EXHIBIT 10.7
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT, dated as of March 3, 2000,
between ZD Events Inc., a Delaware corporation (the "Company"), Ziff Xxxxx Inc.,
a Delaware corporation ("ZD") and Xxxxx X. Xxxxxxxxxx ("Executive").
WHEREAS, pursuant to an Employment Agreement dated as of April
1, 1998 (the "Former Employment Agreement") Executive has served as the
President and Chief Executive Officer of the Company.
WHEREAS, ZD intends to transfer the stock or assets of the
Company to a newly-formed entity ("Holding Co.") to eventually be owned by the
shareholders of ZD (the "Spin-Off").
WHEREAS, ZD has entered into an employment agreement with
Xxxxxxx X. Xxxxx ("Xxxxx") whereby Xxxxx will become Chairman and Chief
Executive Officer of Holding Co.
WHEREAS, the Company and ZD wish to continue to employ
Executive as President and Chief Executive Officer of the Company and as
President and Chief Operating Officer of Holding Co., in both cases reporting
directly to Xxxxx.
WHEREAS, as set forth in Schedule 1, Executive has been
granted options to acquire shares of ZD ("ZD Options"), shares of ZD Net ("ZD
Net Options") and shares of SOFTBANK Corp. ("Softbank Options").
THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Cancellation of Former Employment Agreement.
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The Former Employment Agreement shall be cancelled upon execution
of this Agreement by all parties.
2. Employment
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The Company hereby agrees to continue to employ Executive as
President and Chief Executive Officer of the Company. Executive shall become a
director of Holding Co.,
and Holding Co. shall agree to employ Executive as President and Chief Operating
Officer. Executive hereby agrees to devote his full time and use his best
efforts to serve the Company and Holding Co. in such capacities, on the terms
and conditions set forth herein; it being understood that Executive shall
continue to participate in trade show industry organizations or similar
activities involving a reasonable amount of Company time and expense. Executive
will in both of his capacities as an employee report directly to Xxxxx or
Xxxxx'x successor.
3. Term
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Unless sooner terminated as contemplated herein, the term of
employment of Executive under the terms of this Agreement will commence on the
date hereof and end on March 31, 2001 (the "Term"). Executive shall notify
Employer, in writing, on or before December 1, 2000, if he desires to continue
his employment with Employer after the expiration of the Term, in which case
Executive and Employer shall negotiate in good faith a new employment agreement
governing such continued employment, or if he desires to conclude his employment
with the Employer upon the expiration of the Term. In either event, this
Agreement shall terminate on March 31, 2001, provided, however, that the
provisions of the Agreement which by their terms are intended to survive
(including, without limitation, Sections 7,13,14,15) shall remain in full force
and effect.
4. Place of Performance
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Executive's employment shall be based at the offices of the
Company located at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, or elsewhere
in the greater metropolitan area of Boston, Massachusetts.
5. Compensation and Related Matters
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(a) Salary. During the term of Executive's employment, the
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Company shall pay to Executive an annual base salary at a rate not less than
$800,000 (subject to periodic review for increases), with such salary to be paid
pursuant to the Company's normal payroll practices.
(b) Incentive Bonus. During the term of Executive's
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employment, the Company shall pay to Executive, on or before March 31 (or such
earlier date as bonuses may
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be paid to any other senior Xxxx-Xxxxx executive) a guaranteed bonus of $300,000
in respect of the year 2000; and in respect of the year 2001, an incentive bonus
of $300,000 if 100% of EBITDA targets and non-EBITDA-related performance goals
are achieved, as follows:
(i) A base bonus shall be paid if and to the extent the EBITDA
of the Company for the preceding calendar year exceeds 90% of the
EBITDA target preestablished for such year by the Company's Board of
Directors in consultation with Executive. The amount of such bonus
shall increase linearly at a rate of $24,000 for each 1% (calculated to
the nearest one thousandth) of EBITDA above 90% of target, reaching
$240,000 at 100% of target and continuing thereafter to increase at the
rate of $24,000 for each 1% of EBITDA, with no maximum limit if EBITDA
achieved exceeds target. Budgeted EBITDA targets will, from time to
time, be adjusted as necessary to take account of the removal or
addition of operations previously included or not included,
respectively, as contributing to the achievement of a budgeted target,
as well as for any special expenditures not included in the budget, all
by agreement between the Executive and Xxxxx.
