxxxxxx and NCI.
-----------------------------------
(a) Xxxxxxx acknowledges that NCI shall have the right but not the
obligation to use Xxxxxxx'x name or likeness for any publicity or advertising
purpose.
(b) Xxxxxxx represents that he has the right to enter into this
Agreement and this Agreement constitutes the valid and binding obligation of him
enforceable in accordance with its terms, except that Xxxxxxx makes no
representation as to whether this Agreement conflicts with the provisions of
Section 5 of that certain employment agreement dated August 1, 1998 by and
between Xxxxxxx and American Lawyer Media, Inc. (the "Prior Employment
----------------
Agreement"). Except for the Prior Employment Agreement, Xxxxxxx is not subject
to any restrictive covenant. Xxxxxxx represents that he has not breached and
will not breach the terms of Sections 5(a),(c),(d) or(e) of the Prior Employment
Agreement, and Xxxxxxx has not entered into, and he agrees that he will not
enter into, any agreement, either written or oral, in conflict with this
Agreement.
(c) NCI represents that, as of the date hereof, it is in compliance,
in all material respects, with any material regulatory requirement applicable to
it, including without limitation, the rules and regulations of the SEC.
13. Gross-Up in connection with a Change of Control.
-----------------------------------------------
In the event that, as a result of the payments to which he becomes
entitled by reason of a Change of Control pursuant to the terms hereof or the
terms of any of the other Xxxxxxx Agreements (including but not limited to the
payments provided for pursuant to Section 5 hereof and the accelerated vesting
of restricted stock awards and stock options pursuant to the terms of the other
Xxxxxxx Agreements), Xxxxxxx becomes subject to excise tax (the "Excise Tax")
----------
under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), NCI shall pay to Xxxxxxx as additional compensation an amount (the
----
"Gross-Up Payment") equal to one half of the Gross-Up Amount. The term "Gross-
----------------- -----
Up Amount" shall be an amount which, after payment by Xxxxxxx of all taxes
---------
(including any federal, state and local income tax and excise tax) upon such
amount would allow Xxxxxxx to retain an amount equal to the Excise Tax. For
purposes of determining whether Xxxxxxx will be subject to the Excise Tax and
the amount of such Excise Tax,
(a) any other payments or benefits received or to be received by
Xxxxxxx in connection with a Change in Control or Xxxxxxx'x termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with NCI, any entity whose actions result in a Change
in Control or any entity affiliated with NCI) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be
12
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by NCI's independent auditors and reasonably acceptable to Xxxxxxx such
other payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of Section
280G(b)(4)(B) of the Code, or are otherwise not subject to the Excise Tax,
(b) the amount of payments or benefits treated as subject to the
Excise Tax shall be equal to the lesser of (i) the total amount of payments or
benefits conferred on Xxxxxxx by reason of the Change of Control or (ii) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying clause (a), above), and
(c) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by NCI's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Xxxxxxx shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Xxxxxxx'x residence on the date on which the Excise Tax is incurred,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder, Xxxxxxx shall repay to NCI, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), NCI shall make an additional Gross-Up Payment
in respect of such excess (plus any interest, penalties or additions payable by
Xxxxxxx with respect to such excess) at the time that the amount of such excess
finally is determined. Xxxxxxx and NCI each shall reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax.
14. Disputes.
--------
Except as provided in Section 10 hereof, if NCI or Xxxxxxx shall
dispute any termination of Xxxxxxx'x employment hereunder or if a dispute
concerning any provision hereof or of the other Xxxxxxx Agreements shall exist:
(a) either party shall have the right (but not the obligation) to
compel binding, enforceable and non-appealable arbitration of the dispute in the
City of New York, County of New York under the rules of the American Arbitration
Association by giving written notice of arbitration to the other party within
thirty (30) days after notice of such dispute has been received by the party to
whom notice has been given;
13
(b) in any such an arbitration: (i) the panel shall consist of three
attorneys, each with not less than 10 years of experience in employment law,
(ii) the Federal Rules of Evidence shall apply, (iii) the panel shall render
written findings of fact and conclusions of law, and (iv) the findings of fact
shall be binding on the parties and the conclusions of law shall be subject to
appeal; and
(c) if such dispute (whether or not submitted to arbitration pursuant
to Section 14(a) hereof) results in a determination that (i) NCI did not have
the right to terminate Xxxxxxx'x employment under the provisions of this
Agreement or (ii) the position taken by Xxxxxxx is to any extent correct, NCI
shall promptly pay, or if theretofore paid by Xxxxxxx, shall promptly reimburse
Xxxxxxx for, all reasonable costs and expenses (including reasonable attorney's
fees) incurred by Xxxxxxx in connection with such dispute.
