Exhibit 10.14
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (this "Agreement ") is made as of November 8, 2001,
by and between Ziff Xxxxx Holdings, Inc., a Delaware corporation (the
"Company"), Ziff Xxxxx Publishing, Inc., a Delaware corporation and a wholly
owned indirect subsidiary of the Company ("Publishing"), and Xxxx Xxxxxxxx
("Executive"). Certain definitions are set forth in Section 16 of this
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. In
connection with such employment, Executive desires to acquire from the Company,
and the Company desires to issue and sell or grant certain equity interests to
Executive.
The Company currently anticipates that it will consummate an equity
financing in the near future pursuant to which the Company will issue capital
stock to Xxxxxx Xxxxx & Partners III, L.P. ("WSP III "), affiliates of WSP III
and possibly certain others as well (collectively, the "Investors") in exchange
for cash and, in the case of WSP III and certain of its affiliates, cash and
certain other shares of Company capital stock (the "Pending Equity Financing").
The Company currently contemplates that, upon consummation of the Pending
Equity Financing, the Company would issue to the Investors shares of two new
classes of capital stock which would be senior to all other classes of Company
capital stock: 20% Redeemable Series D Preferred Stock, par value $.01 per
share (the "Series D Preferred "), with an accruing 20% per annum dividend rate
and otherwise with terms substantially similar to the terms of the Company's
Series B Preferred Stock, par value $.01 per share (the "Series B Preferred "),
and Series E Preferred Stock, par value $.01 per share, which would be
convertible into shares of the Company's Common Stock, par value $.01 per share
("Common Stock") at a conversion price of $0.10 per share and otherwise have
terms substantially similar to the terms of the Company's Series C Preferred
Stock, par value $.01 per share (the "Series C Preferred "). The Company
currently contemplates that the purchase price to be paid by the Investors for
shares of Series D Preferred and Series E Preferred in such financing will be
equal to the initial liquidation preference of the shares purchased, that
approximately 95% of the purchase price paid by each Investor will be allocated
to the purchase of shares of Series D Preferred and the balance of the purchase
price paid by each Investor will be allocated to the purchase of shares of
Series E Preferred. However, the parties acknowledge that the actual terms of
the Pending Equity Financing, including the securities to be issued and the
prices thereof, are subject to negotiation between the Company and the
Investors and may be substantially different from those described herein.
Executive desires to purchase from the Company, and the Company desires to
sell to Executive, contemporaneously with the consummation of the Pending
Equity Financing, shares of the Company's capital stock of the same classes, in
the same proportions and on the same economic terms as sold to the Investors
for cash in the Pending Equity Financing. In addition, in connection with the
closing of the Pending Equity Financing, the Company intends to grant to
Executive options to purchase shares of capital stock and to issue and sell to
Executive additional shares of its Common Stock, in each case on terms
consistent with the terms of Section 2 of this Agreement. If the Pending Equity
Financing is consummated as described in the immediately preceding paragraph,
such options granted to Executive would be exercisable to acquire solely shares
of Series D Preferred.
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) and the grant of an Option (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.
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NOW, THEREFORE, the parties hereto agree as follows:
A. PURCHASE AND SALE OF EXECUTIVE STOCK AND GRANT OF STOCK OPTION
1. Purchase and Sale of Coinvest Shares and Incentive Shares; Executive
Note and Pledge. Concurrently with the closing of the Pending Equity
Financing, Executive shall purchase from the Company and the Company shall sell
to Executive (a) for an aggregate purchase price of $50,000, payable in cash,
shares of capital stock of the Company (collectively, the "Coinvest Shares") of
the same type and in the same proportions as are purchased by WS in such
Pending Equity Financing, at the same price per share and on the same other
economic terms as those on which WS purchases such shares of capital stock for
cash in the Pending Equity Financing (it being understood that WS will also
exchange outstanding securities for shares of such stock at such time), and
(b) subject to Section 3 below, 2,350,000/1/ shares of Common Stock (the
"Incentive Shares") at a purchase price of $0.10 per share payable by Executive
in cash or by delivery of a promissory note with an initial principal amount
equal to such purchase price and otherwise in the form of Exhibit A hereto (the
"Executive Note"). Executive's obligations under the Executive Note 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 Exhibit B attached hereto (the "Pledge Agreement "). As a condition
precedent to the Company's obligations to sell to Executive any Coinvest Shares
or Incentive Shares or to grant the Option or to issue the Bonus Shares (as
defined below), Executive must execute and deliver to the Company the Pledge
Agreement, the Executive Note and a counterpart signature page of the Investor
Rights Agreement, (pursuant to which Executive shall become a party thereto,
and thereby shall benefit from the rights and be subject to the obligations of
one of the "New Stockholders" thereunder), permit the Company to deliver to
Executive all financial and other information regarding the Company it believes
necessary to enable Executive to make an informed investment decision and
execute and deliver to the Company such customary, written investment
representations which the Company requires, including as to the matters set
forth on Exhibit C hereto, as of the consummation of such purchase and sale.
