Exhibit 10.26
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EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 1st day of May, 1997 by and among
MODERN LEARNING PRESS, INC., a Delaware corporation with its
principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx, (the "Corporation") and XXXXXX X. XXXXX, an
individual residing at ______________________________________
____________________________________________, Pennsylvania ("Executive").
W I T N E S S E T H:
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WHEREAS, the Corporation desires to employ Executive and
Executive desires to accept such employment, all on the terms and
conditions as set forth below; and
WHEREAS, the Board of Directors (the "Board") of the
Corporation has caused the Corporation to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties hereto, intending
to be legally bound, agree as follows:
1. Employment and Term. Subject to the terms and conditions
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of this Agreement, the Corporation agrees to employ Executive, and
Executive hereby accepts employment by the Corporation, for a term
beginning as of the date hereof (the "Effective Date") and ending
on the second anniversary of the Effective Date; provided, however,
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that commencing on the date one year after the Effective Date, and
on each annual anniversary of such date (such date and each annual
anniversary thereof is hereinafter referred to as the "Renewal
Date"), the term of this Agreement shall be automatically extended
so as to terminate one year from such Renewal Date, unless at least
60 days prior to the Renewal Date the Corporation shall give
written notice that the term of the Agreement shall not be so
extended (the "Employment Term").
2. Certain Definitions.
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(a) A reference herein to a section of the Internal
Revenue Code of 1986, as amended (the "Code") or a subdivision
thereof shall be construed to incorporate reference to any section
or subdivision of the Code enacted as a successor thereto, any
applicable proposed, temporary or final regulations promulgated
pursuant to such sections and any applicable interpretation thereof
by the Internal Revenue Service.
(b) A reference herein to a section of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any rule
or regulation promulgated thereunder shall be construed to
incorporate reference to any section of the Exchange Act or any
rule or regulation enacted or promulgated as a successor thereto.
3. Duties. During the Employment Term, Executive shall
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serve the Corporation in a dual capacity, as its President and
Publisher, or in such other capacity or capacities as may be
determined by the Board (provided that his authority, duties and
responsibilities shall be at least commensurate in all material
respects with his office, status and titles at the time of such
change). Executive shall also serve as a member of the Board of
Directors of Touchstone Applied Science Associates, Inc. ("TASA"),
which owns one hundred (100%) percent of the issued and outstanding
capital stock of the Corporation. Executive shall perform such
executive, administrative, publishing, development, production,
marketing and other services and duties for the Corporation at the
present location of the Corporation or any other office or location
of the Corporation as requested by the Board. During the
Employment Term, and excluding any periods of vacation and sick
leave, Executive agrees to devote a minimum of three days per week
during normal business hours to the business and affairs of the
Corporation and to discharge the responsibilities assigned to
Executive hereunder. During the Employment Term it shall not be a
violation of this Agreement for Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions, and (C) manage personal investments, so long as
Executive's duties in connection therewith do not unreasonably
interfere with Executive's duties under this Agreement. Activities
of Executive consistent with this Section 3 shall not permit the
Corporation to terminate Executive's employment for "Cause", as
defined below.
4. Compensation.
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(a) BASE SALARY. During the Employment Term, the
Corporation shall pay to Executive, in equal installments no less
frequently than twice per month (or at such other intervals as are
in effect from time to time for other executive officers of the
Corporation), an annual base salary (the "Base Salary") of
$72,000.00 during the term of this Agreement. Base Salary to be
paid by the Corporation to Executive shall be reviewed by the Board
of Directors at least once annually prior to each anniversary of
the Effective Date for the purposes of determining whether any
increases to such salary would be appropriate. Any increase in
Base Salary shall not serve to limit or reduce any other obligation
to Executive under this Agreement. Base Salary shall not be
reduced after any such increase.
(b) INCENTIVE, SAVINGS, WELFARE BENEFIT PLANS AND
RETIREMENT PLANS. Except as specifically provided in Paragraphs 6
and 15 below, Executive and Executive's family shall not be
eligible and shall not claim entitlement, to participate in or
benefit from, such medical insurance, life insurance, disability
insurance, pension, bonus, profit-sharing, stock option, stock
purchase and any other fringe benefit plans, practices, programs or
policies provided by the Corporation to executive employees.
(c) KEY MAN INSURANCE. Executive agrees that the
Corporation may obtain key man life insurance with respect to
Executive, and in connection therewith, agrees to submit to all
reasonable and customary examinations by the provider of such life
insurance.