15. Attorneys Fees.
--------------
NCI shall promptly, after the date hereof, reimburse Xxxxxxx for
reasonable attorneys fees and costs incurred by him in connection with the
negotiation and execution of this Agreement and the other Xxxxxxx Agreements,
subject to a maximum amount of $25,000.
16. Successors; Binding Effect; Third Party Beneficiaries.
-----------------------------------------------------
In the event of a future disposition by NCI (whether direct or
indirect, by sale of assets or stock, merger, consolidation or otherwise) of all
or substantially all of its business and/or assets, NCI will require any
successor, by agreement in form and substance reasonably satisfactory to Xxxxxxx
or by operation of law, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that NCI would be required to perform
if no such disposition had taken place. As used in this Agreement, "NCI" shall
mean NCI as herein before defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
This Agreement is personal to Xxxxxxx and, without the prior written
consent of NCI, shall not be assignable by Xxxxxxx otherwise than by will or the
laws of descent and distribution with respect to Xxxxxxx'x rights, if any, to be
paid or receive benefits hereunder. This Agreement shall inure to the benefit
of and be enforceable by Xxxxxxx'x legal representatives. Except for the
foregoing, this Agreement shall not create any rights in favor of any party
other than the parties hereto or their respective successors and assigns.
17. Headings.
--------
The headings of this Agreement are for convenience of reference only
and shall not affect in any manner any of the terms and conditions hereof.
18. Acts and Documents.
------------------
The parties agree to do, sign and execute all acts, deeds, documents
and corporate proceedings necessary or desirable to give full force and effect
to this Agreement.
14
19. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
20. Modifications and Waivers.
-------------------------
No term, provision or condition of this Agreement may be modified or
discharged unless such modification or discharge is authorized by the Board and
is agreed to in writing and signed by Xxxxxxx. No waiver by either party hereto
of any breach by the other party hereto of any term, provision or condition of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
21. Entire Agreement.
----------------
This Agreement, together with the other Xxxxxxx Agreements, constitute
the entire agreement between the parties with respect to the subject matter
herein and supersedes all prior agreements, negotiations and discussions between
the parties hereto, there being no extraneous agreements. This Agreement may be
amended only in writing executed by the parties hereto affected by such
amendment.
22. Notices.
-------
Any notice or other communications required or permitted hereunder
shall be in writing and shall be deemed effective (a) upon personal delivery, if
delivered by hand and followed by notice by mail or facsimile transmission, (b)
three (3) days after the date of deposit in the mails, if mailed by certified or
registered mail (return receipt requested), or (c) on the next business day, if
mailed by an overnight mail service to the parties or sent by facsimile
transmission,
if to NCI: if to Xxxxxxx:
---------- --------------
News Communications, Inc. Xx. Xxxxxx Xxxxxxx
174-15 Xxxxxx Xxxxxxx Expressway Xxx Xxxxx Xxxxxx Xxxxxxx
Xxxxx Xxxxxxx, Xxx Xxxx 00000 Xx. Xxxxx, Xxx Xxxx 00000
Attn.: Chairman of the Board Telecopy: (000) 000-0000
Telecopy: (000) 000-0000
(or the Corporate Office)
with a copy to: with a copy to:
Piper & Marbury L.L.P. Xxxxx Xxxx & Xxxxxxxx
1251 Avenue of the Americas 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
15
Attn: Xxxx X. Xxxxxxx, Esq. Attn: Xxxxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
or at such other address or telecopy number (or other similar number) as either
party may from time to time specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder shall have been deemed
to be given on the date of mailing, personal delivery or telecopy or other
similar means (provided the appropriate answer back is received) thereof and
shall be conclusively presumed to have been received on the second business day
following the date of mailing or, in the case of personal delivery or telecopy
or other similar means, the day of delivery thereof, except that a change of
address shall not be effective until actually received.
23. Law Governing.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to the principles of
conflicts of law). Each of NCI and Xxxxxxx agrees that the federal or state
courts located in the City of New York, State of New York shall have exclusive
jurisdiction in connection with any dispute arising out of this Agreement that
is not being resolved in accordance with Section 13. Any litigation proceeding
under this Agreement shall be confidential in nature to the fullest extent
permitted by applicable law.
