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Exhibit 99.1
EMPLOYMENT AGREEMENT
(XXXXX X. XXXXXX)
EMPLOYMENT AGREEMENT (the "Agreement") dated February 16, 1999
by and between EMP Acquisition Corp., a Delaware corporation ("Newco") and Xxxxx
X. Xxxxxx (the "Executive").
WHEREAS, Newco and America Media, Inc. ("AMI") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
Newco will merge with and into AMI (the "Merger"), with AMI constituting the
surviving corporation (such surviving corporation is hereinafter referred to as
the "Company");
WHEREAS, Newco desires that, upon the consummation of the
Merger, the Company employ Executive and to enter into an agreement embodying
the terms of such employment and Executive desires to accept such employment
with the Company and enter into such an agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. EFFECTIVENESS/TERM OF EMPLOYMENT.
a. EFFECTIVENESS. Notwithstanding any other provision
of this Agreement, this Agreement shall become effective only upon the
consummation of the Merger and the occurrence of the Effective Time (as defined
in the Merger Agreement) (such date being hereinafter referred to as the
"Effective Date"), at which time, this Agreement shall constitute a binding
obligation of the Company as the surviving corporation in the Merger and all
references to Holding Company in the operative provisions of this Agreement
shall be deemed to be references to the Company. In the event the Merger
Agreement is terminated for any reason without the Effective Time having
occurred, this Agreement shall be terminated without further obligation or
liability of either party; PROVIDED that the obligations of EMP Group L.L.C., a
Delaware limited liability company ("Holding Company") under Section 4 shall
survive any such termination.
b. EMPLOYMENT TERM. Subject to the provisions of
Section 8 of this Agreement, Executive shall be employed by the Company for a
period commencing on the Effective Date and ending on the fifth anniversary of
the Effective Date (the "Employment Term") on the terms and subject to the
conditions set forth in this Agreement. Notwithstanding the preceding sentence,
commencing with the first day after the fifth anniversary of the Effective Date
and on each one year anniversary of such date thereafter (each an "Extension
Date"), the Employment Term shall be automatically extended for an additional
one-year period, unless the Company or Executive provides the other party hereto
60 days' prior written notice before the next Extension Date that the Employment
Term shall not be so extended. For the avoidance of doubt, the term "Employment
Term" shall include any extension that becomes applicable pursuant to the
preceding sentence.
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2. POSITION.
a. During the Employment Term, Executive shall serve
as the Company's Chairman, Chief Executive Officer and President. In such
position, Executive shall report to the Board of Directors of the Company (the
"Board") and shall have duties, responsibilities and authority commensurate with
his position as Chairman, Chief Executive Officer and President of the Company,
subject to reasonable and customary oversight and review by the Board; PROVIDED
that it is understood that:
(i) Executive will be responsible for the supervision of, and
the setting of compensation and employment and termination decisions
with respect to, employees of the Company; PROVIDED that, except as
otherwise expressly provided in this Section 2(a), any compensation and
employment and termination decisions with respect to the senior
executives identified on Schedule I hereto and with respect to any
other senior executives of the Company with reasonably comparable
positions, status or responsibilities (the "Senior Management Group")
shall be subject to the unanimous approval of the Compensation
Committee which shall be comprised of Executive and Xxxxxx Xxxxxxx (or
in the event of Xx. Xxxxxxx'x death or incapacity, another
representative of Evercore Partners, Inc.); and
(ii) while the day-to-day ordinary course operations of the
Company will be managed by Executive without the requirement for
approval of the Board (x) the Board (in consultation with Executive)
shall establish the Company's overall strategic direction, business
plan and annual budget and (y) Board approval shall be required prior
to Executive's (A) changing the cover price of any magazine, (B) making
material changes to discounts or other pricing terms with wholesalers
or other distributors and (C) entering into of any contracts which are
material and out of the ordinary course of business.
