EXHIBIT 10.32
EXECUTION COPY
SEPARATION AND RELEASE
AGREEMENT
This Separation and Release
Agreement (“Agreement”), dated as of March 8, 2004 (the
“Termination Date”), is entered into by and between
Thomas S. Rogers (“Rogers”) and PRIMEDIA, Inc.
(together with its subsidiaries and affiliates,
“PRIMEDIA”) (which, together with its successors,
subsidiaries, officers, directors and shareholders are collectively
referred to as the “Beneficiaries”).
WHEREAS, Rogers was employed by
PRIMEDIA pursuant to the Employment Agreement made and entered into
as of January 3, 2000, by and between PRIMEDIA and Rogers (the
“Employment Agreement”); and
WHEREAS, Rogers resigned as an
officer and director of PRIMEDIA effective as of April 17, 2003
(the “Trigger Date”), but has remained employed by
PRIMEDIA as an employee through the Termination Date;
and
WHEREAS, the parties have agreed to
treat Rogers’ resignation as an officer and director of
PRIMEDIA as a termination without “Cause” of Rogers
employment under Section 12(d) of the Employment Agreement, the
effective date of which shall be the Termination Date;
and
WHEREAS, Rogers and PRIMEDIA, on
behalf of all the Beneficiaries, have agreed to resolve and settle
any and all of their disputed claims and all differences between
them, including, but in no way limited to, any differences that
might arise in connection with Rogers’ employment with
PRIMEDIA, Rogers’ rights as an equityholder of PRIMEDIA, and
the termination of Rogers’ employment; 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, Rogers and PRIMEDIA, on behalf of all the
Beneficiaries, agree that, effective as of the close of business on
the Termination Date, Rogers’ employment with PRIMEDIA and
its affiliates shall terminate, and shall further agree as
follows:
1.
PAYMENTS AND BENEFITS TO
ROGERS
1.1
Cash Payments . Subject to the expiration of the
Revocation Period (as defined in Section 2.5(b) below), PRIMEDIA
will pay to Rogers the following amounts at the times and periods
specified in this Section 1.1:
(a)
Lump Sum Payment . On the Effective Date (as
defined in Section 8.2 of this Agreement), PRIMEDIA shall make a
lump sum payment to Rogers in an amount equal to the present value
of the excess of $2,580,000 over the total amount of base salary
paid to Rogers by PRIMEDIA in respect of the period beginning on
the Trigger Date and ending on the Termination Date, which excess
would otherwise be payable over the balance of the twenty-four
month period that commenced on the Trigger Date (the “Base
Salary Payment”). The Base Salary Payment shall be
calculated using as the discount rate the Applicable Federal Rate
specified under Section 1274 of the Internal Revenue Code of 1986,
as amended (the “Code”) for short-term Treasury
obligations (as published by the Internal Revenue Service for the
month in which the Termination Date occurs) (the “Discount
Rate”). Rogers hereby acknowledges and agrees that he
has, as of
the Termination Date, previously
received payment of his base salary from the Trigger Date through
the Termination Date, and that, when aggregated with the Base
Salary Payment, Rogers will have received payments in full
satisfaction of PRIMEDIA’s obligations under Section
12(d)(ii) of the Employment Agreement.
(b)
2003 Pro rata Annual Bonus Payment . On the Effective
Date, PRIMEDIA shall make a lump sum payment to Rogers in an amount
equal to $266,667.00, which represents Rogers’ pro rata
annual bonus payment for the period January 1, 2003 through
April 16, 2003, calculated under Section 12(d)(iii) of the
Employment Agreement.
(c)
Target Bonus Payments . On the Effective Date,
PRIMEDIA shall make a lump sum payment to Rogers in an amount equal
to the sum of (i) the product of (x) $1,600,000 and (y) a fraction,
the numerator of which shall equal the number of days between April
17, 2003 and the Termination Date and the denominator of which
shall equal 365 and (ii) the present value of the balance of
$1,600,000.00 otherwise payable over the period between the
Termination Date and April 16, 2005 (the “Target Bonus
Payment”). The Target Bonus Payment shall be calculated
using the Discount Rate, as provided for under Section 12(d)(iii)
of the Employment Agreement, in full satisfaction of
PRIMEDIA’s obligations thereunder.
(d)
Settlement Payment . On the Effective Date, PRIMEDIA
will pay to Rogers (i) an amount equal to $199,000.00 (the
“Settlement Payment”), which amount is equal to the sum
of (x) a payment to Rogers in settlement of any accrued vacation
pay ($59,000.00) and (y) an additional payment in settlement of
Rogers’ 2002 annual bonus ($140,000.00) and (ii) an amount
equal to any unpaid base salary accrued by Rogers through the
Termination Date.
