Exhibit 10.1: Amendment to Employment Agreement between the Company and Xxxxx X.
Xxxxxxxx, dated July 30, 2004.
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Agreement"), dated effective
as of July 30, 2004, is made and entered into to amend the Employment Agreement,
dated effective December 18, 2001, by and between The Peoples Publishing Group,
Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxx, an
individual resident of the State of New Jersey (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive entered into the Employment
Agreement which provides for a three-year term ending on December 18, 2004 and
automatic one-year renewals thereafter, unless notice of non-renewal is provided
by either party at least 180 days prior to the end of the term; and
WHEREAS, the Company desires to continue to employ the Executive beyond
the initial three-year term and the Executive wishes to accept such continued
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. Amendment. The Employment Agreement shall be amended as provided in
this Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Employment Agreement.
2. Term. The first sentence of Section 2 of the Employment Agreement is
hereby amended to provide as follows:
Unless terminated at an earlier date in accordance with Section 8, the
term of the Executiv's employment hereunder shall be for a period
ending on December 18, 2008. Thereafter, the term of this Agreement, as
amended, 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 180 days prior to the end of the term or any
extension term (the "Non-Renewal Notice").
3. Stock Option. Concurrently with the execution and delivery of this
Agreement and subject to the approval by the Parent's stockholders of an
increase in the number of shares reserved under the Plan, the Executive shall be
granted a stock option award of 48,000 shares of the Parents common stock, par
value of $.02 per share, under the Plan with restrictions on vesting of
ownership and other matters more particularly described in the form of Incentive
Stock Option Agreement attached as Exhibit A and in the Plan.
4. Incentive Compensation. The first sentence of Section 4.03 of the
Employment Agreement is hereby amended to provide as follows:
Commencing with the fiscal year ending December 31, 2004, the Executive
shall be eligible to participate in the annual executive incentive plan as
established within 90 days after the commencement of each fiscal year by
the Parent's compensation committee, provided, however, that such plan
shall include for each year a formula by which the Executive will receive
42.5% of his base salary for the fiscal year based on achievement of
certain financial and/or non-financial criteria included in the Company's
board approved fiscal year budget and shall also include a formula by
which an additional 23.4% of base salary for the fiscal year may be
received for exceeding budgeted criteria. For fiscal year ending December
31, 2004, such incentive plan shall be established on or prior to August
31, 2004.
Further, the following sentence shall be added to the end of Section 4.03
of the Employment Agreement:
The Executive shall be eligible to participate in a new long-term
incentive plan that the Company's or Parent's Board of Directors may seek
to put into place no later than December 31, 2004 for the benefit of all
senior executives of the Company. While the details of any such new plan
have not been determined as of the date of this Agreement, such plan may
consist of stock options, restricted stock grants, stock appreciation
rights, phantom stock, and/or other mechanism as ultimately determined by
the Board to provide for effective long-term incentive to executives. In
addition, the Company intends to adopt an employer-matching program to its
401(k) plan which, if adopted, the Executive will be entitled to receive
subject to limitations under applicable law.
5. Off-Set. Sections 8.01(b)(iii) and 8.01(c)(iii) (up to the definition
of "Good Reason") of the Employment Agreement shall be deleted.
6. Miscellaneous.
6.01 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, without regard to New Jersey's conflicts of law rules.
6.02 Prior Agreements. This Agreement and the Employment Agreement
contain the entire agreement of the parties relating to the subject matter
hereof and supersede all prior agreements 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.
6.03 Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed and delivered by the
parties hereto.
6.04 Assignment. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party.
6.05 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.
6.06 Counterparts. This Agreement may be signed in counterparts,
each of which, when executed and delivered, shall constitute one and the same
instrument.
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: /s/ Xxxxx Xxxxxxx
-----------------------------
Xxxxx Xxxxxxx
Its: Chairman
/s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
ACCEPTED AND AGREED
This 30th day of July 2004
PEOPLES EDUCATIONAL HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Xxxxx Xxxxxxx
Its: Chairman
EXHIBIT A
PEOPLES EDUCATIONAL HOLDINGS, INC.