Notwithstanding the provisions of clause (i) of this Section
2(a), Executive shall be permitted, in Executive's sole discretion and without
seeking approval of the Compensation Committee, to award any member(s) of the
Senior Management Group special bonuses not exceeding $100,000 in the aggregate
in any calendar year for all such members of the Senior Management Group;
PROVIDED, HOWEVER, that no more than $25,000 may be awarded to any single member
of the Senior Management Group in any calendar year (the "Special Bonuses");
PROVIDED, FURTHER, that the aggregate amount of any such Special Bonuses shall
reduce the Management Bonus Pool (as defined in Section 5(c)) with respect to
such calendar year.
b. During the Employment Term, Executive will devote
his full business time and best efforts to the performance of his duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would materially conflict with the rendition
of such services either directly or indirectly, without the prior written
consent of the Board; PROVIDED that nothing herein shall preclude Executive from
continuing to serve on the board of directors or trustees of any business
corporation or any
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charitable organization on which he currently serves and which is identified on
Exhibit A hereto or, subject to the prior approval of the Board (which approval
shall not be unreasonably withheld), from accepting appointment to any
additional directorships or trusteeships, provided in each case, and in the
aggregate, that such activities do not materially interfere with the performance
of Executive's duties hereunder or conflict with Section 9.
3. BASE SALARY. During the Employment Term, the Company shall
pay Executive a base salary (the "Base Salary") at the annual rate of
$1,500,000, payable in regular installments in accordance with the Company's
usual payment practices. Executive shall be entitled to such increases in his
Base Salary, if any, as may be determined from time to time in the sole
discretion of the Board.
4. MAKE-WHOLE BONUS PAYMENTS.
a. Subject to the provisions of this Section 4,
Executive shall be entitled to receive from Holding Company payments in the
amounts set forth on Schedule II hereto (the "Make-Whole Payments"). The
Make-Whole Payments will become payable only following the occurrence of
Executive's termination of employment with his current employer and only to the
extent not already paid by his current employer and will be made as follows: (i)
upon Executive's termination of employment with his current employer, an amount
sufficient on an after-tax basis to repay Executive's Advance (as defined on
Schedule II) and (ii) on April 15, 2000, the remaining portion of the Make-Whole
Payments (the "Remaining Portion"); PROVIDED that in the event the Merger
Agreement is terminated without the Effective Time having occurred and in
connection therewith (x) Holding Company or any members of Holding Company (or
any of their affiliates) receives payment of a break-up fee from AMI or (y)
Holding Company realizes any net profits prior to April 15, 2000 available for
distribution to its members from the purchase of stock pursuant to the Voting
Agreement dated February 15, 1999 between Newco and the Stockholders named
therein and the subsequent sale of such stock (the "Net Profits"), then in lieu
of payment of the Remaining Portion on April 15, 2000, Holding Company shall pay
Executive, out of the proceeds of such break-up fee or Net Profits, as
applicable, the discounted present value of the Remaining Portion (calculated as
of the date of such payment using a discount rate equal to the Reference Rate as
announced from time to time by the New York City branch of The Chase Manhattan
Bank or any successor thereto as of such date of payment).
