Employment Agreement - PRIMEDIA Inc. and David Ferm
February 25, 2000
Mr. David Ferm
Dear David:
The purpose of this letter is to set forth the terms and conditions of
the employment agreement (the "Agreement") between you and PRIMEDIA Inc. (the
"Company").
1. SERVICES.
a. The Company hereby retains you, and you agree to be employed by the
Company in a full-time capacity, as Executive Vice President of the Company and
as President and Chief Executive Officer of the Company's business-to-business
operations, as constituted by the Company from time to time (consisting on the
date of this Agreement of the operations listed on Schedule I hereto)
(collectively, the "B-to-B Company") together with such other similar or higher
executive duties that you may be requested to perform during the term of this
Agreement (consistent with the duties of a Chief Executive Officer of the B-to-B
Company) including serving as a corporate officer of any of the Company's
subsidiaries to which you may be elected. So long as the Company has the right
to elect more than one director to the Board of Directors, you shall serve as a
director of IndustryClick Corp. ("IndustryClick"). You shall report directly to
the Chief Executive Officer of the Company and perform such other duties as such
Chief Executive Officer shall direct, consistent with your positions with the
Company. You will be the most senior executive of the Company in charge of its
business-to-business operations (except for the Chief Executive Officer of the
Company) and all employees of the B-to-B Company shall report directly or
indirectly to you. You shall be based in the executive offices of the Company in
New York City.
b. You shall devote substantially all of your attention, business time
and efforts to the business and affairs of the Company, provided that nothing
shall prohibit you from participating in charitable or educational activities or
the Board of Directors of other companies (provided such other companies do not
compete with the Company), provided such activities do not in the aggregate
materially interfere with the provision of services by you under this Agreement.
2. TERM
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The Term of this Agreement shall commence on the date of this Agreement
and your employment shall commence on the date on which you commence your
employment with the Company (the "Start Date") which shall be March 7, 2000 and
shall expire on the second anniversary of the Start Date (the "Expiration
Date"), unless earlier terminated in accordance with Section 6.
3. COMPENSATION
a. BASE SALARY. Commencing on the Start Date you shall be paid an
annual base salary equal to $700,000 (subject to annual review for increases in
the Company's discretion) less applicable withholdings, payable bi-weekly in
arrears, on the Company's regular pay dates.
b. ANNUAL INCENTIVE AWARD. Commencing with the 2000 calendar year, you
shall participate in the annual Short Term Senior Executive Performance Plan and
the Short Term Senior Executive Discretionary Plan (together, the "Bonus Plans")
provided that your bonus shall be determined based on the performance of the
B-to-B Company. Your aggregate target bonus in the Bonus Plans shall equal 60%
of your earned annual base salary. Notwithstanding anything contained to the
contrary in this Agreement, for the 2000 calendar year your bonus under the
Bonus Plans shall be no less than 30% of your earned base salary in the 2000
calendar year.
c. SIGN-ON BONUS. No later than ten (10) days after your Start Date,
the Company will pay to you $150,000 less applicable withholdings.
4. STOCK OPTIONS
a. COMPANY STOCK OPTIONS. As soon as practicable after the Start Date
(the "Grant Date"), the Company shall grant you an option to purchase 250,000
shares of Company Common Stock at a per share option exercise price equal to the
closing price on the New York Stock Exchange on the date of execution of this
Agreement and in accordance with the terms of the Company's1992 Stock Option
Plan (the "Plan"). Your options will vest at the rate of 20% on each anniversary
date of the Grant Date and, provided you remain in the Company's employ, shall
have a ten-year life from the Grant Date. You shall be considered for annual
grants under the Plan, which grants shall be at the discretion of the Company.
