EXHIBIT 10.18
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1998, between ZD Inc., a Delaware
corporation (the "Company"), and Xxxx Xxxxxxx (the "Executive").
WHEREAS, the Executive is currently employed by Xxxx-Xxxxx Inc., a
Delaware corporation ("ZDI"), pursuant to the Employment Agreement, dated as of
February 29, 1996, with ZDI and SOFTBANK Holdings Inc., a Delaware corporation
("SB Holdings"); and
WHEREAS, as part of a reorganization involving the worldwide
operations of SOFTBANK Corp., a Japanese corporation ("SOFTBANK"), and its
affiliates (the "SOFTBANK Group"), the operations of ZDI are being consolidated
under the management of the Company; and
WHEREAS, the Executive has been awarded in connection with such
reorganization (i) one-time stock options to purchase 398,750 shares and 31,250
shares of Company common stock scheduled to vest over a five-year period (the
"Fixed Option"), and (ii) a one-time stock option to purchase 430,000 shares of
Company common stock the vesting of which is accelerated upon the attainment of
certain performance targets are met (the "Incentive Option"), both granted under
the Company's 1998 Incentive Compensation Plan; and
WHEREAS, the Company and the Executive wish to provide for continuity
of management of the Company and the Business (as defined below); and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company to enter into this
Agreement.
THEREFORE, in consideration of the premises and the respective
covenants and agreements herein contained, the parties hereto agree as follows:
1. Employment
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The Company will employ the Executive as its sole Chairman and sole
Chief Executive Officer, and the Executive will devote his full business time
and use his best efforts to serve the Company in such capacity, on the terms and
conditions set forth herein; it being understood that the Executive will also
spend a reasonable amount of business time in serving as a director of certain
affiliates of the Company and non-profit organizations. The Executive will have
full authority and power to manage the Company and the Business consistent with
his position and the directions of the Board.
As used in this Agreement, the term "Business" includes (i) the
business of the Company and its subsidi aries and (ii) businesses of affiliates
of the Company that the Company manages. The term "affiliate" of the Company
means any corporation, partnership 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.
2. Term
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Unless sooner terminated as contemplated herein, the initial term of
employment of the Executive under this Agreement will commence on the date
hereof and end on April 1, 2004 (the "Initial Term"). Such employment shall
continue thereafter until terminated by either party upon not less than 12
months notice or as provided below. The Company agrees not to bring any action
against the Executive with respect to claims arising out of the Executive's
voluntary termination of his employment hereunder; provided, that such agreement
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shall not prevent the Company from exercising its rights to dispute whether such
termination shall be considered to be for Good Reason (as defined herein).
3. Place of Performance
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The Executive's employment will be based at the principal office of
the Company in New York, New York.
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4. Compensation and Related Matters
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(a) Salary. During the term of the Executive's employment, the
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Company will pay to the Executive an annual base salary of not less than
$900,000 (subject to periodic review by the Compensation Committee of the Board
for increases based upon performance), with such salary to be paid pursuant to
the Company's normal payroll practices.
(b) Incentive Bonus. During the term of his employment, the
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Executive will receive an annual incentive bonus as determined by the
Compensation Committee of the Board, with the proportion awarded based upon the
Company's achievement of objective performance goals pre-established by the
Board in consultation with the Executive; provided, however, that the annual
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target bonus payable for any fiscal year upon achievement of 100% of such
performance goals shall not be less than $600,000.
(c) Stock Award and Option Programs. During the term of his
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employment, the Executive will participate in the executive stock bonus and
option programs of the Company and of the SOFTBANK Group as may be determined by
the respective Compensation Committees appointed by the Boards of Directors of
the Company and SB Holdings.
(d) Benefits and Perquisites. During the term of his employment, the
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Executive will continue to participate in employee benefit plans and programs,
and be provided with perquisites, at least equivalent to those currently
provided to the Executive, including participation in employee benefit plans and
the use of the Company's leased apartment in New York City. Upon termination of
his employment as contemplated by Section 5(d), the Executive will be entitled
to continue, to the extent permitted by law, his participation in such employee
benefit plans and programs and to receive such perquisites (other than use of
the Company's New York City apartment) during the period Executive continues to
receive his base salary under Section 5(d).
5. Termination
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The Executive's employment shall terminate upon his death. The
Company may terminate the Executive's employment at or after April 1, 2004 upon
12 months notice as provided in Section 2, or otherwise at any time for
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Disability or Cause, or without Cause, and the Executive may terminate such
employment at or after April 1, 2004 upon 12 months notice as provided in
Section 2 or otherwise at any time for Good Reason (all as defined below). Any
termination of such employment shall be subject to the following conditions:
(a) Regardless of the reason for such termination, the Company will
pay the Executive his base salary through the Date of Termination (as defined
below) and any amounts owed to the Executive pursuant to the terms and
conditions of the employment benefit plans and programs of the Company at the
time such payments are due.
