EXHIBIT 10
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), dated
effective as of May 17, 2002, by and between The Peoples Publishing Group, Inc.,
a Delaware corporation (the "Company"), and Xxxxxxx X. XxXxxxx, an individual
resident of the State of New Jersey (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive previously entered into an
Employment Agreement, dated May 6, 1999 (the "1999 Agreement"), which expires on
May 17, 2002; and
WHEREAS, the Company desires to continue to employ the Executive and
the Executive wishes to continue his employment with the Company upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the Company and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive as Chief
Financial Officer, and the Executive accepts such employment and agrees to
perform services for the Company and its Affiliates in accordance with the
requirements of the position, for the period and upon the other terms and
conditions set forth in this Agreement. The term "Affiliate" as used in this
Agreement shall mean any subsidiary or parent corporation of the Company and any
other corporation under common control with the Company, including Peoples
Educational Holdings, Inc., a Delaware corporation (hereinafter referred to as
the "Parent").
2. Term. Unless terminated at an earlier date in accordance with
Section 8, the initial term of the Executive's employment hereunder shall be for
a period of three (3) years, commencing on May 17, 2002. Thereafter, the term of
this Agreement shall be automatically extended for successive one-year periods
unless either party objects to such extension by written notice to the other
party at least 90 days prior to the end of the initial term or any extension;
provided, however, that the party objecting to the automatic extension shall do
so by written notice to the other party at least 180 days prior to the end of
the initial term or any extension following (1) a sale of substantially all of
the assets of the Company or Parent to a person or entity that is not an
Affiliate of the Company or the Parent or (2) a merger of the Company or Parent
with a person or entity that is not an Affiliate of the Company or the Parent
and in which merger the Company or the Parent, as applicable, is not the
surviving company. Notwithstanding the foregoing, the terms of Sections 5
(Confidential Information), 7 (Non-Competition), 8 (Termination) and 9
(Miscellaneous) and shall survive the expiration or termination of this
Agreement (whether such expiration or termination occurs as a result of the
expiration of the term as provided herein, by mutual agreement, as a result of
the Executive's resignation, termination by the Company with or without Cause
(as defined below), or any other reason), and continue in full force and effect
in accordance with their terms.
3. Position and Duties.
3.01 Service with Company. During the term of this Agreement,
the Executive shall perform such duties for the Company and its Affiliates as
the Chief Executive Officer ("CEO") or Board of Directors of the Company or the
Parent shall assign to him from time to time.
3.02 Performance of Duties. The Executive shall serve the
Company and its Affiliates faithfully and to the best of his ability, and devote
his full time, attention and efforts to the business and
affairs of the Company and its Affiliates during normal business hours (and
outside normal business hours as reasonably required) during the term of this
Agreement. The Executive hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement, and
that during the term of this Agreement he shall not render or perform services
for any other corporation, firm, entity or person.
4. Compensation.
4.01 Base Salary. As compensation in full for all services to
be rendered by the Executive under this Agreement during the first twelve months
of the three-year term of this Agreement, the Company shall pay to the Executive
an annual base salary of $126,500, which salary shall be paid in accordance with
the Company's normal payroll procedures and policies. The compensation payable
to the Executive for each twelve-month period following the expiration of the
initial twelve-month period of this Agreement shall be mutually agreed upon by
the Company and the Executive prior to the commencement of each such 12-month
period based on the Executive's performance, provided, however, that the base
salary shall not be reduced unless there is a downward adjustment in all
executive salaries of the Company in which case the decrease will be no greater
than the average decrease in the senior executive salaries. The Executive
understands that executive salaries, including any increases in such salaries,
are subject to the approval of the Company's and the Parent's Board of
Directors.
4.02 Incentive Compensation. In addition to the base salary
described in Section 4.01, the Executive shall be eligible to receive incentive
compensation as set forth in the CFO incentive plan attached here as Exhibit A.
If the Executive's employment is terminated pursuant to Sections 8.01(c) or
8.01(d) hereof, no bonus shall be payable for the year in which such termination
occurred. If the Executive's employment is terminated pursuant to Sections
8.01(a), 8.01(b) or 8.02 hereof, the Company shall pay the Executive a pro rated
bonus based upon the full year bonus amount that would have been earned in the
termination year, pro rated for the number of days the Executive worked in that
year, payable promptly after the Company's and its Affiliates' audited financial
statements for the year in which the termination occurred become available.
4.03 Participation in Benefit Plans. The Executive shall also
be entitled to participate in all employee benefit plans or programs (including
vacation time of not less than four weeks annually) established by the Company's
Board of Directors from time to time to the extent that his position, title,
tenure, salary, age, health and other qualifications make him eligible to
participate and at all times at a level which is commensurate with the Company's
and the Parent's other senior executives similarly situated. The Executive's
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto. Without limiting the generality of the
foregoing, the Executive shall be provided with medical, disability, life and
other insurance coverage generally provided to other senior executives of the
Company and the Parent to the extent it is available at a reasonable cost from
reputable insurers. The Company shall pay 100% of the Executive's individual and
family insurance coverage.