INCENTIVE
STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the 30th day of July, 2004, between
PEOPLES EDUCATIONAL HOLDINGS, INC., a Delaware corporation (the "Company"), and
Xxxxx Xxxxxxxx, an employee of the Company or one or more of its subsidiaries
(the "Optionee").
WHEREAS, the Company desires to grant the Optionee this option to purchase
shares of the Company's Common Stock under its 1998 Stock Plan (the "Plan"),
subject to, however, the approval of the Company's stockholders of an increase
in the number of shares reserved for issuance under the Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and Option (hereinafter called the "Option") to purchase from the Company all or
any part of an aggregate amount of 48,000 shares of the Common Stock of the
Company on the terms and conditions herein set forth. It is intended that the
Option shall constitute an incentive stock option, as defined in Section 422 of
the Internal Revenue Code of 1986, as amended, to the maximum extent permitted
by law. The exercise of vested Options shall always be subject to the
availability of shares under the Plan and stockholder approval of an increase in
the number of shares under the Plan.
2. Purchase Price. The purchase price of the shares of the Common Stock
covered by this Option shall be $4.50 per share.
3. Term of Option. The term of the Option shall expire on July 30, 2012,
subject to earlier termination as hereinafter provided.
4. Exercise of Option. Subject to the provisions of paragraphs 5, 7 and 8
hereof, the Option may be exercised during the term specified in Paragraph 3 as
follows:
(a) from and after January 1, 2008, the Option may be exercised as to
11,109 shares;
(b) from and after January 1, 2009, the Option may be exercised as to an
additional 22,222 shares;
(c) from and after January 1, 2010, the Option may be exercised as to an
additional 14,669 shares.
4A. Deferred Vesting Acceleration Schedule. For purposes of paragraphs 7
and 8 hereof, the "Vested Option Deficit" for each of the following time frames
is as follows:
(a) from July 30, 2004 through and including July 29, 2005, 12,000 shares;
(b) from July 30, 2005 through and including July 29, 2006, 24,000 shares;
(c) from July 30, 2006 through and including July 29, 2007, 36,000 shares;
(d) from July 30, 2007 through and including December 31, 2007, 48,000
shares;
(e) from January 1, 2008 through and including December 31, 2008, 36,891
shares;
(f) from and after January 1, 2009 through and including December 31,
2009, 14,669 shares.
5. Change of Control. In lieu of the vesting schedule set forth in
paragraph 4 hereof, if, within twelve (12) months following a Change in Control,
(A) the Company terminates the Executive for reasons other than set forth in
Sections 8.01(a)(i)-(iv) of the Employment Agreement between the Optionee and
The Peoples
\
Publishing Group, Inc., dated December 18, 2001, as amended (the "Employment
Agreement") or (B) the Executive terminates the Employment Agreement for Good
Reason (as defined in the Employment Agreement), all options granted under
paragraph 4 that have not theretofore vested shall become fully vested and
immediately exercisable upon such Change in Control and shall remain exercisable
for a period set forth in paragraph 7.
The term "Change in Control" shall mean a change in control of the Company
which would be required to be reported in response to Item 6(e) on Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not the Company is then subject to such
reporting requirement, including, without limitation, if:
(i) After the date hereof, any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than Cherry Tree Investments, Inc.
