EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

AGREEMENT entered into as of January 30, 2006, by and between MEREDITH
CORPORATION, an Iowa corporation (the "Company"), and STEPHEN M. LACY ("Lacy"),
to become effective July 1, 2006.

WITNESSETH:

WHEREAS, Lacy has been employed by the Company as its President; and

WHEREAS, the Company wishes to continue to employ Lacy pursuant to the terms and
conditions hereof, and in order to induce Lacy to enter into this agreement (the
"Agreement") and to secure the benefits to accrue from his performance hereunder
is willing to undertake the obligations assigned to it herein; and

WHEREAS, Lacy is willing to continue his employment with the Company under the
terms hereof and to enter into the Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:

1. Position; Duties; Responsibilities.

1.1 Lacy shall initially serve as President and Chief Executive Officer of the
Company effective July 1, 2006. Lacy shall at all times report to and be subject
to the supervision, control and direction of the Board of Directors of the
Company. Lacy shall at all times be the most senior executive officer of the
Company. Subject only to Lacy's duty to report to the Board, Lacy's
responsibilities and authorities hereunder shall include day to day and
strategic authority over the Company and its affiliates, P&L authority over all
operations of the Company and its affiliates, and the duty and authority to
hire, make employment decisions, and terminate all subordinates employed by the
Company or its affiliates and Lacy shall report directly and exclusively to the
Board, and all other officers, employees, and consultants of the Company shall
(except to the extent otherwise prescribed by law, regulation, or principles of
good corporate governance) report directly (or indirectly through subordinates)
to Lacy. Lacy shall have such other responsibilities and authorities consistent
with the status, titles and reporting requirements set forth herein as are
appropriate to said positions, subject to change (other than diminution in
position, authority, duties or responsibilities) from time to time by the Board
of Directors of the Company.

1.2 During the course of his employment, Lacy agrees to devote his full time and
attention and give his best efforts and skills to furthering the business and
interests of the Company, which, subject to the mutual agreement of Lacy and the
Board of Directors, which shall not be unreasonably withheld, may include Lacy
volunteering his time and efforts on behalf of charitable, civic, professional
organizations and boards of other corporations.

2. Term.

The term of employment under this Agreement shall commence as of July 1, 2006,
and shall continue through June 30, 2009, unless sooner terminated in accordance
with this Agreement, and thereafter as herein provided. Lacy's term of
employment shall automatically renew for subsequent one (1) year terms, the
first of which would begin on July 1, 2009, subject to the terms of this
Agreement unless either party gives written notice six (6) months or more prior
to the expiration of the then existing term of its decision not to renew (the
"Term").

In the event this Agreement expires at the end of the Term, as extended if
applicable, after the Company has delivered a Non-Renewal Notice to Lacy, such
termination of Lacy's employment with the Company will be treated for all
purposes hereunder as a termination of employment by the Company Without Cause
pursuant to Section 9.4.

3. Base Salary.

3.1 The Company shall pay Lacy a base salary during the Term of this Agreement
at the minimum annual rate of Eight Hundred Ten Thousand Dollars ($810.000)
("Base Salary"), payable in accordance with the standard payroll practices of
the Company.

3.2 It is understood that the Base Salary is to be Lacy's minimum annual
compensation during the Term. The Base Salary may increase at the discretion of
the Compensation Committee of the Company's Board of Directors ("Compensation
Committee"). Base Salary shall include all such increased amounts, and, if
increased, Base Salary shall not thereafter be decreased.

4. Long-Term Incentive Plans.

During the Term of this Agreement, Lacy shall be eligible to participate in all
long-term incentive plans, including, without limitation, stock incentive plans
adopted by the Company and in effect (collectively, "Long-Term Incentive
Plans"), at levels of awards to be granted by the Compensation Committee
commensurate with the level of Lacy's responsibilities and performance thereof.
At its regular August 2006 meeting the Compensation Committee shall approve an
award to Lacy of One Hundred Six Thousand (106,000) stock options with a three
(3) year cliff vesting schedule and a strike price equal to the fair market
value of Meredith common stock on the date of such award.

