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
Xxxxx Xxxxxxxx, an individual resident of the State of New Jersey
(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 President of Lifetime Learning
Systems, Inc. and shall perform duties and exercise authority commensurate with
such role. Executive shall initially report to 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
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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 $120,000 per annum until January 1, 2000, and
thereafter, at a rate of $150,000 (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.
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 $20,000 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
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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.
(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
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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 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
5
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, 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,
Xxxxx Xxxxxxxx
00 Xxxx Xxxxx
Xxxx Xxxxx, 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
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
7
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 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.
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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/ Xxxxx Xxxxxxxx
--------------------------
Xxxxx Xxxxxxxx
