Exhibit 10.17
EMPLOYMENT AGREEMENT
With Xxxx Xxxxxx
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is entered into by IDG Books
Worldwide, Inc. ("IDG Books") and (the "Executive") as of May 1, 2000, and will
be effective on such date hereinafter called ("the Commencement Date")
IDG Books desires to employ the Executive and the Executive desires to be
employed by IDG Books. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Term of Employment: The term of employment of Executive by IDG Books
hereunder shall commence upon the date of this Agreement (the
"Commencement Date") and shall continue thereafter on the same terms and
conditions for a period of four years unless earlier terminated pursuant
to Section 6 (such term being hereinafter referred to as the "Employment
Period"). The term of employment is subject to automatic renewal for
successive one year terms unless either party shall have notified the
other in writing not less than 90 days prior to the then current
expiration date of the Agreement of such party's determination not to
renew the Agreement.
2. Title; Duties: The Executive shall serve as Senior Vice President and
Chief Financial Officer of IDG Books reporting to the President and Chief
Operating Officer of IDG Books. Executive shall perform those duties and
responsibilities inherent in such position, including such duties and
responsibilities as President of IDG Books shall assign. The Executive
agrees to devote his full time and best efforts, attention and energies to
the business and interests of IDG Books. Executive shall serve IDG Books
faithfully and to the best of his ability in such capacities, devoting his
full business time, attention, knowledge, energy and skills to such
employment.
3. Compensation: IDG Books shall pay and Executive shall accept as full
consideration for his services hereunder, compensation consisting of the
following:
3.1 Base Salary. Effective on the Commencement Date, $200,000 per year
base salary, subject to potential increase, in accordance with the
policies of IDG Books from time to time, payable in bi-weekly
installments in accordance with IDG Books' normal payroll practices,
less such deductions or withholdings required by law.
3.2 Bonus. Participation in the IDG Books' Incentive Bonus Plan
equivalent to 100% of your earned base salary, with respect to each
FY; the FY 00 bonus is tied to FY 00 board approved EBIT target as
outlined in Exhibit A. Such bonus participation shall be effective
on your Commencement Date. The Bonus Plan in place on the
Commencement Date shall remain in effect for fiscal year 2000. You
are guaranteed a FY 00 bonus of $83,000.
3.3 Stock Options. Executive will be granted a stock option for 100,000
shares (the "Option") under the IDG Books Stock Option Plan (the
"Stock Option Plan"). The Option price shall be established as the
closing price on the day preceding the Commencement Date unless
otherwise prohibited by SEC regulations/laws. The
Option shall become vested to the extent of 25% on the first
anniversary of the Commencement Date and 2.08% monthly for
thirty-six months thereafter (the "Option Exercise Period") on the
last day of each month during which Executive remains employed with
IDG Books. The Compensation Committee and Board of Directors will
review potential additional stock option grants effective for each
Fiscal Year.
3.4 A relocation agreement and package will be agreed upon and
forthcoming as an attachment. A maximum of $75,000 will be
reimbursed to you against approved receipts or paid directly by the
company where appropriate. An advance against the $75,000 maximum
relocation will be considered as per the offer letter.
4. Benefits: Subject to all applicable eligibility requirements, and legal
limitations, Executive will be able to participate in any and all ESOP,
401(k), vacation, medical, dental, life and long-term disability insurance
and/or other benefit plans which from time to time may be established for
other employees of IDG Books and comparable Senior Managers in the
company.
5. Reimbursement of Expenses: IDG Books will reimburse Executive for all
reasonable travel, entertainment and other expenses incurred or paid by
the Executive in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement.
6. Benefit Upon Termination of Employment Period.
6.1 Disability. In the event of the permanent disability (as hereinafter
defined) of Executive during the Employment Period, IDG Books shall
have the right, upon written notice to Executive, to terminate
Executive's employment hereunder, effective upon the 30th calendar
day following the giving of such notice (or such later day as shall
be specified in such notice). Upon the effectiveness of such
termination, (i) IDG Books shall have no further obligations
hereunder, except to pay and provide, subject to applicable
withholding, (A) all amounts of Base Salary accrued, but unpaid, at
the effective date of termination, less any amounts payable under
the IDG Book's short-term and long-term disability policies for any
period prior to termination, (B) Executive's maximum target bonus
set forth in Exhibit A attached hereto, and (C) all reasonable
unreimbursed business-related expenses, (ii) the Option and any
additional options granted pursuant to Section 3.3 shall immediately
vest and become exercisable to the extent of twelve additional
months of vesting and shall remain exercisable for twelve months
following termination of employment and (iii) Executive shall have
no further obligations hereunder other than those provided for in
Sections 9 and 10 hereof. All amounts payable to Executive pursuant
to this Section 6(a) shall be payable within 30 days following the
effectiveness of the termination of Executive's employment. For
purposes of this Agreement, "permanent disability" shall be
determined in the same manner as such term is determined under IDG
Book's long-term disability insurance policy by the policy provider;
provided that termination shall occur only if Executive is incapable
in any material respect of performing the services required of him
in accordance with his obligations under Section 2 for a period of
180 consecutive days, or for 180 days in any 360 day period.
