AMENDMENT NO. 1 TO RESTATED AND REVISED EMPLOYMENT AGREEMENT DATED AS OF JANUARY 1, 2002 BETWEEN WRC MEDIA INC. AND MARTIN E. KENNEY
EXHIBIT
10.6
AMENDMENT
NO. 1 TO RESTATED AND REVISED EMPLOYMENT
AGREEMENT
DATED AS OF JANUARY 1, 0000 XXXXXXX XXX MEDIA INC.
AND
XXXXXX X. XXXXXX
1. Section
5
of the above agreement is hereby amended by re-designating the existing Section
5 as Paragraph 5(A), and by adding the following Paragraph 5(B):
“B. In
the
event a sale of substantially all of the assets of American Guidance Service,
Inc., or of a controlling interest in the capital stock of American Guidance
Service, Inc., is consummated on or before December 31, 2005, then within
30
days of the closing or other event by which delivery occurs, the Company
will
pay to Executive a Value Enhancement Bonus determined according to the following
formula:
|
Total
Consideration Paid By All Buyers
|
Bonus
To Be Paid
|
|
<$250
million USD
|
½
Executive’s Base Salary as of the date of closing, in no event less than
$287.5 thousand
|
|
$250
million - $300 Million USD
|
Executive’s
Base Salary as of the date of closing, in no event less than $575
thousand
|
|
>$300
million
|
An
amount equal to the sum of (i) Executive’s Base Salary as of the date of
closing, in no event less than $575 thousand plus
(ii) one percent of the excess of consideration received over $300
million
|
In
the
event that less than the entirety of the assets of capital stock of AGS is
sold,
the total consideration shall be, for purposes of this calculation, grossed
up
to determine a pro
forma
enterprise value that includes the value of stock or assets not sold, and
the
above formula will be applied to that total enterprise value.
Total
consideration shall include all escrows and reserves that are subject to
post-closing adjustments.
Total
consideration shall be computed before allowance for taxes, currency exchange,
and transactional expenses.
In
the
event any portion of total consideration is paid other than in cash, the
fair
market value of the non-cash component shall be determined as (i) in the
case of
publicly traded securities, the highest price of such securities attained
in the
period commencing two weeks before the closing and ending two weeks after
the
closing,
or (ii) in the case of consideration other than cash or publicly-traded
securities, that value ascribed to the consideration in the books of the
seller.”
2. Section
15 is amended to delete its second sentence, and to substitute in its place:
“Notwithstanding
the foregoing, Sections 5(B), 10, 11, 12, 14 and 16 and, if Executive's
employment terminates in a manner giving rise to a payment under Section
13,
Section 13 shall survive the termination of this Agreement.”
3. All
other
terms and conditions of the above Agreement remain in full force and
effect.
| WRC MEDIA INC. | XXXXXX X. XXXXXX | |
| |
|
|
|
By:
/s/
|
/s/
|
|
This
Restated and Revised EMPLOYMENT AGREEMENT (“Agreement") is made and entered into
as of the 1st day of January, 0000, xxxxxxx XXX
MEDIA INC.,
a
Delaware corporation (the "Company"), and XXXXXX
X. XXXXXX,
XX.,
an
individual resident of the State of Pennsylvania (the "Executive").
WHEREAS.
the Company wishes to continue to employ Executive, and Executive wishes
to
accept such employment, on the following terms and Conditions, effective
as of
the date set forth above
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 January 1, 2002
and
shall remain in effect until December 31, 2004, and shall be renewed
automatically thereafter for successive one year terms, unless terminated
by
Executive upon 90 days prior written notice to the Company or by the Company
upon 90 days prior written notice to Executive. The period of time between
January 1, 2002 and the termination of this Agreement pursuant to its terms
is
herein referred to as the "Term".
SECTION
3. Duties
and Extent of Service.
Executive shall serve the Company as Chief Executive Officer or in such
other
position as may be mutually agreed upon by Executive and the Company and
shall
perform such services and duties for the Company as are customarily performed
by
an executive in Executive's position at a business such as the Company's
business and as the Board of Directors of the Company (the "Board of Directors")
may assign or delegate to him from time to time as provided in the By-laws
of
the Company. Executive shall devote his full business knowledge, skill,
time and
effort exclusively to the performance of his duties for the Company and
the
promotion of its interests. Executive's duties hereunder shall be performed
at
such place or places as the interests, needs, businesses or opportunities
of the
Company shall require. Executive shall report to the Board of Directors
of the
Company.