4.04 Expenses; Auto Allowance. The Company shall pay or
reimburse the Executive for all reasonable and necessary out-of-pocket expenses
incurred by him in the performance of his duties under this Agreement including,
subject to the CEO's approval, expenses incurred by the Executive for continuing
professional education and maintaining the Executive's CPA certification,
subject to the Company's normal policy for expense verification. The Company
shall pay or reimburse the Executive for all reasonable and necessary
out-of-pocket expenses (including tolls and parking, but specifically excluding
purchases of gas, repairs, maintenance and insurance) incurred by him in the
performance of his duties under this Agreement, subject to the Company's normal
policies for expense verification, and shall also pay the Executive an auto
allowance of $600 per month.
5. Confidential Information. Except as permitted or directed by the
Company's CEO or Board of Directors, during the term of this Agreement and for a
period of one year thereafter the
Executive shall not divulge, furnish or make accessible to anyone or use in any
way (other than in the ordinary course of the business of the Company or any of
its Affiliates) any confidential or secret knowledge or information of the
Company or any of its Affiliates which the Executive has acquired or become
acquainted with or shall acquire or become acquainted with prior to the
termination of the period of his employment by the Company (including employment
by the Company or any of its Affiliates), whether developed by himself or by
others, concerning any trade secrets, confidential or secret designs, processes,
formulae, plans, devices or material (whether or not patented or patentable),
financial results or condition, business plans or projections directly or
indirectly useful in any aspect of the business of the Company or any of its
Affiliates, any confidential customer lists or printer or supplier lists of the
Company or any of its Affiliates, any author or freelance employee lists of the
Company or any of its Affiliates, any confidential or secret development or
research work of the Company or any of its Affiliates, any lists of potential
investors or acquisitions contemplated by the Company or any of its Affiliates,
any plans, proposals or strategies of the Company or its Affiliates to expand,
merge or engage in a business combination or relationship or any other
confidential or secret aspects of the business of the Company or any of its
Affiliates. The Executive acknowledges that the above-described knowledge or
information constitutes a unique and valuable asset of the Company and its
Affiliates, as the case may be, acquired at great time and expense by the
Company, its predecessors and its Affiliates, as the case may be, and that any
disclosures or other use of such knowledge or information other than for the
sole benefit of the Company or any of its Affiliates would be wrongful and would
cause irreparable harm to the Company and its Affiliates, as the case may be.
The foregoing obligations of confidentiality, however, shall not apply to any
knowledge or information which is now public or which subsequently becomes
generally publicly known, other than as a direct or indirect result of the
breach of this Agreement by the Executive.
6. Ventures. If, during the term of this Agreement, the Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company or any of its Affiliates and a third
party or parties, all rights in the project, program or venture, to the extent
that such rights may be claimed by the Executive or the Company or any of its
Affiliates, shall belong to the Company or its Affiliates, as the case may be.
Except as approved by the Company's Board of Directors, the Executive shall not
be entitled to any interest in such project, program or venture or to any
commission, finder's fee or other compensation in connection therewith other
than the compensation to be paid to the Executive as provided in this Agreement.
7. Non-Competition.
7.01 During the term of the Executive's employment by the
Company and for one year following termination of his employment, he shall not,
directly or indirectly, engage in competition with the Company or any of its
Affiliates in any manner or capacity (e.g., as an adviser, consultant,
principal, agent, partner, officer, director, stockholder, employee, member of
any association, or otherwise) in any phase of the business which the Company or
any of its Affiliates is conducting during the term of this Agreement or
conducted during the term of the 1999 Agreement, including the design,
development, distribution, marketing or selling of accessories, manipulatives,
books, supplements, tests, or any other products or services being sold by the
Company and its Affiliates.
7.02 The obligations of the Executive under Section 7.01 shall
apply to any geographic area in which the Company or any of its Affiliates:
(i) has engaged in business during the term of
this Agreement, or during the term of the
1999 Agreement, through production,
promotional, sales or marketing activity, or
otherwise, or
(ii) has otherwise established its goodwill,
business reputation, or any customer
relations.
7.03 For a period of one year following the termination of the
Executive's employment hereunder, the Executive will not, on behalf of himself
or on behalf of any other person, firm or corporation, call on any of the
customers or identified customer prospects of the Company or any of its
Affiliates, for the purpose of soliciting or providing to any said customers or
prospective customers any products or services competitive to the products and
services of the Company or any of its Affiliates, nor will he in any way divert
or take away any customer of the Company or its Affiliates.