b. Notwithstanding the provisions of Section 4(a):
(I) If (x) Executive's employment hereunder is
terminated prior to April 15, 2000 due to Executive's voluntarily resignation
without Good Reason pursuant to Section 8(a) or the Company's termination of
Executive's employment for Cause pursuant to Section 8(a), or (y) if Executive
fails to commence employment with the Company on the Effective Date, other than
due to his death or his physical or mental incapacity rising to the level of a
"Disability" as hereinafter defined, then any unpaid portion of the Make-Whole
Payments will be forfeited and Executive will promptly, but in any event within
30 days of such termination, repay to
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Holding Company any portion of the Make-Whole Payments previously paid pursuant
to Section 4(a) above; and
(II) If all or any portion of the Make-Whole Payments
become payable and the Merger Agreement is terminated for any reason without the
Effective Time having occurred, then Executive shall be required to make a good
faith effort to obtain employment commensurate with his skills and background
and Executive's entitlement to the Make-Whole Payments paid or payable pursuant
to Section 4(a) above will be mitigated, and reduced dollar for dollar, by the
present value of any compensation in excess of $1,500,000 per year earned by
Executive through December 31, 1999 (regardless of when actually paid and
whether paid in cash or other property) from any alternative employment or
consulting arrangement. Executive shall provide documentation satisfactory to
the Company of any such compensation. To the extent any portion of the
Make-Whole Payments is paid to Executive and is subsequently determined to have
been subject to mitigation, Executive shall promptly, but in any event within 30
days of such determination, refund such portion of the Make-Whole Payment to
Holding Company. For purposes of the calculation described in this clause (II),
the following amounts paid or provided in consideration of Executive's providing
employment or consulting services to another person or entity shall be deemed
earned through December 31, 1999:
(A) with respect to any options granted to Executive that vest
through December 31, 1999, the pro-rata portion of the Black-Scholes
value of such options, based on the portion of 1999 Executive is
actually employed or retained to provide such consulting services;
(B) with respect to any options granted to Executive in 1999
(or granted in subsequent years pursuant to an enforceable agreement
entered into in 1999, except to the extent such agreed upon future
grants are consistent with the new employer's or service recipient's
ordinary course option grants to other senior executives or consultants
for services rendered over a commensurate future period of service
after calendar year 1999) which vest after December 31, 1999, a
pro-rata portion of the Black-Scholes value of such options, based upon
the percentage of the period from the date of Executive's commencement
of such employment or provision of such consulting services to the
vesting date of such options that occurs during calendar year 1999
(e.g., if Executive commenced such employment on June 30, 1999 and
received options which vested on December 31, 2000, 33.3% of the
Black-Scholes value of the options would be taken into account).
(C) the pro-rata portion (as determined above) of any long
term bonus ultimately paid to Executive that is attributable to
employment or consulting services performed in 1999;
(D) any short term bonus that is attributable to employment in
1999; and
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(E) base salary earned through December 31, 1999. In no event
shall bona fide pension, welfare or fringe benefits be taken into
account for purposes of this calculation.
5. OTHER BONUS ARRANGEMENTS.
a. DEFERRED SALARY BONUS. Within 30 days following
the occurrence of the Effective Date, the Company shall pay Executive a one-time
deferred salary bonus in the amount equal to the PRODUCT obtained by multiplying
(x) $1,500,000 TIMES (y) the QUOTIENT obtained by dividing (A) the number of
days that occur between the effective date of Executive's termination of
employment with Hachette Filipacchi Magazines, Inc. and its affiliates and the
Effective Date BY (B) 365.
b. ONE-TIME SIGNING BONUS. No later than June 30,
1999, the Company shall pay Executive a special one time signing bonus in the
amount of $250,000.
c. BONUS POOL FOR OTHER EXECUTIVES. The Company shall
establish an annual bonus pool for Company employees (excluding Executive) of
$1,500,000 for 1999 and 1.5% of EBITDA for years thereafter (the "Management
Bonus Pool"), subject in each case, to reduction by the amount of any Special
Bonuses awarded with respect to the applicable year pursuant to Section 2(a).
Payment of any bonuses shall be contingent upon satisfaction of reasonable
performance goals established by the Board in consultation with Executive.
6. EMPLOYEE BENEFITS. During the Employment Term, Executive
shall be provided, in accordance with the terms of the Company's employee
benefit plans as in effect from time to time, customary health insurance and
short term and long term disability insurance, retirement benefits and fringe
benefits (collectively "Employee Benefits") on the same basis as those benefits
are generally made available to other senior executives of the Company,
including a customary long-term disability plan for senior executives. Executive
shall be provided with six weeks of paid vacation per year.
