Exhibits
10.26


 


SEPARATION
AND RELEASE AGREEMENT


 


This Separation
and Release Agreement (“Agreement”) by and between David Ferm  (“Executive”) and PRIMEDIA Inc. (the
“Company”), dated as of December 31, 2003 and executed on the date specified
below (the date of execution by the Executive hereinafter referred to as the
“Execution Date”).


 


RECITAL


 


Executive and Company desire to reach a mutual
understanding and acceptance of the terms and conditions related to Executive’s
cessation of employment with Company.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the
mutual promises and covenants herein contained it is hereby agreed as follows:


 


1.             Cessation
of Employment.  Executive shall
cease to be an employee of Company as of December 31, 2003 (“Separation Date”).


 


2.             Payments.  In consideration of Executive’s acceptance
of this Agreement, on  the later of
January 15, 2004 or the expiration of the Revocation Period, as hereinafter
defined, (the “Payment Date”), Executive shall be entitled to receive and shall
be paid the following payments by the Company in respect of giving up future
employment.


 


(a) Salary.  $750,000, an
amount equal to twelve (12) months’ base salary at Executive’s current rate of
pay.


 


(b)  2003 Annual Bonus
Payment.  $450,000 with respect to the
Executive’s annual incentive award payable under PRIMEDIA’s annual incentive
plan (the “Annual


 


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Incentive Award”) (based on a target Annual Incentive
Award equal to 65% of the Executive’s $750,000 base salary) in respect of
PRIMEDIA’s fiscal year ending December 31, 2003 (the “Bonus Amount”), provided
however in the event that the amount calculated as Executive’s actual Annual
Incentive Award exceeds $450,000, such excess, if any, will be paid to the Executive
when all other bonuses of senior executives of PRIMEDIA Magazines Inc. are
paid.


 


(c) Additional Payment. 
PRIMEDIA will pay to Executive a lump sum payment equal to $30,000,
which amount represents payment in full of Executive’s earned special or
milestone bonus for 2003.


 


3.  Accrued Rights.  Promptly following the Termination Date,
PRIMEDIA will pay to Executive a lump sum payment equal to the sum of (i) any
unpaid Base Salary accrued through the Separation Date, (ii) all accrued but
unused vacation days, and (iii) the amount of any unreimbursed business
expenses incurred by Executive in accordance with Company policy prior to the
Separation Date.


 


4.  Tax Withholding.  All payments made under Sections 2 and 3
shall be treated as supplemental wage payments for purposes of federal, state
and local tax withholding.  PRIMEDIA may
withhold from any amounts payable under this Agreement the minimum amount of
Federal, state and local income, employment and other taxes required to be
withheld in respect of supplemental wage payments (which, as of the date
hereof, was 25% of any such payment for federal tax purposes), provided however
that with respect to payments under Sectioin 2 as such payments are payments in
respect of Executive giving up future employment, no New York State
withholdings shall be deducted.


 


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5.  Attorneys Fees.  PRIMEDIA will pay to Paul, Hastings, or
reimburse Executive, for all reasonable fees (including costs and expenses
incurred thereby) of legal counsel for such counsel’s legal services provided
to Executive in connection with the negotiation and settlement of the subject
matter contained in this Agreement, within thirty (30) days after receipt of a
bill for all such services.


 


6..  Stock Options.  With respect to the outstanding options to
purchase shares of common stock of PRIMEDIA held by Executive as of the date
hereof (the “Options”), notwithstanding the provisions of any of the option
award agreements pursuant to which Executive was granted such options effective
as of the Separation Date, all of the Options having a $1.85 exercise price
that have not already vested as of the Separation Date shall vest and become
fully exercisable.


 


7.  Other Employee Benefits.


 


(a)  Group Health Coverage.  Effective as of the Separation Date,
PRIMEDIA shall continue to provide Executive and his eligible dependents with
medical, dental and vision benefits pursuant to PRIMEDIA’s health and dental
benefit program until the expiration of the eighteen month period commencing on
the Separation Date.  Notwithstanding
the foregoing, as a condition to receiving the benefits hereunder, Executive
and his eligible dependents shall elect to receive group health benefit
coverage from PRIMEDIA as permitted pursuant to the Consolidated Omnibus
Reconciliation Act of 1985, as amended (“COBRA”), which coverage shall begin on
the Separation Date and run through the eighteen month period provided pursuant
to COBRA.  Executive shall not be
required to pay for such coverage.


 


(b)  Other Benefits.  If Executive is currently participating in
the PRIMEDIA Thrift and Retirement Plan (the “PRIMEDIA Plan”), from and after
the Separation Date,


 


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Executive shall cease to be an active participant in
the “PRIMEDIA Plan”.  The vested value
of Executive’s account balance under the PRIMEDIA Plan will be paid to
Executive by separate check issued by the Trustee of the PRIMEDIA Plan in
accordance with the provisions of the Plan; provided, however, that if the
vested value of Executive’s account balance under the PRIMEDIA Plan is greater
than $5,000 (excluding rollover money in Executive’s account), Executive shall
have the option to keep its vested balance in the Plan pursuant to the terms of
the Plan.  It is understood that the
release set forth in this Agreement shall not apply to any rights arising out
of the computation or distribution of Executive’s account balance.