(e)
Attorneys Fees . On the Effective Date, PRIMEDIA will
pay an aggregate amount of $195,000.00 to the law firm of Swidler
Berlin Shereff Friedman, LLP, for distribution Swidler Berlin
Shereff Friedman, LLP and The Bachelder Firm in respect of the
legal fees (including costs and expenses) incurred in respect of
the legal services of such firms provided to Rogers in connection
with the negotiation and settlement of the subject matter contained
in this Agreement.
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1.2
Stock Options and Restricted Shares .
(a)
4/5/6 Stock Options . On the Termination Date, the
options to purchase 3,000,000 shares of common stock of PRIMEDIA
(“PRIMEDIA Stock”) (such options, the “4/5/6
Options”) granted to Rogers pursuant to the Incentive and
Performance Stock Option Agreement dated as of April 16, 2002 (the
“4/5/6 Stock Option Agreement”) shall be fully vested
and exercisable, notwithstanding the provisions of Section 4(b) of
the 4/5/6 Stock Option Agreement. In addition,
notwithstanding the provisions of Section 6 of the 4/5/6 Stock
Option Agreement, all Options granted under the 4/5/6 Stock Option
Agreement (and not previously vested and exercised) shall remain
exercisable until April 16, 2012, and may not be exercised at any
time thereafter. Except as set forth specifically herein, nothing
in this Section 1.2(a) shall be construed to amend, alter, revise
or change any other terms or conditions of the 4/5/6 Stock Option
Agreement.
(b)
Initial Grant Options . All options to purchase
5,000,000 shares PRIMEDIA Stock (“Initial Options”, and
together with the 4/5/6 Options, the “Options”) granted
to Rogers pursuant to the Stock Option Agreement dated as of
December 3, 1999 (the “Original Stock Option
Agreement”) are by their terms fully vested and shall (to the
extent not previously vested and exercised) remain exercisable
until December 3, 2009, and may not be exercised at any time
thereafter. Except as set forth specifically herein, nothing
in this Section 1.2(b) shall be construed to amend, alter, revise
or change any other terms or conditions of the Original Stock
Option Agreement.
(c)
Rabbi Trust Restricted Shares . Pursuant to the
Restricted Stock Units Award Agreement between PRIMEDIA and Rogers
dated as of December 3, 1999 (the “RSU Agreement”) and
the Rabbi Trust Agreement by and between PRIMEDIA and U.S. Trust
Company, National Association (the “Trustee”), dated as
of December 31, 2000 (the “Trust Agreement”), subject
to Section 1.5(b) of this Agreement, PRIMEDIA shall instruct the
Trustee (as defined therein) to deliver to Rogers (or his
designated broker, to the extent so instructed) the 1,380,711
shares of PRIMEDIA Stock (the “Restricted Shares”) held
by the Trustee under the Trust Agreement as soon as practicable on
or after the Termination Date. PRIMEDIA shall pay all fees
and expenses related to the administration of the RSU Agreement and
the Trust Agreement, including the trustee’s and/or custodial
fees associated with the distribution of the Restricted
Shares.
(d)
Shares Issued Upon Option Exercise and Delivery of Restricted
Shares . All shares of PRIMEDIA Stock delivered pursuant
to the exercise of any Option described in Sections 1.2(a) and/or
1.2(b) of this Agreement, and/or pursuant to the RSU Agreement as
described in Section 1.2(c) of this Agreement, shall be (i) free
and clear of any lien, charge, encumbrance or other right in favor
of PRIMEDIA or the Trustee or created by PRIMEDIA, (ii) freely
transferable (subject to any trading restrictions imposed by law or
the exchange(s) on which such shares may trade from time to time)
and (iii) appropriately registered by PRIMEDIA on a Form S-8 (or
any successor form thereto) filed with the Securities Exchange
Commission for resale by Rogers.
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1.3
Other Employee Benefits .
