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 and Chief Financial Officer of the Company and shall perform
duties and exercise authority commensurate with such role. Executive shall
initially report to
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Xxxxx X. Xxxxxx. 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 Company and its direct and indirect subsidiaries. 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 $175,000 per annum until January 1,
2000, and thereafter, at a rate of $210,000 (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 the Company (the "BONUS LETTER"), a copy of which is attached
hereto. 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 shall not be less than the target bonus set forth in the Bonus
Letter.
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.
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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. From the date of the Closing to
December 15, 1999, Executive may elect to purchase up to $150,000 of Common
Stock, par value $0.01 per share ("WRC MEDIA COMMON STOCK"), of WRC Media from
EAC IV L.L.C. at a purchase price of $18.60065 per share in cash. If Executive
purchases any such shares, Executive will enter into a shareholder agreement
among WRC Media, EAC III L.L.C. and certain other executives of the Company and
its affiliates 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) In the event that Executive's
employment with the Company is terminated by the Company for any reason, then
during the period beginning on the Closing Date and ending on the date that is
12 months after the date of termination of Executive's employment 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 the Company, 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, directly or indirectly, other than as an employee of the Company, solicit,
recruit or hire any employees of or persons who have worked for the Company,
other than secretaries, during the twelve-month period prior to termination of
Executive's employment or solicit or encourage any such employee of the Company
to leave the employment of the Company.
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(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 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 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
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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 Executive's Base Salary for the
year in which termination occurs. 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.
Additionally, in the event that any such termination occurs more than six
months after the beginning of any calendar year, the Company shall pay to
Executive a prorated portion of the Bonus that Executive would have been
entitled to for such calendar year puruant to Section 5. Payment of such
severance pay and other amounts will be made within 30 days of such
termination. For purposes of this Agreement, "GOOD CAUSE" shall exist upon the
occurrence of 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
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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, if any; PROVIDED that this Agreement does not
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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,
its affiliates 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.
(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
Xx. Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
(ii) if to Executive,
Xxxxxx Xxxxxxx
0 Xxxxxx Xxx
Xxxxxxxx Xxxxxxx, XX 00000
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 000-000-0000
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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.
(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
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parties. The Company shall pay for all reasonable travel expenses (including
transportation, lodging and meals) incurred by Executive in connection with any
arbitration session.
(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
