This EMPLOYMENT AGREEMENT ("AGREEMENT") is made and entered
into as of the 17 day of November, 1999, by and between Weekly
Reader Corporation, a Delaware corporation (the "COMPANY"), and
Xxxxxx Xxxxxxx, an individual resident of the State of New York
(the "EXECUTIVE").
WHEREAS the Company wishes to employ Executive, and Executive wishes
to accept such employment, on the following terms and conditions, effective as
of the Closing Date (as defined in the Redemption, Stock Purchase and
Recapitalization Agreement dated as of August 13, 1999, as amended (the
"PURCHASE AGREEMENT"), between PRIMEDIA Inc. and WRC Media Inc. (formerly named
EAC II Inc.), a Delaware corporation ("WRC Media");
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties hereby agree as
follows:
SECTION 1. EMPLOYMENT. The Company hereby employs Executive and
Executive accepts employment by the Company, on the terms and conditions
contained in this Agreement.
SECTION 2. TERM. The employment of Executive pursuant hereto shall
commence on the Closing Date and shall remain in effect until December 31, 2001
unless terminated by Executive upon 30 days prior written notice to the Company
or by the Company upon 30 days prior written notice to Executive. The period of
time between the Closing Date and the termination of this Agreement pursuant to
its terms is herein referred to as the "TERM". The Term shall be automatically
renewed for successive one-year periods unless, at least 90 days prior to any
applicable expiration date, either party gives written notice to the other party
that such party does not wish to renew.
SECTION 3. DUTIES AND EXTENT OF SERVICE; PLACE OF PERFORMANCE. During
the Term, Executive shall serve the Company as Executive Vice President of Group
Finance of the Company and its direct and indirect subsidiaries (the
"COMPANIES") and shall perform duties and exercise authority commensurate with
such role. Executive shall initially report to the Chief Executive Officer of
WRC Media. Executive shall devote Executive's full business time and best
efforts to the performance of Executive's duties hereunder and to the business
of the Companies. Except as mutually agreed upon by Executive and the Company,
the Company shall not materially diminish Executive's position at the Company
without Good Cause (as defined in Section 11). During the Term, Executive shall
continue to be employed at the location at which he is employed as of the
Closing Date or at another location within 30 miles thereof as the Company, in
its sole discretion, shall determine.
SECTION 4. BASE SALARY. During the Term, Executive shall be paid a
base salary (the "BASE SALARY"), payable in bi-weekly installments at the end of
every two weeks, at a rate of $250,000 per annum (the "INITIAL SALARY") subject
to annual review; PROVIDED that Executive's Base Salary shall not be reduced
below the Initial Salary.
SECTION 5. BONUS. Executive shall continue to be eligible to receive
any annual bonus for the 1999 calendar year which may be payable to Executive
under the short-term executive incentive compensation plan currently applicable
to Executive in accordance with the terms of Executive's bonus letter from
PRIMEDIA Inc. (the "BONUS LETTER"), a copy of which is attached hereto PROVIDED,
however, that notwithstanding any provision in the Bonus Letter to the
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contrary, Executive will be eligible to receive any such bonus regardless of the
fact that Executive will not be an employee of PRIMEDIA Supplemental Education
Group either on December 31, 1999 or on the date such bonus is paid. Bonuses for
future years during the Term shall be set by the Company annually based on
reasonable criteria communicated to Executive. Such criteria shall be comparable
to the criteria currently set forth in the Bonus Letter. Target bonuses for
future years shall not be less than the target bonus set forth in the Bonus
Letter. The Bonus for any year shall be paid no later than March 15 of the
following year.
SECTION 6. FRINGE BENEFITS. Executive shall be entitled to
participate, to the extent eligible, in such medical, dental, disability, life
insurance, deferred compensation, retirement and other benefit plans as the
Company shall maintain for the benefit of employees generally, on the terms and
subject to the conditions set forth in such plans, which plans shall be
comparable in the aggregate to those plans in effect for Executive as of the
date hereof. Executive shall also be entitled to vacation time and sick leave in
accordance with the Company's policies in existence immediately prior to the
Closing and as applied to Executive immediately prior to the Closing.
SECTION 7. EXPENSES. Upon receipt from Executive of expense vouchers
and other documentation reasonably requested by the Company, the Company shall
reimburse Executive promptly for all reasonable expenses incurred by Executive
in accordance with the Company's policies and procedures in connection with
Executive's duties and responsibilities hereunder.
SECTION 8. EQUITY INVESTMENT. Simultaneously with the Closing,
Executive will purchase 10,752 shares of Common Stock, par value $0.01 per share
("WRC MEDIA COMMON STOCK"), of WRC Media, at a purchase price of $18.60065 per
share in cash for an aggregate purchase price of $200,000 and will enter into a
shareholder agreement among WRC Media, EAC III LLC and certain other executives
of the Companies in the form previously agreed to by such parties. If Executive
so elects, up to one half of Executive's purchase of WRC Media Common Stock may
be financed with a personal loan guaranteed by the Company on commercially
reasonable terms. The Company shall make reasonable efforts to arrange and
guarantee such loan.