Your stock options granted pursuant to Sections 4(a) and (b) shall be "Incentive
Stock Options" as that term is defined under the Federal tax code, to the
fullest extent possible.
b. INTERNET STOCK OPTIONS. The Company has formed a separate internet
venture known as IndustryClick. As soon as practicable after the Start Date (the
"Internet Grant Date"), you shall be granted options to purchase 750,000 shares
of IndustryClick Common Stock at the per share exercise price of $0.50 per
share. Your options will vest at the rate of 25% on the first anniversary of the
Internet Grant Date and 1/16th of the total grant each subsequent three months
thereafter through the fourth anniversary of the Internet Grant Date, provided
you remain in the Company's employ. None of the shares
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of IndustryClick Common Stock received by you on exercise of IndustryClick stock
options nor any of your vested IndustryClick stock options (which are timely
exercised in accordance with the relevent stock option agreement) shall be
callable or redeemable by the Company or IndustryClick. Your IndustryClick stock
options shall be granted pursuant to the IndustryClick stock option plan and
agreement (copies of which have been provided) with such changes as specifically
set forth in this Agreement. While it is not the intention of the Company or
IndustryClick to make annual grants of IndustryClick stock options, if
additional grants to senior executives generally of the Company of IndustryClick
stock options are considered in the future, additional grants to you shall also
be considered.
c. CHANGE IN CONTROL.
(i) Change of Control shall mean the occurrence of any one of the
following events:
(A) a transaction or series of related transactions where
the controlling party sells or otherwise disposes of
Beneficial Ownership (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as
amended (the "1934 Act") ) of securities of the
company in question representing 35% or more of the
Voting Stock (stock having the combined voting power
of all securities of that company entitled to vote in
the election of directors of that company) to any
single person or group (within the meaning of Section
13 (d) (3) of the 1934 Act, and the rules and
regulations promulgated thereunder), and in
connection with or following such disposition such
single person or group obtains control of a majority
of the seats (other than vacant seats) on the Board
of Directors of the company in question;
(B) the company in question adopts any plan of
liquidation providing for the distribution of all or
substantially all of its assets;
(C) all or substantially all of the assets or business of
the company in question is disposed of pursuant to a
merger, consolidation or other transaction (unless
the shareholders of the company in question
immediately prior to such merger, consolidation or
other transaction beneficially own, directly or
indirectly, in substantially the same proportion as
they owned the voting stock of the company in
question, all of the voting stock or other ownership
interests of the entity or entities, if any, that
succeed to the business of the company in question);
or
(D) the company in question combines with another company
and is the surviving corporation but, immediately
after the
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combination, the shareholders of the company in
question immediately prior to the combination have
Beneficial Ownership, equal to 50% or less of the
Voting Stock of the combined company (there being
excluded from the number of shares held by such
shareholders, but not from the Voting Stock of the
combined company, any shares received by affiliates
of such other company in exchange for stock of such
other company).
(ii) In the event of a Change of Control of the Company or
IndustryClick and notwithstanding anything contained in any
stock option plan or agreement pursuant to which such stock
options have been granted, all then unvested stock options in
the company experiencing the Change of Control shall
immediately vest and shall be treated in the Change of Control
transaction as vested stock options.
(iii) In the event that as a result of any payment or benefit to
you, including any of your stock options, upon a Change of
Control (collectively, the "Covered Benefits") , you incur an
excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") or any similar tax that may
hereafter be imposed ("Excise Tax"), the Company shall pay to
you at the time specified below, the Tax Reimbursement
Payment. The Tax Reimbursement Payment is defined as an amount
which, after imposition of all income, employment and excise
taxes thereon, is equal to the Excise Tax on the Covered
Benefits. The Tax Reimbursement Payment attributable to the
Covered Benefits shall be paid to you by the Company prior to
the date that the corresponding Excise Tax payment is due to
be paid by you (through withholding or otherwise). You
covenant that you will use the Tax Reimbursement Payment under
this subsection (iii) for the sole purpose of paying the
Excise Tax.
