Exhibit 10.7
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (this "Agreement") is made as of April 5,
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2000, by and between Ziff Xxxxx Holdings, Inc., a Delaware corporation (the
"Company"), Ziff Xxxxx Publishing, Inc., a Delaware corporation and a wholly
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owned indirect subsidiary of the Company ("Publishing"), and Xxxxxx XxXxxxx
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("Executive"). Certain definitions are set forth in Section 17 of this
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Agreement.
Executive desires to be employed by Publishing, and Publishing desires
to employ Executive and to be assured of its right to have the benefit of
Executive's services on the terms and conditions hereinafter set forth.
Executive desires to purchase shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock") and Series A Preferred Stock, par value $.01
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per share (the "Preferred Stock," and collectively with the Common Stock, the
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"Stock"), of the Company and the Company desires to issue such Common Stock and
Preferred Stock to Executive. The Company, Publishing and Executive desire to
enter into this Agreement (i) setting forth the terms of Executive's purchase of
the Executive Stock (as defined below); (ii) setting forth the terms and
conditions of Executive's employment with Publishing; (iii) providing the
Company with certain rights in respect of the Executive Stock; and (iv) setting
forth the obligation of Executive to refrain from competing with the Company and
its Affiliates (as defined below) under certain circumstances as provided
herein.
NOW, THEREFORE, the parties hereto agree as follows:
A. PURCHASE AND SALE OF EXECUTIVE STOCK
1. Upon execution of this Agreement, Executive shall purchase, and the
Company shall sell, (a) 142.5 shares of Preferred Stock at a price of $1,000 per
share and 30,000 shares of Common Stock at a price of $0.25 per share, which
shares shall be fully vested as of the date hereof (collectively, the "Coinvest
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Shares") and (b) 319,236.11 shares of Common Stock at a price of $0.25 per
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share, which shares shall be subject to vesting as provided herein (the "Vesting
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Shares"), for an aggregate purchase price of $229,809.03. The Company shall
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deliver to Executive stock certificates representing the Coinvest Shares, and
Executive shall deliver to the Company (x) a promissory note in the form of
Annex A attached hereto in the aggregate principal amount of $150,000.00 (the
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"Full Recourse Executive Note") and (y) a promissory note in the form of Annex B
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attached hereto in an aggregate principal amount of $79,809.03 (the "Partial
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Recourse Executive Note" and together with the Full Recourse Executive Note, the
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"Executive Notes"). Executive's obligations under the foregoing Executive Notes
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shall be secured by a pledge to the Company of all of the shares of Executive
Stock, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex C attached hereto.
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2. The Company shall hold each certificate representing the Executive
Stock until such time as the Executive Stock represented by such certificate is
released from the pledge to the Company.
3. Within 30 days after Executive purchases the Executive Stock from the
Company hereunder, Executive shall make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of Annex D attached hereto.
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4 In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(a) The Executive Stock to be acquired by Executive pursuant to this
Agreement shall be acquired for Executive's own account and not with a view to,
or intention of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Stock shall not be disposed
of in contravention of the Securities Act or any applicable state securities
laws.
(b) Executive is an executive officer of Publishing, is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Executive Stock. Executive is an "accredited investor", as
defined in Regulation D promulgated under the Securities Act.
(c) Executive is able to bear the economic risk of Executive's investment
in the Executive Stock for an indefinite period of time because the Executive
Stock have not been registered under the Securities Act and, therefore, cannot
be sold unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(d) Executive has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of Executive Stock and has
had full access to such other information concerning the Company as Executive
has requested. Executive has reviewed, or has had an opportunity to review, a
copy of the Investor Rights Agreement.
(e) This Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance with its terms, and the execution, delivery
and performance of this Agreement by Executive does not and shall not conflict
with, violate or cause a breach of any agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which Executive
is subject.
(f) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any person or entity
other than the Company or Publishing.
(g) Executive has consulted with independent legal counsel regarding his
rights and obligations under this Agreement and that he fully understands the
terms and conditions contained herein. Executive has obtained advice from
persons other than the Company and its counsel regarding the tax effects of the
transaction contemplated hereby.
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5. Executive acknowledges and agrees that neither the issuance of the
Executive Stock to Executive nor any provision contained herein shall entitle
Executive to remain in the employment of Publishing or any of its Affiliates.
6. The Company, Publishing and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Stock has been
issued hereunder, in connection with and as a part of the compensation and
incentive arrangements between the Company, Publishing and Executive.
B. VESTING AND REPURCHASE PROVISIONS
REGARDING CERTAIN EXECUTIVE STOCK.
7. Vesting of Common Stock; Vested Shares. The Company and Executive
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acknowledge and agree that the Vesting Shares purchased by Executive hereunder
will be subject to vesting as hereinafter provided. All Coinvest Shares held by
Executive as of the date hereof shall be considered Vested Shares (as defined
below) for all purposes hereunder. The Vesting Shares shall vest in accordance
with the following schedule, if as of each such date Executive is employed by
the Company or any of its Subsidiaries:
Cumulative Percentage
of Vesting Shares
Date Vested
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First anniversary of the date hereof 20%
Second anniversary of the date hereof 40%
Third anniversary of the date hereof 60%
Fourth anniversary of the date hereof 80%
Fifth anniversary of the date hereof 100%
If Executive ceases to be employed by Publishing on any date other than any
anniversary date prior to the fifth anniversary of the date hereof, the
cumulative percentage of Vesting Shares to become vested shall be determined on
a pro rata basis according to the number of days elapsed since the prior
anniversary date (or, if prior to the first anniversary of the date hereof,
since the date hereof). Notwithstanding the foregoing, all unvested Vesting
Shares shall vest upon the consummation of a Sale of the Company. "Vested
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Shares" means any Vesting Shares which have become vested pursuant to the terms
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of this Agreement and all other Executive Shares which are not Vesting Shares.
All Vesting Shares which have not become vested are referred to herein as
"Unvested Shares."
8. Repurchase Option.
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(a) Repurchase Option. In the event that Executive is no longer employed
by Publishing or any of its Affiliates for any reason, the Executive Stock,
whether held by Executive or one or more Permitted Transferees, will be subject
to repurchase by the Company and the Investors pursuant to the terms and
conditions set forth in this Section 8 (the "Repurchase Option").
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(i) Termination Without Cause; Death or Incapacity. If Executive is
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no longer employed by Publishing or any of its Affiliates as a result of (A) a
termination by Publishing without Cause, (B) as a result of death or Incapacity
or (C) any other reason not covered by Sections 8(a)(ii) or 8(a)(iii) below,
then (x) the Company and the Investors may elect to purchase all or any portion
of the Vested Shares (including all or any portion of any class thereof), at a
price per Share equal to Fair Market Value thereof and (y) the Company and the
Investors may elect to purchase all or any portion of the Unvested Shares at a
price per share equal to the lesser of the Original Cost thereof and the Fair
Market Value thereof.