5. Bonus.

5.1 During the Term of this Agreement, Lacy shall be eligible to participate in
the Meredith Management Incentive Plan (or any successor or replacement annual
incentive plan of the Company) ("MIP"), for such periods as it continues in
effect, subject to the terms of the MIP, and to the discretion vested in the
Compensation Committee under the MIP; provided, however, that the percentage of
Base Salary payable as a target bonus under the MIP shall not be less than one
hundred percent (100%) (actual Company financial results may result in an actual
bonus paid to Lacy equal to less than or more than one hundred percent (100%) of
Base Salary).

5.2 All bonuses pursuant to this Section 5 shall be paid to Lacy in conformance
with the Company's normal bonus pay policies following the end of the respective
fiscal year. For the purpose of this Section 5, bonuses paid with respect to the
fiscal year shall include payments made outside of the fiscal year but for such
fiscal year and shall exclude payments made in the fiscal year that are for
another fiscal year.

6. Short-Term Disability.

During any period of short-term disability, the Company will continue to pay to
Lacy the Base Salary throughout the period of short-term disability, but in no
event beyond the end of Term. In addition, Lacy will continue to receive all
rights and benefits under the benefit plans and programs of the Company in which
Lacy is a participant as determined in accordance with the terms of such plans
and programs, and Lacy shall be eligible to receive the benefit of his target
MIP bonus for the initial year in which the short-term disability occurs without
reduction for the period of short-term disability. In the event of Lacy's death
during a period of short-term disability, the provisions of Section 9.1 shall
apply. For the purposes of this Agreement, short-term disability shall be
defined as the incapacitation of Lacy by reason of sickness, accident or other
physical or mental disability which continues for a period not to exceed the
fifth month anniversary of the date of the cause or onset of such
incapacitation. All benefits provided under this Section 6 shall be in
replacement of and not in addition to benefits payable under the Company's
short-term and long-term disability plan(s), except to the extent such
disability plan(s) provide greater benefits than the disability benefits
provided under this Agreement, in which case the applicable disability plan(s)
would supersede the applicable provisions of this Agreement. In the event Lacy
is determined to be permanently disabled (as determined under Section 9.2), the
provisions of Section 9.2 shall apply.

7. Employee Benefit Plans.

7.1 During the Term of this Agreement and subject to all eligibility
requirements, and to the extent permitted by law, Lacy will have the opportunity
to participate in all employee benefit plans and programs generally available to
the Company's employees in accordance with the provisions thereof as in effect
from time to time, including, without limitation, medical coverage, group life
insurance, holidays and vacations, Meredith Savings and Investment Plan (401k)
and the Meredith Employees' Retirement Income Plan, but not including the
Company's short-term and long-term disability plans, except to the extent that
such disability plans provide greater benefits than the disability benefits
provided under this Agreement, in which case the applicable disability plan
would supersede the applicable provisions of this Agreement.

7.2 In addition to benefits described in Section 7.1 during the Term of this
Agreement, Lacy shall also receive or participate in, to the extent permitted by
law, the various perquisites and plans generally available to officers of the
Company in accordance with the provisions thereof as in effect from time to time
including, without limitation, the following perquisites to the extent the
Company continues to offer them: an automobile or automobile allowance, country
club dues, dining club dues, tax and estate planning, supplemental medical plan
and executive life insurance (if insurable). In addition, Lacy shall participate
in the Meredith Replacement Benefit Plan and the Meredith Supplemental Benefit
Plan.

8. Expense Reimbursements.

During Lacy's employment with the Company, Lacy will be entitled to receive
reimbursement by the Company for all reasonable, out-of-pocket expenses incurred
by him (in accordance with policies and procedures established by the Company),
in connection with his performing services hereunder, provided Lacy properly
accounts therefor.

