AGREEMENT, made as
of January 31, 2007, by and between Haights Cross
Communications, Inc. (the “Company”), and Paul J.
Crecca (“Crecca”).
(a)
Position. The Company agrees to employ Crecca, and Crecca
agrees to serve as Executive Vice President and Chief Financial
Officer of the Company. Crecca shall report to Peter J. Quandt
(“Quandt”), Chairman and Chief Executive
Officer.
(b)
Principal Office. Crecca’s principal office shall be
at the principal executive offices of the Company in White Plains,
New York, except for reasonable business travel obligations
commensurate with Crecca’s position. Crecca’s principal
office shall not be located more than ten miles from White Plains,
New York.
(c)
Duties and Powers. Crecca shall have the customary duties,
powers, responsibilities and authority of a Chief Financial
Officer. Crecca shall perform such duties and exercise such powers
upon such terms and conditions as Quandt or the Board of Directors
shall reasonably impose. Crecca shall devote his full working time
and best efforts to the performance of his duties under this
Agreement, except that, with the consent of the Board of Directors
(which consent shall not be unreasonably withheld), Crecca may
engage in charitable and community affairs activities. Crecca also
agrees that participation as a member of an outside corporate board
will only be undertaken with permission of the Board of
Directors.
(d)
Term. The term of Crecca’s employment under this
Agreement shall commence as of January 1, 2007, and shall
terminate on December 31, 2008, unless extended or sooner
terminated in accordance with the provisions of this Agreement (the
“Term”). The Term shall be extended automatically for
periods of one year (the first possible automatic extension date
being January 1, 2009) unless either the Company or Crecca has
given written notice to the other not later than six months prior
to the expiration of the Term (the first possible such notice date
being July 1, 2008) of such party’s election not to
extend the Term.
2.
COMPENSATION AND BENEFITS. During the Term (i.e., the
period of employment of Crecca hereunder), the Company shall pay
Crecca the following amounts and provide to Crecca the following
benefits:
(a) Base
Salary. The Company shall pay Crecca an annual base salary of
$360,000 for the year 2007, increasing by 4% (four percent) in each
subsequent calendar year of the Term (“Base
Salary”).
(b)
Annual Bonus. The Company shall pay Crecca an annual bonus
(“Bonus”) of not less than 44% (forty-four percent) of
Base Salary in each year of the Term and, in each year of the Term,
Crecca shall be eligible for a greater Bonus within the Board of
Directors’ sole discretion. Bonus shall be paid no later than
March 15 of the year following the applicable Bonus year.
Bonus for 2006 shall be payable at the rate of 44%, or a greater
rate at the discretion of the Board of Directors, of 2006 Base
Salary as if this Agreement was in effect from January 1,
2006.
(c) Other
Compensation Plans and Programs. Crecca shall be eligible to
participate in any other Company compensation plans and programs
for senior executives
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of the Company,
including without limitation a monthly automobile allowance,
without discrimination or duplication.
(d)
Employee Benefits. In accordance with the terms of the
applicable plan documents or policies, the Company shall provide
Crecca with coverage under all employee medical and welfare benefit
programs, plans and practices which the Company generally makes
available to its senior officers, which may be reviewed and changed
from time to time.
(e)
Vacation. Crecca shall be entitled to four weeks’ paid
vacation each year, which may be taken consistent with
Company’s policies and procedures. Crecca shall also be
entitled to ten personal/sick days each year.
(f)
Expenses. In accordance with the Company’s expense
policies, which may be amended from time to time, the Company shall
reimburse Crecca for all reasonable business expenses incurred by
Crecca in carrying out his duties under this Agreement, upon timely
presentation by Crecca of appropriately itemized accounts of such
expenditures, and approved in accordance with Company policy
(“Business Expenses”). In addition, the Company will
reimburse Crecca for up to $3,000 in legal fees incurred in respect
of advice, negotiation, drafting and revising of this
Agreement.
3.
TERMINATION OF EMPLOYMENT BY THE COMPANY OTHER THAN FOR CAUSE OR
BY CRECCA FOR GOOD REASON
The Company may
terminate Crecca’s employment other than for Cause and Crecca
may terminate his employment for Good Reason, in each case subject
to the notice requirement set forth in this Section 3. If,
within the notice period pursuant to Section 3(a), the grounds
for such termination are cured as expressly permitted
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hereunder, the
notice of termination shall be void and no termination pursuant to
such notice shall occur. A non-extension of the Term, if elected by
the Company, shall be deemed to be a termination of Crecca’s
employment other than for Cause if Crecca remains employed until
the end of the Term and his employment then in fact terminates due
to the non-extension of the Term hereunder.