24. Acts and Documents.
------------------
The parties agree to do, sign and execute all acts, deeds, documents
and corporate proceedings necessary or desirable to give full force and effect
to this Agreement.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first set forth above.
/s/ Xxxxxx Xxxxxxx
-------------------
Xxxxxx Xxxxxxx
NEWS COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
--------------------------
Xxxxxx X. Xxxx, Xx.
Chief Executive Officer
17
Appendix A
Affiliate means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
Change (a) The acquisition by any individual, entity or group (within the
of Control meaning of of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
------------
"Person"), other than the current principal stockholders of NCI,
------
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or
more of either (A) the then outstanding shares of NCI Common
Stock of NCI (the "Outstanding NCI Common Stock") or (B) the
-----------------------------
combined voting power of the then outstanding voting securities
of NCI entitled to vote generally in the election of members of
the Board or board of any corporate successor to the business of
NCI (the "Outstanding NCI Voting Securities"); provided,
--------------------------------- --------
however, that for purposes of this subsection (a), the following
-------
acquisitions shall not constitute a Change of Control: (1) any
acquisition of securities directly from NCI, (2) any acquisition
by NCI, or (3) any acquisition by any Person pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (c) below; or
(b) Individuals who, as of the Effective Date, constitute the Board
as reconstituted in accordance with the Stockholders' Agreement
(the "Incumbent Board") cease for any reason within any period of
---------------
18 consecutive months to constitute at least a majority of such
Incumbent Board; provided, however, that any individual becoming
-------- -------
a director subsequent to the Effective Date whose election, or
nomination for election, by NCI's stockholders, was approved by a
vote of at least a majority of the members then comprising the
Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest
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 Incumbent Board; or
(c) Consummation after the Effective Date of a reorganization, merger
or consolidation or sale or other disposition of all or
substantially all of the assets of NCI or the acquisition of
assets of another corporation (a "Business Combination"), in each
--------------------
case, unless, following such Business
18
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding NCI Securities and Outstanding NCI Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of,
respectively, the then Outstanding NCI Securities and the
Outstanding NCI Voting Securities, as the case may be, of the
corporation resulting from such Business Combination in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
Outstanding NCI Securities and Outstanding NCI Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit
plan (or related trust) of NCI or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, fifty percent (50%) or more of, respectively, the
then Outstanding NCI Securities and the Outstanding NCI Voting
Securities resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such Person had an
ownership position in excess of such fifty percent (50%) of the
Outstanding NCI Voting Securities prior to the Business
Combination or (C) at least a majority of the members of the
board of the entity resulting from such Business Combination were
members of the Incumbent Board or Persons who replaced such
Incumbent Board without causing a Change in Control pursuant to
Section (b) above at the time of the execution of the initial
agreement, or of the action of the Incumbent Board, providing for
such Business Combination; or
(d) Approval by the securityholders of NCI of a complete liquidation
or dissolution of NCI.
Control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
19
Exhibit A
Bonus Formula
The amount of the Bonus shall be calculated as set forth below:
(i) for the six month period ended November 30, 1999, 15% of the
amount by which EBITDA for such six month period exceeds EBITDA
for the six month period ended November 30, 1998; and
(ii) for the fiscal years ended November 30, 2000, 2001 and 2002 and
for each fiscal year thereafter, 15% of the amount by which
EBITDA for each such fiscal year exceeds EBITDA for the fiscal
year immediately preceding such fiscal year;
provided, however, that in no case shall the Bonus for any period set
forth above exceed $700,000.
For purposes of the foregoing, "EBITDA" shall mean with respect to any
------
period, earnings of NCI for such period before interest (including without
limitation the interest component of any capital lease obligation), taxes,
depreciation and amortization for such period; provided, that for purposes of
determining EBITDA, (i) cash and non-cash compensation expenses resulting from
Xxxxxxx'x equity arrangements shall, to the extent deducted from earnings in
calculating EBITDA in accordance with generally accepted accounting principles,
be added back to earnings in calculating EBITDA and (ii) earnings shall exclude
earnings from extraordinary items, including net gains or losses from sales of
assets (other than asset sales in the ordinary course of business) or sales of
stock. In comparing EBITDA of NCI at two different points in time, the parties
agree that the determination of EBITDA shall be adjusted on a basis acceptable
to both parties to reflect extraordinary, non-recurring items and events, such
as acquisitions and divestitures and other corporate events which have occurred
during the time period between the two such reference points in time.
20