(ii) A supplemental bonus shall be paid each year upon the
achievement of pre-established performance goals not related to EBITDA,
determined by Xxxxx in consultation with Executive. The amount of such
supplemental bonus shall be $60,000 (in the event that such performance
goals are fully achieved) and shall be subject to increase or decrease,
by agreement between the Executive and Xxxxx, in the event that such
performance goals are exceeded or not fully achieved, respectively.
(c) Benefits and Perquisites. During the term of his
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employment, Executive shall participate in and be provided with employee benefit
plans and programs and perquisites in the aggregate at least equivalent in value
to those provided to any other senior Company executive. In addition, during
such term the Company shall maintain term life insurance for Executive in the
amount of $1,000,000 and disability insurance of $200,000.
(d) Holding Co. Stock Options. Effective not later than the
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date of the Spin-Off, ZD shall cause Holding
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Co. to grant options to the Executive to acquire shares of its common stock in
accordance with an Incentive Compensation Plan to be adopted by the Board of
Holding Co. Such Plan will include all provisions typically found in an
incentive plan for senior executives of a public company including SEC
registration at the expense of Holding Co.
(i) Number of Shares. The number of shares of
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the common stock of Holding Co. which may be acquired by the
Executive upon exercise of the options shall be equal to
3,000,000 shares.
(ii) Exercise Prices. The exercise price for one-half of the
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shares subject to option shall be equal to $4.90 and the exercise price for the
other half of the shares subject to option shall be $11.00, provided, however,
the exercise prices shall in all events be the same as the exercise prices
granted to Xxxx Xxxxx.
(iii) Vesting. Vesting occurs if Executive is employed by the
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Company or the Holding Co. on the relevant date. An equal number of the high-and
low-price options shall vest on each vesting date. No option may be exercised
until vested in accordance with the following schedule or as otherwise provided
in this Agreement:
Portion of ... Which Vest
Options on:
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25% February 28, 2001,
and
6.25% at the end of each
three-month period
thereafter.
Notwithstanding the Terms of the Incentive Compensation Plan the options will
fully vest immediately and become immediately exercisable upon a Change of
Control, which means:
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(A) individuals who, on the date of the spin off, are
members of the Board of Directors of Holding Co. (the
"Incumbent Directors") cease for any reason following the date
of the Spin Off, to constitute at least a majority of such
Board; provided, that any new director who is approved by a
vote of at least a majority of the Incumbent Directors shall
be treated as an Incumbent Director;
(B) the stockholders of Holding Co. approve a merger,
consolidation, statutory share exchange or any manner of
corporate transaction in which Holding Co. is not the
surviving corporation or entity or more than 50% of the value
of Holding Co. is affected by a merger or acquisition;
provided, however, that such approval shall not be a Change in
Control if immediately following such transaction, Executive
is the president and chief operating officer of the surviving
entity; or
(C) the stockholders of Holding Co. approve a
plan of complete liquidation or dissolution or a
sale of all or substantially all of the assets.
(iv) Expiration. Vested options shall expire at
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the earliest of:
(A) The 10th anniversary of the date of grant; or
(B) Immediately upon termination of employment for
Cause (as defined below); or
(C) Ninety (90) days after termination of employment
for any reason other than Cause, except that if
such termination occurs on or after December 1,
2000, 25% (or the percentage of options which have
vested, if greater than 25%) of the options granted
to executive (less the number, if any, of options
exercised by Executive prior to termination of
employment) shall be exercisable until the later of
January 2, 2003 or 90 days after termination of
employment; or
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(D) Under conditions specified in Section 7(e).
(v) Exercise. The exercise price of each share as to which a
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stock option is exercised shall be paid in full at the time of such exercise in
cash, by tender of shares of common stock owned by the Executive valued at fair
market value as of the date of exercise (subject to such guidelines as the
Compensation Committee of the Board may establish), by a "sale to cover" broker
transaction or other cashless exercise method permitted under Regulation T of
the Federal Reserve Board, or by a combination of cash, shares of common stock
and other consideration as the Compensation Committee deems appropriate.