(a)
Notice and Payment Obligations. Any termination of
Crecca’s employment by the Company other than for Cause shall
only become effective at least 30 (thirty) days after written
notice to Crecca from the Company. Any termination of employment by
Crecca for Good Reason shall only become effective at least 30
(thirty) days after written notice to the Company from Crecca
specifying the basis for his belief that he has Good Reason to
terminate his employment. If the Company terminates the employment
of Crecca other than for Cause and other than as a result of death
or Permanent Disability (as defined hereinafter) or if Crecca
terminates his employment for Good Reason (as hereinafter defined),
the Company shall pay Crecca in full satisfaction of its
obligations to him the following amounts:
i.
(A) The Base Salary accrued to the date of termination of
employment, and (B) any amounts payable under all applicable
Company plans or programs, determined pursuant to the terms of such
plans or programs, such amounts to be paid in full on the first
business day of the month following such termination (the amounts
in Clauses (A) and (B), collectively, the “Accrued
Amounts”); plus
ii.
A cash lump sum payment of pro rata Bonus, equal to the higher of
the current year target amount (i.e. target amount being 44% of
current year Base Salary) of Bonus payable to Crecca or the actual
Bonus paid or payable for performance in the
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year prior to
the year of termination, multiplied by a fraction the numerator of
which is the number of days from January 1 of the year of
termination to the termination date and the denominator of which is
365 (but without duplication of any Bonus payout for the year of
termination that is part of the Accrued Amounts), paid in full at
the same date as payment is required under clause (i) above;
plus
iii.
A cash lump sum payment in respect of vacation days accrued
according to the Company’s rules to the date of termination
that Crecca has not taken (the “Vacation Payment”),
paid in full at the same date as payment is required under clause
(i) above, or on such earlier date as may be required by law;
plus
iv.
Payment for any unreimbursed Business Expenses, paid in full at the
same date as payment is required under clause (i) above;
plus
v.
An additional amount (the “Termination Amount”) equal
to two times the sum of (a) Crecca’s Base Salary
(calculated at the salary level in effect at the time of
termination, as adjusted pursuant to Section 2(a)), plus
(b) the higher of the current year target amount of Bonus
payable to Crecca or the actual Bonus paid or payable for
performance in the year prior to the year of termination, plus
(c) an amount equal to the annual cost of medical plan
benefits under COBRA or similar plan, payment of the Termination
Amount being subject to the execution of a Release pursuant to
Section 10. The Termination Amount (less applicable taxes)
shall be payable in one lump sum within 30 days following the
date of termination and receipt of the executed Release pursuant to
Section 10; plus
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vi.
Any amounts payable under the Noncompetition Agreement referenced
in Section 6(b).
(b) Definition
of Good Reason. “Good Reason” shall mean
(i) the failure of the Company to pay any amount due under
this Agreement; (ii) a material breach of this Agreement by
the Company; (iii) a meaningful diminution by the Company in
the title, status, duties, powers, responsibilities or authority of
Crecca; (iv) the failure of any successor to the Company
(through merger or acquisition of assets or any other transaction
that constitutes a Sale Event in which liabilities of the Company
of this nature are to be assumed) to assume and fully perform all
of the remaining obligations of the Company under this Agreement;
or (v) the Company requires Crecca to be based at any office
more than ten miles from White Plains, New York; provided, however,
that none of the foregoing events or matters shall be deemed to
constitute Good Reason if the Company has, prior to the date of
termination, fully cured and corrected the event or matter that
would have constituted Good Reason. In addition, Crecca may elect
to terminate for “Good Reason” during the period of 3
(three) months that begins 6 (six) months after a
transaction or series of transactions in which the persons who on
the date of this Agreement beneficially owned the Common Stock of
the Company, the Class A Preferred Stock of the Company, and
the Class B Preferred Stock of the Company have, in the case
of each such class of stock, ceased to beneficially own at least
50% of that class of stock and such persons, in the aggregate but
regardless of whether acting as a group, no longer beneficially own
securities of the Company that enable them to effectively control
the Company through the power to elect at least 50% of the members
of the Board of Directors (for this purpose, “beneficially
own” and related terms shall
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have the
meaning ascribed to them under Section 13(d) of the Securities
Exchange Act of 1934, as amended).
4.