The Company shall hold each certificate representing Executive Stock until such
time as the Executive Stock represented by such certificate is released from
the pledge to the Company. Within 30 days after Executive purchases the
Incentive Shares 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 there under in the form of Exhibit
D attached hereto.
2. Stock Option.
(a) Grant. Subject to Section 3 below, upon the closing of the Pending
Equity Financing the Company shall grant to Executive an option (the
"Option") to purchase that number of shares of Series D Preferred with
aggregate initial liquidation preference of $2,500,000 at an exercise price
per share equal to the initial liquidation preference of such share. Subject
to Section 3 below, the Option will be granted in a form and pursuant to a
plan including terms and conditions which are consistent with the form of
stock options previously issued by the Company and the terms and conditions
included in the Company's existing stock option plan, except as otherwise
specifically provided herein. The Option will not be an "incentive stock
option" within the meaning of Section 422A of the Code. For the avoidance of
doubt, the Company acknowledges that the shares of Series D Preferred that
will be issuable upon exercise of the Option will commence to accrue
dividends on the date of grant of such Option.
(b) Exercisable Only to Extent Vested. The Option shall initially not be
exercisable and thereafter shall be exercisable only to the extent deemed
vested pursuant to Section 6 below.
(c) Option Term. The Option shall expire at the close of business on,
and in no event shall the Optionbe exercisable in whole or in part at any
time after, the tenth anniversary of the date hereof (the "Expiration
Date "); provided that the Option shall be subject to earlier expiration as
follows:
--------
/1 /This amount will be adjusted at the closing of the Pending Equity Financing
to be equal to 1.5% of the Company fully-diluted common stock.
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(i) If Executive's employment with Publishing or any of its
Affiliates under the control of the Company is terminated for Cause,
Executive resigns from Company Employment (other than for Good Reason)
at any time prior to December 31, 2004 or Executive breaches any of his
obligations under any of Sections 12, 13 and 14 of this Agreement
(except any breach which Executive carries the burden of proving is
solely of a technical nature, is immaterial and was inadvertent), then
the Option shall immediately terminate and Executive shall forfeit all
rights with respect to the Option, regardless of whether the Option, or
any portion thereof, shall have become vested and/or exercisable prior
thereto; and
(ii) If Publishing terminates Executive's Company Employment without
Cause, Executive resigns from Company Employment for Good Reason prior
to December 31, 2004, or if Executive's Company Employment ceases as a
result of the death or Incapacity of Executive, any portion of the
Option that has not vested pursuant to Section 6 below shall expire upon
such Termination and the Option shall not be exercisable in respect of
such expired portion at any time thereafter.
(d) Exercise Procedures. The Option shall be exercisable by Executive
(or a transferee pursuant to Section 7(h)(i) below), to the extent it has
vested, is outstanding and is exercisable in accordance with the terms of
this Agreement, at any time and from time to time prior to the Expiration
Date (or any earlier date of expiration as provided above) by delivering
written notice to the Company and written acknowledgment that Executive has
read and has been afforded an opportunity to ask questions of management of
the Company regarding all financial and other information provided to
Executive regarding the Company, together with payment of the Exercise Price
in respect of the Option Shares to be purchased in accordance with the
provisions of this Agreement and the Option. As a condition to any exercise
of the Option, Executive shall permit the Company to deliver to Executive
all financial and other information regarding the Company it believes
necessary to enable Executive to make an informed investment decision, and
Executive shall make all customary investment representations which the
Company requires. Executive shall be required, as a condition precedent to
Executive's right to exercise the Option, at Executive's expense, to supply
the Company with such evidence, agreements and other assurances (including,
but not limited to, opinions of counsel satisfactory to the Company) as the
Company then may deem necessary or desirable, in form and substance
satisfactory to the Company's counsel, in order to establish to the
satisfaction of the Company that the sale of securities by reason of such
exercise shall be in compliance with applicable law, including the
Securities Act. In addition, as a condition to the issuance of Option Shares
upon Executive's exercise of the Option, the Company may, in its sole
discretion, require that Executive become a party to any stockholder
agreement then in effect. Executive shall have no rights as a shareholder
with respect to the Option Shares issuable under the Option until and unless
all conditions to the Company's obligations to issue such Option Shares have
been satisfied.
