AMENDMENT TO EMPLOYMENT
AGREEMENT
This Amendment to Employment Agreement (the
“ Amendment ”), dated as of the 7th day of
August, 2009, is made by and between Cambium-Voyager Holdings, Inc.
(the “ Corporation ”), Voyager Learning Company
(“ Voyager ”) and Ron Klausner (the “
Executive ”).
WHEREAS, Voyager and the Executive are parties
to an Employment Agreement, originally dated as of May 7,
2007, and as amended and restated as of April 9, 2009 (as
amended, the “ Employment Agreement ”);
and
WHEREAS, Voyager has entered into that certain
Agreement and Plan of Mergers, by and among Voyager, the
Corporation, Vowel Acquisition Corp., VSS-Consonant Holdings II
Corp., Consonant Acquisition Corp., and certain other entities
signatory thereto (the “ Merger Agreement ”);
and
WHEREAS, in connection with the Mergers (as
defined in the Merger Agreement), Voyager shall become a wholly
owned subsidiary of the Corporation; and
WHEREAS, subject to and contingent upon the
consummation of the Mergers, the Corporation and the Executive
mutually desire the Executive to serve as the Chief Executive
Officer of the Corporation, pursuant to the terms of the Employment
Agreement, as amended hereby; and
WHEREAS, as provided in the Merger Agreement,
certain amounts shall be deposited into the Voyager Learning
Company Executive and Deferred Benefit Trust (the “ Rabbi
Trust ”) for the benefit of the Executive, all of which
amounts shall be paid from the Rabbi Trust to the Executive solely
to the extent provided for hereunder; and
WHEREAS, subject to and contingent upon the
consummation of the Mergers, in order to facilitate the foregoing,
the Corporation, Voyager and the Executive desire to amend the
Employment Agreement in certain respects on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing
premises and for other good and valuable consideration the receipt
of which is hereby acknowledged, the Corporation, Voyager and the
Executive hereby agree as follows:
1. Sections 2 through and
including Section 9 of this Amendment are subject to
and contingent upon the consummation of the Mergers, and such
sections shall become effective only as of the Effective Time (as
defined in the Merger Agreement). If the Merger Agreement is
terminated for any reason, then this Amendment shall be void ab
initio .
2. At the Effective Time, Voyager hereby
transfers and assigns the Employment Agreement, as amended hereby,
and all liabilities and obligations thereunder (excluding the
payment obligations referenced in Section 4 and Section 8
below which shall be retained by the Rabbi Trust and Voyager as
provided in such sections), to the Corporation, the Corporation
hereby acknowledges and accepts such transfer and assignment, and
the Executive hereby consents to such transfer and assignment. All
references to the “Company” set forth in the Employment
Agreement shall mean the Corporation. Capitalized terms used in
this Amendment but not defined herein shall have the meanings set
forth in the Employment Agreement.
3. During the Executive’s employment
with Corporation from and after the Effective Time, pursuant to the
Employment Agreement as amended hereby, the Executive shall serve
the Corporation as
its Chief
Executive Officer, and shall report directly to the Board of
Directors of the Corporation (the “ Board ”)
and, if any, to the non-executive chairman of the Board. At the
Effective Time, the Executive shall be elected to serve as a member
of the Board. Following the Effective Time and so long as the
Executive remains employed by the Corporation as Chief Executive
Officer, the Executive shall be nominated by the Corporation for
election to the Board in accordance with the Corporation’s
governance policies and applicable law; provided ,
that , Executive’s continuing service as a member of
the Board shall remain subject to election by the
Corporation’s stockholders in accordance with the
Corporation’s governance policies and applicable law. In the
event the Executive’s employment with the Corporation shall
terminate for any reason whatsoever (including without limitation,
at the End Date, as defined below), the Executive agrees that he
shall immediately resign his position as a member of the Board, and
each other position that he then holds with the Corporation or any
of its affiliates. If the Executive shall fail to so resign, then
such failure shall constitute Cause, and the Board shall thereupon
have the right to remove the Executive from all such positions
without further action, deed or notice.