In the event of a Change of Control, the Executive may elect
to receive in cancellation of his outstanding and unexercised stock options, a
cash payment in an amount equal to the difference between the exercise price of
such stock options and (A) in the event the Change of Control is the result of a
tender offer or exchange offer for the common stock, the final offer price per
share paid for the common stock multiplied by the number of shares of common
stock covered by such stock options, or (B) in the event the Change of Control
is the result of any other occurrence, the aggregate value of the Common Stock
covered by such stock options, as reasonably determined by the Compensation
Committee at such time.
(vi) Adjustments of and Changes in Stock. In the event of any
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change in the outstanding shares of common stock by reason of any stock dividend
or split, recapitalization, merger, consolidation, spinoff, combination or
exchange of shares or other corporate change, or any distributions (including
stock or stock rights distributions) to common shareholders other than regular
cash dividends, the Compensation Committee shall make a substitution or
appropriate adjustment which preserves the aggregate option value and ratio of
exercise price to fair market value of the property subject to option.
(e) ZD and ZD Net Options. Upon the termination of Executive's
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employment with the Company (i) at any time by the Company pursuant to Paragraph
6(d) or (ii) on or after December 1, 2000 for any reason, all of the unvested ZD
and ZDNet stock options granted to Executive by ZD shall immediately vest. Those
options and any options vested
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prior to that date shall be exercisable at any time thereafter until January 2,
2003 at which time all unexercised options shall terminate. While employed by
the Company, Executive shall continue to vest in his ZD and ZDNet options
according to the regular quarterly vesting schedule of each grant and may
exercise those vested options as if he were still employed by ZD. If Executive's
employment with the Company ends prior to December 1, 2000 because of his
resignation without "Good Reason" or Cause (both as later defined), then all
unvested ZD and ZDNet options shall terminate and the Executive shall have
ninety (90) days from such termination to exercise his then vested options (but
not longer than the "Termination Date" state in the stock option agreements
related to each grant). If the Executive's employment with the Company ends
prior to December 1, 2000 because of his death or disability, then those
unvested options that would have vested on December 31, 2000 had Executive
remained employed shall be immediately vested and all remaining unvested options
shall be terminated. In that case, the options vested by Executive's death or
disability and all options vested prior to that date shall be exercisable
immediately thereafter until the date one year after the Executive's termination
date.
6. Termination
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The Company may terminate Executive's employment without Cause
at the end of the Term, or otherwise at any time for Cause. Executive may
terminate such employment effective any time between December 1, 2000, and March
31, 2001, upon not less than ninety (90) days written notice or otherwise at any
time for Good Reason (all as defined below). The Executive's employment shall
also terminate upon his death or Disability. Termination of employment by or
with the Company or by or with Holding Co. shall be deemed termination by or
with both such employers. Any termination of such employment shall be subject to
the following conditions:
(a) Regardless of the reason for such termination, the Company
shall pay Executive his base salary through the Date of Termination (as defined
below) and any amounts owed to Executive pursuant to the terms and conditions of
the employee benefit plans and programs of the Company at the time such payments
are due.
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(b) If such employment is terminated as a result of
Executive's Disability or death, the Company shall pay, following the
determination of such award, the prorated portion of any annual incentive bonus
Executive would have received for the year of such termination to Executive or
his legal representatives or to Executive's estate or as may be directed by the
legal representatives of such estate, as the case may be.
(c) If Executive's employment is terminated by the Company for
Cause or the Executive voluntarily terminates his employment effective prior to
December 1, 2000 other than for Good Reason, the Company shall have no
additional obligations to Executive under this Agreement.