6.2 Death. In the event of the death of Executive during the Employment
Period, this Agreement shall automatically terminate and IDG Books
shall have no further obligations hereunder, except to pay and
provide to Executive's beneficiary or other legal representative,
subject to applicable withholding, (i) all amounts of Base Salary
and bonus accrued but unpaid, at the date of death, (ii) an amount
equal to Executive's
2
maximum target bonus, (iii) the Option and any additional options
granted pursuant to Section 3.3 shall immediately vest and become
exercisable to the extent of twelve additional months of vesting and
shall remain exercisable for twelve months following termination of
employment and (iv) all reasonable unreimbursed business-related
expenses. All amounts payable to Executive pursuant to this Section
6(b) shall be payable within 30 days following the date of death.
6.3 Termination Without Cause. In the event of the termination of
Executive's employment by IDG Books without Cause (as defined below)
or upon the Executive's voluntary termination of his employment for
Good Reason (as defined below), IDG Books shall pay (i) all amounts
of Base Salary and bonus accrued but unpaid on the date of
termination, (ii) a severance payment equal to Executive's Base
Salary on the date of termination for a period of twelve months in
twelve equal monthly installments, (iii) an amount equal to
Executive's maximum target bonus set forth in Exhibit A attached
hereto and (iv) the Option and any additional options granted
pursuant to Section 3.3 shall immediately vest and become
exercisable to the extent of twenty-four additional months of
vesting and shall remain exercisable for 180 days following
termination of employment; provided that if Executive's employment
terminates pursuant to this Section within the first twelve months
following the Commencement Date, Executive shall receive an amount
equal to the Base Salary and maximum target bonus amount that would
be paid but for such termination for the balance of the first three
years of the Employment Period (but not the fourth year of the
Employment Period) and such option vesting and exercisability shall
continue for such Employment Period. Such payment and additional
vesting shall be in lieu of any claims Executive may have had with
respect to termination benefits or additional vesting.
6.4 Circumstances Under Which Termination Benefits Would Not Be Paid.
IDG Books shall not be obligated to pay Executive the termination
benefits or continue the option vesting described in subparagraphs
6.3 (ii) through (iv) above if the Employment Period is terminated
for Cause or if Executive voluntarily terminates his employment
other than for Good Reason (as defined below). IDG Books will give
Executive written notice of any breach and provide a 30-day
improvement/cure period. For purposes of this Agreement, "Cause"
shall be limited to:
(A) Willful failure by Executive to substantially perform his
duties hereunder, other than a failure resulting from his
complete or partial incapacity due to physical or mental
illness or impairment;
(B) A material and willful violation of a federal or state law or
regulation applicable to the business of IDG Books or that
adversely affects the image of IDG Books;
(C) Commission of a willful act by Executive which constitutes
gross misconduct and is materially injurious to IDG Books;
(D) A willful breach of a material provision violation of this
Agreement; or
(E) Executive's death, or permanent disability pursuant to Section
6 above.
6.5 Constructive Termination. Notwithstanding anything in Section 3 or
in this Section 6 to the contrary, for purposes of this Agreement
the Employment Period will be deemed to have been terminated and
Executive will be deemed to have Good Reason for voluntary
3
termination of the Employment Period ("Good Reason"), if there
should occur in lieu of the provisions of Section 6.3:
(A) A material adverse change in Executive's position causing it
to be of materially less stature or responsibility without
Executive's written consent, and such a materially adverse
change shall in all events be deemed to occur if Executive no
longer serves as Chief Financial Officer reporting to the
President and Chief Operating Officer of IDG Books.
(B) A material reduction, without Executive's written consent, in
his level of base compensation (including base salary and
fringe benefits) by more than ten percent (10%);
(D) A Change in Control (as defined below) of IDG Books (other
than International Data Group assuming control of IDG Books);
(E) A relocation of Executive's principal place of employment
(other than a relocation of IDG Book's headquarters with the
concurrence of Management) outside the New York area, without
Executive's consent.
