Second Amendment to Employment Agreement between PRIMEDIA Inc. and David Ferm

Summary

This document is a second amendment to the employment agreement between PRIMEDIA Inc. and David Ferm. It updates Ferm's job title, extends his employment through December 31, 2003, sets his annual base salary at $700,000, and removes his eligibility for a special incentive program. Additionally, it grants Ferm 100,000 stock options with specific vesting schedules and performance-based accelerated vesting tied to company EBITDA targets. The amendment is effective upon execution by both parties.

EX-10.26 26 a2096166zex-10_26.txt EXHIBIT 10.26 EXHIBIT 10.26 June 20, 2002 Mr. David Ferm Dear David: This letter, when executed by you, will serve as a second amendment to your employment agreement dated February 25, 2000 (the "Agreement"). The Agreement shall be amended as follows: 1. Section 1a of the Agreement shall be amended such that Employee's title shall be Executive Vice President of the Company and President of Magazine and Media Group. 2. Section 2 of the Agreement shall be amended such that the Expiration Date shall now be December 31, 2003. 3. Section 3a shall be revised back to its original language such that Employee's annual base salary shall be $700,000. The additional language in the first amendment referencing a special incentive program shall be deleted and Employee shall no longer be eligible for such program. 4. Employee shall receive additional stock options as set forth on the attachment hereto. PRIMEDIA Inc. By: /s/ Michaelanne C. Discepolo -------------------------------- Name: Michaelanne C. Discepolo Title: Executive VP, Human Resources AGREED TO AND ACCEPTED: /s/ David Ferm - --------------------- David Ferm ATTACHMENT TO JUNE 20, 2002 SECOND AMENDMENT TO FEBRUARY 28, 2000 EMPLOYMENT AGREEMENT Number of Options Granted: 100,000 Grant Date: July 1, 2002 Expiration Date: Tenth Anniversary of Grant Date Exercise Price: 30,000 at $4 Tranche I 30,000 at $5 Tranche II 30,000 at $6 Tranche III 10,000 at $6 Tranche IV Regular Vesting: Tranche I In annual installments of 25% on each of first four anniversary dates of Grant Date. Tranche II-IV Eighth Anniversary of Grant Date. Accelerated Vesting: Tranche II December 31, 2003 if 2003 calendar year EBIDTA is GREATER THAN OR EQUAL TO $300 mm. Tranche III December 31, 2003 if 2003 calendar year EBIDTA is GREATER THAN OR EQUAL TO $340 mm. December 31, 2004 if 2004 calendar year EBIDTA is GREATER THAN OR EQUAL TO $340 mm. Tranche IV December 31, 2003 if 2003 calendar year EBIDTA is GREATER THAN OR EQUAL TO $380 mm. December 31, 2004 if 2004 calendar year EBIDTA is GREATER THAN OR EQUAL TO $380 mm. December 31, 2005 if 2005 calendar year EBIDTA is GREATER THAN OR EQUAL TO $380 mm Termination Date: For unvested options, Date of Termination, and for vested options, 90 days after the Date of Termination.

Mr. David Ferm Dear David: This letter, when executed by you, will serve as an amendment to your employment agreement dated February 25, 2000 (the "Agreement"). The Agreement shall be amended as follows: 1. Section 2 of the Agreement shall be amended such that the words "the second anniversary of the Start Date" shall be deleted and replaced with the following: "March 31, 2003". 2. Section 3a shall be amended such that Employee's annual base salary shall be changed from $700,000 to $670,000. In addition, the following language shall be added to the end of Section 3a: "In addition, Employee shall be eligible to participate in a special incentive program as outlined in the memorandum attached hereto." 3. Section 3b shall be amended be adding the following to the end of Section 3b: "For purposes of calculating the annual incentive awards under this section, your annual base salary shall be deemed to be $700,000." 4. For purposes of Section 7(a) and (c) of the Agreement, the maximum amount payable to you under the special incentive program shall be treated as your "target bonus" is treated under Section 7(a) or as your "earned pro rata bonus under Section 3(b)" is treated under Section 7(b)." PRIMEDIA Inc. By: /s/ Michaelanne C. Discepolo 4/3/02 ------------------------------------- Michaelanne C. Discepolo Executive Vice President, Human Resources PRIMEDIA, Inc. AGREED TO AND ACCEPTED: /s/ David Ferm 4/30/02 - ------------------------------ David Ferm Date