(b) If such employment is terminated as a result of the Executive's
Disability or death, the Company will pay, following the determination of such
award, the prorated portion of any annual incentive bonus the Executive would
have received for the year of such termination to the 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 such employment is terminated by the Company for Cause or prior
to the end of the Initial Term by the Executive voluntarily for other than Good
Reason, the Company will have no additional obligations to the Executive under
this Agreement.
(d) If the Company terminates the Executive's employment other than
for Disability or Cause (including termination upon 12 months notice as provided
in Section 2) or the Executive terminates such employment for Good Reason, then
during the period commencing on the Executive's termination of employment and
ending on the later of (i) the second anniversary of such termination, and (ii)
March 31, 2001, the Company will pay the Executive his base salary at the level
in effect as of the Date of Termination (at the time such payments would
normally be made) plus an amount equal to the Executive's average annual
incentive bonus for the two years preceding the year in which the Date of
Termination occurs; provided, however, if such termination is by the Executive
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for Good Reason, the level of such base salary and the amount of such average
annual incentive bonus shall, if greater, be measured with reference to the date
immediately prior to the occurrence of the event justifying
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the termination (as provided in Section 5(e)(iii) below) rather than with
reference to the Date of Termination.
(e) For purposes of this Agreement, the following terms shall have
the meanings specified below:
(i) "Disability" will mean the 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" will mean termination of the Executive's
employment by the Company following the Executive's:
(A) gross misconduct that is injurious to the Company;
(B) conviction of, or plea of nolo contendere to, a felony by or
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before any criminal tribunal;
(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 the Executive has not substantially performed his
duties; or
(D) willful misconduct that results in gain or personal
enrichment of the Executive to the detriment of the Company, whether
monetarily or otherwise.
(iii) Termination for "Good Reason" shall mean termination by the
Executive following (i) a material breach of this Agreement by the Company
or a material diminution of Executive's responsibilities (other than as a
result of the disposition of any part of the Business) or status that is
not corrected within 30 days of the Executive's notifying the Company in
writing of such breach or diminution, or (ii) either (x) a change in
control of the Company within the meaning of the Company's 1998 Incentive
Compensation Plan, (y) the acquisition on or after June 1, 1998 by any
person or group (other than the Company or any
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subsidiary thereof or any employee benefit plan of the Company) of
beneficial ownership of securities of the Company sufficient to elect a
majority of the Board, provided that such person or group did not have such
sufficient beneficial ownership immediately prior to such acquisition of
Company securities or (z) so long as SOFTBANK Corp. has beneficial
ownership of more than 50% of the Company securities entitled to vote at
the election of directors of the Company, a change in control of SOFTBANK
Corp. such that any person or group (other than SOFTBANK Corp. or any
subsidiary thereof) acquires beneficial ownership of securities of SOFTBANK
Corp. sufficient to elect a majority of the board of directors of SOFTBANK
Corp., provided that such person or group was not the beneficial owner of
such sufficient beneficial ownership immediately prior to such acquisition
of securities of SOFTBANK Corp. (any of the events in this clause (ii), a
"Change in Control"); provided, however, the Executive will have the right
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to terminate his employment for Good Reason by virtue of a Change in
Control only upon notification within 60 days following the first
anniversary of such Change in Control.
(iv) "Date of Termination" shall mean the date of Executive's death
or the date otherwise set forth on a notice of termination provided by one
party hereof to the other (which in the event of any termination other than
a termination requiring 12 months notice, shall be no later than 30 days
following such notice of termination)).
6. Confidentiality; Non-Competition
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(a) For a period of two years commencing upon the termination of his
employment hereunder (regardless of the reason for the termination), the
Executive shall not, with out written consent of the Company, engage, as a
stockholder, director, officer, consultant or otherwise, in any enterprise
anywhere in the world which competes with the Company or any business of its
affiliates that, at the time of such termination, is under the Company's
management control, or directly or indirectly employ, contract for or solicit
the services in any capacity of any person who is, or within the prior three
months has been, employed by the Company or any such business. The Executive
will not be deemed to be engaged in a competing enterprise if (A) less
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than 10% of the gross receipts of such enterprise are derived from businesses
that compete with the Company or businesses of its affiliates that were under
the Company's management control, and (B) the Executive's engagement does not
involve such competing businesses. This paragraph shall not bar Executive from
owning up to 5% of the outstanding securities of any publicly-held company.
(b) The 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 confidential information with
respect to the business or affairs of the Company or its affiliates. This
obligation will be in effect while the Executive is employed by the Company and
at all times after he ceases to be so employed, but it will not apply at any
time to information that is or becomes generally known to the public (other than
through a breach of this Section 6(b)).
(c) The Executive acknowledges that the remedy at law for breach of
his covenants under this Section 6 will be inadequate and, accordingly, in the
event of any breach or threatened breach by the Executive of the provisions of
this Section 6 the Company will 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 the right to any payment under this Agree
ment), to an injunction restraining any such breach, without any bond or other
security being required. The 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 6 are to be effective are reasonable. In the event that
any court determines that the time period or the area, or both of them, are
unreasonable and that such covenants are to that extent unenforceable, the
parties 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.