9. Consequences of Termination of Employment.

9.1 Death. In the event of the death of Lacy during the Term of this Agreement
or during the period when payments are being made pursuant to Sections 6 or 9.2,
this Agreement shall terminate and all obligations to Lacy shall cease as of the
date of death except that, (a) the Company will pay to the legal representative
of his estate the Base Salary until the end of the month of the first
anniversary of Lacy's death (but not beyond June 30, 2009), and (b) all rights
and benefits of Lacy under the benefit plans and programs of the Company in
which Lacy is a participant, will be provided as determined in accordance with
the terms and provisions of such plans and programs. Any bonus (or amounts in
lieu thereof) pursuant to Section 5, payable for the fiscal year in which Lacy's
death occurs, shall be determined by the Compensation Committee at its meeting
following the end of such fiscal year pro rata to the date of death and promptly
paid to Lacy's estate. All awards of restricted stock, stock options and any
other benefits under the Long-Term Incentive Plans shall be handled in
accordance with the terms of the relevant plan and agreements entered into
between Lacy and the Company with respect to such awards.

9.2 Disability. If Lacy shall become permanently incapacitated by reasons of
sickness, accident or other physical or mental disability, as such
incapacitation is certified by a physician chosen by the Company and reasonably
acceptable to Lacy (if he is then able to exercise sound judgment), and shall
therefore be unable to perform his normal duties hereunder, then the employment
of Lacy hereunder and this Agreement may be terminated by Lacy or the Company
upon thirty (30) days' written notice to the other party following such
certification. Should Lacy not acquiesce (or should he be unable to acquiesce)
in the selection of the certifying doctor, a doctor chosen by Lacy (or if he is
not then able to exercise sound judgment, by his spouse or personal
representative) and reasonably acceptable to the Company shall be required to
concur in the medical determination of incapacitation, failing which the two
doctors shall designate a third doctor whose decision shall be determinative as
of the end of the calendar month in which such concurrence or third-doctor
decision, as the case may be, is made. After the final certification is made and
the 30-day written notice is provided, the Company shall pay to Lacy, at such
times as Base Salary provided for in Section 3 of this Agreement would normally
be paid, 100% of Base Salary for the first twelve months following such
termination, 75% of Base Salary for the next twelve-month period and 50% of Base
Salary for the remaining period of what would have constituted the current Term
of employment but for termination by reason of disability (but in no event
beyond June 30, 2009). Following the termination pursuant to this Section 9.2,
the Company shall pay or provide to Lacy such other rights and benefits of
participation under the employee benefit plans and programs of the Company to
the extent that such continued participation is not otherwise prohibited by
applicable law or by the express terms and provisions of such plans and
programs. Furthermore, nothing contained in this Section 9.2 shall preclude Lacy
from receiving the benefit of his target MIP bonus for the initial year in which
a short-term disability occurs pursuant to the provisions of Section 6. All
benefits provided under this Section 9.2 shall be in replacement of and not in
addition to benefits payable under the Company's short-term and long-term
disability plans, except to the extent such disability plans provide greater
benefits than the disability benefits provided under this Agreement, in which
case the applicable disability plan(s) would supersede the applicable provisions
of this Agreement. All awards of restricted stock, stock options and any other
benefits under the Long-Term Incentive Plans shall be handled in accordance with
the terms of the relevant plan and agreements entered into between Lacy and the
Company with respect to such awards.