5. FRINGE BENEFITS AND EXPENSES
a. FRINGE BENEFITS. During the term of this Agreement, the Company will
provide you with benefits commensurate with those provided generally to the
Company's most senior corporate officers (other than the Chief Executive Officer
of the Company) at the Company's executive offices including health, medical,
life and disability insurance and thrift and retirement plan, subject to the
terms of those plans as in effect from time to time.
b. REIMBURSEMENT OF BUSINESS AND OTHER EXPENSES; PERQUISITES. You are
authorized to incur reasonable expenses in carrying out your duties and
responsibilities under this Agreement and the Company shall promptly reimburse
you for all reasonable
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business expenses incurred in connection with carrying out the business of the
Company, subject to documentation in accordance with the Company's policy.
6. EARLY TERMINATION. This Agreement
a. shall terminate upon your death and may be terminated by the Company
on written notice to you upon your "Permanent Disability."
b. may be terminated by you voluntarily upon written notice to the
Company (i) if you are removed as Chief Executive Officer of the B-to-B Company
or Executive Vice President of the Company, (ii) if there is a material
diminution in your duties or responsibilities after notice and reasonable
opportunity for the Company to cure, (iii) in the event of the relocation by the
Company of your principal place of employment outside NYC, or (iv) if there is
any other material breach of this Agreement by the Company after reasonable
notice and an opportunity to cure.
c. may be terminated by the Company on written notice to you for
"Cause."
d. As used herein, "Permanent Disability" shall mean a physical or
mental disability which renders you unable to perform your duties hereunder in a
reasonably professional manner provided you have failed to perform such duties
as a result of such disability for an aggregate period of six months in any 12
consecutive month period during the Term. Permanent Disability shall be
determined by the opinion of at least two of three doctors associated with major
hospitals in Manhattan practicing in the field to which the disability relates,
one selected by the Company, one selected by you and one selected by the two
doctors selected as described above.
e. As used herein, "Cause" shall mean (i) any substantial breach or
non-observance of any of your material obligations as set forth herein, (after
reasonable advance written notice and a reasonable opportunity to cure such
breach or non-observance), (ii) the immoderate use of alcohol by you on a
habitual basis to the detriment of the Company (after reasonable advance written
notice and a reasonable opportunity to cease such use), (iii) the illegal use of
narcotics or drugs by you (after reasonable advance written notice and a
reasonable opportunity to cease such use), (iv) willful and repeated absence
from the business for any unreasonable period of time, without leave following
reasonable written notice and an opportunity to cure. and (v) willful and
repeated failure or refusal to perform your duties hereunder which failure or
refusal continues following reasonable advance written notice to you specifying
such failure or refusal and a reasonable opportunity to cure such failure or
refusal. Failure to meet financial targets shall not alone constitute Cause.
f. As used herein, "Date of Termination" shall mean the date of your
death, the effective date of your termination under Sections 6(a) or (c) or your
last date of employment if you voluntarily leave the Company's employ whether
under Section 6(b) or otherwise
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7. COMPENSATION UPON TERMINATION.
a. In the event that this Agreement shall terminate pursuant to Section
6(a) or (b), you or your estate shall be entitled to receive (i) all accrued and
unpaid annual base salary earned through the Date of Termination plus (ii) an
amount equal to one year's base salary at the rate in effect on the Date of
Termination plus (iii) an amount equal to your target bonuses for the calendar
year during which the Date of Termination occurs multiplied by a fraction, the
numerator of which is the number of days from the start of the calendar year to
the Date of Termination and the denominator of which is 365, provided that if
the Date of Termination occurs in calendar year 2000 your bonuses shall be no
less than 30% of your base salary at the rate then in effect.
b.In the event this Agreement shall terminate pursuant to Section 6(c)
or if you voluntarily terminate other than pursuant to Section 6(b), you shall
be entitled to receive your accrued and unpaid annual base salary through the
Date of Termination.