SECTION
4. Base
Salary.
Commencing January 1, 2002 Executive shall be paid a base salary (the "Base
Salary") at a rate of $575,000 per annum (the "Base Salary"), in accordance
with
the Company’s payroll practices. The Base Salary shall not be reviewed for
increase until December 31, 2003 and shall thereafter be annually reviewed.
SECTION
5.
Bonuses. Executive
shall receive an annual bonus ("Bonus"), based on the achievement of specific
objectives to be established by the Board of Directors on an annual basis
in
connection with the development of the Company's annual operating budget
for
earnings
before
interest, depreciation, taxes and amortization and after deductions for
any
bonus payments payable by the Company (“Bonus EBIDTA”). For achievement of the
following percentages of budgeted Bonus EBITDA the corresponding Bonus
will be
paid to Executive:
|
95%
|
$175,000
|
|
100%
|
$225,000
|
|
105%
|
$262,500
|
|
110%
|
$300,000
|
|
115%
|
$337,500
|
|
120%
|
$375,000
|
|
125%
|
$437,500
|
|
130%
|
$500,000
|
|
135%
|
$575,000
|
|
140%
|
$650,000
|
For
each
year of the Term, Bonus EBIDTA will be computed according to the budget
of the
Company adopted by the Board of Directors on or before March 31 or, in
the event
no budget is so approved, the prior year budget; provided that the March
31 approval date shall be equitably extended if management of the Company
has
not delivered to the Board of Directors on or before January 30 a good
faith
proposed budget for the relevant fiscal year. Separate and apart from the
foregoing, Executive shall also receive annually a guaranteed bonus of
$200,000
(the "Guaranteed Bonus"). Payment dates shall be determined by the Board
of
Directors but will in no event occur later than 30 days after delivery
to the
Board of Directors of audited financial statements for the relevant fiscal
year
of the Company.
In
the
event the fiscal year of the Company is changed to other than a calendar
year
basis, a prorated Bonus opportunity will be made available to Executive,
the
terms and conditions of which (including applicable Bonus EBITDA for the
stub
period applicable to the pro rated Bonus) shall be determined in good faith
by
the Board of Directors in a manner reasonably consistent with the Bonus
in
effect for the fiscal year in which such change is made.
In
the
event of a sale or disposition of any business unit of the Company (including
subsidiaries and their subsidiaries, or discrete business operations owned
by
them), budgeted Bonus EBITDA shall be adjusted by reducing the Bonus EBITDA
by
an amount equal to the anticipated EBITDA for the remainder of the then-current
year attributable in the budget for the then-current year to the operations
of
the disposed-of unit.
SECTION
6. Fringe
Benefits.
Executive shall be entitled to participate, to the extent eligible, in
such
medical, dental, disability, life insurance, deferred compensation and
other
benefit plans (such as pension and profit sharing plans) as the Company
shall
maintain for the benefit of
2
employees
generally, on the terms and subject to the Conditions set forth in such
plans.
Executive shall accrue vacation in accordance with the Company’s applicable
policy.
SECTION
7. Expenses.
The
Company shall reimburse Executive promptly for all reasonable expenses
incurred
by Executive in accordance with the Company's budget and policy in connection
with his duties and responsibilities hereunder, including, without limitation,
expenses associated with any relocation.
SECTION
8. [Intentionally Omitted]
SECTION
9. Stock
Options.
(a)
Grant.
In
addition to any other stock option grant made or to be made to Executive
by the
Company, the Company shall grant Executive a nonqualified option to purchase
120,000 shares of Common Stock at an exercise price of $40.00 per share.
Such
option shall vest 33.3% on December 31, 2002, 33.3% on December 31, 2003
and the
final 33.4% on December 31, 2004; provided that such option shall vest
immediately upon a Change of Control (as defined below); and provided
further that such option shall terminate in its entirety in the event that
Executive's employment hereunder is terminated by the Company for "Good
Cause"
(as defined in Section 13) and Executive shall have no rights with respect
to
any portion thereof, whether or not vested. If Executive's employment hereunder
is terminated by the Company for any reason other than "Good Cause" or
by
Executive for any reason then the foregoing vesting schedule shall apply.
