EXHIBIT 10.40 EXECUTIVE AGREEMENT

 

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                                                                   EXHIBIT 10.40

 

                                  CONFIDENTIAL

 

                               EXECUTIVE AGREEMENT

 

            THIS EXECUTIVE AGREEMENT (this "Agreement") is made as of October

15, 2004 (the "Effective Date"), by and between Ziff Davis Media Inc., a

Delaware corporation (the "Company") and Scott McCarthy ("Executive"). Certain

definitions are set forth in the Appendix to this Agreement.

 

            In consideration of the representations and covenants set forth

herein, the parties hereby agree as follows:

 

      1. Employment. The Company shall employ Executive, and Executive hereby

accepts employment with the Company, upon the terms and conditions set forth in

this Agreement for the period beginning October 18, 2004 and ending October 17,

2009 or earlier pursuant to Section 4 hereof (the "Employment Period").

 

      2. Position and Duties.

 

      (a) During the Employment Period, Executive shall serve as the President

of the Ziff Davis Games Group division of the Company and shall have the normal

duties, responsibilities and authority implied by such position. Executive shall

hold a similar position with any Affiliate of the Company to the extent

Executive may be so appointed by the Company in its sole discretion.

 

      (b) Executive shall report directly to the Company's Chief Executive

Officer ("CEO") or to the President or such other senior Company executive as

the CEO may direct, and shall devote his best efforts and substantially all of

his business time and attention to the business and affairs of the Company (and

to the extent applicable, 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.

 

      3. Base Salary; Benefits and Bonuses.

 

      (a) During the Employment Period, Executive's base salary shall be

$300,000 per annum through January 15, 2005 and thereafter shall be $350,000 per

annum or such higher rate as the Company may designate from time to time (the

"Base Salary"), which salary shall be payable by the Company in regular

installments in accordance with the Company'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") in an amount

determined by the Company based upon the achievement of performance targets for

such year (which targets will include both quantitative and qualitative

objectives), payable at the Company's discretion. Any such Bonus, if determined

by the Company to be payable, shall be payable within ninety (90) days following

the end of each fiscal year during the Employment Period. Executive's target

Bonus (i.e., the amount that would be paid if the quantitative and qualitative

objectives are achieved) shall be not less than $250,000. Notwithstanding the

foregoing, Executive shall be paid a bonus for fiscal 2004 in the amount of

$175,000, which amount will be payable on or before March 31, 2005.

 

      (c) During the Employment Period, (i) Executive shall be entitled to

participate in all of the Company's employee benefit plans and programs for

which senior executive employees of the Company are generally eligible, which

currently include, but shall not be limited to, health insurance, dental

insurance, life insurance, short-term and long-term disability insurance and

participation in the Company's 401(k) plan and (ii) Executive shall be eligible

for four (4) weeks of paid vacation in accordance with the policies of the

Company. Executive's right to participate in any employee benefit plans or

programs of the Company shall be subject to the Company's right to amend, modify

or terminate any such plan or program

 

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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) The Company 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 the Company's policies in effect

from time to time for senior executive employees of the Company with respect to

travel, entertainment and other business expenses, subject to the Company's

requirements with respect to reporting and documentation of such expenses.

 

      4. Termination; Severance.

 

      (a) The Employment Period (i) shall terminate upon Executive's death or

Incapacity; (ii) may be terminated by the Company at any time with Cause or

without Cause; and (iii) may be terminated by Executive at any time for Good

Reason or other than for Good Reason. Executive acknowledges and agrees that

nothing contained herein or in any other agreement or document shall entitle

Executive to remain in the employment of the Company or any of its Affiliates.

"Termination" means such time as of which Executive ceases to be Employed by the

Company, for any reason, whether on account of termination by the Company,

resignation by Executive, Executive's death or Incapacity or otherwise and

"Termination Date" means the date on which Termination occurs.

 

      (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 4(d), Executive shall not be

entitled to receive Executive's Base Salary or any bonuses or other benefits

from the Company for any period after the Termination Date.

 

      (c) In the event Executive's employment is terminated (i) by the Company

with Cause, (ii) by Executive other than for Good Reason, or (iii) upon

Executive's death or Incapacity, or upon any Termination on or after October 17,

2009, the Company 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 (i) by the

Company without Cause or (ii) by Executive for Good Reason (in either case prior

to October 17, 2009), following such Termination and upon execution and delivery

by Executive within thirty (30) calendar days after the Termination Date of a

general release in favor of the Company and its Affiliates and its and their

respective officers, directors, employees, representatives, agents and

attorneys, and the successors and assigns of each of the foregoing, in form and

substance satisfactory to the Company, the Company shall, through the first

(1st) anniversary of the Termination Date, (x) pay Executive his annual Base

Salary (as in effect on the Termination Date) in regular installments in

accordance with the Company's general payroll practices and (y) if Executive

elects under COBRA to maintain health insurance benefits through the Company's

group plan (if any), pay that portion of the premium for such benefits that the

Company would have paid had Executive remained an employee of the Company for

such period. After payment of the severance amounts described in this Section

4(d), the Company 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 Section 5 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

the Company may have under this Agreement or otherwise, the Company 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 4.

 

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      5. Noncompete, Non-Solicitation.

 

      (a) In further consideration of the compensation to be paid to Executive

hereunder, Executive acknowledges that in the course of Executive's employment

with the Company and any applicable Affiliate thereof, Executive will during the

Employment Period become familiar with the trade secrets, business plans and

business strategies and with other Confidential Information (as defined on the

Appendix hereto) concerning the Company and any applicable Affiliate of the

Company (and their respective predecessors, successors and assigns) and that

Executive's services have been and shall be of special, unique and extraordinary

value to the Company and any applicable Affiliate of the Company. 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 (whether for Executive or for any other Person) own any interest

in, operate, manage, control, engage in, participate in (whether as an officer,

director, employee, partner, agent, representative or otherwise), invest in,

permit Executive's name to be used by, consult with, advise, render services for

(alone or in association with any other Person), or otherwise assist in any

manner (i) any Person (each a "Restricted Person") that engages in or owns,

invests in, operates, manages or controls any venture or enterprise which

directly or indirectly engages or proposes to engage in any business or

enterprise which manufactures, designs, produces, renders or sells products or

services which compete with the products and services of the Company (or any

products or services the Company is in the process of developing), as the

Company's and its Affiliates businesses exist at the Termination Date or are in

process as of the Termination Date; (ii) any successor, assignee, partner, joint

venture or collaboration partner, subsidiary, division or Affiliate of any

Restricted Person; or (iii) any Person in which any Restricted Person owns an

interest or participates, which any of Restricted Person manages or controls

(whether as an officer, director, employee, partner, agent, representative or

otherwise), or with which any Restricted Person consults or to which any

Restricted Person 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. Without limiting

the generality of the foregoing, Executive and the Company agree that as of the

Effective Date, the following persons are each deemed to be a "Restricted