9.3 Due Cause. The Company may terminate Lacy's employment, remove him as an
officer and director of the Company and terminate this Agreement at any time for
Due Cause. In the event of such termination for Due Cause, Lacy shall continue
to receive Base Salary payments provided for in this Agreement only through the
date of such termination for Due Cause. Any bonus (or amounts in lieu thereof)
pursuant to Section 5, payable for the fiscal year in which a Due Cause
termination occurs, shall be determined by the Compensation Committee at its
meeting following the end of such fiscal year pro rata to the date of
termination and promptly paid to Lacy, and Lacy shall be entitled to no further
benefits under this Agreement, except that any rights and benefits Lacy may have
under the employee benefit plans and programs of the Company, in which Lacy is a
participant, shall be determined in accordance with the terms and provisions of
such plans and programs. Lacy understands and agrees that in the event of the
termination of employment, removal as an officer and director and termination of
this Agreement pursuant to this Section 9.3: (a) All awards of restricted stock,
stock options and any other benefits under the Long-Term Incentive Plans shall
be handled in accordance with the terms of the relevant plan and agreements
entered into between Lacy and the Company with respect to such awards and (b)
except as otherwise provided in this Section 9.3, the Company shall have no
further obligation to pay any bonus to Lacy under the terms of the MIP or this
Agreement, but that the obligations of Lacy under Section 10 shall remain in
full force and effect. The term "Due Cause" shall mean (i) the willful and
continued failure of Lacy to attempt to perform substantially his duties with
the Company (other than any such failure resulting from Disability), after a
demand for substantial performance is delivered to Lacy by the Board, which
specifically identifies the manner in which Lacy has not attempted to
substantially perform his duties, or (ii) the engaging by Lacy in willful
misconduct which is materially injurious to the Company, monetarily or
otherwise. For purposes of this definition, no act, or failure to act, on the
part of Lacy shall be considered "willful" unless it is done, or omitted to be
done, by Lacy in bad faith and without reasonable belief that Lacy's action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by Lacy in good faith and in the best
interests of the Company. Notwithstanding the foregoing, Lacy shall not be
deemed to have been terminated for Due Cause unless and until there have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
at least 3/4 of the Board (excluding Lacy) at a meeting of the Board called and
held for such purpose (after reasonable notice is provided to Lacy and he is
given an opportunity, together with counsel, to be heard before the Board)
finding that in the good faith opinion of the Board Lacy was guilty of conduct
set forth herein and specifying the particulars thereof.

9.4 Without Cause. The other provisions of this Agreement notwithstanding, the
Company may terminate Lacy's employment, remove him as an officer and director
and terminate this Agreement at any time for whatever reason it deems
appropriate, with or without cause and with or without prior notice. In the
event of such a termination of Lacy's employment and this Agreement, Lacy shall
have no further obligations of any kind under or arising out of the Agreement
(except for the obligations of Lacy under Section 10) and the Company shall be
obligated only to promptly pay Lacy the following in a lump sum payment: (a)
Base Salary and the target MIP bonus amounts provided in Section 5 of this
Agreement through the end of the then current Term of this Agreement (the
"Remaining Term") as provided for under Section 2 of this Agreement, but no less
than a total of twenty-four months of Base Salary and target bonus under the MIP
or successor plans; and (b) any other amounts due and owing not then paid;
provided, however, that in the event that as a result of such termination of
employment Lacy would otherwise be entitled to a severance payment (a "Change of
Control Severance Payment") under Section 4 of the Amended and Restated
Severance Agreement dated as of February 1, 2001, and the Addendum to the
Amended and Restated Severance Agreement dated as of May 11, 2004, between Lacy
and the Company, (the "Severance Agreement"), Lacy shall be entitled to the
amounts described in clause (b) above and the greater of: (i) the cash severance
benefits described in clause (a) of this sentence and (ii) the cash severance
benefits described in Section 4(a) of the Severance Agreement, but in no event
to both payments.

After the date of termination under this Section 9.4 or Section 9.6, Lacy shall
not be treated as an employee for purposes of the Company's employee benefit
plans or programs even though he may continue to receive payments as provided in
this Section 9.4, except: that Lacy and his eligible dependents shall continue,
to the extent permitted by law, to be covered by health and welfare insurance
plans or programs in which Lacy and his eligible dependents participate
immediately prior to Lacy's termination of employment for the Remaining Term;
provided, however, that if during such time period Lacy should enter into
employment with a new employer and become eligible to receive comparable
insurance benefits, the continued insurance benefits described herein shall
automatically cease. In the event that Lacy is ineligible, for whatever reason,
to continue to be so covered with respect to any of the above-referenced plans
or programs, the Company shall provide substantially equivalent coverage through
other sources (determined on an after-tax basis). In the event Lacy would
otherwise be entitled to a Change of Control Severance Payment under the
Severance Agreement as a result of a termination of employment under this
Section 9.4, Lacy may elect to receive the continued health and welfare
insurance benefits under this Section 9.4 or under Section 4(b) of the Severance
Agreement, but in no event both benefits.