c. If this Agreement terminates at the Expiration Date or if you
continue in the Company's employ thereafter without an employment agreement, you
shall be entitled to receive (i) your base salary through your last day of
employment with the Company and your earned pro rata bonus under Section 3(b)
for the calendar year during which termination occurs plus (ii) an amount equal
to one year's base salary at the rate in effect immediately prior to your
termination of employment with the Company, but you shall not be entitled to any
severance payments under any severance policy of the Company.
d. In the event of any termination under Section 6, you or your estate
shall be paid all other amounts or benefits due under any fringe benefit or
other plans or arrangements in which you then participate in accordance with the
terms thereof then in effect plus reimbursement for all accrued and unpaid
business expenses and accrued and unused vacation. In the event of any
termination under this Agreement, other than under Section 6(c) or voluntarily
by you without any of the circumstances described in Section 6(b), the Company
shall pay on your behalf all amounts which you would be required to pay if you
elect medical benefits from the Company in accordance with the Consolidation
Omnibus Budget Reconcilation Act ("COBRA").
e. In the event your employment is terminated by the Company without
Cause or by you in accordance with Section 6(b) prior to the first anniversary
of the Start Date, that number of stock options granted to you pursuant Section
4(a) and (b) of this Agreement which would have vested had you stayed in the
Company's employ through and including such first anniversary of the Grant Date
or Internet Grant Date shall vest.
f. You shall have no obligation to mitigate your damages upon
termination of this Agreement under Sections 6(a) or (b) or upon termination by
the Company without Cause and no amounts received by you as compensation from
any other source shall be set-off against any amounts payable to you under this
Agreement.
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g. All payments due to you under this Section 7 shall be paid in a lump
sum, less applicable withholdings, within fifteen (15) days of your last day of
employment.
8. AGREEMENT NOT TO COMPETE OR SOLICIT TO HIRE, CONFIDENTIALITY.
a. NON-COMPETE, NO HIRE. Through the first anniversary of the
Expiration Date if you leave the Company's employ on the Expiration Date ,
through the first anniversary of your Date of Termination if you voluntarily
leave the Company's employment before or after the Expiration date (other than
under the circumstances described in Section 6(b) of this Agreement) or your
employment terminates under Section 6(c);
(i) You agree not to accept employment with, or provide services
to, any person, firm or corporation that competes with the
B-to-B Company or any of its operations or in any of the
Company's businesses to which you render services during the
term of your employment with the Company (a "Competing
Business") provided that you may work for or provide services
to a Competing Business so long as you do not work for or
provide services to that part of the Competing Business which
directly competes with the B-to-B Company or the Company's
other operations to which you rendered services.
(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 the B-to-B
Company or any of the Company's businesses to which you render
services during the term of your employment with the Company.
b. EXCEPTION. Nothing contained in this Section 8 shall prohibit you
from owning less than 5% of the equity securities of any company as a passive
investor.
c. CONFIDENTIALITY.
(i) You agree that you will not, at any time during the term of
this Agreement or thereafter, disclose or use any trade
secret, proprietary or confidential information of the B-to-B
Company, the Company or any subsidiary or affiliate of the
Company, which information is not in the public domain,
obtained during the course of your employment, except as
required in the course of such employment or with the written
permission of the Company or, as applicable, the B-to-B
Company or any subsidiary or affiliate of the Company or as
may be required by law, provided that, if you receive legal
process with regard to disclosure of such information, you
shall promptly notify the Company and reasonably cooperate
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with the Company, at the Company's sole expense, in seeking a
protective order.
(ii) You agree that at the time of the termination of your
employment with the Company, whether at your instance or the
Company's instance, and regardless of the reasons therefor,
you will deliver to the Company, and not keep or deliver to
anyone else, any and all notes, files, memoranda, papers and,
in general, any and all physical matter containing
information, including any and all documents significant to
the conduct of the business of the B-to-B Company, the Company
or any subsidiary or affiliate of the Company which are in
your possession, except for (A) any documents for which the
B-to-B Company, the Company or any subsidiary or affiliate of
the Company has given written consent to removal at the time
of the termination of employment and (B) your personal
rolodex, personal files, phone book and similar items.