3. Adjustment of Incentive Shares, Bonus Shares and Option. The parties
contemplate that the securities to be issued to Executive and the terms of
issuance would be adjusted from those set forth above and in Section 10(b)
below based on the actual terms of the Pending Equity Financing, if different
from those described in the preface to this Agreement, so as to provide an
opportunity for economic returns which is as favorable to Executive, taken as a
whole, as the opportunity with respect to the securities and terms described
above and in Section 10(b) below. Executive understands and acknowledges that
neither the Company nor any of its Affiliates has made any representation or
warranty to Executive as to the value or liquidity of the securities proposed
to be issued to Executive, the future performance or capital structure of the
Company, the prospects for consummation of a Sale of Holdings or other
liquidity event at any time.
4. Representations and Warranties by Executive. In connection with the
execution and delivery of this Agreement, Executive represents and warrants to
the Company that:
(a) 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.
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(b) 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.
(c) 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.
(d) Executive has reviewed, or has had an opportu-nity to review, the
Investor Rights Agreement.
5. Further Acknowledgment. Executive acknowledges and agrees that neither
the issuance of securities or the Option to him by the Company nor any
provision contained herein, therein or in any other agreement or document shall
entitle Executive to remain in the employment of Publishing or any of its
Affiliates.
B. VESTING AND REPURCHASE OF EXECUTIVE STOCK
6. Vesting. The Option and the Incentive Shares shall vest in accordance
with the following schedule, if as of each such date Executive is, and has
been, continuously since the date hereof Employed by the Company:
Cumulative Percentage
of Option and Incentive
Date Shares Vested
---- -----------------------
December 31, 2002...... 33.3%
December 31, 2003...... 66.7%
December 31, 2004...... 100.0%
If Executive ceases to be Employed by the Company on any date other than a date
set forth on the schedule above prior to December 31, 2004, the cumulative
percentage of the Option and of the Incentive Shares to become vested shall be
determined on a pro rata basis according to the number of days elapsed since
the prior date set forth on the schedule above (or, if prior to December 31,
2002, since the date hereof) and any portion of the Option and Incentive Shares
that was not vested on such date on which Executive ceased to be Employed by
the Company shall be deemed unvested (except as provided in subparagraphs (i)
and (ii) below). Notwithstanding the foregoing:
(i) the unvested portion of the Option and the Incentive shares shall
become fully vested upon the consummation of a Sale of the Company if as of
such date, Executive is, and since the date hereof has been, continuously
Employed by the Company through the date of the consummation of such Sale of
the Company,
(ii) if Publishing terminates Executive's Company Employment without
Cause on a date following execution of the definitive agreement providing
for a Sale of the Company, Executive has since the date hereof and until
such Termination been continuously Employed by the Company, and a Sale of
the Company is consummated within 9 months following such Termination and on
substantially the terms and with the purchaser(s) set forth in such
agreement as in effect prior to such Termination, then the unvested portion
of the Option and the Incentive Shares shall become fully vested upon the
consummation of such Sale of the Company; and
(iii) if Publishing terminates Executive's Company Employment without
Cause, Executive ceases to be Employed by the Company on account of his
resignation for Good Reason, or Executive ceases to be Employed by the
Company as a result of the death or Incapacity of Executive, the portion of
the Option or Incentive Shares which would have vested solely on account of
the passage of time (and not any vesting which would have occurred upon the
happening of any other event) during the 12 month period following such
Termination on the pro rata basis described above shall become immediately
vested (with any remaining unvested portion of the Option expiring and being
forfeited).
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7. Purchase Option.
(a) Generally. Upon Termination, the Executive Stock, whether held by
Executive or one or more Permitted Transferees, will be subject to pur-chase
by the Company and the Investors pursuant to the terms and conditions set
forth in this Section 7 (the " Purchase Option").