Furthermore, in the event of a termination Without Cause, Lacy shall be presumed
to have met eligibility requirements specified in Section 2.4 of the Meredith
Replacement Benefit Plan and the Meredith Supplemental Benefit Plan or any
successor thereto. He shall be presumed to have met eligibility requirements for
the Company's Retiree Health Care coverage at end of the Term provided, however,
that if subsequent to such termination Lacy should enter into employment with
another employer and become eligible for health insurance benefits, Lacy's
eligibility for Retirement Health Care coverage shall automatically cease. All
awards of restricted stock and stock options shall automatically vest and be
exercisable for the full unexpired term of the option.

Lacy agrees that the payments described in this Section 9.4 shall be full and
adequate compensation to Lacy for all damages Lacy may suffer as a result of the
termination of his employment pursuant to this Sections 9.4 or 9.6, and in
consideration of the payments and benefits provided in this Section 9.4, Lacy
agrees to execute a Waiver and Release Agreement in the form attached hereto as
Attachment A; provided, however, that, except as specifically provided for under
this Section 9.4, any rights and benefits Lacy may have under the employee
benefit plans and programs of the Company, in which Lacy is a participant, shall
be determined in accordance with the terms and provisions of such plans and
programs.

9.5 Employee Voluntary. In the event Lacy terminates his employment of his own
volition prior to the end of the term of this Agreement, except for a
termination as described in Section 9.6 and except for termination for Good
Reason as specifically provided otherwise in the Severance Agreement, such
termination shall constitute a voluntary termination and in such event the
Company's only obligation to Lacy shall be to make Base Salary payments provided
for in this Agreement through the date of such voluntary termination. Any rights
and benefits Lacy may have under the employee benefit plans and programs of the
Company, in which he is a participant, shall be determined in accordance with
the terms and provisions of such plans and programs. Lacy understands and agrees
that in the event of the termination of employment pursuant to this Section 9.5:
(a) All awards of restricted stock, stock options and any other benefits under
the Long-Term Incentive Plans shall be handled in accordance with the terms of
the relevant plan and agreements entered into between Lacy and the Company with
respect to such awards; and (b) the Company shall have no further obligation to
pay any bonus to Lacy under the terms of the MIP or this Agreement.

9.6 Failure to Re-elect as Chief Executive Officer or Director. If at any time
prior to the end of the Term of this Agreement Lacy is not re-elected to or is
removed from the office of Chief Executive Officer or as a Director of the
Company or the Company materially violates Section 1.1 of this Agreement (for
reasons other than Due Cause), Lacy shall have the right to terminate his
employment with the Company after first giving the Company written notice of the
violation and providing a period of ten (10) days in which the violation may be
cured and by thereafter giving written notice within ninety (90) days after the
date of such action, and such termination shall be deemed to be termination by
the Company without "Due Cause," and such termination shall be treated in
accordance with the terms of Section 9.4 above.

9.7 The Company agrees to continue Lacy's coverage under such directors and
officers' liability insurance policies as shall from time to time be in effect
for active officers and employees for not less than six years following Lacy's
termination of employment.

10. Covenants of Lacy.

10.1 Lacy acknowledges that as a result of the services to be rendered to the
Company hereunder, Lacy will be brought into close contact with many
confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. Lacy further acknowledges that the services to
be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
United States and various parts of the world and that the Company competes with
other organizations that are or could be located in nearly any part of the
United States and in various parts of the world.

10.2 In recognition of the foregoing, Lacy covenants and agrees that, except as
is necessary in providing services under this Agreement or to the extent
necessary to comply with law or the valid order of a court or government agency
of competent jurisdiction, Lacy will not knowingly use for his own benefit nor
knowingly divulge any Confidential Information and Trade Secrets of the Company,
its subsidiaries and affiliated entities, which are not otherwise in the public
domain and, so long as they remain Confidential Information and Trade Secrets
not in the public domain, will not intentionally disclose them to anyone outside
of the Company either during or after his employment. For the purposes of this
Agreement, "Confidential Information and Trade Secrets" of the Company means
information which is secret to the Company, its subsidiaries and affiliated
entities. It may include, but is not limited to, information relating to the
magazines, books, publications, products, services, television stations,
integrated marketing, interactive media, electronic commerce, new and future
concepts and business of the Company, its subsidiaries and affiliates, in the
form of memoranda, reports, computer software and data banks, customer lists,
employee lists, books, records, financial statements, manuals, papers, contracts
and strategic plans. As a guide, Lacy is to consider information originated,
owned, controlled or possessed by the Company, its subsidiaries or affiliated
entities which is not disclosed in printed publications stated to be available
for distribution outside the Company, its subsidiaries and affiliated entities
as being secret and confidential. In instances where doubt does or should
reasonably be understood to exist in Lacy's mind as to whether information is
secret and confidential to the Company, its subsidiaries and affiliated
entities, Lacy agrees to request an opinion, in writing, from the Board of
Directors.

