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Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made as of
January 31, 2007, by and between Haights Cross Communications,
Inc. (the "Company"), and Peter J. Quandt ("Quandt").
1.
EMPLOYMENT
(a) Position. The
Company agrees to employ Quandt, and Quandt agrees to serve as
Chairman, Chief Executive and President of the Company. Quandt
shall report to the Board of Directors.
(b) Principal Office.
Quandt’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
Quandt’s position. Quandt’s principal office shall not
be located more than ten miles from White Plains, New York.
(c) Duties and
Powers. Quandt shall have the customary duties, powers,
responsibilities and authority of a Chairman, Chief Executive and
President. Quandt shall perform such duties and exercise such
powers upon such terms and conditions as the Board of Directors
shall reasonably impose. Quandt 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), Quandt may
engage in charitable and community affairs activities. Quandt also
agrees that participation as a member of an outside corporate board
will only be undertaken with permission of the Board of Directors.
The Company acknowledges that Quandt is on the Board and Chairman
of the Fund for Social Change and confirms its permission for
Quandt to hold such positions.
(d) Term. The term of
Quandt’s employment under this Agreement shall commence as of
January 1, 2007, and shall terminate on December 31,
2009, 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, 2010) unless either
the Company or Quandt 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, 2009) of such
party’s election not to extend the Term.
2. COMPENSATION AND
BENEFITS. During the Term (i.e., the period of employment
of Quandt hereunder), the Company shall pay Quandt the following
amounts and provide to Quandt the following benefits:
(a) Base Salary. The
Company shall pay Quandt an annual base salary of $502,320 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 Quandt an annual bonus ("Bonus") of not less than
55% (fifty-five percent) of Base Salary in each year of the Term
and, in each year of the Term, Quandt 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 55%, 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. Quandt 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 Quandt 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. Quandt
shall be entitled to four weeks’ paid vacation each year,
which may be taken consistent with Company’s policies and
procedures. Quandt 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 Quandt for
all reasonable business expenses incurred by Quandt in carrying out
his duties under this Agreement, upon timely presentation by Quandt
of appropriately itemized accounts of such expenditures, and
approved in accordance with Company policy ("Business Expenses").
In addition, Quandt represents to the Company that he has incurred
$25,000 in legal fees in respect of advice, negotiation, drafting
and revising of this Agreement, and the Company agrees to reimburse
Quandt for that amount.
3. TERMINATION OF
EMPLOYMENT BY THE COMPANY OTHER THAN FOR CAUSE OR BY QUANDT FOR
GOOD REASON
The Company may terminate
Quandt’s employment other than for Cause and Quandt 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
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Section 3(a), the grounds for such termination are cured as
expressly permitted 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 Quandt’s employment other than
for Cause if Quandt 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 Quandt’s employment by
the Company other than for Cause shall only become effective at
least 30 (thirty) days after written notice to Quandt from the
Company. Any termination of employment by Quandt for Good Reason
shall only become effective at least 30 (thirty) days after
written notice to the Company from Quandt specifying the basis for
his belief that he has Good Reason to terminate his employment. If
the Company terminates the employment of Quandt other than for
Cause and other than as a result of death or Permanent Disability
(as defined hereinafter) or if Quandt terminates his employment for
Good Reason (as hereinafter defined), the Company shall pay Quandt
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 55% of
current year Base Salary)
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of Bonus payable to Quandt or the actual Bonus paid or payable
for performance in the 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 Quandt 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 three
times the sum of (a) Quandt’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 Quandt 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 Quandt; (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 Quandt 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, Quandt 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 Quandt 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 Quandt’s employment 30 days
after written notice to Quandt if Quandt 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
Quandt. Quandt’s employment shall end automatically upon
Quandt’s death. Upon any termination for Permanent Disability
or death, the Company shall pay Quandt or Quandt’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 Quandt 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 QUANDT WITHOUT GOOD
REASON
The Company may terminate
Quandt’s employment for Cause and Quandt 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 Quandt’s
employment for Cause, or if Quandt terminates his employment
without Good Reason, the Company shall pay Quandt 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 Quandt 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 Quandt 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 Quandt
involving theft, fraud, embezzlement or other act of similarly
grave misconduct that
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results in significant damage to the business or reputation of
the Company; (ii) any material breach of the provisions of
Section 6 of this Agreement by Quandt or any material breach
of any other material provision of this Agreement by Quandt;
(iii) any action by Quandt 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 Board
of Directors of the Company; or (iv) Quandt’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 Quandt a letter signed by a majority of the Board
of Directors of the Company, specifying, in factual detail, grounds
for termination and providing Quandt 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 Quandt 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 Quandt
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 Quandt
without Good Reason shall only become effective at least 30
(thirty) days after written notice to the Company from
Quandt.
6. NONDISCLOSURE OF
CONFIDENTIAL INFORMATION; NONCOMPETITION
(a) Nondisclosure .
Quandt 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. "
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