(d) If at the end of the Term the Company terminates
Executive's employment without Cause, or Executive terminates such employment at
any time for Good Reason; or the Executive voluntarily terminates his employment
effective between December 1, 2000, and March 31, 2001, upon at least ninety
(90) days prior written notice, then the Company shall pay Executive:
(i) The amounts provided in Section 6(a);
(ii) Any bonus to which Executive may be entitled for the year in
which termination occurs pro rated for the length of service
during that year; and
(iii) A severance payment equal to two years' base salary plus two
times the average annual bonus received by Executive in
respect of the three years prior to year of termination;
(iv) Continued participation in the medical, health insurance,
and life insurance plans of the Company, at the
pre-termination level, without cost to Executive, for a
period until November 30, 2002; and
(v) The maximum allowable contribution to Executive's account
under the applicable 401(k) plan through the date of
termination on a pro rata basis provided such contribution
may legally be made.
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(e) If the Executive's employment is terminated under Section 6(d):
(i) Notwithstanding any other provision of any plans or agreements
under which the ZD, ZD Net and Softbank Options were granted:
(A) All unvested ZD and ZD Net Options shall become fully
exercisable on the Date of Termination and shall remain
exercisable in accordance with Section 5(e).
(B) All unvested Softbank Options shall become fully exercisable
on January 19, 2001 and shall remain fully exercisable until
January 2, 2003, whereafter they shall lapse.
(ii) Executive shall be vested with the greater of:
(A) 25% of the Holding Co. options provided for in Section
5(d)(i), and
(B) the number of such options already vested under the
provisions of the Incentive Compensation Plan.
(f) For purposes of this Agreement, the following terms shall have the
meanings specified:
(i) "Disability" shall mean Executive's absence from his full-time
duties hereunder by reason of physical or mental illness for a period of
six consecutive months.
(ii) Termination for "Cause" shall mean termination of Executive's
employment by the Company following Executive's:
(A) gross misconduct that is injurious to the Company or its
affiliates; or
(B) conviction of, or a plea of nolo contendere to, a felony by
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any criminal tribunal; or
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(C) willful and continuing failure to substantially
perform his reasonable duties (other than as a result of
physical or mental illness) that is not corrected within 30
days following a written demand by the Company that
specifically identifies the manner in which the Company
believes Executive has not substantially performed his duties;
or
(D) willful misconduct that results in gain or personal
enrichment of Executive to the detriment of the Company or its
affiliates, whether monetarily or otherwise;
(iii) Termination for "Good Reason" shall mean termination by
Executive following a material breach of this Agreement by the Company
(without Executive's written consent) that is not corrected within 30
days of Executive notifying the Company in writing of such breach.
(iv) "Date of Termination" shall mean the date of Executive's
death, Disability or the date otherwise set forth on a notice of
termination provided by one party hereof to the other.
7. Confidentiality; Non-Competition
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(a) Without written consent of the Company, Executive may not
for a period of two years following the termination of his employment
(regardless of the reason for the termination) engage in any trade show
enterprise which competes with the Company or any of its affiliates by
conducting trade shows, conferences or other events featuring (i) computers,
(ii) computer related subjects, or (iii) any other subjects on which the Company
has actually held a trade show, conference or other event or has announced and
will hold a show, conference or other event within three months following
Executive's termination of employment. If Executive's position with another
company gives him responsibility for significantly all of the operations of that
company or of a division of that company, including computer or computer-related
competitive operations, such position will not violate this Section 7(a) if the
annual revenues of those competitive operations combined constitute less than 5%
of the total revenues under Executive's direction and are less than $40 million.
This
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paragraph also shall not bar Executive from owning up to 5% of the outstanding
securities of any publicly-held company. As used in this Agreement, the term
"affiliate" of the Company means any partnership, firm, corporation or other
entity which, directly or indirectly, owns or controls, is owned or controlled
by, or is under common ownership or control with, the Company.
(b) Executive shall keep secret and confidential and not use
(except in connection with the business of the Company and its affiliates or
pursuant to applicable law or court order) any information with respect to any
confidential or non-public aspect of the business or affairs of the Company or
any of its affiliates, including without limitation ZD and SOFTBANK Corp. This
obligation shall be in effect while Executive is employed by the Company and at
all times after he ceases to be so employed, but it shall not apply at any time
to information that is or becomes generally known to the public (other than
through a breach of this Section 7(b)).