10.3 Anything to the contrary in this Section 10 notwithstanding, Lacy shall
disclose to the public and discuss such information as is customary or legally
required to be disclosed by a Company whose stock is publicly traded, or that is
otherwise legally required to disclose, or that is in the best interests of the
Company to do so.

10.4 Lacy will deliver promptly to the Company on the termination of his
employment with the Company, or at any other time the Company may so request,
all memoranda, notes, records, reports and other documents relating to the
Company, its subsidiaries and affiliated entities, and all property owned by the
Company, its subsidiaries and affiliated entities, which Lacy obtained while
employed by the Company, and which Lacy may then possess or have under his
control.

10.5 During and for a period of twenty-four (24) months after the termination of
employment with the Company (except that the time period of such restrictions
shall be extended by any period during which Lacy is in violation of this
Section 10.5), Lacy will not knowingly interfere with, disrupt or attempt to
disrupt, any then existing relationship, contractual or otherwise between the
Company, its subsidiaries or affiliated entities, and any customer, client,
supplier, or agent, or knowingly solicit, or assist any other entity in
soliciting for employment, any person known to Lacy to be an agent or executive
employee of the Company, its subsidiaries, or affiliated entities, it being
understood that the right to seek or enter into contractual arrangements with
independent contractors, including, without limitation, consultants,
professionals, authors, advertisers and the like, shall not be abridged by
reason of this Section 10. In addition, in the event of a voluntary termination
under Section 9.5, during and for a period of twenty-four (24) months after the
termination of employment with the Company, Lacy will not render services
directly or indirectly as an employee, officer, director, consultant,
independent contractor or in any other capacity to any person or entity that is
a competitor of the Company.

10.6 Lacy will promptly disclose to the Company all inventions, processes,
original works of authorship, trademarks, patents, improvements and discoveries
related to the business of the Company, its subsidiaries and affiliated entities
(collectively "Developments"), conceived or developed during Lacy's employment
with the Company and based upon information to which he had access during the
term of employment, whether or not conceived during regular working hours,
through the use of the Company time, material or facilities or otherwise. All
such Developments shall be the sole and exclusive property of the Company, and
upon request Lacy shall deliver to the Company all outlines, descriptions and
other data and records relating to such Developments, and shall execute any
documents deemed necessary by the Company to protect the Company's rights
hereunder. Lacy agrees upon request to assist the Company to obtain United
States or foreign letters patent and copyright registrations covering inventions
and original works of authorship belonging to the Company hereunder. If the
Company is unable because of Lacy's mental or physical incapacity to secure
Lacy's signature to apply for or to pursue any application for any United States
or foreign letters patent or copyright registrations covering inventions and
original works of authorship belonging to the Company hereunder, then Lacy
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as his agent and attorney in fact, to act for and in his
behalf and stead to execute and file any such applications and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent or copyright registrations thereon with the same legal force and effect
as if executed by him. Lacy hereby waives and quitclaims to the Company any and
all claims, of any nature whatsoever, that he may hereafter have for
infringement of any patents or copyright resulting from any such application for
letters patent or copyright registrations belonging to the Company hereunder.

10.7 Lacy agrees that the remedy at law for any breach or threatened breach of
any covenant contained in this Section 10 may be inadequate and that the
Company, in addition to such other remedies as may be available to it, in law or
in equity, shall be entitled to injunctive relief without bond or other
security.

10.8 Although the restrictions contained in Sections 10.1, 10.2, 10.4 and 10.5
above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Section 10.1, 10.2, 10.4 and 10.5 shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.

