Sample Business Contracts

Incentive and Performance Stock Option Agreement - PRIMEDIA Inc. and David S. Ferm

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                                    UNDER THE
                             AS AMENDED (THE "PLAN")

     This Incentive Stock Option Agreement (the "Option Agreement") has been
entered into as of July 1, 2002 (the "Effective Date") between PRIMEDIA Inc., a
Delaware corporation (unless the context otherwise requires), together with any
subsidiary (as such term is defined in the Plan), (the "Corporation"), and
David S. Ferm (the "Optionee") pursuant to certain provisions of the Plan.

     1.   DEFINITIONS. Throughout this Option Agreement, capitalized terms not
          otherwise defined herein shall have the meanings indicated in the

     2.   OPTION GRANT. Subject to the terms and conditions set forth herein,
          the Corporation grants to the Optionee that number of options to
          purchase from the Corporation at the respective purchase prices set
          forth below per share, (as adjusted from time to time pursuant to the
          terms of this Agreement and the Plan, (the "Purchase Price"), up to,
          but not exceeding, in the aggregate, 100,000 shares of Common Stock
          (the "Options"), as adjusted pursuant to the Plan. Thirty percent of
          the Options will vest in accordance with the provisions of Section 4
          (a) (the "Time Vest Options") and 70% of the Options will vest in
          accordance with the provisions of Section 4 (b) (the "Performance Vest

                                TIME VEST OPTIONS

          NUMBER OF OPTIONS                           PURCHASE PRICE
          -----------------                           --------------
          30% of Options                              $       4

                            PERFORMANCE VEST OPTIONS

          30% of Options                              $       5
          40% of Options                              $       6

          are intended to be treated for federal income tax purposes as
          Incentive Stock Options under Section 422 of the Internal Revenue Code
          of 1986, as amended (the "Code"), to the maximum extent permissible
          under the Code. If for any reason, all or any of these Options cannot
          be treated as Incentive Stock Options under the Code, the part of
          these Options that cannot be treated as Incentive Stock Options shall
          be valid and outstanding non-qualified stock options. These Options
          are in addition to any other options heretofore or hereafter granted
          to the Optionee by the Corporation or any subsidiary but a duplicate
          original of this instrument shall not cause the grant of another



     4.   VESTING.

          (a)  TIME VEST OPTIONS. So long as the Optionee continues to be
               employed by the Corporation through the applicable vesting date,
               the Optionee's right to exercise these Options with respect to
               the number of Time Vest Options described in Section 2 shall vest
               on an equal prorata basis at the end of each of the 48 calendar
               months starting with the month in which the Effective Date

          (b)  PERFORMANCE VEST OPTIONS. So long as the Optionee continues to be
               employed by the Corporation or a subsidiary through the
               applicable vesting date, the Optionee's right to exercise these
               Options with respect to 100% of the Performance Vest Options
               shall vest on the eighth anniversary of the Effective Date;
               HOWEVER, Optionee's right to exercise the Performance Vest
               Options shall accelerate if the respective Target EBITDA (as
               defined below) is met in the respective years, as set forth in
               subsection (d) below.

          (c)  For purposes of this Section 4:

               (i)    "EBITDA" shall mean for any Fiscal Year an amount equal to
                      the Corporation's consolidated net income from continuing
                      businesses for such year PLUS the sum of interest expense,
                      provisions for income and franchise taxes, depreciation,
                      amortization of intangible assets, other (income) and
                      charges including non-cash compensation and non-recurring
                      charges, provision for severance, closures and
                      restructuring related costs, (gains) losses on the sales
                      of businesses and other, net, amortization of deferred
                      financing costs, provisions for impairment of investments,
                      impairments of goodwill and intangibles, expenses paid or
                      accrued for consulting services provided by Capstone
                      Consulting, and extraordinary charges MINUS the sum of
                      interest income and extraordinary gains, if any, for such
                      year. EBITDA shall be determined in a manner consistent
                      with the Corporation's prior practice as set forth in the
                      Corporation's financial statements forming part of its
                      Quarterly Report on Form 10-Q for the calendar quarter
                      ended March 31, 2002 (Footnote 15, Business Segment
                      Information) which will in any event be in accordance with
                      generally accepted accounting principles as in existence
                      on March 31, 2002.