(c) Without written consent of the Company, Executive shall
not, for two years following the termination of his employment (regardless of
the reason for the termination), employ or solicit the employment of any person
who is at such time an employee of the Company or any of its affiliates or was
such an employee at any time during the year prior to the termination of
Executive's employment; provided, however, Executive shall not be precluded from
engaging in an employment relationship, partnership relationship or other
business relationship with Xxxxxxx X. Xxxxxx.
(d) Executive acknowledges that the remedy at law for breach
of his covenants under this Section 7 will be inadequate and, accordingly, in
the event of any breach or threatened breach by Executive of the provisions of
this Section 7 the Company shall be entitled (without the necessity of showing
economic loss or other actual damage), in addition to all other remedies (which
shall include the termination of Executive's right to any payment under this
Agreement), to seek an injunction restraining any such breach, without any bond
or other security being required. Executive and the Company recognize and agree
that the duration and scope for which the covenants not to compete and solicit
set forth in this Section 7 are to be effective are reasonable. In the event
that any court determines that
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the time period or the area, or both of them, are unreasonable and that such
covenants are to that extent unenforceable, the parties hereto agree that the
covenants shall remain in full force and effect for the greatest time period and
in the greatest area that would not render them unenforceable.
(e) In the event of a material breach by Executive of any
covenant under this Section 7 Executive agrees that, notwithstanding anything to
the contrary in this Agreement or any award of or letter agreement for any
option to acquire common stock of Holding Co., ZD, ZD Net or of SOFTBANK Corp.,
any such option that is at the time of such breach unexercised shall immediately
terminate.
(f) In the event Executive's employment is terminated pursuant
to any provision of Section 6 and the Company defaults in its obligation to pay
amounts required by Section 6 in such circumstances, Executive shall not be
bound by the provisions of paragraphs (a) and (c) of this Section 7.
(g) In the event Executive's employment is terminated for any
reason, the Company will consent to his employment by Worldwide Unlimited, Inc.,
a corporation owned and controlled by Xxxx Xxxxxxxxxx or her children, provided
the total revenues from operations competing with the Company or any of its
affiliates do not exceed $10 million.
8. Successors; Binding Agreement
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(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
(b) This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
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9. Notices
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For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Xx. Xxxxx X. Xxxxxxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
If to the Company:
Key-3 Media
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Attn: Xxx Xxxxxxxxx, Esq.
with, until the spin off occurs, copies to:
Xxxx-Xxxxx Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Chairman and
Attn: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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10. Modification; Waiver
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No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Executive and the Chairman of ZD. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
11. Entire Agreement
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This Agreement and the related documents referred to herein
set forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto;
and any prior agreement of the parties hereto in respect of the subject matter
contained herein (including the Former Employment Agreement, and the Employment
Agreement dated as of April 1, 1995, between SOFTBANK COMDEX Inc. and Executive)
is hereby terminated and cancelled.
12. Validity
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The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
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13. Limitation
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All obligations of ZD under this Agreement, other than those
obligations with respect to ZD and ZD Net Options, shall expire immediately upon
the Spin-Off, except with respect to the ZD, ZD Net and Softbank Options.
14. Governing Law
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This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts. Subject to the
provisions of Section 14, each of the parties consents to personal jurisdiction
in any action brought in any court in Boston, Massachusetts having subject
matter jurisdiction over matters arising under this Agreement.
15. Arbitration
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Any dispute or controversy under this Agreement shall be
settled exclusively by arbitration in Boston, Massachusetts by three arbitrators
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court in Boston
or any court elsewhere having jurisdiction over the party against whom the
judgment is entered.
Nothing in this Section 15 shall prevent the Company from
seeking injunctive relief in any court in Boston or any other court having
jurisdiction over Executive for any breach or threatened breach of this
Agreement, including, without limitation, the provisions of Section 7. All costs
and expenses of any arbitration proceeding (including fees and disbursements of
counsel) shall be borne by the respective party incurring such costs and
expenses, but the Company shall reimburse Executive for such reasonable costs
and expenses in the event he substantially prevails in such arbitration
proceeding.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
ZD EVENTS INC.
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Director
ZIFF XXXXX INC.
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Chairman and Chief Executive Officer
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Xxxxx X. Xxxxxxxxxx
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