SECTION 9. NONSOLICITATION. (a) During the period beginning on the
Closing Date and ending on the later of (i) the date that is 12 months after the
date of termination of Executive's employment with the Company and (ii) December
31, 2001 and to the fullest extent permitted under applicable law, Executive
agrees that Executive shall not, directly or indirectly, solicit or attempt to
solicit any business from any customers or clients of any of the Companies,
including actively sought prospective customers or clients, in connection with
any Competing Publication or Product Line (as defined on Schedule I). During the
period beginning on the Closing Date and ending on the date that is 24 months
after the date of termination of Executive's employment with the Company and to
the fullest extent permitted under applicable law, Executive agrees that
Executive shall not, except as an employee of the Company, directly or
indirectly, solicit, recruit or hire any employees of or persons who have worked
for any of the Companies during the twelve-month period prior to termination of
Executive's employment or solicit or encourage any such employee of any of the
Companies to leave the employment of any of the Companies.
(b) If a judicial determination is made that any of the provisions of
this Section 9 constitutes an unreasonable or otherwise unenforceable
restriction against Executive, the
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provisions of such Section shall be rendered void only to the extent that such
judicial determination finds such provisions to be unreasonable or otherwise
unenforceable.
SECTION 10. NONDISCLOSURE. The parties hereto agree that during the
course of Executive's employment by the Company, Executive will have access to,
and will gain knowledge with respect to, the Companies' Confidential Information
(as defined below). The parties acknowledge that unauthorized disclosure or
misuse of such Confidential Information would cause irreparable damage to the
Companies. Accordingly, Executive agrees to the nondisclosure covenants in this
Section 10. Executive agrees that Executive shall not (except as may be required
by law), without the prior written consent of the Company during Executive's
employment with the Company under this Agreement, and any extension or renewal
hereof, and thereafter for a period ending on the fifth anniversary of the date
of termination of Executive's employment with the Company, use or disclose, or
knowingly permit any unauthorized person to use, disclose or gain access to, any
Confidential Information; PROVIDED that Executive may disclose Confidential
Information to a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of Executive's
duties under this Agreement. Upon termination of this Agreement for any reason,
Executive shall return to the Company the original and all copies of all
documents and correspondence in Executive's possession relating to the business
of any of the Companies or any of their affiliates, including but not limited to
all Confidential Information, and shall not be entitled to any lien or right of
retention in respect thereof. Upon termination of this Agreement for any reason,
Executive shall be entitled to remove all documents and correspondence of a
purely personal nature. For purposes of this Agreement, "CONFIDENTIAL
INFORMATION" shall mean all business information (whether or not in written
form) which relates to any of the Companies, any of their affiliates or their
respective businesses or products and which is not known to the public
generally, including but not limited to technical information or reports; trade
secrets; unwritten knowledge and "know-how"; operating instructions; training
manuals; customer lists; customer buying records and habits; product sales
records and documents, and product development, marketing and sales strategies;
market surveys; marketing plans; profitability analyses; product cost;
long-range plans; information relating to pricing, competitive strategies and
new product development; information relating to any forms of compensation and
other personnel-related information; contracts; and supplier lists; PROVIDED
that "Confidential Information" shall not include general business know-how.
SECTION 11. SEVERANCE. If Executive's employment hereunder is
terminated upon a breach by the Company of this Agreement, by the Company for
any reason other than for Good Cause or by reason of a notice of nonrenewal
given by the Company, the Company shall pay to Executive as severance pay a lump
sum cash payment in an amount equal to the product of Executive's entire Base
Salary for the year in which termination occurs multiplied by the greater of (a)
one and (b) the quotient of (x) the number of months from and including the
month in which such termination occurs to and including the month ending
December 31, 2001 divided by (y) 12. The Company shall also pay to Executive any
accrued and unpaid Base Salary owed to Executive for the period prior to such
termination, a prorated portion of Executive's Base Salary for any accrued
unused vacation time of Executive for the period prior to such termination and
any incurred but unpaid reimbursable expenses as contemplated by Section 7.
Payment of such severance pay and other amounts will be made within 30 days of
such termination. If the applicable bonus criteria have been achieved, no later
than March 31 of the year following the year in which any such termination
occurred, the Company shall also pay to Executive a prorated portion of
Executive's bonus for the portion of the year in which termination occurred from
the beginning of the calendar year to the date of termination. For purposes of
this Agreement, "GOOD CAUSE" shall exist upon the occurrence of
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any of the following: (i) Executive is convicted of, pleads guilty to, confesses
to, or enters a plea of nolo contendere to, any felony or any crime that
involves moral turpitude or any act of fraud, misappropriation or embezzlement;
(ii) Executive has engaged in a fraudulent act to the damage or prejudice of any
of the Companies or any affiliate of any of the Companies; (iii) any act or
omission by Executive involving malfeasance or gross negligence in the
performance of Executive's duties to the Company; (iv) Executive otherwise fails
to comply in any material respect with the terms of this Agreement or deviates
in any material respect from any reasonable written policies or reasonable
directives of the Board of Directors of the Company and, within 60 days after
written notice from the Company of such failure or deviation, Executive has not
corrected such failure; or (v) the occurrence of the death or total disability
of Executive (total disability meaning the failure of Executive to perform
Executive's normal required services hereunder for a period of six consecutive
months during the term hereof by reason of Executive's mental or physical
disability, as determined by an independent physician reasonably satisfactory to
Executive and the Company).