7.04 During the term of this Agreement, the Executive shall
not, directly or indirectly, assist or encourage any other person in carrying
out, directly or indirectly, any activity that would be prohibited by the above
provisions of this Section 7 if such activity were carried out by the Executive,
either directly or indirectly; and in particular the Executive shall not,
directly or indirectly, induce any employee of the Company or any of its
Affiliates to carry out, directly or indirectly, any such activity.
7.05 For a period of one year following the termination of the
Executive's employment hereunder, the Executive will not, directly or
indirectly, employ, solicit for employment, or advise or recommend to any other
person, firm or corporation that they employ or solicit for employment any
employee of the Company or any of its Affiliates.
7.06 Except as set forth in sections 8.01 or 8.02, during the
period when the noncompetition covenant contained in Section 7.01 is effect
following the termination of the Executive's employment by the Company, the
Company shall pay to the Executive, as consideration for such covenant, an
amount equal to 60% of the Executive's annual base salary at the time of
termination of employment, which amount shall be payable to the Executive on a
monthly basis; provided, however, that the Company may, upon 30 days' written
notice to the Executive, terminate its obligation to make such payments to the
Executive and, in such event, this noncompetition covenant shall terminate as of
the end of such 30-day period. However, if the Executive becomes employed with
another corporation or entity or as a sole proprietor, the Company shall not be
obligated to continue the payments required under this Section 7.06 and the
Executive shall continue to be bound by this noncompetition covenant for the
duration of its term.
7.07 Ownership by the Executive, as a passive investment, of
less than 1% of the outstanding shares of capital stock of any corporation
listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of this Section 7.
8. Termination.
8.01 Grounds for Termination. This Agreement shall terminate
prior to the expiration of the initial three-year term set forth in Section 2 or
of any extension thereof and neither the Company nor any of its Affiliates shall
be obligated to make any further payments (including payments under Section
7.06) or to provide any benefits (except up to the date of termination) to the
Executive in the event that at any time during such initial term or any
extension thereof:
(a) Executive shall die, or
(b) Executive shall become disabled in accordance with Section
8.04, or
(c) Executive has breached the provisions of Sections 5 or 7
of this Agreement in any material respect, or
(d) Executive is terminated for "Cause", which means (i) the
Executive's violation of a specific written direction from CEO or the Board of
Directors of the Company or the Parent or (ii) the Executive's failure or
refusal to perform duties in accordance with this Agreement; provided, however,
no termination shall be for cause under subsection (i) or (ii) unless the
Executive shall have first received written notice from the CEO or the Board of
Directors of the Company or the
Parent advising the Executive of the act or omission that constitutes cause and
such act or omission continues after the Executive's receipt of such notice for
at least a period of time that would have allowed the Executive to correct such
act or omission or (iii) an act or acts of personal dishonesty taken by the
Executive and intended to result in substantial personal enrichment of the
Executive at the expense of the Company or its Affiliates, or (iv) the willful
engaging by the Executive in illegal conduct that is materially and demonstrably
injurious to the Company or its Affiliates. For the purposes of this section, no
act, or failure to act, on the Executive's part shall be considered "dishonest",
"willful" or "deliberate" unless done, or omitted to be done, by the Executive
in bad faith and without reasonable belief that the Executive's action or
omission was in, or not opposed to, the best interest of the Company or its
Affiliates. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board of the Company or the Parent shall be
conclusively presumed to be done, or omitted to be done, by Executive in good
faith and in the best interest of the Company and its Affiliates.
Notwithstanding any termination of this Agreement pursuant to this Section 8.01,
the Executive, in consideration of his employment hereunder to the date of such
termination, shall remain bound by the provisions of this Agreement which
specifically relate to periods, activities or obligations upon or subsequent to
the termination of the Executive's employment.
8.02 Termination Without Cause. If the Company terminates the
Executive prior to the expiration of the initial three-year term or an extension
term of this Agreement for reasons other than set forth in Sections 8.01(a)-(d)
or the Executive terminates this Agreement for Good Reason (as defined below),
the Company shall pay the Executive his salary and benefits through the date of
termination, and:
(a) the Company shall be obligated to pay to the
Executive his then-current monthly base salary for an aggregate period
of twelve (12) months from the date of termination or the remainder of
the term of this Agreement, whichever is shorter. Such amount shall be
payable by the Company on a monthly basis. The Executive shall not be
entitled to any of the payments or benefits set forth in Sections 4.01,
4.02, 4.03 and 4.04 during the period during which the Company pays the
Executive as provided in this Section 8.02(a); and
(b) the Executive shall remain bound by the
provisions of Section 7 in accordance with the terms thereof during the
payment period set forth in Section 8.02(a) above, and the Company
shall not be obligated to pay the Executive the amounts set forth in
7.06 in consideration therefor. Notwithstanding the foregoing, if the
period of the required payments under Section 8.02(a) above is less
than twelve (12) months, the Executive shall be bound by the provisions
of Section 7 of this Agreement for such additional number of months
which, when added to the number of months the Company is required to
pay the Executive under Section 8.02(a) above, equals an aggregate of
twelve (12) months, provided that the Company pays the Executive the
amounts set forth in Section 7.06 of this Agreement for such additional
months.