(ii) Voluntary Termination. If Executive is no longer employed by
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Publishing or any of its Affiliates during the Employment Period as a result of
a Voluntary Termination, then the Company and the Investors may elect to
purchase (A) all or any portion of (x) the Vested Shares which are not Vesting
Shares and (y) up to 50% of the Vested Shares which are Vesting Shares, in each
case at a price per share equal to the Fair Market Value thereof, and (B) all or
any portion of (1) the Unvested Shares and (2) 50% of the Vested Shares which
are Vesting Shares, in each case at a price per share equal to the lesser of the
Original Cost thereof and the Fair Market Value thereof.
(iii) Termination with Cause. If Executive is no longer employed by
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Publishing or any of its Affiliates as a result of a termination by Publishing
with Cause, then the Company and the Investors may elect to purchase all or any
portion of the Executive Stock (including Vested Shares and Unvested Shares) at
a price per share equal to the lesser of the Original Cost thereof and the Fair
Market Value thereof.
(b) Repurchase Procedures. After the termination of Executive's employment
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with Publishing or any of its Affiliates for any reason, the Company may elect
to exercise the right to purchase Executive Stock (in the amounts and for the
prices set forth in Sections 8(a)(i) and 8(a)(ii)) pursuant to the Repurchase
Option by delivering written notice (the "Repurchase Notice") to the holder or
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holders of Executive Stock at any time prior to the end of the six-month period
commencing on the date of such termination of employment. The Repurchase Notice
will set forth the number of shares of each class and type of Executive Stock to
be acquired from such holder(s), the aggregate consideration to be paid for such
shares of Executive Stock and the time and place for the closing of the
transaction. If any shares of Executive Stock are held by Permitted Transferees,
the Company shall purchase the shares each class and type of Executive Stock
elected to be purchased from such holder(s) of Executive Stock pro rata
according to the number of shares of such class and type of Executive Stock held
by such holder(s) at the time of delivery of such Repurchase Notice (determined
as nearly as practicable to the nearest share). The Company may elect to
purchase all or any portion of the Unvested Shares without or before purchasing
any Vested Shares. If both Unvested Shares and Vested Shares of any class are to
be purchased by the Company and shares of Executive Stock are held by Permitted
Transferees of Executive, the number of Unvested Shares and Vested Shares of
such class to be purchased will be allocated among such holders pro rata
according to the total number of shares of Executive Stock of each type and/or
class to be purchased from such person.
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(c) Rights of the Investors
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(i) If for any reason the Company does not elect to purchase all of
the Executive Stock pursuant to the Repurchase Option, the Investors will be
entitled to exercise the Repurchase Option, in the manner set forth in this
Section 8, for all or any portion of the shares of Executive Stock which the
Company has not elected to purchase (the "Available Shares"). As soon as
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practicable after the Company determines that there will be any Available
Shares, but in any event upon the earlier of (A) the delivery of the Repurchase
Notice and (B) six months after the-4-termination of Executive's employment with
the Company, the Company will deliver written notice (the "Option Notice") to
the Investors, setting forth the number of each class and type of Available
Shares and the price for each Available Share.
(ii) the Investors will be permitted to purchase all or any portion
of the Available Shares by delivering written notice (an "Election Notice") to
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the Company within 30 days after receipt of the Option Notice from the Company
(such 30-day period being referred to herein as the "Investor Election Period");
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provided that if more than one Investor elects to purchase any or all Available
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Shares of any type or class and the number of Available Shares of such type or
class is less than the aggregate number of Available Shares of such type or
class elected to be purchased by such electing Investors, each Investor shall be
entitled to purchase the lesser of (i) the number of shares of such type or
class such Investor has elected to purchase as indicated in the Election Notice
or (ii) the number of shares of such type or class obtained by multiplying the
number of shares specified in the Option Notice by a fraction, the numerator of
which is the number of shares of Common Stock (on a fully-diluted basis) held by
such Investor and the denominator of which is the aggregate number of shares of
Common Stock (on a fully-diluted basis) held by all electing Investors. If any
Available Shares of such type or class remain after giving effect to such
allocation, such allocation shall be repeated until either all of the Available
Shares of such type or class requested to be purchased by the electing Investors
have been so allocated or no Available Shares of such type or class are
available for purchase.
(d) Supplemental Repurchase Notice. As soon as practicable but in any
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event within five (5) business days after the expiration of the Investor
Election Period, the Company will, if necessary, notify the holder(s) of
Executive Stock as to the number of shares of Executive Stock being purchased
from such holder(s) by the Investors (the "Supplemental Repurchase Notice"). At
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the time the Company delivers a Supplemental Repurchase Notice to the holder(s)
of Executive Stock, the Company will also deliver to the Investors written
notice setting forth the number of shares of Executive Stock the Company and the
Investors will acquire, the aggregate purchase price to be paid and the time and
place of the closing of the transaction.
(e) Closing. The closing of the transactions contemplated by this
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Section 8 will take place on the date designated by the Company in the
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than 60 days after the delivery of the later of such
notices, as the case may be. The Company and/or the Investors, as the case may
be, will pay for the shares of Executive Stock to be purchased pursuant to the
Repurchase Option by delivery of, (i) in the case of the Company, (A) a check
payable to the holder(s) of such shares
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of Executive Stock, (B) by offsetting any amounts owed by Executive to Company
under the Executive Notes or other bona fide indebtedness of Executive to the
Company or its Affiliates against the price for such shares of Executive Stock
or (C) any combination of (A) and (B) in the aggregate amount of the purchase
price for such shares of Executive Stock, (ii) in the case of the Investors, a
check payable to the holder(s) of such shares of Executive Stock, or (iii) in
any such case, as the holder(s) of such shares of Executive Stock and the
purchaser(s) thereof may otherwise agree; provided however that if payment in
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cash by the Company pursuant to the preceding clause (A) is restricted by the
financing or credit arrangements of the Company and its Subsidiaries or if the
Company does not have available cash on hand in an amount sufficient to pay the
purchase price for the shares to be repurchased, the Company may deliver a
subordinate note or notes payable in-5-up to three (3) equal annual
installments, with the first installment due on the first anniversary of the
closing of such purchase, and bearing interest (payable quarterly in cash or, if
so required by a lender to the Company or any of its Subsidiaries, in additional
notes of the same tenor) at a rate of 7% per annum. Any obligations of the
Company under any notes issued by the Company pursuant to this paragraph 8(e)
shall be subject to any restrictive covenants to which the Company is subject at
the time of such purchase. The Company and the Investors, as the case may be,
will receive customary representations and warranties from each seller of
Executive Stock regarding the sale of the Executive Stock, including but not
limited to the representation that such seller has good and marketable title to
the shares of Executive Stock to be transferred, free and clear of all liens,
claims and other encumbrances.