(i) Termination Without Cause; Death or Incapacity; Expiration of
Term; Resignation for Good Reason. Upon a Termination (A) by Publishing
without Cause, (B) resulting from Executive's death or Incapacity, (C)
resulting from the expiration of the Employment Period without
termination thereof by Publishing or resignation by Executive, or (D)
resulting from Executive's resignation for Good Reason, then the Company
and the Investors may elect to purchase (x) all or any portion of the
Executive Stock which has vested pursuant to Section 6 above (including
without limitation all or any portion of the vested and exercisable, but
unexercised, portion of the Option, and including as "vested" for such
purposes all Coinvest Shares and Bonus Shares) at a price per share
equal to the Fair Market Value of such share (or of such portion of the
Option, as applicable) and (y) all or any portion of any other Executive
Stock at a price per share equal to the lesser of the Fair Market Value
of such share and the Original Cost of such share. For purposes of the
foregoing, the Fair Market Value of any portion of the vested and
exercisable, but unexercised, portion of the Option shall be deemed
equal to the Fair Market Value of any Option Shares which are issuable
upon exercise thereof less the aggregate Exercise Price payable to the
Company upon such exercise. If Executive is terminated by Publishing
without Cause and, during the nine-month period commencing on the
Termination Date, the Company consummates either an initial public
offering of its common stock pursuant to a registration statement filed
under the Securities Act (an "IPO ") or a Sale of the Company, then
notwithstanding the foregoing, for purposes of this Section 7(a) the
"Fair Market Value" of each share of the Company's capital stock shall
be deemed equal to the net cash proceeds received by the Company or the
Investors in such transaction in respect of each share of capital stock
of the Company of such class of capital stock included in the Executive
Stock. In such event, if the Company or the Investors consummated a
purchase of Executive Stock pursuant to the exercise of rights under
this Section 7 prior to the consummation of such IPO or Sale of the
Company and the Fair Market Value per share of such capital stock as
determined pursuant to the immediately preceding sentence exceeds the
price previously paid to Executive for each share of such class of
Executive Stock, then each Person who previously so purchased Executive
Stock of such class from Executive shall (severally and not jointly)
make a payment to Executive in an amount equal to (1) the amount of such
excess, multiplied by (2) the number of shares of Executive Stock
previously purchased by such Person from Executive.
(ii) Termination With Cause; Resignation Other Than For Good
Reason. Upon a Termination with Cause or a resignation by Executive
other than for Good Reason on or prior to December 31, 2004, then the
Company and the Investors may elect to purchase (A) all or any portion
of the Executive Stock which constitutes Coinvest Shares or Bonus Shares
at a price per share equal to the Fair Market Value thereof, and (B) all
or any portion of the Executive Stock which does not constitute Coinvest
Shares or Bonus Shares at a price per share equal to the lesser of the
Original Cost thereof and the Fair Market Value thereof.
(b) Purchase Procedures. After a Termination, the Company may elect to
exercise the right to purchase Executive Stock (in the amounts and for the
prices set forth in Section 7(a)) pursuant to the Purchase Option by
delivering written notice (the "Purchase Notice") to the holder or holders
of Executive Stock at any time prior to the date which is six months after
the Termination Date. The Purchase 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 Purchase Notice
(determined as nearly as practicable to the nearest share).
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(c) Rights of the Investors.
(i) If for any reason the Company does not elect to purchase all of
the Executive Stock pursuant to the Purchase Option, the Investors will
be entitled to exercise the Purchase Option, in the manner set forth in
this Section 7, 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 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 Purchase Notice and (B) the next business day following
the expiration of the period during which the Company may exercise its
right to purchase the applicable shares of Executive Stock, 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. Investors holding a majority of the
shares of Common Stock held by the Investors, including shares of Common
Stock issuable upon exercise or conversion of capital stock, warrants or
other rights held by Investors, may waive all or any rights of the
Investors pursuant to this Agreement, provided that no such waiver shall
be effective unless in writing.
(ii) The Investors will be permitted to purchase all or any portion
of the Available Shares by delivering written notice (an "Election
Notice") to 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 "); provided that if more than one
Investor elects to purchase any or all Available 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 Purchase Notice. As soon as practicable but in any
event within five 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 Purchase
Notice"). At the time the Company delivers a Supplemental Purchase 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 contem-plated by this
Section 7 will take place on the date desig-nated by the Company in the
Purchase Notice or the Supplemental Purchase 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 Purchase Option by delivery of, (i) in the case of the
Company, (A) a check payable to the holder(s) of such shares of Executive
Stock, (B) by offsetting any amounts owed by Executive to Company under any
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. The Company and the Investors, as the case may be, will
receive customary repre-sentations and warranties from each seller of
Executive Stock regarding the sale of the Executive Stock, including but not
limited to the representation
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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. Any Investor purchasing shares of Executive Stock pursuant to
this Section 7 shall at such time acknowledge its obligations pursuant to
the last sentence of Section 7(a)(i) above.