               (ii)   "Fiscal Year" means any one of the Corporation's calendar
                      years 2002 through 2005, as applicable.

               (iii)  "Target EBITDA" shall mean, for any given Fiscal Year the
                      EBITDA set forth in Section 4.

          (d)  The Performance Vest Options shall accelerate in accordance with
               the following table when the respective Target EBITDA is met in
               any one of the Fiscal Years set forth in the column "Fiscal Year"
               next to the Target EBITDA:

                NUMBER OF       PURCHASE                              FISCAL
TRANCHE          OPTIONS         PRICE         TARGET EBITDA           YEAR
---------     --------------    -------        -------------     ------------------
Tranche 1     30% of Options       $   5        $ 300 million    2003
Tranche 2     30% of Options       $   6        $ 340 million    2003 or 2004
Tranche 3     10% of Options       $   6        $ 380 million    2003, 2004 or 2005



          (e)  In the event that the Corporation fails to achieve, in respect of
               any given Fiscal Year, Target EBITDA set for such year, there
               shall be no acceleration of vesting of any Tranche as to which
               the Target EBITDA is not met in that Fiscal Year.

          (f)  The Corporation shall use its best efforts to determine EBITDA
               for each Fiscal Year by March 31 of the following Fiscal Year
               and, following such determination, the Corporation shall promptly
               notify Optionee of the results of such determination.

          (g)  In addition, the Compensation Committee may adjust any or all
               Target EBITDA to fairly and appropriately reflect the effect of
               any significant mergers, acquisitions, or dispositions approved
               by the Board of Directors in any case that was not contemplated
               in establishing the respective Target EBITDA; PROVIDED, HOWEVER,
               that in the event the Compensation Committee takes any such
               action, such adjustment shall be only the amount deemed
               reasonably necessary by the Compensation Committee, in the
               exercise of its good faith judgment, to accurately reflect the
               direct and measurable effect such event has on such Target
               EBITDA. The Compensation Committee's determination of such
               necessary adjustment shall be made within 60 days following the
               completion or closing of such event, and shall be based on the
               Corporation's accounting as set forth in its books and records
               and on the Corporation's financial plan pursuant to which the
               Target EBITDA was originally established.

          (h)  The Options shall vest on the last day of the Fiscal Year as to
               which the EBITDA Target is met.

     5.   CHANGE OF CONTROL. In the event of a "Change of Control" (as defined
          in this paragraph), then 100% of such unvested portion of the Time
          Vest Options shall become fully vested. A "Change of Control" for
          purposes of this Option Agreement shall mean:

                      (a) A transaction or series of related transactions
               whereby KKR Associates and/or its Affiliates ("KKR") (a) 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 Corporation representing
               35% or more of the combined voting power of all securities of the
               Corporation entitled to vote in the election of directors of the
               Corporation 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), other than to an Affiliate of KKR, 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.

                      (b) the Corporation adopts any plan of liquidation
               providing for the distribution of all or substantially all of its

                      (c) all or substantially all of the assets or business of
               the Corporation is disposed of pursuant to a merger,
               consolidation or other transaction (unless the shareholders of
               the Corporation 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 Corporation, all of the voting stock or other ownership
               interests of the entity or entities, if any, that succeed to the
               business of the Corporation); or the Corporation combines with
               another Corporation and is the



               surviving corporation but, immediately after the combination, the
               shareholders of the Corporation immediately prior to the
               combination hold, directly or indirectly, 50% or less of the
               voting stock of the combined Corporation (there being excluded
               from the number of shares held by such shareholders, but not from
               the voting stock of the combined Corporation, any shares received
               by affiliates of such other Corporation in exchange for stock of
               such other Corporation).