(f) Restrictions on Repurchase. Notwithstanding anything to the contrary
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contained in this Agreement, all repurchases of Executive Stock by the Company
shall be subject to applicable restrictions contained in the Delaware General
Corporation Law and in the Company's and its Subsidiaries' debt and equity
financing agreements. If any such restrictions prohibit the repurchase of
Executive Stock hereunder which the Company is otherwise entitled to make, the
time periods in this Section 8 shall be suspended and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
(g) Termination of Repurchase Right. The right of the Company and the
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Investors to repurchase shares of Executive Stock pursuant to this Section 8
shall terminate upon of a Sale of the Company.
(h) Additional Restrictions on Transfer.
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(i) Until the fifth anniversary of the date hereof, Executive shall
not Transfer any Executive Stock except (A) to a Permitted Transferee in
compliance with the provisions of Section 2D of the Investor Rights Agreement or
(B) the sale of Coinvest Shares in a registered public offering effected
pursuant to Section 10 of the Investor Rights Agreement. The restrictions set
forth in this Section 8(i) shall terminate upon the consummation of a Change in
Control.
(ii) All Executive Stock is subject to the additional restrictions on
Transfer set forth in the Investor Rights Agreement.
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(iii) In addition to any other legend required pursuant to the
Investor Rights Agreement or otherwise, any certificates representing the
Executive Stock shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON APRIL 5, 2000, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN AN EXECUTIVE AGREEMENT BETWEEN THE COMPANY AND THE
ORIGINAL HOLDER HEREOF DATED AS OF APRIL 5, 2000, A COPY OF WHICH
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
(iv) Opinion of Counsel. Executive may not sell, transfer or dispose
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of any Executive Stock (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel reasonably acceptable in form and substance to the Company that
registration under the Securities Act or any applicable state securities law is
not required in connection with such transfer.
C. EMPLOYMENT PROVISIONS
9. Employment. Publishing shall employ Executive, and Executive hereby
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accepts employment with Publishing, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in Section 12 hereof (the "Employment Period").
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10. Position and Duties.
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(a) During the Employment Period, Executive shall serve as the Senior
Executive Vice President and Chief Operating Officer of Publishing and shall
have the normal duties, responsibilities and authority of a chief operating
officer.
(b) Executive shall report to the Chief Executive Officer of Publishing,
and Executive shall devote Executive's best efforts and Executive's full
business time and attention (except for permitted vacation periods, periods of
illness or other incapacity, reasonable time spent with respect to civic and
charitable activities and serving on the boards of directors of other companies
(provided that none of such activities shall interfere with Executive's duties
to Publishing), and other permitted absences for which senior executive
employees of Publishing are generally eligible from time to time
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under Publishing's policies) to the business and affairs of Publishing and its
Affiliates. Executive shall perform Executive's duties and responsibilities to
the best of Executive's abilities in a diligent, trustworthy, businesslike and
efficient manner. In connection with Executive's employment by Publishing,
Executive shall not be required to relocate from the greater New York, New York
area without Executive's prior consent.
11. Base Salary; Benefits and Bonuses.
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(a) During the Employment Period, Executive's base salary shall be not
less than $350,000 per annum, subject to an annual cost of living increase at
the beginning of each fiscal year beginning April 1, 2001 at a rate equal to the
increase in the Consumer Price Index -All Urban for the New York area during the
prior year, or such higher rate as the Board of Publishing may designate from
time to time (the "Base Salary"), which salary shall be payable in regular
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installments accordance with Publishing's general payroll practices and shall be
subject to customary withholding.
(b) In addition to the Base Salary, during the Employment Period,
Executive shall be eligible to receive an annual bonus (the "Bonus") of
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$250,000, payable at the discretion of the Board of the Company. Any such Bonus,
if determined by the Board of the Company to be payable, shall be payable within
90 days following the end of each fiscal year (provided that the first fiscal
year for which the Bonus will be paid will be that beginning April 1, 2000)
during the Employment Period.
(c) During the Employment Period, Executive shall be entitled to
participate in all of Publishing's employee benefit plans and programs for which
senior executive employees of Publishing are generally eligible, which shall
include, but shall not be limited to, health insurance, dental insurance, life
insurance, disability insurance and participation in Publishing's 401(k) plan.
Executive's right to participate in any employee benefit plans or programs of
Publishing shall be subject to Publishing's right to amend, modify or terminate
any such plan or program in accordance with its terms and applicable law and
subject in each case to any applicable waiting periods or other restrictions
contained in such benefit plans or programs. During the Employment Period,
Executive shall be eligible for paid vacation in accordance with the policies of
Publishing for senior executive employees of Publishing.
(d) Publishing shall reimburse Executive for all reasonable business
expenses incurred by Executive in the course of performing Executive's duties
under this Agreement which are consistent with Publishing's policies in effect
from time to time for senior executive employees of Publishing with respect to
travel, entertainment and other business expenses, subject to Publishing's
requirements with respect to reporting and documentation of such expenses.
12. Term; Termination; Severance.
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(a) The Employment Period shall be for a period of five years from the date
hereof; provided that (i) the Employment Period shall terminate prior to such
date upon Executive's death or Incapacity; (ii) the Employment Period may be
terminated by Publishing at any time prior to such
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date with Cause or without Cause; and (iii) the Employment Period may be
terminated by Executive at any time for any reason (a "Voluntary Termination"),
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except that a termination by Executive as a result of material breach of this
Agreement by Publishing which is not cured within 20 days after written notice
thereof by Executive to Publishing and the Company shall not be deemed a
Voluntary Termination. Any termination of the Executive's employment with
Publishing shall be a "Termination." The date of any termination of Executive's
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employment with Publishing shall be the "Termination Date."
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(b) Upon any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through Executive's Termination Date, prorated on
a daily basis together with all accrued but unpaid vacation time earned by
Executive during the fiscal year in which such Termination occurs. Except as set
forth in Section 12(d), Executive shall not be entitled to receive Executive's
Base Salary or any bonuses or other benefits from Publishing for any period
after the Termination Date.
(c) In the event Executive's employment is terminated by Publishing with
Cause, upon a Voluntary Termination or upon Executive's death or Incapacity,
Publishing shall have no obligation to make any severance or other similar
payment to or on behalf of Executive.
