Exhibit 10.4
SEPARATION AND RELEASE
AGREEMENT
This Separation and Release
Agreement (“Agreement”), dated as of May 27, 2008,
is entered into by and between Robert Metz (“Metz”) and
PRIMEDIA Inc. (together with its subsidiaries and affiliates,
“PRIMEDIA”) (which, together with its successors,
subsidiaries, officers, and directors (as of the date of this
Agreement), are collectively referred to as the
“Beneficiaries”).
WHEREAS, PRIMEDIA and Metz entered
into a letter agreement regarding Metz’s employment with
Consumer Source Holdings Inc. (formerly known as Haas Publishing
Companies, Inc.), a subsidiary of PRIMEDIA, dated March 10,
2005 (the “Employment Letter Agreement”);
and
WHEREAS, Metz’s employment
with PRIMEDIA terminated, effective April 25, 2008 (the
“Termination Date”), and is being treated as a
termination without cause for purposes of the Employment Letter
Agreement; and
WHEREAS, the Employment Letter
Agreement requires that Metz enter into a separation and release
agreement in the form customarily used by PRIMEDIA; and
NOW, THEREFORE, in consideration of
the recitals, promises, and other good and valuable consideration
specified herein, the receipt and sufficiency of which is hereby
acknowledged, Metz and PRIMEDIA, on behalf of all the
Beneficiaries, agree as follows:
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1.
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TERMINATION
OF EMPLOYMENT.
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Effective as of the Termination
Date, Metz resigned from all positions held with PRIMEDIA,
including all positions on the board of directors of PRIMEDIA and
any committees thereof. The parties acknowledge that as of the
Termination Date Metz incurred a “separation from
service” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (“Section
409A”).
2.1 Payments . In accordance
with the terms of the Employment Letter Agreement, subject in each
case to the expiration of the Revocation Period (as defined in
Section 3.2 below), PRIMEDIA will pay to Metz the amounts
specified in this Section in consideration for Metz entering into
this Agreement, specifically including the General Release (as
described in Section 3 below) and other restrictive covenants
identified herein:
(a) Base Salary
Severance Payments . By no later than the sixtieth (60
th
) day following
the Termination Date, PRIMEDIA will commence payment to Metz an
aggregate amount equal to $787,500.00, which amount shall be
payable in substantially equal bi-weekly installments, in
accordance with PRIMEDIA’s regularly scheduled payroll dates,
during the eighteen month period following the Termination Date,
which amount represents eighteen months of Metz’s base salary
at the annual rate in effect on the Termination Date ($525,000).
For the avoidance of doubt, each bi-weekly payment referenced
herein constitutes a separate payment for purposes of
Section 409A.
(b) 2008 Pro Rata LTP Bonus
Payment . PRIMEDIA will pay to Metz, in a lump sum, and in lieu
of a prorated portion of the amount of the LTP bonus that would
have been payable to Metz under the Long Term Compensation Program
(the “LTCP”) in respect of 2008 if he had remained
employed with PRIMEDIA through December 31, 2008 (the
“LTP Bonus”), an aggregate amount equal to $74,155.00
(the “Pro Rata Bonus Amount”). PRIMEDIA will pay to
Metz the Pro Rata Bonus Amount in calendar year 2009, but in no
event later than March 31, 2009.
(c) Target Bonus Severance
Payment . PRIMEDIA will pay to Metz, in a lump sum, an amount
equal to $551,250.00, which amount represents the product of
(x) 1.5 and (y) Metz’s target PRIMEDIA Executive
Incentive Compensation Plan (the “EICP”) bonus as of
the end of calendar year 2008 (equal to 70% of his annual rate of
base salary as of the end of 2008). PRIMEDIA will pay to Metz this
amount in calendar year 2009, but in no event later than
April 15, 2009. Any other bonuses otherwise payable to Metz
under the EICP in respect of any completed calendar years that
remain unpaid as of the Termination Date shall be paid in full in
accordance with the EICP.