For purposes of this Agreement, "Good Reason" shall mean the assignment to the
Executive of duties involving a material violation of applicable law, provided,
however, that no termination shall be for Good Reason unless (1) the Board of
Directors of the Company shall have first received written notice from the
Executive advising the Board of the specific nature of the alleged violation
that constitutes the basis for the termination for Good Reason by the Executive;
(2) the Board has determined in its good faith judgment that the duties assigned
to the Executive do involve a material violation of applicable law; and (3) the
Board has not directed that the assignment of duties in question be withdrawn.
8.03 Resignation. If the Executive resigns prior to the
expiration of the initial or an extension term of this Agreement, the Company
shall be obligated to pay the Executive his salary and benefits through the date
of resignation. Thereafter, no salary, bonus or any other benefits or amounts
shall be payable by the Company to the Executive. In the event the Executive
resigns, the provisions of Section 7 shall continue to apply.
8.04 "Disability" Defined. The Board of Directors may
determine that the Executive has become disabled, for the purpose of this
Agreement, in the event that the Executive shall fail, because of illness or
incapacity, to render services of the character contemplated by this Agreement
for a period of six consecutive months and on the date of determination
continues to be so disabled. The existence or nonexistence of grounds for
termination of this Agreement for any reason under Section 8.01(b) shall be
determined in good faith by the Board of Directors after notice in writing given
to the Executive at least 30 days prior to such determination. During such
30-day period, the Executive shall be permitted to make a presentation to the
Board of Directors for its consideration.
8.05 Surrender of Records and Property. Upon termination of
his employment with the Company, the Executive shall deliver promptly to the
Company all records, manuals, books, blank forms, documents, letters,
manuscripts, publishing proposals from authors or employees, memoranda, notes,
notebooks, reports, data, tables, calculations, computer files, financial
statements or records, budgets or business plans or copies thereof, which are
the property of the Company or any of its Affiliates or which relate in any way
to the business, products, practices or techniques of the Company or any of its
Affiliates, and all other property, trade secrets and confidential information
of the Company or any of its Affiliates, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company or any of its Affiliates, which in any of these cases
are in his possession or under his control.
9. Miscellaneous.
9.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
9.02 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements (including the 1999 Agreement) and understandings with
respect to such subject matter, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein.
9.03 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
9.04 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
9.05 Assignment. This Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party.
9.06 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waive and shall not constitute
a waiver of such term of condition for the future or as to any act other than
that specifically waived.
9.07 Injunctive Relief. The Executive agrees that it would be
difficult to compensate the Company fully for damages for any violation of the
provisions of this Agreement, including without limitation the provisions of
Sections 5, 7, and 8.05. Accordingly, the Executive specifically agrees that the
Company shall be entitled to temporary and permanent injunctive relief to
enforce the provisions of this
Agreement. This provision with respect to injunctive relief shall not, however,
diminish the right of the Company to claim and recover damages in addition to
injunctive relief.
9.08 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provision of this Agreement be in excess
of that which is valid and enforceable under applicable law, then such provision
shall be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. The Executive acknowledges the uncertainty
of the law in this respect and expressly stipulates that this Agreement be given
the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
IN WITNESS WHEREOF, the parties have hereunto set their hands,
intending to be legally bound, as of the date first above written.
THE PEOPLES PUBLISHING GROUP, INC.
By:
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Its: Chief Executive Officer and President
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Xxxxxxx X. XxXxxxx
EXHIBIT A
CFO INCENTIVE PLAN
I. DEFINITIONS:
"Pre-Tax Net Income" shall mean the pre-tax net income as reported on the
Parent's consolidated audited statements of income for the applicable fiscal
year, prior to giving effect to the payment of bonuses payable to executive
officers of the Company, prior to giving effect to compensation expenses
attributable to the exercise of stock options by employees, independent
contractors or directors, and prior to giving effect to any compensation
payments in the form of stock grants to employees or directors.
II. INCENTIVE PLAN
The Executive shall be entitled to receive 1.5% percent of the Pre-Tax Net
Income for the Year Ending December 31, 2002. Subsequent yearly incentive plans
will remain at 1.5% of Pre-Tax Net Income unless mutually agreed upon by the
President and Chief Executive Officer and the Executive.