10.9 Notwithstanding that Lacy's employment hereunder may expire or be
terminated as provided in Sections 2 or 9 above, this Agreement shall continue
in full force and effect insofar as is necessary to enforce the covenants and
agreements of Lacy contained in this Section 10. In addition, the Company
obligations under Sections 9, 11 and 19 shall continue in full force and effect
with respect to Lacy or his estate.

11. Arbitration.

The parties shall use their best efforts and good will to settle all disputes by
amicable negotiations. The Company and Lacy agree that, with the express
exception of any dispute or controversy arising under Section 9.2 or Section 10
of this Agreement or as may be required under Section 3(g) of the Severance
Agreement, any controversy or claim arising out of or in any way relating to
Lacy's employment with the Company, including, without limitation, any and all
disputes concerning this Agreement and the termination of this Agreement that
are not amicably resolved by negotiation, shall be settled by arbitration in Des
Moines, Iowa, or such other place agreed to by the parties, as follows:

(a) Any such arbitration shall be heard before an arbitrator who shall be
impartial. Except as the parties may otherwise agree, the arbitrator shall be
appointed by the American Arbitration Association in accordance with its rules
and procedures. In determining the appropriate background of the arbitrator, the
appointing authority shall give due consideration to the issues to be resolved,
but its decision as to the identity of the arbitrator shall be final.

(b) An arbitration may be commenced by any party to this Agreement by the
service of a written Request for Arbitration upon the other affected party. Such
Request for Arbitration shall summarize the controversy or claim to be
arbitrated, and shall be referred by the complaining party to the appointing
authority for appointment of arbitrators ten (10) days following such service.
If an arbitrator is not appointed by the appointing authority within sixty (60)
days following such reference, any party may apply to any court within the State
of Iowa for an order appointing arbitrators qualified as set forth below. No
Request for Arbitration shall be valid if it relates to a claim, dispute,
disagreement or controversy that would have been time barred under the
applicable statute of limitations had such claim, dispute, disagreement or
controversy been submitted to the courts of the State of Iowa.

(c) Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.

(d) It is intended that controversies or claims submitted to arbitration under
this Section 11 shall remain confidential, and to that end it is agreed by the
parties that neither the facts disclosed in the arbitration, the issues
arbitrated, nor the views or opinions of any persons concerning them, shall be
disclosed by third persons, any employees of the Company involved in such
arbitration proceedings, or Lacy's or the Company's representatives, at any
time, except to the extent necessary to enforce an award or judgment or as
required by law or in response to legal process or in connection with such
arbitration. In addition, Lacy shall be entitled to disclose the facts disclosed
in arbitration, the issues arbitrated, and the views or opinions of any persons
concerning them to legal and tax advisors so long as such advisors agree to be
bound by the terms of this Agreement.

12. Successors and Assigns.

12.1 Assignment by the Company. This Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Company.

12.2 Assignment by Lacy. Lacy may not assign this Agreement or any part thereof;
provided, however, that nothing herein shall preclude one or more beneficiaries
of Lacy from receiving any amount that may be payable following the occurrence
of his legal incompetency or his death and shall not preclude the legal
representative of his estate from receiving such amount or from assigning any
right hereunder to the person or persons entitled thereto under his will or, in
the case of intestacy, to the person or persons entitled thereto under the laws
of the intestacy applicable to his estate.

13. Governing Law.

This Agreement shall be deemed a contract made under, and for all purposes shall
be construed in accordance with, the laws of the State of Iowa without reference
to the principles of conflict of laws.

14. Entire Agreement.

This Agreement and those plans and agreements referenced herein contain all the
understandings and representations between the parties hereto pertaining to the
subject of the employment of Lacy by the Company and supersede all undertakings
and agreements, whether oral or in writing, if any there be, previously entered
into by them with respect thereto.

15. Amendment or Modification; Waiver.

No provision of this Agreement may be amended or modified unless such amendment
or modification is agreed to in writing, signed by Lacy and by a duly authorized
officer of the Company and approved in advance by the Compensation Committee.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party of any condition or provision of
the Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time.

16. Notices.

Any notice to be given hereunder shall be in writing and delivered personally or
sent by overnight mail, such as Federal Express, addressed to the party
concerned at the address indicated below or to such other address as such party
may subsequently give notice of hereunder in writing:

If to Company:

Chairman of the Compensation Committee

Board of Directors

Meredith Corporation

1716 Locust Street

Des Moines, Iowa 50309-3023

with a copy to:

John Zieser, Esquire

Vice President-General Counsel & Secretary

Meredith Corporation

1716 Locust Street

Des Moines, Iowa 50309-3023

If to Lacy:

Stephen M. Lacy

Chief Executive Officer Meredith Corporation

1716 Locust Street

Des Moines, Iowa 50309-3023

with a copy to:

Margo C. Soule, Esquire

Sonnenschein Nath & Rosenthal LLP

4520 Main Street

Kansas City, Missouri 64111

17. Severability.

In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions or
portions of this Agreement shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.

18. Withholding.

Anything to the contrary notwithstanding, all payments required to be made by
the Company hereunder to Lacy or his beneficiaries, including his estate, shall
be subject to withholding and deductions as the Company may reasonably determine
it should withhold or deduct pursuant to any applicable law or regulation. In
lieu of withholding or deducting, such amounts, in whole or in part, the Company
may, in its sole discretion, accept other provision for payment as permitted by
law, provided it is satisfied in its sole discretion that all requirements of
law affecting its responsibilities to withhold such taxes have been satisfied.

19. Deferred Payments.

Any amounts required under this Agreement to be paid to Lacy that Lacy can and
does elect to defer under any Company benefit plan or program shall be deemed to
have been paid to him for purposes of this Agreement; provided, however, that if
the Company breaches the terms of any deferred compensation plan, arrangement or
agreement with respect to which such amounts are to be paid, Lacy may claim a
breach of this Agreement.

Notwithstanding anything in this Agreement or elsewhere to the contrary:

(a) If payment or provision of any amount or other benefit that is "deferred
compensation" subject to Section 409A of the Code at the time otherwise
specified in this Agreement or elsewhere would subject such amount or benefit to
additional tax pursuant to Section 409A(a)(1)(B) of the Code, and if payment or
provision thereof at a later date would avoid any such additional tax, then the
payment or provision thereof shall be postponed to the earliest date on which
such amount or benefit can be paid or provided without incurring any such
additional tax. In the event this Section requires a deferral of any payment,
such payment shall be accumulated and paid in a single lump sum on such earliest
date together with interest for the period of delay, compounded annually, equal
to the prime rate (as published in The Wall Street Journal), and in effect as of
the date the payment should otherwise have been provided.

(b) If any payment or benefit permitted or required under this Agreement, or
otherwise, is reasonably determined by either party to be subject for any reason
to a material risk of additional tax pursuant to Section 409A(a)(1)(B) of the
Code, then the parties shall promptly agree in good faith on appropriate
provisions to avoid such risk without materially changing the economic value of
this Agreement to either party.

20. Survivorship.

The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

21. Duty to Mitigate: Set-off.

Lacy shall not be required to seek employment, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned
by Lacy as the result of employment by another employer after the date of
termination of Lacy's employment, or otherwise, except as may be provided under
Section 9.4 with respect to health and welfare insurance benefits. The Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense, or other claim, right or action that the
Company may have against Lacy or others, except to be extent such employment
violates Section 10.5.

22. Headings.

Headings of the sections of this Agreement are intended solely for convenience
and no provision of this Agreement is to be construed by reference to the title
of any section.

23. Knowledge and Representation.

Lacy acknowledges that the terms of this Agreement have been fully explained to
him, that Lacy understands the nature and extent of the rights and obligations
provided under this Agreement, and that Lacy has been represented by legal
counsel in the negotiation and preparation of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

 

MEREDITH CORPORATION

 

By: __/s/ Herbert M. Baum___________

Chairman of the Compensation Committee

Dated: ____January 30, 2006_________

 

 

STEPHEN M. LACY

 

___/s/ Stephen M. Lacy_____________

Dated: ___January 30, 2006__________

 

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