 


8.  Releases.


 


(a) Executive for
Executive, Executive’s heirs, executors, administrators and assigns, hereby
unconditionally releases, discharges and acquits Company, its subsidiaries,
parents, and affiliates, and each of them, and their respective officers,
directors, shareholders, partners, employees, agents and affiliates, and each
of them (hereinafter collectively referred to as “Releasees”) from any and all
debts, agreements, promises, liabilities, claims, damages, actions, causes of
action, or demands of any kind or nature including without limitation all
claims of wrongful discharge, breach of contract, intentional infliction of
emotional distress, breach of alleged implied covenant of good faith and fair
dealing, invasion of privacy, defamation, and age or sex discrimination, or
discrimination based on any other ground, including but not limited to those
arising under the Age Discrimination in Employment Act, as amended, Title VII
of the Civil Rights Act of 1964, the Executive Retirement Income Security Act
of 1974, the Fair Labor Standards Act, as amended, the Americans with


 


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Disabilities Act and the Family and Medical Leave Act
of 1993 and all other federal, state and local equal employment, fair
employment, civil or human rights laws, codes and ordinances, regardless of
whether such claims are past, present, or future, personal or representative,
known or unknown, or arising out of any occurrence to date and expressly
including but not limited to any liability arising out of or in connection with
the employment of Executive by Company, or the termination hereof, and claims
for attorneys’ fees and costs, and any and all forms of compensation, including
without limitation any amounts payable under the Executive’s Employment
Agreement dated February 22, 2000, as amended (the “Employment Agreement”), any
incentive awards or bonuses, relating to such employment, other than as
specifically set forth in this Agreement.


 


(b)  It is
understood and agreed that the releases set forth in clause (a) above  are intended as and shall be deemed to be a
full and complete release of any and all claims that Executive may have against
the Company arising out of any occurrence arising on or before the date of this
Agreement and said release is intended to cover and does cover any and all
future damages not now known to Executive or which may later develop or be
discovered, including all causes of action therefor and arising out of or in
connection with any occurrence arising on or before the date of this Agreement.  For purposes of clarity, the release in the
preceding paragraph is intended to include and does include (i) a release by
Executive of any claims Executive may have that could be a part of the class
action lawsuit Harrell v. PRIMEDIA Inc. et al, in the United States District Court,
Central District of California, Case No. 01-07006 (the “Harrell Class Action”)
and (ii) an irrevocable waiver of Executive’s right to participate as a class
member in the Harrell Class Action.


 


(c).  By signing and returning this Agreement,
Executive acknowledges that Executive:


 


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(i)            has carefully read and fully
understands the terms of this Agreement;


 


(ii)           is entering into
this Agreement voluntarily and knowing that Executive is releasing claims that
Executive has or believes Executive may have against Company;


 


(iii)          has hereby been
advised by this Agreement that Executive has the right to consult with an
attorney of Executive’s choosing prior to signing this Agreement; and


 


(iv)          is giving this release of claims in
return for consideration to which Executive otherwise would not have been
entitled, to wit, any compensation and benefit enhancements beyond those that
Executive would otherwise be entitled to pursuant to the Company’s policies and
practices.


 


(d)  Executive hereby covenants not to sue or
bring any claim against Releasees and acknowledges and agrees that this general
release may be pleaded as a full and complete defense to, and may be used as
the basis for an injunction against, any action, claim, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of this
release.


 


9.  Non-Disparagement.  Executive promises not to make any
statement, written or oral, directly or indirectly, which in any way disparages
Company or any of its affiliates or their publications, or the employees,
officers, directors or shareholders of any of them.  Executive promises to maintain this Agreement in strict
confidence and to make no disclosure of the terms of this settlement to any third
party, provided, however, that nothing herein contained shall prohibit


 


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Executive from disclosing the terms of this Agreement as may be
required by law.  Notwithstanding
anything herein to the contrary, the foregoing shall in no way limit the effect
of the release set forth above.


 


10,  The
Company and Executive agree that the Agreement Not to Compete set forth in
Section 8 (a) of the Employment Agreement is amended to read and provide as
follows:


 


(a)          “Non-Compete, No
Hire.  Through December 31, 2004:


 


(i) You (Executive) agree not to accept employment
with, or provide services to, any person, firm or corporation that publishes
magazines that compete with magazines published on the date hereof by PRIMEDIA
Consumer Magazines and Media excluding New York Magazine.


 


(ii) You agree not to yourself or for and on behalf of
any person, firm or corporation for which you provide services, solicit for
employment or hire any employee employed by any of the Company’s businesses to
which you rendered services during the term of your employment with the
Company.”


 


11.  Company Property.  Except as specifically set forth in this
Agreement to the contrary, Executive agrees to return all Company property in
Executive’s possession to Company on or before the Separation Date.  Executive acknowledges receipt of the Notice
on Conclusion of Employment, attached hereto as Exhibit “A”.  Executive understands and agrees that any
disclosure in contravention of this Agreement or Notice on Conclusion of
Employment may release Company from any obligations it may have to Executive
under this Agreement.