or any of its affiliates or any combination of partners and limited partners who
owned a 50% or greater equity interest, directly or indirectly, in investment
funds managed by Cherry Tree Investments, Inc. or its affiliates as of December
18, 2001, or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any subsidiary of the Company, becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) During any period of two consecutive years (not including any period
ending prior to the effective date of this Agreement), the Incumbent Directors
cease for any reason to constitute at least a majority of the Board of Directors
of the Company. The term "Incumbent Directors" shall mean those individuals who
are members of the Board of Directors of the Company on the effective date of
this Agreement and any individual who subsequently becomes a member of the Board
of Directors (other than a director designated by a person who has entered into
agreement with the Company to effect a transaction that would constitute a
Change of Control) whose election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of the then Incumbent
Directors; or
(iii) The Company consummates a merger, consolidation, share exchange,
division or other reorganization of the Company with any corporation or entity,
other than an entity owned at least 80% by the Company, unless immediately after
such transaction, the shareholders of the Company immediately prior to such
transaction beneficially own, directly or indirectly 51% or more of the combined
voting power of resulting entity's outstanding voting securities as well as 51%
or more of the Total Market Value of the resulting entity, or in the case of a
division, 51% or more of the combined voting power of the outstanding voting
securities of each entity resulting from the division as well as 51% or more of
the Total Market Value of each such entity, in each case in substantially the
same proportion as such shareholders owned shares of the Company prior to such
transaction; or the shareholders of the Company approve an agreement for the
sale or disposition (in one transaction or a series of transactions) of all of
substantially all of the assets of the Company. "Total Market Value" shall mean
the aggregate market value of the Company's or the resulting entity's
outstanding common stock (on a fully diluted basis) plus the aggregate market
value of the Company's or the resulting entity's other outstanding equity
securities as measured by the exchange rate of the transaction or by such other
method as the Board determines where there is not a readily ascertainable
exchange rate.
Notwithstanding the foregoing, it shall not be deemed a Change in Control
if Cherry Tree Investments, Inc. or any of its affiliates ceases to own at least
50% of the Company's voting power as a result of a sale of securities by the
Company if such sale does not otherwise meet the requirements of a Change in
Control set forth above.
6. Non-Transferability. The Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of the Optionee, only by the Optionee. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged, or
hypothecated in any way; shall not be assignable by operation of law; and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment, or
similar process upon the Option, shall be null and void and without effect.
7. Termination of Employment. In the event the employment of the Optionee
shall be terminated for any reason whatsoever (including retirement), the Option
may be exercised (to the extent the Optionee shall have been entitled to do so
at the date of his or her termination of employment) by the Optionee at any time
within three
(3) months after such termination of employment, but in no event later than the
expiration of the term specified in paragraph 3. If the Optionee shall be
terminated for any reason whatsoever during a time frame in which the Optionee
has a Vested Option Deficit pursuant to paragraph 4A hereof, the Option shall be
treated as exercisable as to an additional number of shares equal to the amount
of the Vested Option Deficit specified for the time frame set forth in paragraph
4A in which the Optionee's termination occurred. For example, if the Optionee's
termination occurred on July 29, 2007 the option hereunder would be exercisable
as to 48,000 shares and if the Optionee's termination occurred on January 1,
2008 the Option hereunder would be exercisable as to 11,109 shares pursuant to
paragraph 4 and as to an additional 36,891 shares pursuant to paragraph 4A. So
long as the Optionee shall continue to be an employee of the Company or one or
more of its subsidiaries, the Option shall not be affected by any change of
duties or position. Nothing in this Option Agreement shall confer upon the
Optionee any right to continue in the employ of the Company or of any of its
subsidiaries or interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any time.
8. Death or Permanent Disability of Optionee. Notwithstanding the
provisions of paragraph 7 of this Agreement, if the Optionee shall die while
still employed by the Company or one or more of its subsidiaries, or shall
become permanently and totally disabled while still employed by the Company or
one or more of its subsidiaries, the Option may be exercised (to the extent that
the Optionee shall have been entitled to do so at the date of his or her death
or termination by reason of permanent and total disability, including any shares
as to which the Option becomes exercisable as of the date of termination due to
the application of the provisions of paragraph 7 related to the Vested Option
Deficit) by the Optionee, his or her legal representative or the person to whom
the Option is transferred by will or the applicable laws of descent and
distribution, at any time within nine (9) months after the Optionee's death or
termination by reason of permanent disability, but in no event later than the
expiration of the term specified in paragraph 3 hereof.