(f) Restrictions on Repurchase. Notwithstanding anything to the contrary
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 7 applicable to
repurchases by the Company, or purchases by the Investors, of Executive
Stock (other than repurchases of Incentive Shares, as to which the time
periods set forth in the Section 7 shall not be suspended or extended) shall
be suspended and shall resume at such time as the Company is permitted to do
so under such restrictions, so that the Company and the Investors may make
such repurchases and purchases of Executive Stock (other than repurchases of
Incentive Shares) during the balance of such period following such time as
the Company becomes permitted to make such purchases under such restrictions.
(g) Termination of Purchase Right. The right of the Company and the
Investors to purchase shares of Executive Stock pursuant to this Section 7
shall terminate upon the earlier of (i) a Sale of the Company, or (ii) if
Executive remains Employed by the Company continuously from the date hereof
through the fifth anniversary of the date hereof, upon such fifth
anniversary (unless Publishing terminates Executive's employment for Cause
thereafter).
(h) Additional Restrictions on Transfer.
(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 (other than clause (i) thereof), (B) the sale of Executive
Stock pro rata with WS, based on holdings of Common Stock on a
fully-diluted basis, in a registered public offering effected pursuant
to Section 9 or Section 10 of the Investor Rights Agreement, (C) sales
of Executive Stock pursuant to Section 2C of the Investor Rights
Agreement, or (D) if, at any time after the Company consummates a public
offering of Common Stock which is registered under the Securities Act
and thereafter WS sells shares of Common Stock pursuant to Rule 144
promulgated under the Securities Act, then at any time thereafter
Executive may sell up to the number of shares of Common Stock equal to
(x) the product of (i) the number of shares of Common Stock then held by
Executive and constituting Executive Stock, multiplied by (ii) a
fraction, the numerator of which is the aggregate number of shares of
Common Stock sold by WS pursuant to Rule 144 and the denominator of
which is the aggregate, maximum number of shares of Common Stock held by
WS, calculated on a fully-diluted basis (e.g., including shares issuable
upon conversion of shares of stock held by WS) at any time after the
date hereof, minus (y) the aggregate number of shares of Common Stock
sold by Executive at or prior to such time pursuant to Rule 144. The
restrictions set forth in this Section 7(h)(i) shall terminate upon the
consummation of a Sale of the Company. Notwithstanding anything in this
Agreement to the contrary, Executive shall not Transfer any interest in
the Option except pursuant to applicable laws of descent and
distribution.
(ii) All Executive Stock is subject to the additional restrictions on
Transfer set forth in the Investor Rights Agreement.
(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
, 2001, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS
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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 PURCHASE
OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXECUTIVE AGREEMENT
BETWEEN THE COMPANY AND THE ORIGINAL HOLDER HEREOF DATED AS OF
, 2001, 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 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
8. Employment. Publishing shall employ Executive, and Executive hereby
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 11 hereof (the "Employment Period ").
9. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Chief
Financial Officer and the Chief Operating Officer of Publishing and shall
have the normal duties, responsibilities and authority implied by such
positions. Executive shall hold similar positions with the Company and Ziff
Xxxxx Media Inc. ("Media") as well as any entity controlled by the Company
which the Board determines to be a key affiliate, and Executive shall have
the right to serve in the same positions with respect to all other
Affiliates controlled by the Company except to the extent (i) the Company's
Chief Executive Officer approves the election of another person to any such
position, or (ii) applicable law precludes Executive from holding such
positions in a foreign entity, provided that Executive shall not be entitled
to any additional compensation for serving in such positions. So long as
Executive remains employed in such positions with Publishing, the Company,
Media and each of such key Affiliates, Executive shall be deemed to be
"Employed by the Company" for purposes hereof, and if Executive ceases for
any reason to be employed in such positions with any of such entities,
Executive will be deemed to be no longer "Employed by the Company", and his
"Company Employment " shall be deemed to have ceased or terminated. For the
avoidance of doubt, Executive will be deemed to have resigned from "Company
Employment " if Executive resigns from such positions with Publishing, the
Company, Media or any of such key Affiliates.
(b) Executive shall report directly to the Chief Executive Officer of the
Company and shall devote his best efforts and substantially all of his
business time and attention (except for vacation periods contemplated
hereby, periods of illness or other incapacity, reasonable time spent with
respect to civic and charitable activities, service on the boards of
directors of other companies as approved by the Board of the Company,
provided that none of such activities shall interfere with Executive's
duties to Publishing, and other permitted absences, if any, for which senior
executive employees of Publishing are generally eligible from time to time
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.