4. Notwithstanding Sections 2(b) and 2(c)
of the Employment Agreement, with respect to calendar year 2010 and
subsequent years during which the Executive remains employed and
eligible for a bonus, his bonus range shall be 0% to a maximum of
140% of Base Salary, with a target level of 70% of Base Salary, and
all determinations relating to the Executive’s annual bonus
opportunities and payments within such range shall be made by the
Compensation Committee of the Board (the “ Committee
”) in its sole and absolute discretion, including with
respect to any applicable performance goals, the Board-approved
budget for such year, and the Executive’s achievement of
other goals set by the Committee for such year (“ Post
2009 Annual Bonus ”). The Executive and the Corporation
acknowledge that the Executive’s regular annual bonus in
respect of calendar year 2009 shall be paid by the trustee of the
Rabbi Trust from the Rabbi Trust and only secondarily from Voyager
if the Rabbi Trust cannot or does not pay in full (subject to the
terms of the Rabbi Trust). Such payment shall be made at the same
time bonuses are paid to other senior executives, but no later than
March 14, 2010. In addition, if both the Effective Time occurs
and the Executive remains continuously employed with the
Corporation through the date which is six months immediately
following the Effective Time (the “ 2009 Bonus Date
”), then the Executive shall be paid from the Rabbi Trust,
and only secondarily from Voyager if the Rabbi Trust cannot or does
not pay in full (subject to the terms of the Rabbi Trust), a bonus
equal to the excess of $751,906 over the amount of the regular
annual bonus already paid to Executive in respect of calendar year
2009, if any, as provided in the preceding provisions of this
paragraph, which excess amount shall be paid on the 2009 Bonus Date
(the “ 2009 Bonus ”); provided ,
however , if the Corporation terminates the Executive
without Cause or in the event he resigns for Good Reason, in either
case, before the 2009 Bonus Date, then, the Executive shall be
entitled to payment of the 2009 Bonus upon the Release Effective
Date. Notwithstanding the foregoing to the contrary, the 2009 Bonus
shall be forfeited in the event the Executive’s employment is
terminated by the Corporation for Cause, or in the event the
Executive resigns from his employment prior to the 2009 Bonus Date
other than for Good Reason (unless, following the fifth month after
the Effective Time, he has complied with the requirements under
Section 6 of this Amendment, except that he must remain
continuously employed through such 2009 Bonus Date). The trustee of
the Rabbi Trust shall be provided specific directions to pay, or
not pay, the Executive, the 2009 Bonus in accordance with this
paragraph.
5. (a) At the Effective Time, the
Executive shall be granted an option to purchase 750,000 shares of
Corporation common stock pursuant to the Corporation’s 2009
Equity Incentive Plan. The terms and conditions of such stock
options shall be determined by the Committee in its sole and
absolute discretion; provided , however , that such
terms and conditions shall be no less favorable to the Executive
than those set forth on Annex A hereto; and, provided
, further , however , that such options shall vest
ratably over four years beginning on the date of grant, such that
the number of vested option shall equal the total number of options
initially granted multiplied by a fraction, the numerator of which
is the number of days employed by the Corporation since the date of
grant, and the denominator of which is 1,460.
(b) With respect to the Executive’s
stock appreciation right, granted as of April 24, 2007,
relating to 300,000 shares of Voyager common stock (i) rights
with respect to 200,000 shares shall be retained by the Executive
and adjusted and converted in accordance with the terms of the
Merger Agreement and (ii) rights with respect to 100,000
shares shall automatically terminate at Effective Time.
6. As provided under Section 10 of the
Employment Agreement, the Executive’s employment with the
Corporation is and shall remain at-will and, accordingly, the
Executive may resign, and the Corporation may terminate the
Executive, from his employment at any time and for any or no
reason. The Executive’s rights, benefits and entitlements
upon any such termination shall be as set forth in this Amendment.