If
a
Change of Control (as defined below) occurs, the option shall be deemed
to have
fully vested as of the date of such Change of Control. "Change of Control"
shall
mean the acquisition of direct or indirect Control (as defined below) of
the
Company by any Person (other than EAC III L.L.C.
(“EAC III”), SGC Partners II LLC (“SGC”) or any of their Affiliates (as defined
below) or group other than any group including EAC III or SGC or any of
their
Affiliates. "Affiliate" means, with respect to any specified Person, any
other
Person that directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such specified
Person. For purposes of this Section 9(a), "Control" (including, with
correlative meanings, the terms" Controlled by" and "under common Control
with"), as used with respect to any Person, means the direct or indirect
possession of the power to direct or cause the direction of the management
or
policies of such Person, whether through the ownership of voting securities,
by
contract or otherwise. “Person” means any individual, corporation, partnership,
trust, association, limited liability company, joint venture, joint-stock
company or any other entity or organization, including a government or
governmental agency. A consummated private sale of 50% or more of the common
stock of the Company (including any rights to convert securities to the
common
stock of the Company, whether or not such right is exercised) in a single
transaction or in a series of related transactions, in each case, with
any
Person or their Affiliates shall presumptively constitute a Change of
Control.
(b)
[Reserved]
(c)
Exercise
of
Stock Options. The Executive may exercise the vested portion of options
granted pursuant to Sections 9(a) by notifying the Company of the number
of
shares of
3
Common
Stock to be purchased under such option and delivering with such notice
an
amount equal to the aggregate exercise price for such number of shares
in cash.
Notwithstanding the foregoing, Executive may notify the Company that Executive
desires to make a cashless exercise of such option with respect to a specified
number of shares of Common Stock, in which case such option shall be deemed
exercised with respect to such specified number of shares but Executive
shall
only be entitled to receive a number of shares of Common Stock equal to
the
product of (A) such specified number multiplied by (B) the quotient of
(1) the
aggregate Fair Market Value of such specified number of shares of Common
Stock
(determined as of the date the Company receives such notice in accordance
with
Section 14(b) minus the aggregate exercise price for such specified number
of
shares divided by (2) such aggregate Fair Market Value. Delivery of shares
with
respect to any exercise shall take place within 10 days of exercise.
(d)
Transfer,
Adjustment of Stock Options. The options granted hereby shall not be
transferable or assignable by Executive, otherwise than by will or the
laws of
descent and distribution, and no such option shall be subject to execution,
attachment or other similar process. In no event shall any such option
be
exercisable on or after the tenth anniversary of the date hereof. In the
event
of changes in the outstanding Common Stock by reason of stock dividends,
stock
splits, reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations or other changes in capitalization occurring
after
the date of this Agreement, the number of shares and exercise price under
such
option shall be equitably adjusted by the Board of Directors of the Company.
Any
amount payable under such option shall be subject to applicable withholding
taxes.
(e)
Tag-Along
Rights If EAC III, SGC and their Affiliates (the "Sellers") desire to
transfer in excess of 10% of their shares of Common Stock to a prospective
transferee (or transferees) other than (A) in connection with a public
offering
of the Common Stock (a "Permitted Transfer") or (B) to EAC III, SGC or
their
Affiliates (a "Permitted Transferee"), and, after giving effect to such
transfer, the Sellers shall have transferred in excess of 75% of their
aggregate
shares of Common Stock to a transferee (or transferees) other than in connection
with a Permitted Transfer or to Permitted Transferees, the Sellers shall,
as a
condition to such transfer, (i)
provide a notice to Executive in writing (a "Tag-Along Notice") of the
material
terms of the proposed transfer at least 15 days prior to such transfer
and (ii)
permit Executive (or cause Executive to be permitted) to sell (either to
the
prospective transferee or to another financially reputable transferee reasonably
acceptable to Executive) the same portion of his respective shares of Common
Stock (including such shares issuable pursuant to any option) (the “Shares”) as
that transferred by the Sellers in the aggregate to transferees other than
Permitted Transferees or in Permitted Transfers (after giving effect to
such
proposed transfer) on the same terms and conditions, subject to the same
agreements and at the same price as the proposed sale by the Sellers (less
any
option exercise price), which sale shall take place on the date the Sellers'
shares of Common Stock (or such portion) are transferred to such transferee
(or
transferees). Executive shall have five days from the date of receipt of
a
Tag-Along Notice to exercise his right to sell pursuant to clause (ii)
above by
delivering written notice to the Sellers of his intent to exercise such
right.