7. BUSINESS EXPENSES.
a. EXPENSES. During the Employment Term, reasonable
business expenses incurred by Executive in the performance of his duties
hereunder (including, without limitation, those expenses set forth on Schedule
III hereto) shall be reimbursed by the Company in accordance with Company
policies to be established by Executive, subject to approval by the Board.
b. SPECIFIC AGREEMENTS REGARDING EXPENSES. Without
limiting the generality of Section 7(a), Executive shall be entitled to (i)
reimbursement for business travel expenses (including first class travel), (ii)
reimbursement for the cost of cellular and home
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business telecommunication lines, (iii) use of a leased luxury car, including a
driver, (iv) reasonable tax and investment management services up to an annual
maximum of $30,000 for such services and (v) a tax gross-up payment with respect
to items in clauses (i) through (iv) above (and the items set forth on Schedule
III) to the extent necessary to offset any income taxes incurred by Executive
with respect to such items.
c. RELOCATION EXPENSES. If the Company and Executive
mutually agree that Executive relocate to Florida, the Company shall reimburse
Executive for all reasonable costs incurred in connection with the moving of his
household goods and possessions from Executive's existing home in Connecticut to
Florida, up to a maximum of $20,000.
8. TERMINATION. Notwithstanding any other provision of this
Agreement, Executive's entitlement to compensation and benefits following the
termination of Executive's employment with the Company for any reason shall be
limited to that set forth in this Section 8 as follows:
a. BY THE COMPANY FOR CAUSE OR BY EXECUTIVE
RESIGNATION WITHOUT GOOD REASON.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company for Cause (as defined below) or by
Executive's resignation without Good Reason (as defined in Section 8(c));
PROVIDED that Executive will be required to give the Company at least 30 days
advance written notice of a resignation without Good Reason.
(ii) For purposes of this Agreement, "Cause" shall
mean (i) Executive's conviction of, or plea of guilty or NOLO CONTENDERE to, any
felony which materially adversely affects the Company, (ii) Executive's wilful
or gross misconduct in the performance of duties owed to the Company that is
intended to materially adversely affect the Company or that Executive knew or
should have known would have such effect or (iii) Executive's wilful refusal or
wilful failure to substantially perform Executive's essential duties to the
Company (other than due to Executive's illness); PROVIDED that prior to any
termination pursuant to this clause (iii), (A) the Company must provide
Executive with written notice specifically identifying the reasons the Company
believes this clause (iii) is applicable and (B) Executive must have continued
to wilfully refuse or wilfully fail to perform such essential duties for a 30
day period following receipt of such notice; and PROVIDED further that it is
understood this clause (iii) shall not permit the Company to terminate
Executive's employment for Cause because of dissatisfaction with the quality of
services provided by, or disagreement with the actions taken by, Executive in
the good faith performance of Executive's duties to the Company. Any act or
inaction believed in good faith by Executive to be in the best interests of the
Company shall not be considered "wilful" for purposes of this Agreement.
(iii) If Executive's employment is terminated by the
Company for Cause,
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or if Executive resigns without Good Reason, Executive shall be entitled to
receive (x) the Base Salary through the date of termination and (y) such
Employee Benefits, if any, as to which Executive may be entitled under the
employee benefit plans of the Company. Following such termination of Executive's
employment by the Company for Cause or resignation by Executive without Good
Reason, except as set forth in this Section 8(a), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.
b. DISABILITY OR DEATH.
(i) The Employment Term and Executive's employment
hereunder shall terminate upon his death and if Executive becomes physically or
mentally incapacitated and is therefore unable for a period of 180 consecutive
days or for an aggregate of 270 days in any 720 consecutive days period to
perform his duties (such incapacity is hereinafter referred to as "Disability").
Any question as to the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination in writing. The determination
of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement.