(d) In the event that Executive's employment is terminated by Publishing
without Cause, following such Termination and upon execution by Executive of a
general release in favor of Publishing and its Affiliates, in form satisfactory
to Publishing, releasing any and all claims for payments (other than those
payments due under Section 11(c)), due to Executive arising under or pursuant to
this Agreement against Publishing and its Affiliates as of the Termination Date,
Publishing shall pay Executive his annual Base Salary (as in effect on the
Termination Date) until the one-year anniversary of the Termination Date. Each
severance payment hereunder shall be payable in accordance with Publishing's
normal payroll procedures and cycles and shall be subject to withholding of
applicable taxes and governmental charges in accordance with federal and state
law. After payment of the severance amounts described in this Section 12(d),
Publishing shall have no obligation to make any further severance or other
payment to or on behalf of Executive except as otherwise expressly contemplated
hereby. Notwithstanding the foregoing, in the event that Executive shall breach
any of Executive's obligations under Sections 13, 14 or 15 of this Agreement,
then, in addition to any other rights that Publishing may have under this
Agreement or otherwise, Publishing shall be relieved from and shall have no
further obligation to pay Executive any amounts to which Executive would
otherwise be entitled pursuant to this Section 12.
D. ADDITIONAL AGREEMENTS
13. Confidential Information. Executive acknowledges that by reason of
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Executive's duties to and association with the Publishing and its Affiliates, as
well as Publishing's predecessor, Executive has had and will have access to and
has and will become informed of Confidential Information (as defined in Section
17 below) which is a competitive asset of Publishing and/or its Affiliates.
Executive agrees to keep in strict confidence and not, directly or indirectly,
make known, disclose, furnish, make available or use, any Confidential
Information, except for use in Executive's regular authorized duties on behalf
of Publishing and its Affiliates (including their predecessors). Executive
acknowledges that all documents and other property including or reflecting
Confidential
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Information furnished to Executive by Publishing or any of its Affiliates or
otherwise acquired or developed by Publishing or any of its Affiliates or
Executive or known by Executive shall at all times be the property of the
Publishing and its Affiliates. Executive shall take all necessary and
appropriate steps to safeguard Confidential Information and protect it against
disclosure, misappropriation, misuse, loss and theft. Executive shall deliver to
Publishing at the termination of the Employment Period, or at any other time
Publishing may request, all memoranda, notes, plans, records, reports, computer
tapes, printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined in Section 17
below) or the business of Publishing or any of its Affiliates which Executive
may then possess or have under Executive's control.
14. Inventions and Patents.
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(a) Executive acknowledges that all Work Product (as defined in Section 17
below) is the exclusive property of Publishing. Executive hereby assigns all
right, title and interest in and to all Work Product to Publishing. Any
copyrightable works that fall within the Work Product will be deemed "works made
for hire" under Section 201(b) of the 1976 Copyright Act, and Publishing shall
own all of the rights comprised in the copyright therein; provided, however,
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that to the extent such works may not, by operation of law, constitute "works
made for hire," Executive hereby assigns to Publishing all right, title and
interest therein.
(b) Executive shall promptly and fully disclose all Work Product to
Publishing and shall cooperate and perform all actions reasonably requested by
Publishing (whether during or after the Employment Period) to establish, confirm
and protect Publishing's right, title and interest in such Work Product. Without
limiting the generality of the foregoing, Executive agrees to assist Publishing,
at Publishing's expense, to secure Publishing's rights in the Work Product in
any and all countries, including the execution of all applications and all other
instruments and documents which Publishing shall deem necessary in order to
apply for and obtain rights in such Work Product and in order to assign and
convey to Publishing the sole and exclusive right, title and interest in and to
such Work Product. If Publishing is unable because of Executive's mental or
physical incapacity or for any other reason (including Executive's refusal to do
so after request therefor is made by Publishing) to secure Executive's signature
to apply for or to pursue any application for any United States or foreign
patents or copyright registrations covering Work Product belonging to or
assigned to Publishing pursuant to paragraph 14(a) above, then Executive hereby
irrevocably designates and appoints Publishing and its duly authorized officers
and agents as Executive's agent and attorney-in-fact to act for and in
Executive's behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
patents or copyright registrations thereon with the same legal force and effect
as if executed by Executive. Executive agrees not to apply for or pursue any
application for any United States or foreign patents or copyright registrations
covering any Work Product other than pursuant to this paragraph in circumstances
where such patents or copyright registrations are or have been or are required
to be assigned to Publishing.
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15. Non-Compete, Non-Solicitation.
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(a) In further consideration of the compensation to be paid to Executive
hereunder and the Executive Stock made available for Executive's purchase
hereunder, Executive acknowledges that in the course of Executive's employment
with the Publishing and its Affiliates, and Publishing's predecessor, he has
prior to the date of this Agreement, and will during the Employment Period,
become familiar with Publishing's and its Affiliates' (and their predecessors')
trade secrets, business plans and business strategies and with other
Confidential Information concerning Publishing and its predecessors and its
Affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to the Publishing and its Affiliates. Therefore,
Executive agrees that, during the Employment Period and for one (1) year
thereafter (such period, the "Noncompete Period"), Executive shall not directly
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or indirectly own any interest in, manage, control, participate in (whether as
an officer, director, employee, partner, agent, representative or otherwise),
consult with, render services for, or in any other manner engage in, any of the
businesses of International Data Group, Inc., CMP Media, Inc. (a subsidiary of
United News & Media PLC) and Imagine Media, Inc. (or of any successor, assignee,
partner, joint venture partner, subsidiary, division or Affiliate thereof, or
any business or Person in which any of such Persons owns an interest or
participates, which any of such Persons manages or controls (whether as an
officer, director, employee, partner, agent, representative or otherwise), or
with which any of such Persons consults or to which any of such Persons
otherwise provides management or financial support). Nothing herein shall
prohibit Executive from being an owner, indirectly through a mutual fund or
other similar pooled investment vehicle, of a passive investment in the stock of
a corporation which is publicly traded, so long as Executive has no other
participation in the business of any such corporation.