Executive's right to sell pursuant to clause (ii) above shall terminate
if not
exercised within such five-day period. If Executive elects to exercise
his right
to sell pursuant to clause (ii), Executive shall share, on a pro rata basis,
the
legal, investment banking and other expenses of the Sellers incurred in
connection with such transfer.
4
(f)
Drag-Along
Rights.
If at
any time the Sellers desire to transfer all (or any portion in excess of
50%) of
their shares of Common Stock to any person or entity that is not considered
a
Permitted Transferee under Section 9(e), above (a "Third Party Purchaser"),
the
Sellers shall have the right to require that Executive transfer the same
portion
of his respective Shares to such Third Party Purchaser(s) on the same terms
and
conditions, subject to the same agreements and at the same price as the
sale by
the Sellers. The Sellers shall provide a notice to Executive in writing
(a
"Drag-Along Notice") of such sale at least 10 days prior to such transfer,
and
the Drag-Along Notice shall identify such Third Party Purchaser(s), all
material
terms of the sale and the date of closing. Upon the closing of any sale
by the
Sellers of all (or such portion) of its shares of Common Stock as described
in a
Drag-Along Notice, such Third Party Purchaser(s) shall pay to Executive
the
consideration payable to Executive in connection with such sale of all
(or such
portion) of his Shares to such Third Party Purchaser(s), net of any option
exercise price and Executive's proportionate share of the legal, investment
banking and other expenses of the Sellers incurred in connection with such
sale,
and the Executive's Shares (or such portion) shall be deemed transferred
to such
Third Party Purchaser(s).
SECTION
10. Registration
Rights.
Beginning no earlier than 180 days after the consummation of a public offering
of Common Stock, the Company shall grant to the management of the Company
the
right to require the Company to register for re-sale under applicable federal
securities laws shares of Common Stock held by Executive (the “Registration
Right”); provided that (i)
the Registration Right may be exercised only once by the management of
the
Company, (ii)
the
Registration Right shall be exercised on behalf of all members of management
by
the Chief Executive Officer of the Company, and (iii) the Registration
Right may
not be exercised at any time or during any period the Company or lead
underwriter to the Company determines in good faith that such exercise
would
adversely affect a public offering of Common Stock that the Company is
in good
faith considering. The terms and conditions of the Registration Right
(including, without limitation, the number of shares of Common Stock that
may be
registered) shall be customary for the private equity industry.
SECTION
11.
Noncompete and Nonsolicitation During
the Term, and for two years thereafter, Executive shall not directly or
indirectly (other than as an employee of or consultant to the Company or
an
affiliate of the Company):
(a)
engage in
activities or businesses within the United States which are substantially
in
competition with the Company (“Competitive Activities"), including (i) selling
goods or services of the type sold by the Company or any of its subsidiaries;
(ii) soliciting or attempting to solicit any customer or client or prospective
customer or client of the Company (or any of its subsidiaries) including,
without limitation, actively sought prospective customers or clients, to
purchase any goods or services of the type sold by the Company or any of
its
subsidiaries from anyone other than the Company or any of its subsidiaries;
and
(iii) assisting any person in any way to do, or attempt to do, anything
prohibited by (i) or (ii) above;
(b)
perform any
action, activity or course of conduct which is substantially detrimental
to the
business or business reputation of the Company or any of its subsidiaries
5
("Detrimental
Activities"), including (i) soliciting, recruiting or hiring any employees
of
the Company or persons who have worked for Ripplewood Holdings L.L.C.
("Ripplewood"), the Company or any of their respective affiliates; (ii)
soliciting or encouraging any employee of Ripplewood, the Company or any
of
their respective affiliates to leave the employment of Ripplewood, the
Company
or any of their respective affiliates; (iii) intentionally interfering
with the
relationship of Ripplewood, the Company or any of their affiliates with
any
person or entity who or which is employed by or otherwise engaged to perform
services for Ripplewood, the Company or any such affiliate; and (iv) disclosing
or furnishing to anyone any confidential information relating to Ripplewood,
the
Company or any of their respective affiliates or otherwise using such
confidential information for its own benefit or the benefit of any other
person;
or
(c)
establish in the
United States any new business which engages in Competitive Activities.