(ii) Upon termination of Executive's employment
hereunder for either Disability or death, Executive or his estate (as the case
may be) shall be entitled to receive (x) the Base Salary through the date of
termination, (y) any unpaid portion of the Make-Whole Payments to the extent
expressly provided pursuant to Section 4 and (z) such Employee Benefits, if any,
as to which he may be entitled under the employee benefit plans and arrangements
of the Company. Following such termination of Executive's employment due to
death or Disability, except as set forth in this Section 8(b), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement.
c. BY THE COMPANY WITHOUT CAUSE OR RESIGNATION BY
EXECUTIVE FOR GOOD REASON.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company without Cause or by Executive's
resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason"
shall mean any of the following actions that is not cured within 30 days of
written notice by Executive to the Company that specifies the grounds for Good
Reason:
(A) the assignment of any duties materially
inconsistent with Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by this Agreement or any other action by the Company which
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results in a substantial diminution in such position, authority, duties or
responsibilities;
(B) any reduction in the Base Salary or the Employee
Benefits guaranteed pursuant to Section 6;
(C) the Company's requiring Executive to be based at
any office or location other than one in South Florida, Fairfield County,
Connecticut or the New York metropolitan area;
(D) any failure by the Company to have any successor
to the Company assume this Agreement by operation of law or otherwise; or
(E) the Company's failure to make available the
minimum amount of the Management Bonus Pool as set forth in Section 5, subject
to meeting the applicable performance goals associated therewith.
(iii) If Executive's employment is terminated by the
Company without Cause (other than by reason of death or Disability) or if
Executive resigns for Good Reason, Executive shall be entitled to receive:
(A) Until the later of (x) twelve (12) months
following such termination and (y) the scheduled expiration of the Employment
Term (determined without regard to Executive's termination of employment but
excluding any further extensions of the Employment Term) (I) continued payment
of the Base Salary; and (II) continued health, life insurance and disability
benefits;
(B) Immediate vesting of all nonvested plan benefits
(or a cash payment in lieu thereof), including immediate vesting/exercisability
of any stock options and other equity-based compensation of the Company;
(C) Outplacement services for twelve (12) months
following such termination; and
(D) In the event of a Change of Control (as defined
below), a golden parachute excise tax gross-up payment (the "Parachute
Gross-Up"), if applicable (i.e, the payment of an amount, on an after-tax basis,
necessary to make Executive whole for any excise taxes incurred by Executive
pursuant to Section 4999 of the Internal Revenue Code in connection with such
Change of Control), up to a maximum of $4,800,000, it being agreed that the
calculation and payment of the Parachute Gross-Up shall be subject to the
provisions of Exhibit B hereto;
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(E) Any unpaid portion of the Make-Whole Payments to
the extent expressly provided pursuant to Section 4; and
(F) such Employee Benefits, if any, as to which
Executive may be entitled under the employee benefit plans and arrangements of
the Company.
Upon termination of Executive's employment by the
Company without Cause (other than by reason of Executive's death or Disability)
or by Executive's resignation for Good Reason, except as set forth in this
Section 8(c), Executive shall have no further rights to any compensation or any
other benefits under this Agreement.
(iv) "Change of Control" shall mean any transaction
or series of transactions described in Section 280G(b)(2)(A)(i) of the Code or
any successor provision thereto, or the applicable final, temporary or proposed
regulations thereunder.
d. EXPIRATION OF EMPLOYMENT TERM.
(i) ELECTION NOT TO EXTEND THE EMPLOYMENT TERM. In
the event either party elects not to extend the Employment Term pursuant to
Section 1, unless Executive's employment is earlier terminated pursuant to
paragraphs (a), (b) or (c) of this Section 8, Executive's termination of
employment hereunder (whether or not Executive continues as an employee of the
Company thereafter) shall be deemed to occur on the close of business on the day
immediately preceding the next scheduled Extension Date and Executive shall be
entitled to receive (x) the Base Salary through the date of such termination
hereunder and (y) such Employee Benefits, if any, as to which he may be entitled
under the employee benefit plans and arrangements of the Company. Following such
termination of Executive's employment hereunder as a result of either party's
election not to extend the Employment Term, except as set forth in this Section
8(d)(i), Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
(ii) CONTINUED EMPLOYMENT BEYOND THE EXPIRATION OF
THE EMPLOYMENT TERM. Unless the parties otherwise agree in writing, continuation
of Executive's employment with the Company beyond the expiration of the
Employment Term shall be deemed an employment at will and shall not be deemed to
extend any of the provisions of this Agreement and Executive's employment may
thereafter be terminated at will by either Executive or the Company; PROVIDED
that the provisions of Sections 9, 10 and 11 of this Agreement shall survive any
termination of this Agreement or Executive's termination of employment
hereunder.
e. NOTICE OF TERMINATION. Any purported termination
of employment by the Company or by Executive (other than due to Executive's
death) shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 12(h) hereof. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall
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indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.
