Exhibit 10.24
TRANSITIONAL SERVICES AGREEMENT ("SERVICES
AGREEMENT") dated as of November 17, 1999, between
PRIMEDIA INC., a Delaware corporation ("PRIMEDIA"),
WRC MEDIA INC. (formerly named EAC II INC.), a
Delaware corporation ("PURCHASER"), and WEEKLY READER
CORPORATION, a Delaware corporation ("WRC").
WHEREAS PRIMEDIA and Purchaser have entered into a Redemption,
Stock Purchase and Recapitalization Agreement (the "PURCHASE AGREEMENT") dated
as of August 13, 1999, relating to the purchase by Purchaser of 2,685,670 shares
of Common Stock, par value $.01, of WRC from PRIMEDIA and certain other
transactions; and
WHEREAS WRC is interested in purchasing certain services from
PRIMEDIA during a transition period commencing on the date hereof.
NOW, THEREFORE, the parties, intending to become legally bound,
hereby agree as follows:
ARTICLE I
AGREEMENT TO BUY AND SELL SERVICES
SECTION 1.01. DEFINITIONS. Capitalized terms used herein but
not defined herein are used as defined in the Purchase Agreement. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation".
SECTION 1.02. PROVISION OF SERVICES. (a) PRIMEDIA shall provide
to the Companies the Services listed and described on Schedule A (the
"SERVICES"). The Companies shall pay to PRIMEDIA the incremental costs
reasonably incurred by PRIMEDIA in providing such Services. In every case, all
the Services shall be provided in accordance with the terms, limitations and
conditions set forth herein and on Schedule A.
(b) The Companies shall provide to PRIMEDIA the Company
Services listed and described on Schedule B (the "Company Services"). PRIMEDIA
shall pay to the applicable Companies the incremental costs reasonably incurred
in providing such Company Services. In every case, all the Company Services
shall be provided in accordance with the
2
terms, limitations and conditions set forth on Schedule B and herein, PROVIDED
that with respect to the Company Services, all provisions of this Services
Agreement other than this Section 1.02(b), Section 7.01 and Article IV shall be
read and apply as if (i) "PRIMEDIA" is substituted for "WRC" and "the
Companies", (ii) "WRC" or "the Companies", as applicable, is substituted for
"PRIMEDIA" and (iii) "Company Services" is substituted for "Services".
SECTION 1.03. ACCESS. WRC shall, and shall cause the Companies
to, make available on a timely basis to PRIMEDIA all information reasonably
requested by PRIMEDIA to enable it to provide the Services. WRC shall, and shall
cause the Companies to, give PRIMEDIA reasonable access, during regular business
hours and at such other times as are reasonably required, to the Companies'
premises for the purposes of providing Services.
SECTION 1.04. BOOKS AND RECORDS. PRIMEDIA shall keep books and
records of the Services provided and reasonable supporting documentation of all
charges incurred in connection with providing such Services and shall produce
records that verify the Services were performed and when such Services were
performed, and shall make such books and records available to Purchaser and the
Companies, upon reasonable notice, during regular business hours.
ARTICLE II
SERVICES; PAYMENT; INDEPENDENT CONTRACTOR
SECTION 2.01. SERVICES TO BE PROVIDED. (a) Unless otherwise
agreed by the parties, the Services shall be performed by PRIMEDIA for the
Companies in a manner that is substantially the same as the manner in which such
Services were generally performed by PRIMEDIA for the Companies prior to the
date of this Services Agreement and the Companies shall use such Services for
substantially the same purposes and in substantially the same manner as the
Companies had used such Services prior to the date hereof. PRIMEDIA shall act
under this Services Agreement solely as an independent contractor and not as an
agent of the Companies.
(b) PRIMEDIA shall not be obligated to pay any amounts to the
Companies or any of their employees in respect of payroll, benefits or similar
obligations unless PRIMEDIA has received such amounts from the Companies or any
third party.
3
SECTION 2.02. PAYMENT. Statements will be rendered each month
by PRIMEDIA to WRC for Services delivered during the preceding month, and each
such statement shall set forth in reasonable detail a description of such
Services and the amounts charged therefor and shall be payable net thirty (30)
days after the date thereof.
SECTION 2.03. PRIORITIES. In providing Services, PRIMEDIA shall
accord the Companies the same priority it accords it own operations.