7.0 Change in Control Benefits:
Should there occur a Change in Control (as defined below), then the
following provisions shall become applicable in lieu of the
provisions of Section 6.3:
(A) During the period (if any) following a Change in Control that
Executive shall continue to remain employed, then the terms and
provisions of this Agreement shall continue in full force and
effect, and Executive shall continue to vest in all of his unvested
stock options; or
(B) In the event of (i) a termination of the Executive's employment
by IDG Books other than for Cause within twelve (12) months after a
Change in Control or (ii) Executive voluntarily terminates his
employment for Good Reason within twelve (12) months after a Change
in Control:
(i) IDG Books shall pay to Executive an amount equal to (A)
all amounts of Base Salary and bonus accrued to the date of termination and (B)
two hundred percent (200%) of Executive's Base Salary and maximum target bonus
set forth in Exhibit A attached hereto on the date of termination in one lump
sum amount, on or before the fifth business day following the effective date of
Executive's termination; and
(ii) All of the unvested options held by Executive on the date
of such Change in Control shall immediately vest and become exercisable in full
and shall remain exercisable for the period of 180 days following termination of
employment.
For purposes of this Section 7, the term "Change of Control" shall mean:
(x) The sale, lease, conveyance, liquidation or other disposition
of all or substantially all of IDG Books' assets as an
entirety or substantially as an entirety to any person, entity
or group of persons acting in concert other than in the
ordinary course of business;
(y) Any transaction or series of related transactions (as a result
of a tender offer, merger, consolidation or otherwise) that
results in any Person (as defined in
4
Section 13(h)(8)(E) under the Securities Exchange Act of 1934)
becoming the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934), directly or indirectly,
of more than 50% of the aggregate voting power of all classes
of common equity of IDG Books, except if such Person is (A) a
subsidiary of IDG Books, (B) an employee stock ownership plan
for employees of IDG Books or (C) a company formed to hold IDG
Books' common equity securities and whose shareholders
constituted, at the time such company became such holding
company, substantially all the shareholders of IDG Books; or
(z) A change in the composition of IDG Books' Board of Directors
over a period of thirty-six (36) consecutive months or less,
such that a majority of the then current Board members ceases
to be comprised of individuals who either (a) have been Board
members continuously since the beginning of such period, or
(b) have been elected or nominated for election as Board
members during such period by at least a majority of the Board
members described in clause (a) who were still in office at
the time such election or nomination was approved by the
Board.
In the event that the severance and other benefits provided to Executive
pursuant to Section 6 of this Agreement (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code") and (ii) but for this Section 7, such
severance and benefits would be subject to the excise tax imposed by
Section 4999 of the Code, then Executive's severance benefits under this
Section 7 shall be payable either:
(a) in full,
(b) as to such lesser amount which would result in no portion of
such severance and other benefits being subject to excise tax
under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and
local income taxes and the excise tax imposed by Section 4999,
results in the receipt by Executive on an after-tax basis, of
the greatest amount of severance benefits under this
Agreement. Unless IDG Books and Executive otherwise agree in
writing, any determination required under this Section 7 shall
be made in writing by independent public accountants agreed to
by IDG Books and Executive (the "Accountants"), whose
determination shall be conclusive and binding upon Executive
and IDG Books for all purposes. For purposes of making the
calculations required by this Section 7, the Accountants may
make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G
and 4999 of the Code. IDG Books and Executive shall furnish to
the Accountants such information and documents as the
Accountants may reasonably request in order to make a
determination under this Section 7. IDG Books shall bear all
costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section 7.
8. Arbitration: To the fullest extent permitted by law all controversies
between Executive and the IDG Books, arising under this Agreement
including whether any termination is with or without cause, will be
submitted for resolution to binding arbitration in New York, New York or
such other venue as may be mutually agreed to, in accordance with the
rules of the American Arbitration Association. Discovery shall be
permitted to the same extent as in a proceeding under the Federal Rules of
Civil Procedure. The parties agree to mutually select a single arbiter.
This means that except as otherwise stated, both IDG Books and the
Executive understand that
5
arbitration will be their exclusive forum for resolving disputes between
them, and that both parties waive their entitlement, if any, to have
controversies between them arising under this Agreement decided by a court
or a jury. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof
9. Cooperation with IDG Books After Termination of the Employment Period:
Following termination of the Employment Period by Executive, Executive
shall fully cooperate with IDG Books in all matters relating to the
winding up of his pending work on behalf of IDG Books and the orderly
transfer of any such pending work to other employees of IDG Books as may
be designated by IDG Books.