9. NON-COMPETITION; NON-SOLICITATION. Executive acknowledges
and recognizes the highly competitive nature of the businesses of the Company
and its affiliates and accordingly agrees as follows:
a. During the Employment Term and for a period of
twelve (12) months following Executive's termination of employment with the
Company for any reason or, if Executive fails to commence employment with the
Company on the Effective Date, other than due to his death or physical or mental
incapacity rising to the level of a Disability, for a period of twelve (12)
months following the Effective Time, Executive will not directly or indirectly
(i) engage in any publishing venture that directly competes with the DSI
business of the Company or one or more of the properties or magazines of the
Company, (ii) enter into the employ of, or render any services to, any person
engaged in any publishing venture that directly competes with the DSI business
of the Company or one or more of the properties or magazines of the Company,
(iii) acquire a financial or equity interest, or otherwise become actively
involved with, any person engaged in any publishing venture that directly
competes with the DSI business of the Company or one or more of the properties
or magazines of the Company directly, or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant, (iv)
interfere with business relationships between the Company and customers or
suppliers of the Company or solicit, induce or entice any customers or suppliers
of the Company to do business with any entity that competes with the DSI
business of the Company or one or more of the properties or magazines of the
Company; or (v) solicit, induce or entice any employee of the Company to leave
his or her employment or hire any such employee who has left the employment of
the Company within twelve (12) months after the date of his or her termination
of employment.
b. Notwithstanding anything to the contrary in this
Agreement, the Executive may, directly or indirectly own, solely as an
investment, securities of any person engaged in the business of the Company or
its affiliates which are publicly traded on a national or regional stock
exchange or on the over-the-counter market if the Executive (i) is not a
controlling person of, or a member of a group which controls, such person and
(ii) does not, directly or indirectly, own 5% or more of any class of securities
of such person.
c. It is expressly understood and agreed that
although Executive and the Company consider the restrictions contained in this
Section 9 to be reasonable, if a final judicial determination is made by a court
of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
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amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.
10. CONFIDENTIALITY. Except as required by law, Executive will
not at any time (whether during or after his employment with the Company)
disclose or use for his own benefit or purposes or the benefit or purposes of
any other person, firm, partnership, joint venture, association, corporation or
other business organization, entity or enterprise other than the Company and any
of its subsidiaries or affiliates, any trade secrets, information, data, or
other confidential information relating to customers, development programs,
costs, marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, or the
business and affairs of the Company generally, or of any subsidiary or affiliate
of the Company, PROVIDED that the foregoing shall not apply to information which
is not unique to the Company or which is generally known to the industry or the
public other than as a result of Executive's breach of this covenant. Executive
agrees that upon termination of his employment with the Company for any reason,
he will return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any
way relating to the business of the Company and its affiliates, except that he
may retain personal notes, notebooks and diaries that do not contain
confidential information of the type described in the preceding sentence.
Executive further agrees that he will not retain or use for his account at any
time any trade names, trademark or other proprietary business designation used
or owned in connection with the business of the Company or its affiliates.
11. SPECIFIC PERFORMANCE. Executive acknowledges and agrees
that the Company's remedies at law for a breach or threatened breach of any of
the provisions of Section 9 or Section 10 would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach (other than any immaterial breach or immaterial threatened
breach of Section 10), in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to cease making any payments or providing
any benefit otherwise required by this Agreement and obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
12. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to conflicts of laws principles thereof.