(d) EXPENSES. Executive shall be entitled to
reimbursement for all normal and reasonable travel, entertainment
and other expenses necessarily incurred by him in the performance
of his duties hereunder in accordance with the policies, practices
and procedures of the Corporation in effect with respect to other
key employees of the Corporation.
(e) FRINGE BENEFITS. During the Employment Term, unless
specifically set forth herein, Executive shall not be entitled to,
nor claim entitlement to fringe benefits in accordance with the
plans, practices, policies and programs of the Corporation in
effect with respect to other key employees of the Corporation.
(f) DISABILITY. Except as hereinafter provided, the
Corporation shall pay Executive for any period, up to a maximum of
two months, during the Employment Term in which he is unable fully
to perform his duties because of physical or mental disability or
incapacity, an amount equal to the Base Salary due him for such
period pursuant to Section 5(a), less the aggregate amount of all
income disability benefits which for such period he may receive by
reason of (i) any group health insurance plan, or disability
insurance plan paid for by the Corporation, in each case which is
intended to function as a salary replacement plan, (ii) any
applicable compulsory state disability law, (iii) the Federal
Social Security Act, (iv) any applicable workmen's compensation law
or similar law and (v) any plan towards which the Corporation or
any subsidiary or affiliate of the Corporation (including any
predecessor of any thereof) has contributed or for which it has
made payroll deductions, such as group accident or health policies,
other than those which reimburse for actual medical expenses.
(h) VACATION. During the Employment Term, Executive
shall be entitled to a paid vacation in accordance with the plans,
practices, policies and programs of the Corporation as in effect
with respect to other employees of the Corporation.
5. Stock Options.
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(a) As part of the consideration to be paid to Executive
for his services hereunder, Executive shall be eligible to
participate in any stock incentive plan adopted by the Corporation
or TASA (the "Plan") for which Executive, as an executive level
employee, may participate.
(b) The Corporation or TASA, as the case may be, hereby
agrees that it shall cause to be filed with the Securities and
Exchange Commission a registration statement on Form S-8 (or
equivalent form as may be in effect at such time) with respect to
all options theretofore granted to Executive under the Plan. The
Corporation or TASA, as the case may be, covenants that it will
keep such registration statement current until Executive is no
longer employed by the Corporation. TASA or the Corporation, as
the case may be, agrees that, for so long as either the Corporation
or TASA does not have an effective registration statement on Form
S-8 or the Corporation or TASA has an effective registration
statement on Form S-8 but Executive is restricted in his ability to
resell shares acquired pursuant to the exercise of options because
of the provisions of General Instruction C.2(b) to Form S-8,
Executive shall have "piggyback" registration rights with respect
to the options granted to Executive under the Plan and the shares
underlying such options.
(c) As an incentive to enter into this Agreement, TASA,
as of May 30, 1997 shall deliver to Executive a Stock Option
Agreement pursuant to its Amended and Restated 1991 Stock Option
Incentive Plan, granting to Executive options for One Hundred and
Twenty-Five Thousand (125,000) shares of the common stock of the
Corporation at fair market value as of the date granted,
exercisable over a five year period.
6. Rights of Termination.
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(a) CAUSE. During the Employment Term, the Corporation
shall have the right, at any time effective upon notice by either
to Executive, to terminate Executive's employment for "Cause" (as
hereinafter defined). For purposes of this Agreement, "Cause"
shall mean (i) an act or acts of personal dishonesty engaged in by
Executive and intended to result in personal enrichment of
Executive at the expense of the Corporation, (ii) repeated
violations by Executive of Executive's obligations under Section 3
of this Agreement which are not remedied within thirty (30) days
after receipt of written notice from the Corporation; (iii)
commission by Executive of a felony or any act of embezzlement or
misappropriation of funds, and (iv) willful fraud or gross
negligence in the performance of his duties hereunder.
(b) DISABILITY; DEATH. In the event that Executive, due
to physical or mental disability or incapacity, is unable to
substantially perform his duties hereunder for a period of two or
more successive months, the Corporation or Executive shall have the
right to terminate this Agreement and Executive's employment
hereunder upon 30 days' prior written notice and termination shall
be effective on the 30th day after receipt of such notice by the
Executive (the "Disability effective date"). In the event that
Executive is able to and recommences rendering services and
performing his duties hereunder within such 30-day notice period,
Executive shall be reinstated and such notice shall be without
further force or effect. If Executive dies during the Term, this
Agreement shall terminate immediately upon his death.
(c) VOLUNTARY TERMINATION. Executive may terminate this
Agreement on six months written notice to the Corporation at any
time.
(d) NOTICE OF TERMINATION. Any termination of
Executive's employment by the Corporation for Cause, or by
Executive for Voluntary Termination, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 16 of this Agreement.
(e) DATE OF TERMINATION. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, however, that if
Executive's employment is terminated by reason of death or
Disability, or voluntary withdrawal, the Date of Termination shall
be the date of death or Executive or the Disability effective date,
or the last date of employment, as the case may be.
7. Effects of Termination. In the event that Executive's
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employment is terminated pursuant to Section 6 hereof, Executive's
employment hereunder shall terminate without further obligations to
Executive, other than those obligations accrued or earned and
vested (if applicable) by Executive through the Date of
Termination, including for this purpose all "Accrued Obligations",
defined as those obligations accrued or earned and vested (if
applicable) by Executive as of the Date of Termination, including,
for this purpose (i) Executive's pro rata Base Salary accrued but
unpaid as of the Date of Termination, (ii) any compensation
previously deferred by Executive (together with any accrued earning
thereon) and not yet paid by the Corporation and any accrued
vacation pay not yet paid by the Company and (iii) if applicable,
all amounts payable to the estate or designated beneficiaries of
Executive under any pension, savings, life insurance or other
plans, practices, policies and programs of the Corporation, and/or
all other amounts payable pursuant to Section 4 hereof. In
addition:
(i) the Corporation shall pay to Executive all
Accrued Obligations such that the Accrued Obligations specified in
Section 4 hereof, shall be paid to Executive in a lump sum in cash
within 30 days of the Date of Termination, and the other Accrued
Obligations shall be paid in accordance with Executive's specific
elections pursuant to, and otherwise in accordance with the terms
of, any plan, practice, policy or program providing benefits
forming a part of the Accrued Obligations;
(ii) all then non-exercisable options shall
immediately and automatically terminate, and
(iii) any registration rights theretofore
granted which have not been invoked with respect to shares of
Common Stock of the Corporation or TASA either acquired by
Executive pursuant to the exercise of stock options or underlying
vested options shall immediately and automatically terminate.
8. Confidentiality.
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(a) Executive understands and acknowledges that as a
result of Executive's employment with the Corporation, he is or
shall necessarily become informed of, and have access to,
confidential information of the Corporation including, without
limitation, inventions, copyrights, trade secrets, technical
information, marketing plans and information, pricing information,
identity of authors, customers and prospective customers and
identity of suppliers, and that such information, even though it
may have been or may be developed or otherwise acquired by
Executive, is the exclusive property of the Corporation to be held
by Executive in trust and solely for the Corporation's benefit.
Executive shall not at any time, either during or subsequent to his
employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, or
use, any of the Corporation's confidential information, without the
written consent of the Board, except for use on behalf of the
Corporation in connection with the Corporation's business, and
except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other
than Executive.
(b) Upon the termination of his employment with the
Corporation for any reason, Executive shall promptly deliver to the
Corporation all drawings, manuals, letters, notes, notebooks,
reports, tapes or discs, and copies thereof and all other
materials, including, without limitation, those of a secret or
confidential nature, relating to the Corporation's business which
are in Executive's possession or control.
(c) For purposes of this Section 8 and Section 9, the
term "Corporation" includes the Corporation and any other
predecessor corporation, and affiliates (including, without
limitation, TASA, subsidiaries and joint ventures).
9. Non-Competition. (a) Executive agrees that, for a period
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commencing on the date hereof and ending two years after the
termination of his employment with the Corporation for any reason,
he shall not, anywhere in the United States (or for such lesser
area or such lesser period as may be determined by a court of
competent jurisdiction to be a reasonable limitation on the
competitive activity of Executive) directly or indirectly:
(i) solicit or attempt to solicit business of any
customers of the Corporation (including prospective customers
solicited by the Corporation during the term of his employment) for
products or services the same or similar to those offered, sold,
produced or under development by the Corporation during the term of
his employment therewith or dealt in by Executive during his
employment with the Corporation;
(ii) solicit or attempt to solicit for any business
endeavor any employee of the Corporation;
(iii) interfere with any business relationship
between the Corporation and any other person or entity;
(iv) use the name of the Corporation or a name similar
thereto; or
(v) render any services as an officer, director,
employee, partner, consultant or otherwise to, or have any interest
as a stockholder, partner, lender or otherwise in, any person which
is engaged in activities which, if performed by Executive would
violate this Section 9.