10. Base Salary; Benefits and Bonuses.
(a) During the Employment Period, Executive's base salary shall be
$500,000 per annum, subject to an annual cost of living increase at the
beginning of each calendar year beginning January 1, 2003 at a rate
8
equal to the increase in the Consumer Price Index--All Urban Consumers for
the New York area during the prior year (but subject to a minimum annual
increase of 2%), or such higher rate as the Board of the Company may
designate from time to time (the "Base Salary"), which salary shall be
payable by Publishing in regular installments in 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") as
follows: (i) with regard to each of calendar years 2002, 2003 and 2004,
Executive shall have the opportunity to earn an annual target Bonus of up to
$500,000, so long as Executive remains Employed by the Company through
December 31 of the applicable calendar year and based upon the achievement
of performance targets for the applicable calendar year determined by the
Chief Executive Officer and the Board of the Company, which targets will
include both quantitative and qualitative objectives, provided that
Executive's Bonus in respect of calendar year 2002 will not be less then
$250,000 (so long as Executive remains Employed by the Company through
December 31, 2002); and (ii) Executive shall be entitled to an additional
Bonus of $500,000 so long as Executive remains Employed by the Company
through December 31, 2004 and the Company generates consolidated EBITDA for
the twelve month period ended December 31, 2004 of at least $125,000,000.
Any such Bonus, if determined by the Board of the Company in good faith to
be payable, shall be payable within 90 days following the end of each
calendar year during the Employment Period, consistent with Publishing's
policies. In addition to the foregoing, Executive shall be entitled to a
signing bonus of $250,000, which shall be paid (x) $100,000 in cash (subject
to customary withholding) promptly following the execution and delivery of
this Agreement by Executive and (y) $150,000 in the form of shares of Series
D Preferred (the "Bonus Shares") which shall have a liquidation preference
upon issuance of $150,000 and shall be issued promptly following the closing
of the Pending Equity Financing.
(c) During the Employment Period, (i) 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 and (ii) Executive shall be eligible for four (4)
weeks of paid vacation in accordance with the policies of Publishing.
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.
(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.
11. Term; Termination; Severance.
(a) The Employment Period shall commence on November 26, 2001 and shall
terminate on December 31, 2004; 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 date with Cause or without Cause; and (iii) the Employment Period
may be terminated by Executive at any time for Good Reason or other than for
Good Reason.
(b) Upon any Termination, Executive shall be entitled to receive
Executive's Base Salary earned through the Termination Date, prorated on a
daily basis together with all accrued but unpaid vacation time earned by
Executive during the calendar year in which such Termination occurs and any
Bonus in respect of a prior, completed calendar year which is then due and
owing and has not been paid. Except as set forth in Section 11(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.
9
(c) In the event Executive's employment is terminated by Publishing with
Cause, upon a resignation by Executive from Company Employment other than
for Good Reason, or upon Executive's death or Incapacity, or upon any
Termination on or after December 31, 2004, 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 or upon a resignation by Executive from Company Employment for
Good Reason (in either case prior to December 31, 2004), following such
Termination and upon execution and delivery by Executive within 30 days
after the Termination Date of a general release in favor of the Company and
its Affiliates, in form and substance satisfactory to Publishing, Publishing
shall pay Executive his annual Base Salary (as in effect on the Termination
Date) and provide Executive health insurance benefits through the Severance
Termination Date, and, if such Termination occurs during calendar years
2002, 2003 or 2004, pay to Executive, in the manner described in this
paragraph, a bonus payment calculated in accordance with the next two
following sentences (the "Termination Bonus Amount"). Such bonus payment
would be (i) if Executive is so terminated during calendar year 2002, the
amount equal to $250,000 multiplied by a fraction, the numerator of which is
the number of days elapsed in 2002 prior to such Termination and the
denominator of which is 365 (but in no event less than $62,500), and (ii)
for each of the calendar years 2003 and 2004, 50% of the amount of bonus, if
any, paid by Publishing to Executive as required by this Agreement in
respect of the immediately prior calendar year. In addition, if Executive's
employment by Publishing is terminated during calendar year 2004 by
Publishing without Cause, by Executive with Good Reason or on account of
Executive's death or Incapacity during such calendar year, and the Company
generates consolidated EBITDA for the twelve month period ended December 31,
2004 of at least $125,000,000, the Termination Bonus Amount shall also
include a $500,000 payment, which payment shall be deemed in lieu of the
amount to which Executive would have been entitled pursuant to Section
10(b)(ii) above had he remained Employed by the Company through December 31,
2004. 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. Such severance payments shall not be subject to
reduction for any income earned by Executive from other sources after
Termination (and, consequently, Executive shall have no duty to mitigate
Publishing's severance obligations). For purposes hereof, "Severance
Termination Date" means the earlier of the date which is one year and six