(b) During the Employment Period and for one (1) year thereafter,
Executive shall not directly or indirectly through another Person (i) induce or
attempt to induce any employee of Publishing or any Affiliate to leave the
employ of Publishing or such Affiliate, or in any way interfere with the
relationship between Publishing or any Affiliate and any employee thereof, (ii)
hire any person who was an employee of Publishing or any Affiliate at any time
during the one year period prior to the termination of the Employment Period,
(iii) call on, solicit or service any customer, supplier, licensee, licensor,
franchisee or other business relation of Publishing or any Affiliate in order to
induce or attempt to induce such Person to cease or reduce doing business with
Publishing or such Affiliate, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and
Publishing or any Affiliate (including, without limitation, making any negative
statements or communications about Publishing or its Affiliates) or (iv)
directly or indirectly acquire or attempt to acquire any business in the United
States of America to which Publishing or any of its Affiliates has made an
acquisition proposal prior to the Termination Date relating to the possible
acquisition of such business (an "Acquisition Target") by Publishing or any of
------------------
its Affiliates, or take any action to induce or attempt to induce any
Acquisition Target to consummate any acquisition, investment or other similar
transaction with any Person other than Publishing or any of its Affiliates.
16. Enforcement. If, at the time of enforcement of Sections 13, 14 or 15
-----------
of this Agreement, a court shall hold that the duration, scope, or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period,
-11-
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed and directed to revise the restrictions contained herein to cover the
maximum period, scope and area permitted by law. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would not be an adequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, Publishing or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security). In addition, in
the event of an alleged breach or violation by Executive of Section 15, the
Period set forth in such Section shall be tolled until such breach or violation
has been duly cured. Executive agrees that the restrictions contained in Section
15 are reasonable and that Executive has received consideration in exchange
therefor.
17. Definitions.
-----------
"Affiliate" of a Person means any other person, entity or investment
---------
fund controlling, controlled by or under common control with the Person and, in
the case of a Person which is a partnership, any partner of the Person.
"Board" means the board of directors of the specified Person.
-----
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to Publishing, any of its Affiliates or any of
their customers or suppliers, (ii) intentional or willful conduct which conduct
brings Publishing or any of its Affiliates into public disgrace or disrepute in
any material respect, (iii) substantial failure to perform (other than due to
Incapacity) duties of the office held by Executive as reasonably directed by the
Chief Executive Officer or Board of Publishing which is not cured within 15 days
after notice thereof to Executive or which is incapable of cure, (iv) gross
negligence or willful misconduct with respect to Publishing or any of its
Affiliates, or (v) any breach of this Agreement which is not cured within 15
days after notice thereof to Executive or which is incapable of cure.
"Certificate of Incorporation" means the Company's certificate of
----------------------------
incorporation in effect at the time as of which any determination is being made.
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Confidential Information" means all information of a confidential or
------------------------
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that is or was disclosed to, or
developed or learned by, Executive in connection with Executive's relationship
with the Company or any of its Affiliates prior to the date hereof or during the
Employment Period and that relates to the business, products, services,
financing, research or
-12-
development of the Company or any of its Affiliates or their respective
suppliers, distributors or customers. Confidential Information includes, but is
not limited to, the following: (i) internal business information (including
information relating to strategic and staffing plans and practices, business,
training, marketing, promotional and sales plans and practices, cost, rate and
pricing structures, accounting and business methods); (ii) identities of,
individual requirements of, specific contractual arrangements with, and
information about, any of the Company' or any of its Affiliates' suppliers,
distributors and customers and their confidential information; (iii) trade
secrets, knowhow, compilations of data and analyses, techniques, systems,
formulae, research, records, reports, manuals, documentation, models, data and
data bases relating thereto; (iv) inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports and all similar or
related information (whether or not patentable); and (v) Acquisition Targets and
potential acquisition candidates. Confidential Information shall not include
information that Executive can demonstrate: (a) is or becomes publicly known
through no wrongful act or breach of obligation of confidentiality; (b) was
rightfully received by Executive from a third party (other than ZD, Inc. or any
of its Affiliates) without a breach of any obligation of confidentiality by such
third party; (c) was known to Executive prior to his employment with the
Publishing and its Affiliates and prior to his employment with ZD, Inc. or any
of it Affiliates; or (d) is required to be disclosed pursuant to any applicable
law or court order; provided, however, that Executive provides Publishing with
-------- -------
prior written notice of the requirement for disclosure that details the
Confidential Information to be disclosed and cooperates with Publishing to
preserve the confidentiality of such information to the extent possible.
"Executive Stock" means, collectively, the Coinvest Shares, the
---------------
Vesting Shares and any other Stock or equity securities hereafter acquired by
Executive. Such Stock shall continue to be Executive Stock in the hands of any
holder (except for the Company, the Investors and transferees in a Public Sale
consummated in accordance with this Agreement and the Investor Rights
Agreement), and except as otherwise provided herein, each such other holder of
Executive Stock shall succeed to all rights and obligations attributable to
Executive as a holder of Executive Stock hereunder. Executive Stock shall
include both vested and unvested Executive Stock and shall include interests in
the Company issued with respect to Executive Stock including, without
limitation, by way of any recapitalization.
"Fair Market Value" shall mean:
-----------------
(a) with respect to each share of Executive Stock which is listed on
any stock exchange or quoted in the NASDAQ System or the over-the-counter
market, the average of the closing prices of the sale of any such share on all
stock exchanges on which such security may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic over-the-
counter market as reported by the National Quotation Bureau Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the
-13-
day as of which the Fair Market Value is being determined and the 20 consecutive
business days prior to such day; and
(b) with respect to each share of Executive Stock which is not, as of
the date of determination, listed on any stock exchange or quoted in the NASDAQ
System or the over-the-counter market, the Fair Market Value thereof shall be
the amount which each such share of Executive Stock would receive upon a
liquidating distribution, in accordance with the Certificate of Incorporation,
of the proceeds of a sale of the Company and its Subsidiaries as a going concern
at market value as determined in good faith mutually by the Board of the Company
and Executive and in accordance with the Certificate of Incorporation and
determined (x) as of the Termination Date, if any Repurchase Notice or
Supplemental Repurchase Notice has been delivered within three months after the
Termination Date, or (y) as of a date determined by the Board of the Company
within thirty (30) days prior to the delivery of the earlier of any Repurchase
Notice or Supplemental Repurchase Notice, if any Repurchase Notice or
Supplemental Repurchase Notice is delivered after the third month following the
Termination Date; provided that if the parties cannot agree on Fair Market Value
--------
within 30 days after the delivery of the earlier of such notices, the Fair
Market Value will be decided by a mutually acceptable independent investment
bank and if the parties are unable to agree on such an investment bank, one
shall be chosen by lot from four nationally recognized investment banks, two of
which shall be designated by the Company and two of which shall be designated by
Executive. The determination of the investment bank pursuant hereto will be
final and binding and the fees and expenses of such investment bank shall be
shared equally by the Company and Executive. Any determination of Fair Market
Value of any Share of Executive Stock shall take into account, in the event of
any Voluntary Termination, any diminution in the value of the Company as a
result of the loss of Executive's services to Publishing and its Affiliates.