 


12.  Indemnification.  Executive agrees to indemnify and hold
harmless the Company from any claims made or assessed, including interest and
penalties, by any Federal, state or local governmental agency or taxing
authority which claim asserts, that the Company improperly withheld


 


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from the amounts
payable to Executive under this Agreement. 
Upon receipt of any such claim by the Company, the Company shall give
Executive reasonable notice and an opportunity to defend such claim on behalf
of the Company.  Unless Executive shall
have satisfactorily paid, settled or gotten dismissed any such claim within 90
days of receipt of notice from the Company, the Company shall have the right to
pay such claim in full and claim the amount so paid from Executive.


 


13.  Entire Agreement.  This Agreement sets forth the entire
agreement between the parties regarding Executive’s separation from Company,
supersedes any prior written, oral or implied agreement between the parties
hereto regarding the subject matter hereof and may only be amended by a written
agreement signed by the parties hereto. 
Notwithstanding the foregoing, the provision of Section 8 of the
Employment Agreement, as amended by this Agreement, shall remain in full force
and effect.


 


14.  No Publicity.  Executive agrees and understands that
neither the content nor the execution of this Agreement shall constitute or be
construed as any implied or actual admission by Company of any liability to or
of the validity of any claim by Executive that Executive is entitled to
additional compensation or continued employment with the Company or that the Company
engaged in any wrongdoing.


 


15.  Executive’s Determination.  Executive hereby represents and agrees that
in entering into this Agreement, Executive has relied solely upon Executive’s
own judgment, belief and knowledge and Executive’s own legal and other
professional advisors and that no statement made by or on behalf of Company has
in any way influenced Executive in such regard.


 


16.  No Claims Assigned.  Executive hereby represents and warrants to
Company that Executive has not assigned any claim Executive may or might have
against Company to any third party.


 


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17.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.


 


18.  Full Settlement.  It is agreed by each of the parties hereto
that they have read the above and fully understand the terms of this Agreement
which they voluntarily execute in good faith and deem to be a full and
equitable settlement of this matter.


 


19.  Separability.  The provisions of this Separation and
Release Agreement are severable.  If any
provision of the Separation and Release Agreement is declared invalid or
unenforceable, the ruling will not affect the validity and enforceability of
any other provision of the Separation and Release Agreement.


 


20.  Review Right.  Executive may review and consider this
Agreement for a period of up to forty-five (45) days from the date of this
Agreement.  Executive agrees and
understands that Executive’s failure to execute this Agreement and to return
this signed document on or before forty-five (45) days after the date of this
Agreement will release Company from any obligation to enter into this
Agreement.


 


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21.  Revocation.  Executive shall be entitled to revoke this
Agreement within seven (7) days after Executive’s timely execution of same by
delivering a written revocation to Company. 
If Executive so revokes or if Executive fails to execute this document,
this Agreement shall be null and void and of no force and effect and the
provisions of the Employment Agreement shall control the Executive’s cessation
of employment effective December 31, 2003.


 


	
  Agreed and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David Ferm

  	
   

  	
  Dated: 
  January 6, 2003

  	
   

  
	
  David Ferm

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed and Accepted for PRIMEDIA Inc.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Beverly C. Chell

  	
   

  	
  Dated: 
  January 5, 2003

  	
   

  
	
  Name: 
  Beverly C. Chell

  	
   

  	
   

  
	
  Title: Vice Chairman

  	
   

  	
   

  



 


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EXHIBIT “A”


 


NOTICE ON CONCLUSION OF EMPLOYMENT


 


In connection with the conclusion of employment with PRIMEDIA Inc.
and/or its subsidiaries and affiliates (“Company”), each employee has an
obligation to surrender and return to Company all mail, files, records,
manuals, books, blank forms, tapes, discs, photographs, negatives, documents,
letters, memoranda, notes, notebooks, materials, property, reports, data
tables, calculations, information or copies thereof, which are the property of
Company or which relate in any way to the business, products, practices or
techniques of Company and all other property, trade secrets or confidential
information of Company and any third parties with whom it deals, including but
not limited to, all keys, passwords, combinations and documents which in any of
these cases are in the employee’s possession or under the employee’s control.


 


The employee also has a continuing obligation to preserve as CONFIDENTIAL
and refrain from using, trade secrets or confidential information concerning
the business, products, practices or techniques of Company and any third
parties with whom it deals, including but not limited to, manuscripts,
photographs, techniques, systems, designs, research, processes, inventions,
developments, proposals, plans, publications, computer programs, user manuals
and documentation, products (whether or not copyrighted or copyrightable, or
patented or patentable), marketing and merchandising methods, subscriber,
circulation, customer or supplier lists, business, accounting and financial
information of Company, that has been disclosed to or is known to the Executive
by reason of employment by Company, and to refrain from acts or omissions that
would reduce the value of such trade secrets and confidential information to
Company.


 


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