b. ENTIRE AGREEMENT/AMENDMENTS. This Agreement
contains
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the entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
c. NO WAIVER. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
d. SEVERABILITY. In the event that any one or more
of the provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
e. ASSIGNMENT. This Agreement shall not be assignable
by Executive. This Agreement shall be assigned by Holding Company to the Company
as contemplated by Section 1 and may be assigned by the Company to a company
which is a successor in interest to substantially all of the business operations
of the Company. Any assignment by the Company shall become effective when the
Company notifies the Executive of such assignment or at such later date as may
be specified in such notice. Upon such assignment, the rights and obligations of
the Company hereunder shall become the rights and obligations of such successor
company, PROVIDED that any assignee expressly assumes the obligations, rights
and privileges of this Agreement.
f. NO MITIGATION. Except as otherwise expressly
provided in this Agreement, Executive shall not be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking other
employment or otherwise.
g. SUCCESSORS; BINDING AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devises and legatees.
h. NOTICE. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of this Agreement,
PROVIDED that all notices to the Company shall be directed to the attention of
its General Counsel, with a copy to Evercore Partners, Inc., 00 X. 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; Attention: Xxxxxx Xxxxxxx, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
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i. WITHHOLDING TAXES. The Company may withhold from
any amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
j. LEGAL FEES. The Company shall reimburse Executive
for the reasonable fees of legal counsel in connection with the negotiation and
preparation of this Agreement, up to a maximum of $175,000. In addition, the
Company will reimburse Executive for all reasonable costs, including reasonable
attorneys' fees, incurred by Executive in any action to enforce Executive's
rights under this Agreement if Executive substantially prevails in such action.
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k. COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
Address:
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EMP ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
Title: President
Address:
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Confirming its obligations under Section 4
of the Agreement:
EMP GROUP L.L.C.
By: EVERCORE CAPITAL PARTNERS L.P.,
Authorized Person
By: EVERCORE PARTNERS L.L.C.,
member
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Member
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SCHEDULE I
(SENIOR EXECUTIVES)
1. Editor in Chief - National Enquirer
2. Editor in Chief - Star
3. VP Publisher - National Enquirer
4. VP Publisher - Star
5. Executive VP Finance and Administration
6. VP Marketing
7. CEO - Distribution Services Inc.
8. President/COO - Distribution Services Inc.
9. Executive VP CFO
10. SVP Manufacturing
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SCHEDULE II
(MAKE-WHOLE PAYMENT)
LTIP: $3,033,000
Advance: The amount required to be paid by Executive to Hachette Filipacchi
Magazines, Inc. pursuant to the Promissory Note dated July 18,
1996 in the principal amount of $1,500,000 by and between
Executive and Hachette Filipacchi Magazines, Inc. after taking
into account any bonuses payable pursuant to Section 4(m) of
Executive's current employment agreement, but not to exceed
$1,156,985.35, plus stated interest accruing thereafter
pursuant to the Promissory Note through the date of repayment.
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SCHEDULE III
(EXPENSES)
The following items shall be reimbursable under the expense
reimbursement policy of the Company:
11. Charter flights when suitable commercial flight arrangements are
impracticable or would materially impair Executive's ability to
accomplish the Company's business objectives, it being understood that
use of such charter flights, if any, will be out of the ordinary course
of business.
12. Reasonable gifts presented by Executive to clients and Company
employees.
13. Dues and membership fees for a country club of Executive's choosing in
the New York metropolitan area or Florida.
14. Business-related flights to London or Xxxxx xxx be made on the
Concorde.
15. In the event Executive and the Company agree that Executive shall
permanently relocate to Florida, then:
(x) until the earlier of (i) 6 months following such
determination and (ii) Executive's moving into a new permanent
residence in Florida (whether purchased or rented) (the "New
Residence"), the Company shall pay Executive $10,000 per month
as a supplemental living allowance; and
(y) The Company shall reimburse Executive for (i)
reasonable costs incurred with the moving of his household
goods and possessions from Executive's existing home in
Florida to the New Residence, (ii) customary broker's fees
incurred in connection with the sale of Executive's existing
Florida residence and (iii) in the event Executive moves into
the New Residence prior to selling his existing Florida
residence, continued payment of (or recommencement of payment
of, as applicable) the supplemental living allowance described
in clause (x) until the earlier of (A) the sale of Executive's
existing residence in Florida and (B) 1 year from the date
Executive moves into the New Residence.