months after the Termination Date or, so long as a Sale of the Company has
not occurred prior to the Termination Date, December 31, 2004; provided that
in no event will the Severance Termination Date be earlier than the first
anniversary of the Termination Date. The Termination Bonus Amount shall be
payable in equal monthly increments over the period from the date of
determination thereof through the Severance Termination Date, and shall be
paid contemporaneously with payment of Base Salary during such period. After
payment of the severance amounts described in this Section 11(d), Publishing
shall have no obligation to make any further severance or other payment or
provide any other benefit to or on behalf of Executive. Notwithstanding the
foregoing, in the event that Executive shall breach any of Executive's
obligations under any of Sections 13, 14 and 15 of this Agreement (except
any breach which Executive carries the burden of proving is solely of a
technical nature, is immaterial and was inadvertent), then, in addition to
any other rights that Publishing or the Company 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 11.
D. ADDITIONAL AGREEMENTS
12. Confidential Information. Executive acknowledges that by reason of
Executive's duties to and association with Publishing and its Affiliates,
Executive will have access to and will become informed of Confidential
Information (as defined in Section 14 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. Executive
acknowledges that all documents and other property
10
including or reflecting Confidential 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 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 memoran-da, 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 14 below) or the business of
Publishing or any of its Affiliates which Executive may then possess or have
under Executive's control.
13. Inventions and Patents.
(a) Executive acknowledges that all Work Product (as defined in Section
14 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, 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 12(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.
14. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to Executive
hereunder, the Executive Stock to be made available for Executive's purchase
and the grant of the Option and the issuance of the Bonus Shares, Executive
acknowledges that in the course of Executive's employment with Publishing
and its Affiliates, Executive 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 Affiliates and that
Executive's services have been and shall be of special, unique and
extraordinary value to 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 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 (i) of International Data Group, Inc., CMP Media,
Inc. (a subsidiary of United News & Media PLC), or CNET Networks, Inc. (the
"Restricted
11
Persons"), (ii) of any successor, assignee, partner, joint venture or
collaboration partner, subsidiary, division or Affiliate of any of the
Restricted Persons, or (iii) in which any of the Restricted Persons owns an
interest or participates, which any of the Restricted Persons manages or
controls (whether as an officer, director, employee, partner, agent,
representative or otherwise), or with which any of the Restricted Persons
consults or to which any of the Restricted 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.
15. Enforcement. If, at the time of enforcement of any of Sections 12, 13
and 14 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, 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 14, 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 14 are reasonable
and that Executive has received consideration in exchange therefor.
16. 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, (ii) the commission of any other act or omission involving
dishonesty, disloyalty or fraud with respect to the Company, any of its
Subsidiaries or any of their advertisers or other customers or suppliers or
any intentional act materially adversely affecting the reputation or
standing of any of the Company and it
12
Subsidiaries, (iii) substantial failure to perform duties as reasonably
directed by the Chief Executive Officer or the Board of the Company which
failure, if curable, is not cured within 15 days after notice thereof to
Executive, (iv) willful or reckless misconduct or, if curable, gross
negligence which is not cured within 15 days after written notice thereof to
Executive, with respect to the Company or any of its Subsidiaries, or (v)
any other material breach of this Agreement or company policy established by
the Chief Executive Officer or the Board of the Company, which breach, if
curable is not cured within 15 days after written notice thereof to
Executive.
"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 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's or any of its Affiliates' suppliers, distributors and customers
and their confidential information; (iii) trade secrets, know-how,
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 successors or Affiliates) without a breach of any obligation of
confidentiality by such third party; (c) was known to Executive prior to his
employment with Publishing and its 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.
"EBITDA" for any year means the consolidated net income of the Company
and its Subsidiaries for such year plus, to the extent deducted in
determining such net income, interest expense, provisions for taxes,
depreciation and amortization, calculated before extraordinary gains and
losses, treating as an expense all bonuses contemplated hereby (other than
the bonus payable pursuant to Section 10(b)(ii) above) or under similar
arrangements (whether paid in cash or otherwise payable) with other
employees of the Company and its Subsidiaries, and without reduction for any
charge in respect of the Option, and calculated in accordance with generally
accepted accounting principles and determined from the Company's audited
annual financial statements for such year.