"Incapacity" means the disability of Executive caused by any physical
----------
or mental injury, illness or incapacity as a result of which Executive is unable
to effectively perform the essential functions of Executive's duties as
determined by the Board of Publishing in good faith, for a period of 90
consecutive days or a period of 120 days during any 180-day period; provided
--------
that any determination of Incapacity shall be made in compliance with the
----
provisions of the Family Medical Leave Act.
"Independent Third Party" means any Person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Company'
Common Stock on a fully diluted basis (a "5% Owner"), who is not controlling,
--------
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"Investors" has the meaning given such term in the Investor Rights
---------
Agreement.
"Investor Rights Agreement" means that certain Investor Rights
-------------------------
Agreement, dated as of the date hereof, by and among the Company, the Executive
and other holders of Stockholder Shares, as such agreement may be amended from
time to time in accordance with its terms.
-14-
"Original Cost" of any share of Executive Stock means the price paid
-------------
by Executive for such share of Executive Stock.
"Permitted Transferee" means any permitted transferee of Stock
--------------------
pursuant to a transfer in accordance with Section 2D of the Investor Rights
Agreement.
"Person" means an individual or a corporation, partnership, limited
------
liability company, trust, unincorporated organization, association or other
entity.
"Public Sale" means any sale of Stockholder Shares to the public
-----------
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Sale of the Company" means the sale of the Company to an Independent
-------------------
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
to elect a majority of the Board (whether by merger, consolidation or sale or
transfer of the Company's capital stock) or (ii) all or substantially all of the
assets of the Company determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Stockholder Shares" has the meaning given such term in the Investor
------------------
Rights Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity (other than
a corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity. For purposes hereof, references to a
"Subsidiary" of the Company shall be given effect only at such times that the
Company has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
"Transfer" has the meaning given such term in the Investor Rights
--------
Agreement.
"Work Product" means all inventions, innovations, improvements,
------------
developments, methods, processes, designs, analyses, drawings, reports and all
similar or related information
-15-
(whether or not patentable or reduced to practice or comprising Confidential
Information) and any copyrightable work, trade xxxx, trade secret or other
intellectual property rights (whether or not comprising Confidential
Information) and any other form of Confidential Information, any of which relate
to Publishing's or any of its Affiliates' actual or anticipated business,
research and development or existing or future products or services and which
were or are conceived, reduced to practice, contributed to, developed, made or
acquired by Executive (whether alone or jointly with others) while employed
(both before and after the date hereof) by Publishing (or its predecessors,
successors or assigns) and its Affiliates.
"WS" has the meaning given such term in the Investor Rights
--
Agreement.
18. Notices. Any notice provided for in this Agreement must be in writing
-------
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipients at the address indicated below:
If to Executive: Xxxxxx XxXxxxx
00 Xxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to: _____________________________
_____________________________
_____________________________
If to the Company: Ziff Xxxxx Holdings, Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
with a copy to: Xxxxxx, Xxxxx & Partners II, L.P.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
and Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
If to WS or the Investors Xxxxxx, Xxxxx & Partners II, L.P. :
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
-16-
with a copy to Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
19. General Provisions.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or attempted
-----------------------------------
Transfer of any Stock in violation of any provision of this Agreement shall be
void, and the Company shall not record such Transfer on its books or treat any
purported transferee of such Stock as the owner of such Stock for any purpose.
(b) Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly referred
------------------
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, any employment agreement or similar agreement
assumed by Publishing or its Affiliates and Executive, which is hereby
terminated).
(d) Counterparts. This Agreement may be executed in separate counterparts,
------------
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
----------------------
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, Publishing the Investors and their respective successors
and assigns; provided that the rights and obligations of Executive under this
--------
Agreement shall not be assignable except in connection with a permitted transfer
of Stock hereunder.
(f) Governing Law. The corporate law of the State of Delaware will govern
-------------
all issues concerning the relative rights of the Company and its stockholders.
All other issues concerning this Agreement shall be governed by and construed in
accordance with the laws of the State of
-17-
New York without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the law of any jurisdiction other than the State of New
York.
(g) Remedies. Each of the parties to this Agreement shall be entitled to
--------
enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(h) Survival. The provisions set forth in Section 4, Section 8 and
--------
Sections 13 through 19 shall survive and continue in full force and effect in
accordance with their terms notwithstanding any termination of the Employment
Period.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
--------------------
and waived only with the prior written consent of the Company, Publishing,
Executive and WS.
(j) Third-Party Beneficiaries. The parties hereto acknowledge and agree
-------------------------
that the Investors are third party beneficiaries of this Agreement. This
Agreement will inure to the benefit of and be enforceable by the Investors and
their respective successors and assigns, subject to amendment or waiver as
provided in subparagraph (i) foregoing.
* * * *
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement on the date first written above.
ZIFF XXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
Its: ______________________________
ZIFF XXXXX PUBLISHING, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
Its: ______________________________
EXECUTIVE:
/s/ Xxxxxx XxXxxxx
-----------------------------------
[Signature Page to Executive Agreement]
Annex A
-------
PROMISSORY NOTE
---------------
$150,000.00
April __, 2000
For value received, Xxxxxx XxXxxxx ("Executive") promises to pay to
---------
Ziff Xxxxx Holdings, Inc., a Delaware corporation (the "Company"), the aggregate
-------
principal sum of $150,000.00 together with interest thereon calculated from the
date hereof (the "Date of Issuance") in accordance with the provisions of this
----------------
Promissory Note (this "Note"). This Note was issued pursuant to and is subject
----
to the terms of that certain Executive Agreement (the "Executive Agreement"),
-------------------
dated as of the date hereof, by and between the Company and Executive. Any
capitalized terms used herein and not defined shall have the meaning assigned to
them in the Executive Agreement.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 7.0% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the Maturity Date.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note, plus all accrued and unpaid interest, on July 3, 2000 (the
"Maturity Date").
-------------
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with Executive's ownership of the Executive Stock,
Executive shall prepay an amount of this Note equivalent to the amount of
all such cash proceeds received up to the amount of principal and unpaid
interest due hereunder.
-1-
(ii) Upon the consummation of a Sale of the Company prior to the
Maturity Date, this Note shall be immediately due and payable and Executive
shall prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, as of the date of the consummation of
such Sale of the Company.
(iii) If Executive's employment by Publishing terminates for any
reason, this Note shall be immediately due and payable and Executive shall
prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, as of the date of such termination.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of the Executive Stock, pursuant to a certain Stock Pledge Agreement,
dated as of the date hereof, by and between Executive and Company (the "Pledge
------
Agreement").