(d) In the event of a breach by the Executive of any covenant under
this Section 6, the 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 the Company or of SOFTBANK, including the Fixed Option
and the Incentive Option, any
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such option that is at the time of such breach unexercised shall immediately
terminate.
7. Inventions
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All copyrights, trademarks, proprietary processes and analytical
models or formulas and other intangible or intellectual property rights that may
be invented, conceived, developed or enhanced by the Executive during the term
of his employment under this Agreement that relate to the business or operations
of the Company or any affiliate thereof of which the Executive has served as an
officer or in which the SOFTBANK Group has held an equity interest, or that
result from any work performed by the Executive for the Company or any such
affiliate, will be the sole property of the Company or such affiliate, as the
case may be, and the Executive hereby waives any right or interest that he may
otherwise have in respect thereof. Upon the reasonable request of the Company,
the Executive will execute and deliver any instrument or document reasonably
necessary or appropriate to give effect to this Section 7 and do all other acts
and things reasonably necessary to enable the Company or such affiliate, as the
case may be, to exploit the same or to obtain patents or similar protection with
respect thereto.
8. Certain Taxes
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In the event of termination of the Executive's employment as a result
of a Change in Control, the Company shall pay to the Executive an amount which,
on an after-tax basis (including federal income and excise taxes, and state and
local income taxes) equals the excise tax, if any, imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, upon the Executive by reason of
amounts payable under this Agreement (including this Section 8), as well as
amounts payable by the Company, SB Holdings, MAC Inc. or any affiliate thereof
under any stock option or stock award program that are described in Section
280G(b)(2)(A)(i) of the Code. For purposes of this Section 8, the Executive
shall be deemed to pay federal, state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the gross up payment is
to be made, taking into account the maximum reduction in federal income taxes
which could be obtained from deduction of state and local income taxes.
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9. No Obligation to Mitigate Damages; Other Rights
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The Executive shall not be required to mitigate damages or any amount
payable under this Agreement by seeking other employment or otherwise, nor shall
any such amount be reduced by any compensation received by the Executive from
another employer after the date of resignation or termination, or otherwise.
The provisions of this Agreement, and any payment provided for hereunder, shall
not, to the extent permitted by law, reduce any amounts otherwise payable, or in
any way diminish the Executive's rights under any other employee benefit plan,
contract or arrangement.
10. 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 the 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 the Executive hereunder will
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die following his termination of
employment while any amounts would still be payable to him pursuant to the
provisions of Section 5 or Section 8 if he had continued to live, all such
amounts will be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
11. 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
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mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Xxxx Xxxxxxx
000 Xxxxxxx Xxxxxxxxx, Xxxx 00
Xxxxxxx, XX 00000
and
ZD Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Esq.
If to the Company:
ZD Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Secretary
and
ZD Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Legal Department
with a copy to:
SOFTBANK Holdings Inc.
00 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Vice Chairman
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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.
12. 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
the Executive and the Company and a duly authorized member of the Board. 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 will 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.
13. Arbitration
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Any dispute arising out of or in connection with this Agreement or
under any related stock option or bonus program shall be settled exclusively by
arbitration in New York City in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction over the party against whom
the judgment is entered.
Nothing in this Section 13 shall prevent the Company from seeking
injunctive relief in any court in New York City or any other court having
jurisdiction over the Executive for any breach or threatened breach of this
Agreement, including, without limitation, the provisions of Section 6.
14. Entire Agreement
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This Agreement and the related documents referred to herein set forth
the entire agreement of the parties in respect of the subject matter contained
herein, and upon the effectiveness of this Agreement shall supersede all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral
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or written, by any officer, employee or representative of any party hereto
(including the Employment Agreement, dated as of February 29, 1996, with ZDI and
SB Holdings); provided, however, nothing herein shall affect the Executive's
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continuing obligations with respect to non-competition and confidentiality under
any other agreements to which the Executive is a party (including, without
limitation, the "Phantom Equity" Agreement, dated as of July 3, 1989 and amended
September 9, 1994, or the Special Compensation Agreement dated May 8, 1990, as
amended June 17, 1994, both with Ziff Communications Company).
15. Validity
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The invalidity or unenforceability of any provision or provisions of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, which will remain in full force and effect.
16. Governing Law
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This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York. Subject to the provisions of Section 13, each
of the parties consents to personal jurisdiction in any action brought in any
court in New York City having subject matter jurisdiction over matters arising
under this Agreement.
17. Counterparts
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This Agreement may be signed in two counterparts, each of which shall
be deemed an original agreement, but both of which together shall constitute one
and the same instrument.
18. Condition
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The effectiveness of this Agreement is subject to completion of the
initial public offering of common stock of the Company.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
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ZD INC.
___________________ By:______________________
Xxxx Xxxxxxx Xxxxxx X. Xxxxxx
Director
FOR PURPOSES OF SECTION 14.
XXXX-XXXXX INC.
By:_____________________
Xxxxxx X. Xxxxxx
Director
SOFTBANK HOLDINGS INC.
By:______________________
Xxxxxx X. Xxxxxx
Vice Chairman
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