Notwithstanding the foregoing, the Corporation hereby agrees that
in the event the Executive desires to resign from employment with
the Corporation, if and only if (i) the Executive remains
employed with the Corporation, in good standing, as Chief Executive
Officer for a period of at least five (5) months following the
Effective Time, (ii) at any time following such five
(5) month period the Executive provides seven (7) months
advance notice of such resignation (the “ Notice
Period ”), and (iii) during the Notice Period, the
Executive (X) assists the Board in any replacement search for
his successor and in transitioning his duties to his designated
successor and (Y) continues to perform his duties on behalf of
the Corporation in accordance with the Employment Agreement through
the last day of the Notice Period (the “ End Date
”), the Executive shall be entitled to receive from the
Corporation (A) salary and employee benefits (including his
Post-2009 Annual Bonus with respect to any calendar year that ends
during the Notice Period) subject to and in accordance with the
Employment Agreement and (B) the Pro Rata Bonus (as defined
below). The “ Pro Rata Bonus ” shall be a bonus
in respect of the calendar year in which the End Date occurs. The
amount of the Pro Rata Bonus shall equal the amount of Post 2009
Annual Bonus that the Executive would have earned assuming that he
remained employed with the Corporation for the entire calendar
year, and based upon the Corporation’s actual performance as
compared to any applicable performance goals pre-established by the
Committee, multiplied by a fraction, the numerator of which is the
number of days the Executive worked during such calendar year, and
the denominator of which is equal to 365. Such Pro Rata Bonus shall
be paid in accordance with the Corporation’s bonus plan, and
upon the later of (x) the Release Effective Date (as defined
below), and (y) at or about the same time annual bonuses are
paid to other executives of the Corporation, but in no event later
than March 15 of the calendar year following the year in which
the End Date occurs. If the foregoing payments and benefits become
payable as provided above and are so paid or provided, no
additional payments and benefits shall be owed or paid under
Section 7 of this Amendment, or under any severance plan,
policy or arrangement of the Corporation.
7. As of the Effective Time, and except as
provided in Section 8(b) below, Sections 4 and 5 of the
Employment Agreement (entitled, respectively, “Severance and
Change in Control Protection” and “Regular Severance
Benefits”) are hereby terminated, deleted in their entirety,
and replaced by the following provisions; provided ,
however , that the terms and conditions in Section 6 of
the Employment Agreement (entitled, “Conditions to Receiving
Severance Benefits”) shall remain in full force and effect
and shall apply with respect to the payments discussed immediately
below:
The
Executive’s Entitlement to Severance Payments
.
If the
Executive’s employment terminates either by the Corporation
without Cause or by the Executive’s resignation for Good
Reason, in either case, following the Effective Time and on or
prior to December 31, 2010, then the Executive shall be
entitled to his Base Salary through, and at the rate in effect on,
the date of termination, plus an amount equal to the greater of
(x) 100% of the Executive’s then-current annualized rate
of Base Salary, or (y) the Executive’s Post 2009 Annual
Bonus applicable in respect of 2010, at the target level determined
in accordance with Section 4 above, and calculated as if the
Executive was employed for all of 2010 (and assuming that all
applicable performance goals were attained at such target level).
Such amount shall be paid upon the later of (x) the
Release
Effective Date
and (y) at or about the same time annual bonuses in respect of
the calendar year in which the Executive’s termination occurs
are paid to other executives of the Corporation but not later than
March 15 after such calendar year.
If the
Executive’s employment terminates either by the Corporation
without Cause, or by the Executive’s resignation for Good
Reason, in either case on or after January 1, 2011, then the
Executive shall be entitled to the following:
(A) his
Base Salary through, and at the rate in effect on, the date of
termination, paid in accordance with the Corporation’s
regular payroll schedule; and
(B) an
amount equal to 100% of the Post 2009 Annual Bonus for the year in
which such termination occurs, calculated as if the Executive was
employed for the entire year in which such termination occurred
(but subject to the Committee’s determination of
Executive’s achievement of applicable performance goals for
such year), multiplied by a fraction, the numerator of which is
equal to the number days the Executive worked in the year of
termination, and the denominator of which is equal to 365. Such
amount shall be paid upon the later of (x) the Release
Effective Date, and (y) at or about the same time annual
bonuses in respect of such year of termination are paid to other
executives of the Corporation (but no later than March 15 of
the year immediately following the year in which such termination
occurs); and
(C) payments that in the aggregate equal
100% of the then-current annual Base Salary (the “Aggregate
Amount”), paid as follows: (i) a portion of the
Aggregate Amount equal to the maximum amount that will qualify
under the limitation set forth under Treasury
Regulation 1.409A-1(b)(9)(iii)(A), shall be paid in equal
installments ratably in the form of salary continuation payments in
accordance with the Corporation’s regular payroll schedule
for a period of one year commencing with the first regularly
scheduled payroll date immediately following the Release Effective
Date; and (ii) a portion of the Aggregate Amount equal to the
exces
|