(d) You agree that the Company's remedies at law would be inadequate in
the event of a breach or threatened breach of this Section 8; accordingly, the
Company shall be entitled, in addition to its rights at law, to seek an
injunction and other equitable relief.
9. GOVERNING LAW. This Agreement shall be governed and interpreted and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed in the State of New York.
10. NOTICES. Any notice required or desired to be served, given or
delivered hereunder shall be in writing, and shall be deemed to have been
validly served, given or delivered (i) five business days after deposit in the
United States mails, with proper postage prepaid, whether by registered or
certified mail, (ii) one business day after being deposited with an overnight
courier with all charges prepaid, or (iii) , if hand-delivered by messenger on
the scheduled delivery date, all of which shall be properly addressed to the
party to be notified and sent to the address indicated as follows:
If to the Company: PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Attn: General Counsel
If to you: To address first above written
With a copy to: John Turitzin, Esq.
Battle Fowler
75 East 55th Street
New York, NY 10022
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or to such other address as such party may specify to the other in writing in
accordance with the provisions hereof.
11. MISCELLANEOUS.
a. WAIVER. Waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such waiving party.
b. ASSIGNMENT. This Agreement shall not be assignable by either party
except that the Company may assign its rights and obligations hereunder to any
of its subsidiaries, provided that any such assignment results from a
restructuring of the Company or similar transaction so that your position,
duties and responsibilities are not diminished, and that any such assignment
shall not result in any change in the terms of this Agreement and Company shall
remain secondarily liable for its obligations hereunder.
c. ENTIRE AGREEMENT, PREEMPTION.
(i) This instrument contains the entire agreement and
understanding of the parties hereto. It may not be
changed except by an agreement in writing signed by
you and the Company.
(ii) In the event there is difference between the terms or
provisions of this Agreement and the terms or
provisions of any of the Plan or the IndustryClick
Stock Option Plan or the stock option agreements
relating thereto, the terms and provisions of this
Agreement shall govern.
d. ENFORCEABILITY. If any term, condition or provision of this
Agreement shall be declared, to any extent, invalid or unenforceable, the
remainder if the Agreement, other than the term, condition or provision held
invalid or unenforceable, shall not be affected thereby and shall be considered
in full force and effect and shall be valid and be enforced to the fullest
extent permitted by law.
e. CAPTIONS. The captions set forth in this Agreement are used solely
for convenience or reference and shall not control or affect the meaning or
interpretation of any of the provisions.
f. COUNTERPARTS. This Agreement may be signed in any number of
counterparts each of which shall be deemed an original.
g. SURVIVAL. The provisions of Section 6, which by their terms extend
beyond the Date of Termination or the Expiration Date, and Section 8 of this
Agreement
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shall survive the termination of this Agreement and the termination of your
employment hereunder before, on or after the Expiration Date.
h. INDEMNIFICATION. You shall be indemnified by the Company as an
executive officer of the Company and as an executive, officer and director of
the Company's subsidiaries and affiliates to the same extent as the most senior
management of the Company. The Company maintains directors' and officers'
liability insurance pursuant to which upon your election as an officer of the
Company you shall become an insured.
i. The Company agrees to reimburse you for your actual and
reasonable legal fees and expenses incurred in the negotiation and
consummation of this Agreement up to a total of $25,000.
If you are in agreement with the foregoing, please sign the enclosed
copy of this Agreement and return a copy to the undersigned.
PRIMEDIA Inc.
By:
---------------------------------
Title:
AGREED TO AND ACCEPTED:
----------------------------
By: David Ferm
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Schedule I
Bacon's Information
Federal Sources, Inc.
IndustryClick
Intertec Publishing Inc.
Pictorial, Inc.
PRIMEDIA Directories
PRIMEDIA Workplace Learning
Qwiz, Inc.
Simba
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