     6.   EXPIRATION OF OPTIONS. The Options granted hereunder may not be
          exercised to any extent after the first to occur of the following
          events (the "Expiration Date"):

          (a)  The tenth anniversary of the Grant Date; or

          (b)  The first anniversary of the effective date of the Optionee's
               termination of employment by reason of death, Retirement or
               Permanent Total Disability or

          (c)  90 days after termination of the Optionee's employment for any
               reason other than for death, Permanent or Total Disability or
               Retirement; or

          (d)  If the Committee so determines, the effective date of either the
               merger or consolidation of Corporation into another corporation,
               or the exchange or acquisition by another corporation of all or
               substantially all of Corporation's assets or 80% or more of its
               then outstanding voting stock, or the recapitalization,
               reclassification, liquidation or dissolution of Corporation. At
               least ten (10) days prior to the effective date of such event,
               the Committee shall give the Optionee notice of such event if the
               Options have not yet been fully exercised and the Expiration Date
               has not yet occurred. Nothing in this provision shall negate the
               acceleration of the Time Vest Options upon a change.

     7.   EXERCISE.

                      (a) During the Optionee's lifetime, only the Optionee may
               exercise the Options or any exercisable portion thereof. After
               the death of the Optionee and prior to the close of business on
               the Expiration Date, the Options or any exercisable portion
               thereof may be exercised by the Optionee's personal
               representative, or by any person empowered to do so under the
               Optionee's will or under the then applicable laws of descent and
               distribution. The party entitled to exercise the Options shall be
               referred to herein as the "Exercising Party".

                      (b) The Options or any exercisable portion thereof may be
               exercised in whole or in part at any time prior to the close of
               business on the Expiration Date; provided, however, that any
               exercise shall be for whole shares only.

                      (c) The Options or any exercisable portion thereof may be
               exercised solely by delivering to the Office of the Secretary of
               Corporation all of the following prior to the closing of business
               on the Expiration Date:

               (i)   Notice in writing, signed by the Exercising Party, stating
                      the number of Shares with respect to which the Options are
                      being exercised;

               (ii)  Full payment (in cash, by check, or Shares owned more than
                      six months which shall be valued at their fair market
                      value, or by a combination thereof) for the Shares with



                      respect to which such Options or portion thereof are
                      exercised, plus any withholdings applicable thereto; and

               (iii) In the event that the Exercising Party is not the Optionee,
                      appropriate proof, in the sole judgement of Corporation,
                      of the right of such person to exercise the Options.

          (d)  No Options shall become exercisable as to any additional Shares
               following the effective date of the termination of employment of
               the Optionee for any reason other than the death, Permanent or
               Total Disability or Retirement of Optionee; and

          (e)  In the event of a termination of employment because of death,
               Permanent or Total Disability or Retirement, the Options shall
               become exercisable as to all Shares as of the effective date of
               such termination of employment

          (f)  Notwithstanding the other provisions of this Section 7, the
               Committee may take such reasonable additional steps that it
               reasonably deems appropriate, including the requirement of
               additional documents, representations and actions of or by the
               Exercising Party, to ensure the observance and performance of the
               representations set forth in the notice of exercise, and
               compliance with applicable federal or state securities laws or

          (g)  In addition, Corporation shall not be required to issue or
               deliver any certificate representing Shares prior to the
               obtaining of approval or other clearance from any state or
               federal governmental agency or securities exchange that the
               Committee shall, in its absolute discretion, determine to be
               necessary or advisable.

          (h)  The Shares deliverable upon the exercise of the Options, or any
               portion thereof, may be either previously authorized but unissued
               shares of Common Stock or issued Shares that have been reacquired
               subsequently by Corporation. Such Shares shall be fully paid and

          (i)  Each Exercising Party shall be obligated to notify Corporation in
               writing when any Shares are sold, transferred or otherwise
               disposed of.