Notwithstanding
anything to the contrary contained in this Agreement, the foregoing covenant
shall not be deemed breached as a result of the ownership by Executive
of: (i)
less than an aggregate of 5% of any class of stock of a person engaged,
directly
or indirectly, in Competitive Activities; provided, however, that such
stock is listed on a national securities exchange or is quoted on the National
Market System of NASDAQ; (ii) less than an aggregate of 10% in value of
any
instrument of indebtedness of a person engaged, directly or indirectly,
in
Competitive Activities; or ( iii) stock or other debt or equity interests
in the
Company, or the participation by Executive in the activities and business
conducted by the Company or any of its subsidiaries; provided, however,
that, for the lesser of a period of two years from the date hereof or so
long as
Executive owns stock or other debt or equity interests in the Company or
participates in the activities or business conducted by the Company or
any of
its subsidiaries, Executive shall not engage in any Competitive Activities
except to the extent Executive engaged in such Competitive Activities as
of
November 17, 1999.
If
a
judicial determination is made that any of the provisions of this Section
11
constitutes an unreasonable or otherwise unenforceable restriction against
Executive, the provisions of this Section 11 shall be rendered void only
to the
extent that such judicial determination finds such provisions to be unreasonable
or otherwise unenforceable. Moreover, notwithstanding the fact that any
provisions of this Section 11 is determined not to be specifically enforceable,
the Company shall nevertheless be entitled to recover monetary damages
as a
result of Executive's breach of such provision.
Executive
agrees that the provisions of this Section 11 are reasonable and properly
required for the adequate protection of the business and the goodwill of
the
Company.
SECTION
12. Nondisclosure.
The
parties hereto agree that during the course of his employment by the Company,
Executive will have access to, and will gain knowledge with respect to,
the
Company's Confidential Information (as defined below). The parties acknowledge
that unauthorized disclosure or misuse of such Confidential Information
would
cause irreparable damage to the Company and its subsidiaries. Accordingly
Executive agrees to the nondisclosure covenants in this Section 12. Executive
represents that his experience and capabilities are such
6
that
the
provisions of Section 11 and this Section 12 will not prevent him from
earning
his livelihood. Executive agrees that he shall not (except as may be required
by
law), without the prior written consent of the Company during his employment
with the Company under this Agreement, and any extension or renewal hereof,
and
thereafter for so long as it remains Confidential Information, use or disclose,
or knowingly permit any unauthorized person to use, disclose or gain access
to,
any Confidential Information; provided, however, 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 his
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 his possession relating to the business
of the
Company or any of its affiliates, including but not limited to all Confidential
Information, and shall not be entitled to any lien or right of retention
in
respect thereof.
For
purposes of this Agreement, "Confidential Information" shall mean all business
information (whether or not in written form) which relates to the Company,
any
of its 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 or other personnel-related information;
contracts; and supplier lists. Confidential Information shall not include
such
information known to Executive prior to his involvement with Ripplewood.
SECTION
13. Severance.
(a)
If Executive's
employment hereunder is terminated (1) upon a breach by the Company of
this
Agreement; (2) by the Company for any reason other than for "Good Cause"
(as
defined below) including a refusal to renew the Agreement by the Company,
or (3)
by the Company as a result of the occurrence of the death or total disability
of
Executive (total disability meaning the failure of Executive to perform
his
normal required services hereunder for a period of three 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) the Company shall pay to Executive as severance pay lump
sum
cash payments totaling the amount (in each case prorated for any portion
of a
year less than a full year) of his (i) Base Salary and (ii) Guaranteed
Bonus for
a Payment Period which is the longer of (x) the balance of the Term of
this
agreement and (y) twenty four months and (if applicable) (iii) the Supplemental
Payment described in sub-paragraph (c) below. Payment of the Base Salary
and
Guaranteed Bonus components of such severance pay will be made within thirty
(30) days of such termination.
(b)
Executive shall
have the option of receiving the Base Salary and Guaranteed Bonus components
of
severance pay specified in the preceding sub-paragraph in the form of equal
continuation payments for 24 months (the "Severance Period"). In the event
that
Executive elects to receive severance pay in the form of continuation payments,
Executive shall
7
continue
to receive medical, dental and vision coverage for the Severance Period,
subject
to Executive’s payment of the costs of such benefits to the extent such benefits
are paid for by active employees. For purposes of this Agreement, termination
for "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 wilfully
engaged in a fraudulent act to the damage or prejudice of the Company or
any
affiliate of the Company; (iii) any act or omission by Executive involving
malfeasance or gross negligence in the performance of Executive's duties
to the
Company; or (iv) Executive otherwise wilfully 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 and, within 30 days after written notice from the Company of
such
failure or deviation, Executive has not corrected such failure.
(c)
If Executive is
entitled to severance payments hereunder, the Company shall pay Executive
an
additional amount (the "Supplemental Payment") equal to the product of
A and B,
where A is the Bonus that would have been paid to Executive under the terms
of
this Agreement for that fiscal year of the Company that includes Executive's
date of termination (which shall be based on the Company's actual performance
for that year), and B is a fraction, the numerator of which is the number
of
months in the applicable Payment Period and the denominator of which is
12. The
Supplemental Payment, if any, shall be made at the time the Company is
required
to pay Bonus for the fiscal year of the Company that includes Executive's
date
of termination in accordance with the provisions for payment of Bonus in
SECTION
5.
SECTION
14. Options
to Purchase and Sell Common Stock.
(a)
(i) If
Executive's employment is terminated for any reason, the Company shall
have an
option to purchase all or any portion of Executive's shares of Common Stock
(including any shares obtained or obtainable through the exercise of any
option)
at a purchase price equal to the Fair Market Value (as defined below),
determined in accordance with Section 14(b) as of the date of such termination.
The Company shall within 90 days of such date of termination give notice
in
writing to Executive of its election to exercise or not to exercise such
option,
which notice shall set forth the portion, if any, of Executive's shares
of
Common Stock that the Company elects to purchase (the “Acquired Interest”). The
purchase of Executive's shares of Common Stock shall take place at the
principal
office of Ripplewood, currently at One Rockefeller Plaza, New York, New
York on
the date specified by the Company (not later than the later of the twentieth
business day following the receipt by Executive of the required notice
from the
Company and the satisfaction of any legal requirements to the purchase
of the
Acquired Interest). The consideration for the purchase of the Acquired
Interest
shall be paid by delivery to Executive of a certified or bank check made
payable
to Executive or by wire transfer of immediately available funds to a bank
account designated by Executive, within one business day after delivery
of
certificates or other instruments representing Executive's shares of Common
Stock so purchased, appropriately endorsed by Executive, free and clear
of all
security interests, liens, claims, encumbrances, charges, options, restrictions
on transfer, proxies and voting and other agreements of whatever nature.
The
Company may assign its rights under this Section 14 to any person.
8
(ii)
If Executive's
employment is terminated by the Company for other than Good Cause, including
a
refusal to renew the Agreement by the Company,
Executive
shall have an option to sell to the Company all or any portion of Executive's
shares of Common Stock purchased
on the Closing Date (as defined in the Redemption, Stock Purchase and
Recapitalization Agreement dated as of August 13, 1999, as amended, among
PRIMEDIA Inc., a Delaware corporation, and the Company) at a purchase price
equal to the Fair Market Value of such shares, determined in accordance
with
Section 14(b) as of the date of such termination; provided, that to the
extent
that the Board of Directors of the Company reasonably determines that such
purchase, if made, would (x) cause the Company to be or remain in default
under
any agreements with lenders or financing sources, despite commercially
reasonable efforts by the Company to obtain consents or amendments necessary
to
permit such purchase, or (y) conflict with the terms (including with respect
to
priority of payment) of the 15% Senior Exchangeable Preferred Stock Due
2011,
par value $0.01 per share, of the Company, the Company shall be relieved
of its
obligations to make such purchase under this Section 14(a)(ii) while and
to the
extent such conditions continue to exist. Executive shall within 90 days
of such
date of termination give notice in writing to the Company of his election
to
exercise or not to exercise such option, which notice shall set forth the
portion, if any, of Executive's shares of Common Stock that Executive elects
to
sell. The sale of Executive's shares of Common Stock shall take place at
the
principal office of Ripplewood, currently located at One Rockefeller Plaza,
New
York, New York, on the date specified by Executive (not later than the
later of
the twentieth business day following the receipt by the Company of the
required
notice from Executive and the satisfaction of any legal requirements to
the sale
of Executive's shares of Common Stock). The consideration for the sale
of
Executive's shares of Common Stock shall be paid by delivery to Executive
of a
certified or bank check made payable to Executive or by wire transfer of
immediately available funds to a bank account designated by Executive,
against
delivery of certificates or other instruments representing Executive's
shares of
Common Stock so purchased, appropriately endorsed by Executive, free and
clear
of all security interests, liens, claims, encumbrances, charges, options,
restrictions on transfer, proxies and voting and other agreements of whatever
nature.
(b)(i)
If a
determination of the Fair Market Value of any shares of Common Stock is
required
by this Agreement when there is no public trading market for shares of
Common
Stock, such "Fair Market Value" shall be such amount as is determined in
good
faith by the Company's Board of Directors as of the date such Fair Market
Value
is required to be determined hereunder. In making a determination of such
Fair
Market Value, the Company's Board of Directors shall give due consideration
to
such factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the Company
and its subsidiaries in recent periods, its potential value and that of
its
subsidiaries as a whole, its future prospects and that of its subsidiaries
and
the industries in which they compete, its history and management and that
of its
subsidiaries, the general condition of the securities markets and the fair
market value of securities of privately owned companies (with transfer
restrictions) engaged in businesses similar to those of the Company's,
if any.
The Fair Market Value as determined in good faith by the Company's Board
of
Directors shall be binding and conclusive upon Executive.
9
(ii)
If a
determination of the Fair Market Value of any shares of Common Stock is
required
by this Agreement when there is a public trading market for shares of Common
Stock, such "Fair Market Value" shall mean the average daily closing sales
price
of shares of Common Stock for the ten consecutive trading days preceding
the
date the Fair Market Value is required to be determined hereunder. The
closing
price for each day shall be the last reported sales price regular way or,
in
case no such reported sale takes place on such day, the average of the
reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which shares of Common Stock are listed
and
admitted to trading, or, if not listed and admitted to trading on any such
exchange, on the NASDAQ National Market System, or, if not quoted on the
National Market System, the average of the closing bid and asked prices
in the
over-the-counter market as furnished by any New York Stock Exchange member
firm
selected from time to time by the Company's Board of Directors for that
purpose.
SECTION
15. Termination;
Survival.
This
Agreement shall terminate upon the termination of Executive’s employment by the
Company. Notwithstanding the foregoing, Sections 10, 11, 12, 14 and 16
and, if
Executive's employment terminates in a manner giving rise to a payment
under
Section 13, Section 13 shall survive the termination of this Agreement.
SECTION
16. Miscellaneous.
(a)
This Agreement
shall inure to the benefit of and shall be binding upon Executive and his
executor, administrator, heirs, personal representative and permitted assigns,
and the Company and its successors and permitted assigns; provided, however,
that Executive shall not be entitled to assign or delegate any of his 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
Delaware, 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, and supersedes all prior agreements,
if any, whether written or oral, between them, relating to Executive's
employment by the Company or any of its subsidiaries. All prior agreements
between the Company or any of its subsidiaries and Executive with respect
to
Executive's employment by the Company or any of its subsidiaries shall
terminate
and be without further force or effect as of the execution of this Agreement;
provided, however, that any award of any compensation or other benefits
earned
during the term of such agreement(s), including but not limited to Bonus
for the
year 2001, shall survive. Executive hereby releases the Company its subsidiaries
and its affiliates from any claims or rights under such agreements, without
any
liability or other adverse consequence to the Company, its affiliates or
its
subsidiaries.
10
(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,
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Chief Operating Officer
Fax
000-000-0000
with
a
copy to:
Ripplewood
Holdings L.L.C.
Xxx
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxxxx
Fax
000-000-0000
(ii)
if to Executive,
Xxxxxx
X.
Xxxxxx, Xx.
Xxxx
Xxxxxxxxx Xxxx
Xxxxx,
XX
00000
Fax:
000-000-0000
11
Communications
by telecopier also shall be sent concurrently by overnight courier, but
shall in
any event be effective the first business hour after confirmation of receipt
by
electronic transmission. Each party may from time to time change its address
for
notices under this Section 16(d) by giving at least five days' notice of
such
changed address to the other parties hereto.
(e)
This Agreement
maybe 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 parties.
(i)
All amounts paid
hereunder will be net of any applicable withholdings required by existing
or
future tax laws.
12
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
By
/s/
XXXXXX
X. XXXXXX
/s/
13