9. Method of Exercising Option. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by written notice to the
Secretary of the Company at the principal office of the Company. Such notice
shall state the election to exercise the Option and the number of shares in
respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by payment of the full
purchase price of such shares which payment shall be made in cash or by
certified check or bank draft payable to the Company, by any other form of legal
consideration deemed sufficient by the Company and consistent with the purpose
of the Plan and applicable law, or, in the sole discretion of the Company, by
delivery of shares of Common Stock of the Company with a fair market value equal
to the purchase price or by a combination of cash and such shares, whose fair
market value shall equal the purchase price. For purposes of this paragraph the
"fair market value" of the Common Stock of the Company shall be established in
the manner set forth in Section 1(h) of the Plan. The certificate or
certificates for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person so exercising the Option, or if
the Optionee so elects, in the name of the Optionee or one other person as joint
tenants, and shall be delivered as soon as practicable after the notice shall
have been received. In the event the Option shall be exercised by any person
other than the Optionee, such notice shall be accompanied by appropriate proof
of the right of such person to exercise the Option. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and nonassessable.
10. Withholding Requirements. Upon exercise of the Option by the Optionee
and prior to the delivery of shares purchased pursuant to such exercise, the
Company shall have the right to require the Optionee to remit to the Company
cash in an amount sufficient to satisfy applicable federal and state tax
withholding requirements. The Company shall inform the Optionee as to whether it
will require the Optionee to remit cash for withholding taxes in accordance with
the preceding sentence within two (2) business days after receiving from the
Optionee notice that such Optionee intends to exercise, or has exercised, all or
a portion of the Option.
11. 1998 Stock Plan. This Option is subject to certain additional terms
and conditions set forth in the Plan pursuant to which this Option has been
issued. A copy of the Plan is on file with the Secretary of the Company and each
Option holder by acceptance hereof agrees to and accepts this Option subject to
the terms of the Plan.
12. General. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Option Agreement, shall pay all
original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and will from time to time
use its best efforts to comply with all laws and regulations which, in the
opinion of counsel for the Company, shall be applicable thereto.
13. Investment Certificate. Prior to the receipt of the certificates
pursuant to the exercise of the Option granted hereunder, the Optionee shall, if
required in the Company's discretion, demonstrate an intent to hold the shares
acquired by exercise of the Option for investment and not with a view to resale
or distribution thereof to the public by delivering to the Company an investment
certificate or letter in such form as the Company may require.
14. Subsidiary. As used herein, the term "subsidiary" shall mean any
current or future corporation which would be a "subsidiary corporation" of the
Company, as that term is defined in Section 425 of the Internal Revenue Code of
1986, as amended.
15. Status. Neither the Optionee nor the Optionee's executor,
administrator, heirs, or legatees shall be or have any rights or privileges of a
shareholder of the Company in respect of the shares transferable upon exercise
of the Option granted hereunder, unless and until certificates representing such
shares shall be endorsed, transferred, and delivered and the transferee has
caused the Optionee's name to be entered as the shareholder of record on the
books of the Company.
16. Company Authority. The existence of the Option herein granted shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock of the Company or
the rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
17. Disputes. As a condition of the granting of the Option herein granted,
the Optionee agrees, for the Optionee and the Optionee's personal
representatives, that any dispute or disagreement which may arise under or as a
result of or pursuant to this Agreement shall be determined by the Board of
Directors of the Company, in its sole discretion, and that any interpretation by
the Board of the terms of this Agreement shall be final, binding and conclusive.
18. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
duly executed by an officer thereunto duly authorized, and the Optionee has
hereunto set his or her hand, all as of the day and year first above written.
PEOPLES EDUCATIONAL HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxxxxx
Its: Chairman
/s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx Optionee