16. Up to 17 round trip flights per year for Executive's spouse between New
York and Florida and all other flights for Executive's spouse travel if
Executive reasonably determines that his spouse's presence on the trip
promotes a business interest of the Company.
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17. Until such time, if ever, that the Company and Executive agree that
Executive shall permanently relocate to Florida, to the extent
Executive travels to Florida to conduct the Company's business, for
each night that Executive is required to stay overnight in order to
conduct the Company's business and for which Executive elects to stay
in Executive's existing Florida residence rather than stay in a hotel,
the Company shall pay Executive a per diem allowance of $300.
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EXHIBIT A
(OTHER ACTIVITIES)
The French Institute
Candies, Inc. (Pending)
VF Corporation (Pending)
DEA Foundation
New York Benevolence Association
New York Police Museum
Madison Square Boys and Girls Club
Hachette Filipacchi, Inc.
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EXHIBIT B
(PARACHUTE GROSS-UP)
In the event the provisions of Section 8(c)(iii)(D) of the
employment agreement to which this Exhibit B is a part shall become applicable,
then the following provisions shall apply:
(a) If it shall be determined that any amount, right or
benefit paid, distributed or treated as paid or distributed by the Company or
any of its affiliates (including Evercore Capital Partners, L.P. and its
affiliates) to or for Executive's benefit (other than any amounts payable
pursuant to this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986 (the "Code"), or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties,
collectively, the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount equal to the lesser of
(i) $4,800,000 and (ii) the amount necessary such that after payment by
Executive of all federal, state and local taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this Exhibit
B, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company's independent auditors (the
"Auditor"). The Auditor shall provide detailed supporting calculations to both
the Company and Executive within 15 business days of the receipt of notice from
Executive or the Company that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Auditor shall be paid
by the Company. Any Gross-Up Payment, as determined pursuant to this Exhibit B,
shall be paid by the Company to Executive (or to the Internal Revenue Service or
other applicable taxing authority on Executive's behalf) within 5 days of the
receipt of the Auditor's determination. All determinations made by the Auditor
shall be binding upon the Company and Executive; PROVIDED that following any
payment of a Gross-Up Payment to Executive (or to the Internal Revenue Service
or other applicable taxing authority on Executive's behalf), the Company may
require Executive to xxx for a refund of all or any portion of the Excise Taxes
paid on Executive's behalf, in which event the provisions of paragraph (c) below
shall apply. As a result of uncertainty regarding the application of Section
4999 of the Code hereunder, it is possible that the Internal Revenue Service may
assert that Excise Taxes are due that were not included in the Auditor's
calculation of the Gross-Up Payments (an "Underpayment"). In the event that the
Company exhausts its remedies pursuant to this Exhibit B and Executive
thereafter is required to make a payment of any Excise Tax, the Auditor shall
determine the amount of the Underpayment that has occurred
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and any additional Gross-Up Payments that are due as a result thereof shall be
promptly paid by the Company to Executive (or to the Internal Revenue Service or
other applicable taxing authority on Executive's behalf).
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after Executive receives
written notification of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30 day period
following the date on which it gives such notice to the Company )(or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall: (i) give the Company all information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and ceasing all
efforts to contest such claim; (iii) cooperate with the Company in good faith in
order to effectively contest such claim; and (iv) permit the Company to
participate in any proceeding relating to such claim; PROVIDED, HOWEVER, that
the Company shall bear and pay directly all reasonable costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expense. Without limiting the foregoing provisions of this Exhibit B, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine and direct; PROVIDED, HOWEVER
that if the Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for Executive's taxable year with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to
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settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the Executive's receipt of an amount advanced by
the Company pursuant to this Exhibit B, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the Executive's
receipt of an amount advanced by the Company pursuant to this Exhibit B, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after the Company's receipt of notice of such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