SECTION 12. TERMINATION; SURVIVAL. This Agreement shall terminate upon
the earlier of (a) the termination of the Purchase Agreement pursuant to its
terms and (b) the termination of Executive's employment by the Company.
Notwithstanding the foregoing, Sections 9, 10 and 13 and, if Executive's
employment terminates in a manner giving rise to a payment under Section 11,
Section 11 shall survive the termination of this Agreement.
SECTION 13. MISCELLANEOUS. (a) This Agreement shall inure to the
benefit of and shall be binding upon Executive and Executive's executor,
administrator, heirs, personal representative and permitted assigns and the
Company and its successors and permitted assigns; PROVIDED that Executive shall
not be entitled to assign or delegate any of Executive's rights or obligations
hereunder without the prior written consent of the Company.
(b) This Agreement shall be deemed to be made in, and in all respects
shall be interpreted, construed and governed by and in accordance with, the laws
of the State of New York, without regard to the conflicts of law principles of
such State. No provision of this Agreement or any related document shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or drafted such provision.
(c) This Agreement constitutes the entire agreement between the
Company and Executive with respect to Executive's employment by the Company
after the Closing Date and, effective as of the Closing Date, supersedes all
prior agreements, whether written or oral, between them relating to Executive's
employment by the Company, including those agreements set forth on Schedule II
attached hereto; PROVIDED that this Agreement does not supersede the Bonus
Letter. Effective as of the Closing Date, Executive hereby releases the Company
and its affiliates from any claims or rights under such agreements, without any
liability or other adverse consequence to the Company, the Companies or WRC
Media and the Company hereby releases Executive from any claims or rights under
such agreements, without any liability or other adverse consequence to
Executive.
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(d) All notices or other communications required or permitted by this
Agreement shall be made in writing and any such notice or communication shall be
deemed delivered when delivered in person, transmitted by telecopier, or one
business day after it has been sent by a nationally recognized overnight
courier, at the address for notices as follows:
(i) if to the Company,
Weekly Reader Corporation
c/o Ripplewood Holdings L.L.C.
Xxx Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(ii) if to Executive,
Mr. Xxxxxx Xxxxxxx
00 Xxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Communications by telecopier also shall be sent concurrently by overnight
courier, but shall in any event be effective as stated above. Each party may
from time to time change its address for notices under this Section 13(d) by
giving at least five days' notice of such changed address to the other parties
hereto.
(e) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more of the counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
(f) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(g) No failure or delay by Executive or the Company in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment of any steps
to enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement in writing entered into by Executive and the Company.
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(h) Any controversy, dispute or claim arising out of, in connection
with, or in relation to the interpretation, performance, non-performance,
validity or breach of this Agreement or otherwise arising out of, or in any way
related to, this Agreement shall be determined, at the request of any party, by
arbitration conducted in New York City, before and in accordance with the
then-existing Rules for Commercial Arbitration of the American Arbitration
Association, and any judgment or award rendered by the arbitrator shall be
final, binding and unappealable, and any judgment may be entered by any state or
Federal court having jurisdiction thereof. In its award the arbitrator shall
allocate, in its discretion, among the parties to the arbitration all costs of
the arbitration, including the fees and expenses of the arbitrator and
reasonable attorneys' fees, costs and expert witness expenses of the parties.
(i) All amounts paid hereunder will be net of any applicable
withholdings required by existing or future tax laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
WEEKLY READER CORPORATION,
by /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
/s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx
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COMPETING PUBLICATIONS AND PRODUCT LINES
"COMPETING PUBLICATION OR PRODUCT LINE" means (a) distributing books
and reference materials in print that compete with those currently distributed
by PRIMEDIA Reference Inc. for distribution to libraries and schools, (b)
publishing books in print that compete with those currently published by Xxxxxx
Xxxxxxx, Inc. for distribution to school libraries, (c) publishing an annual
general interest almanac for consumers, (d) publishing assessment test materials
in print which are targeted to elementary and secondary school students who are
in the lower fiftieth percentile of achievement, and which compete with the
assessment test materials published by American Guidance Service Inc. and its
direct and indirect subsidiaries, or (e) publishing print periodicals and
supplemental educational materials in print, in each case, sold on an annual
subscription basis to teachers, schools, or school districts for in-school
distribution to grades Kindergarten through 12, and which compete with those
published by Weekly Reader Corporation and its direct and indirect subsidiaries,
in each case in the United States.
1. Letter agreement dated January 15, 1998 from PRIMEDIA, Inc. to Xxxxxx
Xxxxxxx.