(a)
Group Health Coverage . Effective as of the
Termination Date, PRIMEDIA shall continue to provide Rogers and his
eligible dependents with medical, vision and dental benefits
pursuant to PRIMEDIA’s health, vision and dental benefit
programs in effect from time to time, at such levels and at such
costs as made available to Rogers and his eligible dependents and
his eligible dependents immediately prior to the Termination Date
(“Medical Coverage”) until the earlier of (i) April 16,
2005 or (ii) the date or dates that Rogers becomes eligible for
coverage and benefits under the plans and programs of a subsequent
employer, as applicable. Notwithstanding the foregoing, (x)
as a condition to receiving the benefits under this Section 1.3(a)
and as required pursuant to PRIMEDIA’s health insurance
policy as in effect on the date hereof, Rogers shall elect to
receive group health insurance 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 (the “COBRA Coverage Period”), (y) the Medical
Coverage provided to Rogers by PRIMEDIA under this Agreement shall
be in full satisfaction of PRIMEDIA’s obligations to Rogers
with respect to the provision of health insurance under the
Employment Agreement and (z) upon the expiration of the Medical
Coverage as provided in the immediately proceeding sentence, Rogers
may continue to receive group health insurance coverage from
PRIMEDIA, at the same cost PRIMEDIA pays to provide such coverage
for the balance of the COBRA Coverage Period, as permitted under
COBRA. To the extent the Medical Coverage provided to Rogers
by PRIMEDIA as set forth above is subject to Federal, state or
local personal income, employment and other taxes (collectively,
the “Taxes”), PRIMEDIA will provide Rogers with an
additional payment, at the time such Taxes are payable, in an
amount such that, after payment of all such Taxes on such
additional payment, Rogers will retain an amount equal to the
amount of any such Taxes imposed on Rogers as a result of the
provision of such Medical Coverage.
(b)
Other Benefit Plans . PRIMEDIA acknowledges that it is
required under Section 13(d) of the Employment Agreement to
continue certain employee benefits for Rogers or, if such coverage
cannot be continued, to pay Rogers an amount sufficient to obtain,
on an after-tax basis, equivalent coverage. Rogers hereby
acknowledges that the terms of those PRIMEDIA benefit plans that
provide the benefits listed on Schedule B, attached hereto, do not
permit Rogers to continue to participate in such plans (unless
otherwise specified in Schedule B) following the Termination
Date. In connection with the foregoing, Schedule B hereto (i)
lists the benefits PRIMEDIA is required to continue and (ii)
specifies whether PRIMEDIA will continue such coverage or provide
Rogers with cash payments that are sufficient for Rogers to obtain
benefits that are equivalent to the benefits to which Rogers was
entitled immediately prior to the Termination Date, as set forth on
Schedule B (the “Benefit Payments”). The Benefit
Payments shall be payable in such amounts, and at such times, as
are set forth on Schedule B. To the extent the Benefit Payments are
subject to Federal, state or local income, employment and other
Taxes, PRIMEDIA will provide Rogers with an additional payment (the
“Benefit Tax Payment”), at the time each Benefit
Payment is payable pursuant to Schedule B, in an amount such that,
after payment of all such Taxes, Rogers will retain an amount equal
to the corresponding Benefit Payment. Rogers hereby
acknowledges and agrees that the amounts set forth on Schedule B
attached hereto with respect to each of the particular
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benefit or
coverage identified on such schedule (which, for the avoidance of
doubt, includes all Benefit Payments and the corresponding Benefit
Tax Payments) are sufficient for Rogers to purchase benefits that
are equivalent to those corresponding benefits that he was eligible
to receive immediately prior to the Termination Date, as identified
on Schedule B.
1.4
Office Accommodations and Equipment; Reimbursement of
Expenses .
(a)
For the period commencing November 1, 2003 and ending on April 16,
2004 (the “Lease Period”), PRIMEDIA shall pay TRget
Media LLC, $53,188.00 (the “Lease Payment”) in a single
lump sum on the Effective Date for the office accommodations
identified on Schedule C. In addition, during the Lease
Period, PRIMEDIA shall provide to Rogers the equipment and services
(including reimbursement for utilities and other expenses, as
applicable) set forth on Schedule C, in accordance with the terms
of Schedule C, and transfer title to Rogers (to the extent PRIMEDIA
itself holds title) of the following: (i) any computer and
telecommunications office equipment (including fax machines,
blackberry e-mail devices, telephones, and cell phones) located at
Rogers’ residence as of the Termination Date and (ii) all
furnishings, file cabinets and office equipment maintained at
Rogers’ current office.
(b)
On the Effective Date, PRIMEDIA shall make a lump sum payment to
Rogers to reimburse Rogers in full for costs incurred from the
Trigger Date to the Termination Date for office or home office,
computer and telecommunications equipment or services not
previously reimbursed by PRIMEDIA, which costs have been documented
and which documentation has been submitted by Rogers to PRIMEDIA
prior to the date of this Agreement or which shall be submitted by
Rogers within five business days of the Termination
Date.
1.5
Tax Withholding .
(a)
Withholding Generally . All payments made under this
Agreement (with the exception of the payment of attorneys fees and
the payments, transfers and services described in Section 1.4 and
Schedule C (the “Office Payments”)) shall be treated as
supplemental wage payments (the applicable rate of which, as of the
date hereof, is 26% of any such payment for Federal income tax
purposes) for purposes of Federal, state and local tax
withholding. Subject to Section 1.5(b), PRIMEDIA may withhold
from any amounts payable in cash under this Agreement (other than
the attorneys fees and the Office Payments) such 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, including, without limitation,
supplemental wage payments, and an amount in respect of the
applicable withholding liability arising upon the distribution of
the Restricted Shares to Rogers as provided in Section 1.2(c) of
this Agreement. For the avoidance of doubt, PRIMEDIA shall not
withhold any Taxes from the attorneys’ fees or the Office
Payments.
(b)
Withholding in respect of Restricted Shares . In
connection with the payment to PRIMEDIA by Rogers of the applicable
withholding liability in respect of the Taxes payable upon the
distribution of the Restricted Shares, determined in a manner
consistent with Section 1.5(a) above (the “Restricted Share
Withholding Liability”),
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PRIMEDIA shall
deliver to the Trustee the Payment Schedule (as defined in the
Trust Agreement) as required under the terms of the Trust
Agreement, which Payment Schedule shall provide that, on the
Termination Date, the Trustee will transfer (i) a number of
Restricted Shares having a fair market value (calculated based on
the closing price of one share of common stock of PRIMEDIA on the
first trading day immediately preceding the Termination Date) equal
to the amount of the Restricted Share Withholding Liability (the
“Withholding Shares”) to a broker designated in writing
by Rogers (the “Broker”) and (ii) the remainder of the
Restricted Shares directly to Rogers (or his Broker or other agent
as Rogers may designate in writing). In addition, Rogers
shall deliver irrevocable instructions to the Broker to sell on the
Termination Date all of the Withholding Shares it receives from the
Trustee, and to promptly remit all proceeds from such sale to
PRIMEDIA. In the event that such sales proceeds do not
satisfy the amount of the Restricted Share Withholding Liability,
Rogers shall promptly pay to PRIMEDIA in cash any such
shortfall. In the event that such sales proceeds are in
excess of the amount of the Restricted Share Withholding Liability,
PRIMEDIA shall promptly pay to Rogers in cash any such
excess.
1.6
Full Satisfaction of Potential Claims . Rogers hereby
acknowledges and agrees that his receipt of all payments and
benefits provided in Section 1 of this Agreement constitutes full
and final payment, accord and satisfaction of any and all potential
claims described in Section 2 of this Agreement against the Company
Releasees (as defined therein) and that, except as provided in
Section 1.3 of this Agreement, no benefits or payments provided for
herein shall be reduced on account of any subsequent employment or
engagement of Rogers.
2.
RELEASES AND
REPRESENTATIONS
2.1
Rogers Release . For and in consideration of the
payment of the amounts described in Section 1 of this Agreement,
Rogers hereby agrees on behalf of himself, his agents, assignees,
attorneys, successors, assigns, heirs and executors, to, and Rogers
does hereby, fully and completely forever release the Beneficiaries
and their respective past, current and future affiliates,
predecessors and successors and all of their respective past and/or
present officers, directors, partners, members, managing members,
managers, employees, agents, representatives, administrators,
attorneys, insurers and fiduciaries, in their individual and/or
representative capacities (hereinafter collectively referred to as
the “Company Releasees”), from any and all causes of
action, suits, agreements, promises, damages, disputes,
controversies, contentions, differences, judgments, claims, debts,
dues, sums of money, accounts, reckonings, bonds, bills,
specialities, covenants, contracts, variances, trespasses, extents,
executions and demands of any kind whatsoever, which Rogers or his
agents, assignees, attorneys, successors, assigns, heirs and
executors ever had, now have or may have against Company Releasees
or any of them, in law, admiralty or equity, whether known or
unknown to Rogers, for, upon, or by reason of, any matter, action,
omission, course or thing whatsoever occurring up to the date this
Agreement is signed by Rogers (such date, as set forth on the
signature page attached hereto, the “Execution Date”),
including, without limitation, in connection with or in
relationship to Rogers employment or other service relationship
with PRIMEDIA, the termination of any such employment or service
relationship and any applicable employment, compensatory or equity
arrangement with PRIMEDIA (including, without limitation, the
Employment Agreement, any exhibits attached thereto, any amendments
thereto, and any equity or employee benefit plans, programs,
policies or other arrangements), any claims of breach of contract,
wrongful termination, retaliation, fraud, defamation, infliction of
emotional distress or national origin,
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race, age, sex, sexual orientation,
disability, medical condition or other discrimination or
harassment, (such released claims are collectively referred to
herein as the “Released Claims”); provided that
such Released Claims shall not include any claims (i) to enforce
Rogers’ rights or obligations under, or specifically referred
to in, this Agreement, (ii) related
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