"Executive Stock" means, collectively, the Coinvest Shares, the Incentive
Shares, the Option Shares (including any Unexercised Option Shares), the
Bonus Shares and any other Stock or equity securities hereafter acquired or
acquirable 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
13
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.
"Exercise Price" means with respect to an Option Share, the amount
payable by Executive to the Company in connection with the exercise of the
Option to purchase such Option Share.
"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 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 as of
the Termination Date; provided that if the parties cannot agree on Fair
Market Value within 30 days after the delivery of the earlier of the
Purchase Notice or the Supplemental Purchase Notice, 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 resignation
by Executive other than for Good Reason, any diminution in the value of
the Company as a result of the loss of Executive's services to the
Company and its Affiliates.
"Good Reason" means the occurrence, without Executive's consent, of any
of the following: (a) unless corrected within 15 days after written notice
by Executive to the Chief Executive Officer and the Board of the Company of
objection thereto, the assignment to Executive of any significant duties
materially inconsistent with Executive's status as the Chief Financial
Officer and Chief Operating Officer of the Company (and its controlled
Affiliates other than foreign entities where prohibited by applicable law
and except to the extent the Chief Executive Officer of the Company has
approved the election of another person to any such position) or a
diminution of Executive's title(s), or a substantial adverse alteration in
the nature or status of Executive's responsibilities; (b) a reduction in
Executive's annual Base Salary as contemplated hereby, except for
across-the-board salary reductions similarly affecting all senior executives
of Publishing; or (c) the Board of the Company requires Executive to
relocate from the New York metropolitan area.
"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
14
Executive's duties as determined by the Board of the Company in good faith,
for a period of 90 consecutive days or a period of 120 days during any
180-day period.
"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 April 5, 2000 by and among the Company and the Company's
stockholders, as such agreement may be amended from time to time in
accordance with its terms.
"Option Shares" shall mean (a) all shares of capital stock of the Company
issued or issuable upon the exercise of the Option and (b) all shares of
capital stock of the Company issued with respect to the capital stock
referred to in clause (a) above by way of a stock dividend or stock split or
in connection with any conversion, merger, consolidation or recapitalization
or other reorganization affecting such capital stock. Option Shares shall
continue to be Option Shares in the hands of any holder other then Executive
(except for the Company, the Investors and transferees in a Public Sale
consummated in accordance with this Agreement and the Investor Rights
Agreement), and each such transferee thereof shall succeed to the rights and
obligations of a holder of Option Shares hereunder.
"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) ownership or voting rights to capital stock of
the Company possessing the voting power to elect a majority of the Board of
the Company (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
15
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.
"Termination" means such time as of which Executive ceases to be Employed
by the Company, for any reason, whether on account of termination by
Publishing, resignation by Executive, Executive's death or Incapacity or
otherwise.
"Termination Date" means the date on which Termination occurs.
"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 (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 successors or assigns) and its Affiliates.
"WS" has the meaning given such term in the Investor Rights Agreement.
17. 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: Xxxx Xxxxxxxx
with a copy to: _________________________________________________
Attn: _________________________________________
If to the Company: Ziff Xxxxx Holdings, Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
with a copy to: Ziff Xxxxx Holdings, Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
16
and Xxxxxx, Xxxxx & Partners Management III, L.L.C.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Avy X. Xxxxx
Xxxxxx X. Xxxxxxxxxx
and Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
Xxxxx X. Breach
If to WS or the Investors: Xxxxxx, Xxxxx & Partners Management III, L.L.C.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Avy X. Xxxxx
Xxxxx X. Xxxxxxxxxx
with a copy to Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx
Xxxxx X. Breach
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 five days after
deposit in the U.S. mail, if mailed, or otherwise when so delivered or sent
otherwise.
18. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stock or the Option 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 or such Option as
the owner of such Stock or such Option 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.
(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.
17
(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 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 7 and
Sections 12 through 18 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 WSP III.
(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: _________________________________
Its: ________________________________
ZIFF XXXXX PUBLISHING, INC.
By: _________________________________
Its: ________________________________
EXECUTIVE:
_____________________________________
[Signature Page to Executive Agreement]
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EXHIBIT C
Representations and Warranties by Executive
(1) 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.
(2) 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.
(3) 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.
(4) 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.
A-1