2.2 Equity
(a) Stock Option . With
respect to the outstanding options to purchase shares of common
stock of PRIMEDIA (“Stock”) held by Metz as of the date
hereof (the “Options”) that were granted to Metz prior
to December 31, 2004, notwithstanding the provisions of any of
the option award agreements pursuant to which Metz was granted such
Options (as amended, if applicable, the “Option
Agreements”), effective as of the Termination Date:
(a) all of the Options that have not already vested as of the
Termination Date shall remain outstanding and become vested on the
last day of the eighteen month period following the Termination
Date (the “Delayed Vesting Date”) and (b) all such
Options shall thereafter be exercisable until the later of
(i) the date such Options would have expired if they had been
exercisable immediately following the Termination Date pursuant to
the terms of the Option Agreements as in effect prior to the date
of this Agreement and (ii) thirty (30) days after the
Delayed Vesting Date. Except as set forth specifically herein,
nothing in this Section 2.2(a) shall be construed to amend,
alter, revise or change any other terms or conditions of the
applicable Option Agreements (including, without limitation,
PRIMEDIA’s right, in its sole discretion to accelerate the
vesting of the Options and otherwise terminate such Options
pursuant to the applicable PRIMEDIA Stock incentive plan under
which the Options were granted).
(b) Restricted Stock . With
respect to the restricted shares of Stock held by Metz as of the
date hereof (the “Restricted Stock”) that were granted
to Metz prior to December 31, 2004 and subject to
Section 2.4 below, notwithstanding the provisions of any of
the restricted stock award agreements pursuant to which Metz was
granted such Restricted Stock (as amended, if applicable, the
“Restricted Stock Agreements”), effective as of the
Termination Date: the shares of such Restricted Stock that have not
already vested as of the Termination Date shall remain outstanding
and become vested on the Delayed Vesting Date (or such earlier date
to which such vesting may be accelerated by PRIMEDIA in its sole
discretion under the applicable PRIMEDIA Stock incentive plan under
which the Restricted Stock were granted). Except as set forth
specifically herein, nothing in this Section 2.2(b) shall be
construed to amend, alter, revise or change any other terms or
conditions of the applicable Restricted Stock
Agreements.
2.3 Other Employee
Benefits
(a) Group Health Coverage .
Effective as of the Termination Date, Metz, his spouse and his
eligible dependents may 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
Termination Date and run through the period provided pursuant to
COBRA. PRIMEDIA shall provide Metz with the required COBRA notice
at such time as required under COBRA.
(b) Other Benefit Plans .
Metz shall be entitled to all benefits that he has accrued or in
which he has become vested under any tax-qualified retirement
benefit plans maintained by PRIMEDIA in accordance with their
terms.
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2.4 Tax Withholding .
PRIMEDIA may withhold from any amounts payable in cash under this
Agreement such Federal, state and local income, employment and
other taxes as may be required to be withheld in respect of any
payment and/or any benefit provided for under this Agreement
pursuant to any applicable law or regulation. Metz acknowledges
that, simultaneously with the vesting of the Restricted Stock on
the Delayed Vesting Date, Metz may be required to make arrangements
with PRIMEDIA prior to such date for the payment of any such taxes
as may be required to be withheld in respect of such
vesting.
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3.
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RELEASES;
METZ REPRESENTATIONS
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3. 1 General Release
.
For and in consideration of the
payment of the amounts and the provision of the benefits described
in Section 2 of this Agreement, Metz hereby agrees to execute
a release of all claims against the Beneficiaries in the form
attached as Exhibit I hereto (the “General Release”) on
the date of execution of this Agreement.
3.2 Metz’s Representations
and Warranties .
Metz represents that he has
carefully read and fully understands the terms of this Agreement,
and that Metz has been advised to consult with an attorney and has
availed himself of the opportunity to consult with an attorney
prior to signing this Agreement. Metz acknowledges and agrees that
he is executing this Agreement willingly, voluntarily and
knowingly, of his own free will, in exchange for the payments and
benefits described in Section 2 of this Agreement, and that he
has not relied on any representations, promises or agreements of
any kind made to him in connection with his decision to accept the
terms of this Agreement, other than those set forth in this
Agreement. Metz further acknowledges, understands, and agrees that
as of the Termination Date his employment with PRIMEDIA terminated,
that the provisions of Section 2 of this Agreement are in lieu
of any and all payments and benefits to which Metz may otherwise be
entitled to receive pursuant to the Employment Letter Agreement,
that Metz will not be reemployed by PRIMEDIA, and that Metz will
not apply for or otherwise seek employment with PRIMEDIA or any of
its parents, companies, subsidiaries, divisions or affiliates.
Metz understands that, except as otherwise expressly provided
for under this Agreement, he will not receive any payments or
benefits under this Agreement until the seven (7) day
revocation period provided for under the General Release has
passed, and then, only if he has not revoked the General Release
(such period during which no such revocation has occurred, the
“Revocation Period”).
3.3 PRIMEDIA’s
Representations and Warranties .
PRIMEDIA represents and warrants
that, as of May 27, 2008, it is not aware of any claims that
it has against Metz.
TO THE FULLEST EXTENT PERMITTED BY
LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF TH