          (j)  Neither the Optionee nor any Exercising Party shall be a
               stockholder of the Corporation or have any of the rights or
               privileges thereof in respect of any Shares unless and until
               certificates representing such Shares shall have been issued by
               Corporation to such Optionee or other Exercising Party.

          (k)  Notwithstanding the foregoing, the Options may be exercised by
               the Exercising Party utilizing a "cashless exercise" or "brokered
               exercise" transaction.

     8.   POWERS OF COMMITTEE. The Committee shall have the power to interpret
          the Plan and this Agreement and to adopt such rules for the
          administration, interpretation and application of the Plan as are
          consistent therewith and to interpret or revoke any such rules. All
          actions taken and all interpretations and determinations made by the
          Committee shall be final and binding upon the Optionee or other
          Exercising Party, Corporation and all other interested persons. No
          member of the Committee shall be personally liable for any action,
          determination or interpretation made in good faith with respect to the
          Plan or this Agreement. In its absolute discretion, the Board of
          Directors of Corporation may at any



          time and from time to time exercise any and all rights and duties of
          the Committee under the Plan and this Agreement.

     9.   OPTIONS NOT TRANSFERABLE. The Optionee's rights under this Agreement
          may not be transferred or assigned, and neither the Options nor any
          interest or right therein or part thereof shall be liable for the
          debts, contracts or engagements of the Optionee or his or her legal
          successors or shall be subject to disposition by transfer, alienation,
          anticipation, pledge, encumbrance, assignment or any other means,
          whether such disposition be voluntary or involuntary or occur by
          operation of law by judgement, levy, attachment, garnishment or any
          other legal or equitable proceedings (including bankruptcy), and any
          attempted disposition thereof shall be null and void and of no effect.
          Notwithstanding the foregoing, this Section 9 shall not prevent
          transfers by will or by the applicable laws of descent and
          distribution. All of the terms and provisions of this Agreement shall
          be binding on, and shall inure to the benefit of, the respective legal
          successors and assigns of the parties.

     10.  NO OBLIGATION TO EXERCISE OPTIONS. The grant and acceptance of these
          Options imposes no obligation on the Optionee to exercise.

     11.  ADJUSTMENTS. The Option Purchase Price and the number of shares of
          Common Stock subject to these Options shall be subject to adjustment
          from time to time in accordance with Section 7.1 of the Plan.

     12.  RIGHTS AS SHAREHOLDER. An Optionee shall have no rights as a
          stockholder of the Corporation with respect to any shares underlying
          the Options until the day of the payment of the Option Purchase Price
          in accordance with the terms and provisions hereof.

     13.  PAYMENT OF WITHHOLDING TAXES. Upon the Optionee's exercise of his or
          her Options in accordance with the provisions of this Option
          Agreement, the Optionee shall pay to the Corporation at the time of
          delivery of the notice and payment of the Purchase Price the amount of
          any federal, state or local income tax withholding or other employment
          related tax that may be due upon the exercise of the Options. The
          determination of the amount of any such federal, state or local income
          tax withholding or other employment tax due in such event shall be
          made by the Corporation and shall be binding upon the Optionee.

     14.  RESERVATION AND REGISTRATION OF SHARES. The Corporation shall at all
          times during the term of the Options reserve and keep available such
          number of shares of Common Stock as will be sufficient to satisfy the
          requirements of this Agreement. The Shares issuable upon the exercise
          of the Options are registered under the Securities Act of 1933 (the
          "Act") and the Corporation shall use its best efforts to maintain the
          registration under the Act of the Shares issuable upon exercise of the

          Option Agreement to the contrary notwithstanding, if, at any time
          specified herein for the issuance of Common Stock resulting from the
          exercise of these Options, any law, regulation or requirements of any
          governmental authority having jurisdiction in the premises shall
          require either the Corporation or the Optionee, in the judgment of the
          Corporation, to take any action in connection with the shares then to
          be issued, then the issue of such shares shall be deferred until such
          action shall have been taken.