SECTION 2.04. USE OF SERVICES. PRIMEDIA shall be required to
provide Services only to the Companies in connection with the conduct by them of
their businesses. The Companies shall not resell any Services to any person
whatsoever or permit the use of the Services by any person other than in
connection with the conduct of business in the ordinary course by the Companies.
SECTION 2.05. OBLIGATION TO REPERFORM. In the event of any
breach of this Services Agreement by PRIMEDIA with respect to any error or
defect in the provision of any Service, PRIMEDIA shall, at WRC's request,
correct such error or defect or reperform such Services at the expense of
PRIMEDIA.
SECTION 2.06. RELEASE AND INDEMNITY. Except as specifically set
forth in this Services Agreement, WRC hereby releases PRIMEDIA, its
subsidiaries, affiliates and their employees, agents, officers, directors,
stockholders, members and partners ("PRIMEDIA INDEMNITEES") and agrees to
indemnify and hold harmless the PRIMEDIA Indemnitees, from any and all claims,
demands, complaints, liabilities, losses, damages (other than special, indirect,
incidental or consequential damages of the PRIMEDIA Indemnitees) and all
incremental costs arising from or relating to the use of any Service provided
hereunder by WRC to the extent not arising from the gross negligence or willful
misconduct of PRIMEDIA. PRIMEDIA represents and warrants that it has all
necessary right and authority to provide the Services to the Companies
hereunder.
ARTICLE III
TERM OF PARTICULAR SERVICES
SECTION 3.01. TERM OF PARTICULAR SERVICES. (a) The provision of
Services shall commence on the date hereof and shall terminate at the close of
business on March 31, 2000; PROVIDED that WRC may cancel any Service
4
upon thirty (30) days' written notice subject to the requirement that WRC pays
to PRIMEDIA the out of pocket costs reasonably incurred by PRIMEDIA as a result
of such cancellation, which costs shall be set forth in reasonable detail in a
written statement provided to WRC.
(b) Upon the termination of a Service or Services with respect
to which PRIMEDIA holds books, records or files, including current and archived
copies of computer files, owned by a Company and used by PRIMEDIA in connection
with the provision of a Service to the Companies, PRIMEDIA will return all of
such books, records or files as soon as reasonably practicable. At its expense,
PRIMEDIA may make a copy of such books, records or files for its legal files.
ARTICLE IV
POST CLOSING COOPERATION
SECTION 4.01. POST CLOSING COOPERATION. (a) PRIMEDIA and
Purchaser shall cooperate with each other, and shall cause their affiliates and
their officers, employees, agents, auditors and representatives to cooperate
with each other, for a period of six months after the Closing with a view to
minimizing any disruption to the Companies and the other respective businesses
of PRIMEDIA and Purchaser that might result from the change of control of the
Companies contemplated by the Purchase Agreement.
(b) Each of PRIMEDIA and Purchaser shall reimburse the other
for incremental costs reasonably incurred in assisting the other pursuant to
this Section 4.01. Neither PRIMEDIA nor Purchaser shall be required by this
Section 4.01 to take any action that would unreasonably interfere with the
conduct of its business or unreasonably disrupt its normal operations (or, in
the case of Purchaser, those of the Companies).
ARTICLE V
FORCE MAJEURE
SECTION 5.01. FORCE MAJEURE. PRIMEDIA shall not be liable for
any interruption of Service, delay or failure to perform under this Services
Agreement when such interruption, delay or failure results from causes beyond
its reasonable control, including any strikes, lock-outs or other labor
difficulties, acts of any government, riot, insurrection or other hostilities,
embargo, fuel or energy shortage, fire, flood, acts of God, wrecks or
transportation
5
delays, or inability to obtain necessary labor, materials or utilities. In any
such event, PRIMEDIA's obligations hereunder shall be postponed for such time as
its performance is suspended or delayed on account thereof. PRIMEDIA will
promptly notify WRC in writing upon learning of the occurrence of such event of
force majeure. Upon the cessation of the force majeure event, PRIMEDIA will use
reasonable efforts to resume its performance with the least possible delay.
ARTICLE VI
TERMINATION
SECTION 6.01. TERMINATION. This Services Agreement shall
terminate on the earliest to occur of (a) the date on which the provision of all
Services have terminated or been canceled pursuant to Section 3.01 and (b) the
date on which this Services Agreement is terminated pursuant to Section 6.02.
SECTION 6.02. BREACH OF SERVICES AGREEMENT. If either party
shall cause or suffer to exist any material breach of any of its obligations
under this Services Agreement, including any failure to make payments when due,
and said party does not cure such default within thirty (30) days after
receiving written notice thereof from the non-breaching party, the non-breaching
party may terminate this Services Agreement and the provision of Services
pursuant hereto immediately by providing written notice of termination.
SECTION 6.03. SUMS DUE. In the event of a termination of this
Services Agreement, PRIMEDIA shall be entitled to all outstanding amounts due
from Purchaser and the Companies up to the date of termination.
SECTION 6.04. EFFECT OF TERMINATION. Section 2.05, 2.06,
3.01(b), 4.01, 5.01 and 6.03, Article VII and this Section 6.04 shall survive
any termination of this Services Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All the notices or other communications
made in connection with this Services Agreement shall be in writing. Any notice
or other
6
communication in connection herewith shall be deemed duly given (a) two business
days after it is sent by express, registered or certified mail, return receipt
requested, postage prepaid or (b) one business day after it is sent by overnight
courier, in every case, addressed as follows:
(i) if to WRC, to it at:
Weekly Reader Corporation
c/o Ripplewood Holdings L.L.C.
One Rockefeller Plaza
32nd Floor
New York, NY 10020
Attention: Mr. Timothy C. Collins
Mr. Charles L. Laurey
Phone: (212) 218-2719
Fax: (212) 582-4110
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
Phone: (212) 474-1767
Fax: (212) 765-0978
(ii) if to PRIMEDIA, to it at:
PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Attention: Mark Colodny
Phone: (212) 745-0100
Fax: (212) 745-0645
with a copy to:
PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Attention: Ann M. Riposanu, Esq.
Phone: (212) 745-0100
Fax: (212) 745-0131
or, in each case, at such other address as may be specified by notice to the
other parties hereto. Any party may give any notice or other communication in
connection herewith using any other means (including personal delivery,
messenger service, telecopy, or ordinary mail), but no such
7
notice or other communication shall be deemed to have been duly given unless and
until it is actually received by the individual for whom it is intended.
SECTION 7.02. HEADINGS. The headings contained in this Services
Agreement are for purposes of convenience only and shall not affect the meaning
or interpretation of this Services Agreement.
SECTION 7.03. ENTIRE AGREEMENT. This Services Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
SECTION 7.04. COUNTERPARTS. This Services Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall together constitute one and the same instrument.
SECTION 7.05. GOVERNING LAW. This Services Agreement shall be
governed in all respects, including as to validity, interpretation and effect,
by the internal laws of the State of New York.
SECTION 7.06. BINDING EFFECT. This Services Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns.
SECTION 7.07. ASSIGNMENT. This Services Agreement shall not be
assignable by any party without the prior written consent of the other parties;
PROVIDED that (a) WRC may assign this Services Agreement to any Company, (b)
Purchaser may assign its and WRC's rights hereunder by way of security and such
secured party may assign such rights by way of exercise of remedies and (c)
PRIMEDIA may delegate performance of all or any part of its obligations under
this Services Agreement to (i) any subsidiary of PRIMEDIA or (ii) third parties
to the extent such third parties are routinely used to provide such Services to
other PRIMEDIA businesses; PROVIDED FURTHER that, in each case, no such
delegation or assignment shall in any way affect any party's obligations under
this Services Agreement. Any purported assignment in violation of this Section
7.07 shall be void.
SECTION 7.08. THIRD PARTY BENEFICIARIES. Nothing in this
Services Agreement shall confer any rights upon any person or entity other that
the parties and each such party's respective successors and permitted assigns.
8
SECTION 7.09. AMENDMENT; WAIVERS, ETC. No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of amendment, modification, discharge or waiver is
sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time.
SECTION 7.10 CONFIDENTIALITY; SECURITY; TITLE TO DATA. (a) Each
of the parties agrees that any confidential information of the other party
received in the course of performance under this Agreement shall be kept
strictly confidential by the parties, except that PRIMEDIA may disclose such
information for the purpose of providing Services pursuant to this Services
Agreement to any subsidiary of PRIMEDIA or to third parties that provide such
Services; PROVIDED that any such subsidiary or third party shall have agreed to
be bound by this Section 7.10. Upon the termination of this Services Agreement,
each party shall return to the other party all of such other party's
confidential information to the extent that such information has not been
previously returned pursuant to Section 3.01(b) of this Services Agreement.
(b) PRIMEDIA agrees that all records, data, files, input
materials and other information received or computed for the benefit of the
Companies and which relate to the conduct of the Companies' businesses are the
property of the Companies.
IN WITNESS WHEREOF, the parties have executed this Services
Agreement as of the date first written above.
PRIMEDIA INC.,
by /s/ Beverly C Chell
------------------------------
Name: Beverly C Chell
Title: Vice Chairman
9
WRC MEDIA INC.,
by
------------------------------
Name: Charles Laurey
Title: Secretary
WEEKLY READER CORPORATION,
by /s/ Beverly C Chell
------------------------------
Name: Beverly C Chell
Title: Vice Chairman
Schedule A
SERVICES AND TERMS
EMPLOYEE BENEFITS
During the period commencing as of the Closing and terminating
on the earlier of December 31, 1999 or such date as Purchaser shall designate in
writing to PRIMEDIA (provided that PRIMEDIA receives at least 10-days' notice of
such designation and that the date so designated is the end of a calendar
month), PRIMEDIA will continue to (i) make available to all employees (and their
eligible dependents) of the Companies who are participating in the relevant plan
on the Closing Date, participation in each of those employee benefit plans
listed in Schedule 3.15 of the Purchase Agreement which are designated as
sponsored by PRIMEDIA which Purchaser may request of PRIMEDIA in writing no
later than 10 days prior to the Closing and (ii) provide administrative services
in respect of those employee benefit plans listed in Schedule 3.15 which are
maintained exclusively by the Companies for their respective employees which
Purchaser may request of PRIMEDIA in writing no later than 10 days prior to the
Closing. Purchaser will promptly reimburse PRIMEDIA, upon receipt by Purchaser
of a written invoice from PRIMEDIA detailing the component costs and expenses,
for all reasonable administrative costs and expenses directly related to the
services provided by PRIMEDIA in respect of the Companies' employees including,
as applicable, for all contributions made by PRIMEDIA, including both the
employer and employee portions, all claims paid under self-insured welfare plans
and all employer and employee (to the extent not received by PRIMEDIA from
employee payroll withholding) premiums paid to insurance carriers. PRIMEDIA's
obligations to provide administrative services in respect of any particular plan
will be on substantially the same basis that it currently provides services in
respect of such plan. Administrative services will include, but not be limited
to, all administrative and management services provided by PRIMEDIA as of the
date hereof with respect to each applicable employee benefit plan, including all
administrative and management services (including recordkeeping, the provision
of informational documentation to employees and human resources personnel and
other services typically necessary for these types of benefit programs,
consistent with past practice). PRIMEDIA's obligation to continue to make
available any welfare plan under clause (i) of the first sentence of this
paragraph shall be subject to any required consent of the applicable insurance
carrier (if any) and the parties agree to cooperate to obtain such consent.
2
OFFICE SPACE-GROUP STAFF
PRIMEDIA will continue to make available office space currently occupied by the
Companies' staff ([LeBrasseur,] Jackson, Schwartz, Slivken) and services related
thereto (including security, cleaning, access to telephones, fax and copy
machines, mail and delivery services, and other services consistent with those
provided prior to the Closing) at a monthly rental of $8,500 [12,000 if
LeBrasseur included] plus the incremental direct costs of telephone calls,
telecopies, and any postage, overnight delivery or other courier charges.
Schedule B
COMPANY SERVICES AND TERMS
SERVICE REQUIREMENTS AND WRC ON BEHALF OF FILMS FOR THE HUMANITIES ("FFH")
WRC shall:
1. provide day to day maintenance of Computron Financial software and hardware
systems ("Computron") and related databases (including emergency services,
trouble shooting, upgrades, reports and uploads), consistent with current
practice;
2. provide continued T-1 access from WRC to FFH, consistent with current
practice;
3. perform uploads of data from Excel spreadsheets into Computron, consistent
with current practice; and
4. assist FFH/FFH consultants in extraction/conversion of FFH data from
Computron for purposes of transitioning to the FFH financial package and
provide required access to WRC personnel, premises & systems for such
extraction.