---------
4. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder
when due, Executive shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Delaware.
* * * * *
-2-
IN WITNESS WHEREOF, Executive has executed and delivered this
Executive Promissory Note as of the date first written above.
EXECUTIVE:
_______________________________________
[Signature Page to Promissory Note]
Annex B
-------
PROMISSORY NOTE
---------------
$79,809.03 April __, 2000
For value received, Xxxxxx XxXxxxx ("Executive") promises to pay to
---------
Ziff Xxxxx Holdings, Inc., a Delaware corporation (the "Company"), the aggregate
-------
principal sum of $79,809.03 together with interest thereon calculated from the
date hereof (the "Date of Issuance") in accordance with the provisions of this
----------------
Promissory Note (this "Note"). This Note was issued pursuant to and is subject
----
to the terms of that certain Executive Agreement (the "Executive Agreement"),
-------------------
dated as of the date hereof, by and between the Company and Executive. Any
capitalized terms used herein and not defined shall have the meaning assigned to
them in the Executive Agreement.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 7.0% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on the seventh anniversary of
the Date of Issuance (the "Maturity Date").
-------------
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with Executive's ownership of the Executive Stock,
Executive shall prepay an
amount of this Note equivalent to the amount of all such cash proceeds
received up to the amount of principal and unpaid interest due hereunder.
(ii) Upon the consummation of a Sale of the Company prior to the
Maturity Date, this Note shall be immediately due and payable and Executive
shall prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, as of the date of the consummation of
such Sale of the Company.
(iii) If Executive's employment by Publishing terminates for any
reason, this Note shall be immediately due and payable and Executive shall
prepay all of the outstanding principal amount of this Note, plus all
accrued and unpaid interest thereon, as of the date of such termination.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of the Executive Stock, pursuant to a certain Stock Pledge Agreement,
dated as of the date hereof, by and between Executive and Company (the "Pledge
------
Agreement").
---------
4. Limited Recourse. Notwithstanding anything to the contrary
----------------
herein, the Company hereby agrees that Executive shall not have personal
liability with respect to any amounts owed under this Note, except as set forth
in this paragraph and except for the Company's rights of set off as set forth in
Section 8(e) of the Executive Agreement. Executive shall have personal liability
under this Note, but in no event shall such liability exceed the Aggregate
Recourse Amount determined as of the time of the Company's claim. "Aggregate
---------
Recourse Amount" means as of any time an amount equal to (A) 60% of the
---------------
aggregate original principal amount of this Note, minus (B) the aggregate amount
of all principal and interest payments made under this Note from the Date of
Issuance of this Note through such time, including payments incident to
Executive's declaring bankruptcy. Nothing in this paragraph 4, however, shall
affect any of the Company's rights under the Pledge Agreement.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder
when due, Executive shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of Delaware.
* * * * *
-2-
IN WITNESS WHEREOF, Executive has executed and delivered this
Executive Promissory Note as of the date first written above.
EXECUTIVE:
___________________________________
[Signature Page to Promissory Note]
Annex C
-------
STOCK PLEDGE AGREEMENT
----------------------
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of April
---------
___, 2000, by and between Xxxxxx XxXxxxx ("Pledgor") and Ziff Xxxxx Holdings,
Inc., a Delaware corporation (the "Company"). Any capitalized terms used herein
-------
but not defined shall have the meanings assigned to them in the Executive
Agreement.
The Company and Pledgor are parties to an Executive Agreement (the
"Executive Agreement"), dated as of the date hereof, pursuant to which the
-------------------
Company sold to Pledgor 349,236.11 shares of the Company's Common Stock and
142.5 shares of the Company's Series A Preferred Stock (collectively, the
"Pledged Interests"), all of which are pledged pursuant to this Agreement, and
-----------------
the Company has permitted the Pledgor to pay the purchase price therefor in part
by delivery to the Company of a promissory note (the "Full Recourse Promissory
------------------------
Note") in the aggregate principal amount of $150,000.00 and a promissory note
----
(the "Partial Recourse Promissory Note" and together with the Full Recourse
Promissory Note, the "Notes") in the aggregate principal amount of $79,809.03.
-----
This Agreement provides the terms and conditions upon which the Notes are
secured by a pledge to the Company of the Collateral (as defined below).
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Notes as
payment for the Pledged Interests, Pledgor and the Company hereby agree as
follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
------
Company a security interest in, the Pledged Interests and any related rights to
payment, profits, distributions thereon, as the case may be, and all proceeds
thereof, including any securities and moneys received (collectively the
"Collateral"), whether now existing or acquired, as security for the prompt and
----------
complete payment when due of the unpaid principal of and interest on the Notes
and full payment and performance of the obligations and liabilities of Pledgor
hereunder (including costs and attorneys fees associated with enforcement
hereunder).
2. Delivery of Pledged Interests. Pledgor agrees to deliver to the
-----------------------------
Company any certificates or instruments representing the Pledged Interests or
other Collateral, duly endorsed in blank or accompanied by undated stock powers
duly executed in blank by such Pledgor or such other instruments of transfer as
are acceptable to the Company.
3. Voting Rights; Cash Distribution. Notwithstanding anything to the
--------------------------------
contrary contained herein, during the term of this Agreement until such time as
there exists a default in the payment of principal or interest on the Notes or
any other default under the Notes or hereunder, Pledgor shall be entitled to all
voting rights with respect to the Pledged Interests and shall be entitled to
receive all cash distributions paid in respect of the Pledged Interests. Upon
the occurrence of and during the continuance of any such default, at the option
of the Company and upon notice by the
Company to the Pledgor, Pledgor shall not be able to vote the Pledged Interests,
such voting rights with respect thereto shall be exercisable by the Company and
the Company shall retain all such cash distributions payable on the Pledged
Interests as additional security hereunder. In furtherance of the Company's
rights under this Section, the Pledgor shall execute and deliver to the Company,
or cause to be executed and delivered to the Company, all such proxies, powers
of attorney, and other instruments as the Company may reasonably request for the
purpose of enabling the Company to exercise the voting rights which it is
entitled to exercise or refrain from exercising pursuant to this Section 3.
4. Other Distributions, etc. If, while this Agreement is in effect,
------------------------
Pledgor becomes entitled to receive or receives any securities or other property
in addition to, in substitution of, or in exchange for any of the Pledged
Interests (whether as a distribution in connection with any recapitalization,
reorganization or reclassification), Pledgor shall accept such securities or
other property on behalf of and for the benefit of the Company as additional
security for Pledgor's obligations under the Notes and shall promptly deliver
such additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Interests hereunder.
5. Default. If Pledgor (a) defaults in the payment of the principal
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under either of the Notes when either of them becomes due (whether upon demand,
acceleration or otherwise) or any other event of default under either of the
Notes or this Agreement occurs (including, without limitation, the bankruptcy or
insolvency of Pledgor) or (b) defaults in the payment of interest or any other
amount related to either of the Notes, the Company may (following five (5) days
notice to Executive, during which the default is not cured) exercise any and all
the rights, powers and remedies of any owner of the Pledged Interests (including
the right to vote the Pledged Interests and receive any distributions with
respect to such Pledged Interests) and shall have and may exercise without
demand any and all the rights and remedies granted to a secured party upon
default under the Uniform Commercial Code of Delaware or otherwise available to
the Company under applicable law. Without limiting the foregoing, after the
occurrence of and during the continuance of a default, the Company is authorized
to sell, assign and deliver at its discretion, from time to time, all or any
part of the Collateral at any private sale or public auction, on not less than
ten days written notice to Pledgor, at such price or prices and upon such terms
as the Company may deem advisable. Pledgor shall have no right to redeem the
Collateral after any such sale or assignment. At any such sale or auction, the
Company may bid for, and become the purchaser of, the whole or any part of the
Pledged Interests offered for sale. In case of any such sale, after deducting
the costs, attorneys' fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the principal of and accrued
interest on the Notes and other amounts related thereto (including costs,
attorneys' fees associated with enforcement hereof); provided that after payment
--------
in full of the indebtedness evidenced by both of the Notes, the balance of the
proceeds of sale then remaining shall be paid to Pledgor and Pledgor shall be
entitled to the return of any of the Pledged Interests remaining in the hands of
the Company. Pledgor shall be liable for any deficiency (to the extent liable
therefor under the Notes) if the remaining proceeds are insufficient to pay the
indebtedness under the Notes in full, including the fees of any attorneys
employed by the Company to collect such deficiency.
-2-
6. Payment of Indebtedness and Release of Pledged Interests. Upon
--------------------------------------------------------
payment in full of the indebtedness evidenced by the Notes and any amounts owed
hereunder, the Company shall take all necessary action required to release any
security interests the Company has with respect to the Collateral.
7. No Other Liens; No Sales or Transfers. Pledgor hereby represents
-------------------------------------
and warrants that Pledgor has good and valid title to all of the Collateral,
free and clear of all liens, security interests and other encumbrances (other
than pursuant to the Investor Rights Agreement or the Executive Agreement ), and
Pledgor hereby covenants that, until such time as all of the outstanding
principal of and interest on the Notes and amounts due and owing hereunder have
been repaid, Pledgor shall not (i) create, incur, assume or suffer to exist any
pledge, security interest, encumbrance, lien or charge of any kind against the
Collateral or Pledgor's rights or a holder thereof, other than pursuant to the
Executive Agreement or this Agreement, or (ii) sell or otherwise transfer any of
the Collateral or any interest therein (other than pursuant to the Executive
Agreement or the Investor Rights Agreement).
8. Further Assurances. Pledgor agrees that at any time and from time
------------------
to time upon the written request of the Company, Pledgor shall execute and
deliver such further documents (including UCC financing statements) and do such
further acts and things as the Company may reasonably request to effect the
purposes of this Agreement.
9. Severability. Any provision of this Agreement which is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
------------------------------
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended except
by an instrument in writing, duly executed by the parties hereto. This Agreement
and all obligations of the Pledgor hereunder shall together with the rights and
remedies of the Company hereunder, inure to the benefit of the
-3-
Company and its successors and assigns. This Agreement shall be governed by, and
be construed and interpreted in accordance with, the laws of the State of
Delaware, without giving effect to any applicable principles of conflicts of
laws.
* * * * *
-4-
IN WITNESS WHEREOF, this Stock Pledge Agreement has been executed as
of the date first above written.
EXECUTIVE:
___________________________________
ZIFF XXXXX HOLDINGS, INC.
By: _______________________________
Its: ______________________________
[Signature Page to Stock Pledge Agreement]
Annex D
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April __, 2000
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
On April __, 2000 (the "Effective Date"), the undersigned purchased
--------------
from Ziff Xxxxx Holdings, a Delaware corporation (the "Company"), 319,236.11
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shares of Common Stock of the Company, par value $.01 per share ("Executive
---------
Securities"). Under certain circumstances, the Company and/or certain of the
----------
Company's stockholders (the "Investors") have the right to repurchase the
---------
Executive Securities at cost from the undersigned (or from the holder of the
Executive Securities, if different from the undersigned) should the undersigned
cease to be employed by Ziff Xxxxx Publishing Inc. ("Publishing") and its
----------
subsidiaries. Hence, the Executive Securities are subject to a substantial risk
of forfeiture and are nontransferable. The undersigned desires to make an
election to have the Executive Securities taxed under the provision of Code
(S)83(b) at the time the undersigned purchased the Executive Securities.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election with respect to
the Executive Securities (as described in paragraph 2 below), to report as
-----------
taxable income for calendar year 2000 the excess (if any) of the Executive
Securities' fair market value on April __, 2000 over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1. The name, address and social security number of the undersigned:
Xxxxxx XxXxxxx
00 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (___) ___-____
Phone: (__) ___-____
SS#: ______ -- ____--______
2. A description of the property with respect to which the election
is being made: 319,236.11 shares of Common Stock of the Company, par value $.01
per share.
3. The date on which the property was transferred: April __, 2000.
The taxable year for which such election is made: calendar year 2000.
4. The restrictions to which the property is subject: If at any time
prior to April __, 2005, the undersigned ceases to be employed by Publishing or
any of its subsidiaries, the unvested portion of the Executive Securities shall
be subject to repurchase by the Company and/or the Investor at their original
cost. The Executive Securities shall become vested ratably, on a daily basis,
over the five year period commencing April __, 2000, as long as Executive
remains employed by Publishing or any of its subsidiaries, and shall be deemed
to be unvested to the extent not vested as of termination of such employment;
provided that all Executive Securities shall become fully vested if Executive
remains employed by Publishing or any of its subsidiaries through the time of
certain that certain events occur. Notwithstanding the foregoing, in the event
the Executive ceases to be employed by Publishing or any of its subsidiaries for
cause, all of the Executive Securities shall be subject to repurchase by the
Company and/or the Investors at their original cost.
5. The fair market value on April __, 2000 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $79,809.03.
6. The amount paid for such property: $79,809.03.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated: _____________, 2000 ___________________________
Xxxxxx XxXxxxx
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