TERMINATION OF EMPLOYMENT DUE TO PERMANENT DISABILITY OR
DEATH
If Crecca shall be
unable to perform the essential functions of his employment
hereunder, with reasonable accommodation, because of illness,
physical or mental disability or other incapacity for a period of
180 days in any 365 consecutive day period, or upon diagnosis
of a permanent or complete disability (in either event, a
“Permanent Disability”), the Company may terminate
Crecca’s employment 30 days after written notice to
Crecca if Crecca has not resumed the full-time performance of his
duties before the end of such 30-day period. The existence of a
Permanent Disability shall be determined by a medical doctor
reasonably acceptable to the Company and to Crecca. Crecca’s
employment shall end automatically upon Crecca’s death. Upon
any termination for Permanent Disability or death, the Company
shall pay Crecca or Crecca’s estate in full satisfaction of
its obligations to him the Accrued Amounts, the Vacation Payment,
any unreimbursed Business Expenses, and a cash lump sum payment of
pro rata Bonus equal to the current year target amount of Bonus
payable to Crecca multiplied by a fraction the numerator of which
is the number of days from January 1 of the year of termination to
the termination date and the denominator of which is 365 (but
without duplication of any Bonus payout for the year of termination
that is part of the Accrued Amounts). Payments under this
Section 4 shall be made within 30 days after the
termination event, and amounts payable under the Noncompetition
Agreement referenced in Section 6(b) shall be payable in accordance
with that Agreement.
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5.
TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE OR BY CRECCA
WITHOUT GOOD REASON
The Company may
terminate Crecca’s employment for Cause and Crecca may
terminate his employment voluntarily without Good Reason, in each
case subject to the notice requirement set forth in this
Section 5. If, within such notice period, the grounds for
termination by the Company for Cause are cured as expressly
permitted hereunder, the notice of termination shall be void and no
termination pursuant to such notice shall occur.
(a)
Company Obligations. If the Company terminates
Crecca’s employment for Cause, or if Crecca terminates his
employment without Good Reason, the Company shall pay Crecca in
full satisfaction of its obligations to him the Accrued Amounts,
any unreimbursed Business Expenses, plus Vacation Payment, plus, if
termination is not by the Company for Cause, a cash lump sum
payment of pro rata Bonus equal to the current year target amount
of Bonus payable to Crecca multiplied by a fraction the numerator
of which is the number of days from January 1 of the year of
termination to the termination date and the denominator of which is
365 (but without duplication of any Bonus payout for the year of
termination that is part of the Accrued Amounts). Payments under
this Section 5 shall be made within 30 days after the
termination date. In addition, the Company shall pay to Crecca any
amounts payable under the Noncompetition Agreement referenced in
Section 6(b) at the times specified in the Noncompetition
Agreement.
(b) Definition
of Cause. “Cause” shall mean (i) any action by
Crecca involving theft, fraud, embezzlement or other act of
similarly grave misconduct that results in significant damage to
the business or reputation of the Company; (ii) any
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material breach
of the provisions of Section 6 of this Agreement by Crecca or
any material breach of any other material provision of this
Agreement by Crecca; (iii) any action by Crecca involving
material malfeasance or material misconduct in connection with his
employment, continuing failure to perform any material duties
hereunder, or failure to follow any lawful, reasonable and material
direction of the Chief Executive, President or Board of Directors
of the Company; or (iv) Crecca’s conviction of any
felony that involves dishonesty, fraud, or moral
turpitude.
(c)
Notice of Termination. Termination of employment for Cause
shall be made by delivering to Crecca a letter signed by a majority
of the Board of Directors of the Company, specifying, in factual
detail, grounds for termination and providing Crecca with a 30-day
period to cure such grounds if cure is possible. If cure is not
effected, termination shall be effective at the end of the 30-day
period, provided, however, that Crecca shall have the opportunity,
if he so desires, to place the matter before the Board of Directors
of the Company, by means of a personal appearance by him and his
counsel, before such termination shall be effective. The Company
and Crecca agree that they both are obligated to conduct the
in-person meeting contemplated herein within 30 days of the
notice of termination for Cause. Any termination of employment by
Crecca without Good Reason shall only become effective at least 30
(thirty) days after written notice to the Company from
Crecca.
6.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION;
NONCOMPETITION
(a)
Nondisclosure. Crecca shall not at any time during or after
his employment hereunder, without the prior written consent of the
Company, make any use
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of or disclose
to any person or entity any Confidential Information, as defined
herein, except (i) while employed by the Company, in connection
with the business of and for the benefit of the Company or
(ii) as required by law. “Confidential
Informati
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