10. Confidentiality; Return of Property; NonSolicitation:
(a) The Executive acknowledges that during the Employment Period he will
receive confidential information from IDG Books and subsidiaries of
IDG Books and the respective clients thereof (each a "Relevant
Entity"). Accordingly, the Executive agrees that during the
Employment Period (as it may be extended from time to time) and
thereafter for a period of two years, the Executive and his
affiliates shall not except in the performance of his obligations to
IDG Books hereunder or as may otherwise be approved in advance by
IDG Books, directly or indirectly, disclose or use (except for the
direct benefit of IDG Books) any confidential information that he
may learn or has learned by reason of his association with any
Relevant Entity. Upon termination of this Agreement, the Executive
shall promptly return to IDG Books any and all properties, records
or papers of any Relevant Entity, that may have been in his
possession at the time of termination, whether prepared by the
Executive or others, including, but not limited to, confidential
information and keys. For purposes of this Agreement, "confidential
information" includes all data, analyses, reports, interpretations,
forecasts, documents and information concerning a Relevant Entity
and its affairs, including, without limitation with respect to
clients, products, policies, procedures, methodologies, trade
secrets and other intellectual property, systems, personnel,
confidential reports, technical information, financial information,
business transactions, business plans, prospects or opportunities,
(i) that IDG Books reasonably believes are confidential or (ii) the
disclosure of which could be injurious to a Relevant Entity or
beneficial to competitors of a Relevant Entity, but shall exclude
any information that the Executive is required to disclose under any
applicable laws, regulations or directives of any government agency,
tribunal or authority having jurisdiction in the matter or under
subpoena or other process of law. For purposes of this Agreement,
"affiliate" means any entity that, directly or indirectly, is
controlled by, or under common control with, the Executive. For
purposes of this definition, the terms "controlled" and "under
common control with" means the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting
stock, by contract or otherwise.
(b) For a period of one (1) year following the termination of his
employment with IDG Books for any reason, he will not, without IDG
Books' express written consent, either on his own behalf or on
behalf of another, solicit employees of IDG Books or any subsidiary
of IDG Books for the purpose of hiring them.
(c.) Noncompetition. Executive acknowledges the reasonability of IDG
Books seeking appropriate "noncompete" provisions under certain
circumstances, other than if this Agreement is not extended beyond
the four
6
year Employment Period as set forth in Section 1 hereof. IDG Books
and Executive agree that they will apply best efforts and negotiate
in good faith to add a noncompete covenant with mutually agreed to
terms and conditions (consistent with comparable agreements and
practice for similarly senior executives in the book publishing
business) as an amendment to this Agreement within sixty days of its
execution.
11. General:
11.1 Indemnification. In the event Executive is made, or threatened to be
made, a party to any legal action or proceeding, whether civil or
criminal, solely by reason of the fact that Executive is or was a
director or officer of IDG Books or serves or served any other
corporation fifty percent (50%) or more owned or controlled by IDG
Books in any capacity at IDG Books' request, Executive shall be
indemnified by IDG Books, and IDG Books shall pay Executive's
related expenses when and as incurred, all to the fullest extent
permitted by law.
11.2 Waiver. Neither party shall, by mere lapse of time, without giving
notice or taking other action hereunder, be deemed to have waived
any breach by the other party of any of the provisions of this
Agreement. Further, the waiver by either party of a particular
breach of this Agreement by the other shall neither be construed as,
nor constitute a, continuing waiver of such breach or of other
breaches by the same or any other provision of this Agreement.
11.3 Severability. If for any reason a court of competent jurisdiction or
arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to
conform to applicable laws or regulations, or if it cannot be so
amended without materially altering the intention of the parties,
the remainder of the Agreement shall continue in full force and
effect as if the offending provision were not contained herein.
11.4 Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon transmission of a
facsimile or the deposit with Federal Express or in Express Mail and
addressed to the President/Chief Operating Officer of IDG Books as
its principal corporate address, and to Executive at his most recent
address shown on IDG Books' corporate records, or at any other
address which he may specify in any appropriate notice to IDG Books.
11.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which taken together constitutes one and the same instrument and in
making proof hereof it shall not be necessary to produce or account
for more than one such counterpart.
11.6 Entire Agreement. The parties hereto acknowledge that each has read
this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement and the referenced
stock option agreements shall constitute the complete and exclusive
statement of the agreement between the parties and supersedes all
proposals (oral or written), understandings, representations,
conditions, covenants, and all other communications between the
parties relating to the subject matter hereof.
7
11.7 Governing Law. This Agreement shall be governed by the law of the
State of New York.
11.8 Assignment and Successors. IDG Books shall have the right to assign
its rights and obligations under this Agreement to an entity which
acquires substantially all of the assets of IDG Books. The rights
and obligation of IDG Books under this Agreement shall inure to the
benefit and shall be binding upon the successors and assigns of IDG
Books.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Dated: 3/28/00 /s/ Xxxx X. Xxxxxx
------------------------- -----------------------------
Executive
Dated: 4/5/00 IDG Books Worldwide, Inc.
-------------------------
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
As President and Chief Operating
Officer of IDG Books Worldwide, Inc.
8