          event that the outstanding shares of the stock subject to Options are,
          from time to time, changed into or exchanged for a different number or
          kind of shares of the Corporation or other securities of the
          Corporation by reason of a merger, consolidation, recapitalization,
          reclassification, stock split, stock dividend, combination of shares,
          or otherwise, the Corporation shall make an adjustment in the number
          and kind of shares and/or the amount of consideration as to which or
          for which, as the case may be, such Options, or portions thereof then
          unexercised, shall be exercisable, in such manner as the Corporation
          determines is reasonably necessary to maintain as nearly as
          practicable the rights, benefits and obligations that the parties
          would have had absent such event. Any such adjustment made by the
          Corporation shall be final and binding upon the Optionee, the
          Corporation and all other interested persons.


          (a)  Any notice to be given under the terms of this Agreement to the
               Corporation shall be addressed to Corporation as follows:

                  PRIMEDIA, Inc.
                  745 Fifth Avenue
                  New York, NY 10151
                  Attention: Secretary

               Any notice to be given to the Optionee shall be sent to the
               address given beneath his or her signature to this Agreement. By
               a notice given pursuant to this Section 17, either party may
               hereafter designate a different address for notices. Any notice
               that is required to be given to the Optionee shall, if the
               Optionee is then deceased, be given to the Optionee's personal
               representative if such representative has previously informed
               Corporation of his or her status and address by written notice
               under this Section 17. All notices and other communications under
               this Option Agreement shall be in writing and shall have been
               deemed duly given when delivered personally, mailed by registered
               mail, return receipt requested or sent by documented overnight
               delivery service.

          (b)  Titles are provided herein for convenience of reference only
               and are not to serve as a basis for interpretation or
               construction of this Option Agreement.

               (i)    This Option Agreement, the Options and any Shares issued
                      hereunder shall be subject to all of the terms and
                      provisions of the Plan to the extent applicable. In the
                      event of any conflict between this Option Agreement and
                      the Plan, the terms of the Plan shall control.

               (ii)   Notwithstanding the provisions of any agreement relating
                      to Optionee's employment heretofore entered into, none of
                      the Performance Vest Options shall vest upon a Change of

          (c)  No provision of this Option Agreement may be amended or modified
               except by an instrument or instruments in writing signed by the
               parties hereto. Any party may waive compliance by another with
               any of the provisions of this Option Agreement, provided that (a)
               no waiver of any provision hereof shall be construed as a waiver
               of any other provision or subsequent breach and (b) any such
               waiver shall be in writing. The failure



               of any party hereto to enforce at any time any provision hereof
               shall not be construed to be a waiver of such provision, nor in
               any way to affect the validity hereof of any part hereof or the
               right of any party thereafter to enforce each and every such

                      (d) To the extent not governed by the laws of the United
               States, including the Code, this Agreement shall be governed by,
               and construed and enforced in accordance with, the laws of the
               State of Delaware (without regard to conflicts of law principles
               for such state).

                      (e) Corporation and the Optionee hereby irrevocably submit
               to the jurisdiction of any New York or Delaware state court, or
               any Federal court in the Southern District of New York or in
               Delaware in any action or proceeding arising out of or relating
               to this Option Agreement, and the parties hereto irrevocably
               agree that all claims in respect of such action or proceeding
               shall be heard and determined only in such courts. Corporation
               and the Optionee hereby consent to and grant to any such court
               jurisdiction over the persons of such parties and over the
               subject matter of any such dispute and agree that delivery or
               mailing of any process or other papers in the manner provided in
               Section 17 herein, or in such other manner as may be permitted by
               law, shall be valid and sufficient service thereof.

          IN WITNESS WHEREOF, this Agreement has been executed and delivered by
     the parties hereto on the date first set forth above.

                                                   PRIMEDIA Inc.

                                                         Beverly C. Chell
                                                         Title: Vice Chairman


          Optionee Signature

          Optionee Name (Print):
          Social Security Number: