<SEQUENCE>2

<FILENAME>c61379ex10-5.txt

<DESCRIPTION>EMPLOYMENT AGREEMENT WITH MATTI A. PRIMA

<TEXT>



<PAGE>   1







                              EMPLOYMENT AGREEMENT





         THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated effective as of

October 21, 1999, by and between Peoples Educational Holdings, Inc., a Minnesota

corporation (the "Company"), and Matti Prima, an individual resident of the

State of New Jersey (the "Executive").



         WITNESSETH:



         WHEREAS, the Company desires to employ the Executive and the Executive

wishes to accept employment with the Company upon the terms and conditions set

forth in this Agreement.



         NOW, THEREFORE, in consideration of the foregoing and the mutual

agreements herein contained, the Company and the Executive agree as follows:



         1. Employment. The Company hereby employs the Executive as Senior Vice

President of Business Development, with such additional operating titles as the

Chief Executive Officer of the Company (the "CEO") shall from time to time

approve, and the Executive accepts such employment and agrees to perform

services for the Company and its affiliates in accordance with the requirements

of the position, for the period and upon the other terms and conditions set

forth in this Agreement. The term "affiliate" as used in this Agreement shall

mean any subsidiary or parent corporation of the Company and any other

corporation under common control with the Company, including The Peoples

Publishing Group, Inc., a Delaware corporation (hereinafter referred to as the

"Subsidiary").



         2. Term. Unless terminated at an earlier date in accordance with

Section 8, the initial term of the Executive's employment hereunder shall be for

a period of two years, commencing on October 21, 1999. Thereafter, the term of

this Agreement may be extended by mutual written agreement between the parties.

Notwithstanding the foregoing, the terms of Sections 5 and 7 shall survive the

termination of this Agreement, except as set forth in Section 8.01.



         3. Position and Duties.





                  3.01 Service with Company. During the term of this Agreement,

the Executive shall perform such duties for the Company and its affiliates as

the CEO or Board of Directors of the Company shall assign to him from time to

time. Without limiting the generality of the foregoing, it is understood between

the Company and the Executive that the responsibilities of the Executive will

include the coordinating the prospecting and execution of, and obtaining the

financing for, acquisition transactions for the Company consistent with the

Company's long-term growth objectives in supplementary educational publishing.

The Executive would be expected to work closely with the Company's operating

management and the Board of Directors as they make decisions on proper

acquisitions.



                  3.02 Performance of Duties. The Executive shall serve the

Company and its affiliates faithfully and to the best of his ability, and devote

his full time, attention and efforts to the business and affairs of the Company

and its affiliates during normal business hours (and outside normal business

hours as reasonably required) during the term of this Agreement. The Executive

hereby confirms that he is under no contractual commitments inconsistent with

his obligations set forth in this Agreement, and that during the term of this

Agreement he shall not render or perform services for any other corporation,

firm, entity or person.



                  3.03 Certain Proprietary Information. If the Executive

possesses any proprietary information of another person or entity as a result of

prior employment or relationship, the Executive shall honor any confidentiality

or any other legal obligation that the Executive has with that person or entity

with respect to such proprietary information.

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