10. Remedies and Survival. Because the Corporation does not
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have an adequate remedy at law to protect its interest in its trade
secrets, privileged, proprietary or confidential information and
similar commercial assets, or its business from Executive's
competition, the Corporation shall be entitled to injunctive
relief, in addition to such other remedies and relief that would,
in the event of a breach of the provisions of Sections 8 or 9, be
available to the Corporation. The provisions of Sections 8 and 9
and this Section 10 shall survive any termination of Executive's
employment with the Corporation for any reason whatsoever. In no
event shall an asserted violation of the provisions of Sections 8
or 9 of this Agreement constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this
Agreement.
11. Set-off. The payments and performance by the Corporation
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as provided for in this Agreement shall be subject to any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Corporation may have against Executive.
12. Non-exclusivity of Rights. Except as specifically
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provided in this Agreement, it is intended that Executive's present
and future participation in any benefit, bonus, incentive or other
plans, practices, policies or programs provided by the Corporation
and for which Executive or Executive's family may otherwise qualify
and be eligible be limited or unavailable. Nothing contained in
this Agreement, however, shall limit or otherwise affect such
rights as Executive may have under any stock option agreements with
the Corporation. Amounts which are vested benefits or which
Executive is otherwise entitled to receive at or subsequent to the
Date of Termination shall be payable in accordance with the plan,
practice, policy or program of the Corporation under which
Executive has such entitlement, if any.
13. Entire Agreement. This Agreement sets forth the entire
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understanding of the parties hereto with respect to its subject
matter, merges and supersedes any prior or contemporaneous
agreements or understandings with respect to its subject matter,
and shall not be modified or terminated except by another agreement
in writing executed by the Corporation and Executive. Failure of
a party to enforce one or more of the provisions of this Agreement
or to require at any time performance of any of the obligations
hereof shall not be construed to be a waiver of such provisions by
such party nor to in any way affect the validity of this Agreement
or such party's right thereafter to enforce any provision of this
Agreement.
14. Severability. If any provision of this Agreement is held
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to be invalid or unenforceable by any court or tribunal of
competent jurisdiction, the remainder of this Agreement shall not
be affected by such judgement and such provision shall be carried
out as nearly as possible according to its original terms and
intent to eliminate such invalidity or unenforceability.
15. Successors and Assigns. This Agreement is personal to
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Executive and without the prior written consent of the Corporation
shall not be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the parties' legal
representatives, successors and assigns. As used in the Agreement,
"Corporation" shall mean the Corporation as hereinbefore defined
and any successor to its business and/or assets as aforesaid with
assumes and agrees to perform this Agreement by operation of law or
otherwise.
16. Communications and Notices. All notices and other
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communications under this Agreement shall be in writing and shall
be deemed to have been duly given three (3) business days after
they are mailed in any United States post office enclosed in a
registered or certified postage-paid envelope and addressed as set
forth at the beginning of this Agreement, or to such other address
as any party may specify by notice to the other parties, or
delivered by Federal Express or a similar overnight courier to such
address, with evidence of delivery to such address; provided,
however, that any notice of change of address shall be effective
only upon receipt.
17. Construction; Counterparts. The headings contained in
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this Agreement are for convenience only and shall in no way
restrict or otherwise affect the construction of the provisions
hereof. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which together shall
constitute one and the same instrument.
18. Validity. The invalidity or unenforceability of any
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provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement. A party's
failure to insist upon strict compliance with any provision hereof
shall not be deemed to be a waiver of such provision. This
Agreement contains the entire understanding of the Corporation and
Executive with respect to the subject matter hereof but does not
supersede or override the provisions of any stock option, employee
benefit or other plan, program, policy or practice in which
Executive is a participant or under which Executive is a
beneficiary.
19. Governing Law. This Agreement shall be governed by and
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construed under the laws of the State of New York.
20. Prior Operations of the Corporation. It is understood
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and acknowledged that Executive was not employed by, or consultant
to, the Corporation at any time prior to April 16, 1997. Executive
shall, therefore, under no circumstances be responsible personally
for any circumstances, terms or conditions created by the previous
publisher. This does not preclude responsibility of the
Corporation itself for such circumstances, terms or conditions.
IN WITNESS WHEREOF, the undersigned parties have executed and
delivered this Agreement as of the date first above written.
MODERN LEARNING PRESS, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: President
Executive:
/s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
