FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of _______________ __, 2001, is made by and
between PRIMEDIA Inc., a Delaware corporation hereinafter referred to as the
"Corporation", and [ ], an employee of the Corporation or an Affiliate of
the Corporation, hereinafter referred to as "Optionee".
WHEREAS, the Corporation wishes to afford the Optionee the
opportunity to purchase shares of its common stock, $.01 par value (the "Common
Stock");
WHEREAS, the Corporation wishes to carry out the Plan (as
hereinafter defined), the terms of which are hereby incorporated by reference
and made a part of this Agreement; and
WHEREAS, the Committee (as defined below) has determined that it
would be to the advantage and best interest of the Corporation and its
stockholders to grant the Option (as hereinafter defined) provided for herein to
the Optionee as an incentive for increased efforts during his term of office
with the Corporation or its Affiliates, and has advised the Corporation thereof
and instructed the undersigned officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 - BOARD
"Board" shall mean the Board of Directors of the Corporation.
SECTION 1.2 - CAUSE
"Cause" shall have the same meaning as in the Employment Agreement.
SECTION 1.3 - CHANGE OF CONTROL
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) a transaction or series of related transactions whereby KKR
Associates and/or its affiliates ("KKR") 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 assets;
(c) all or substantially all of the assets or business of the
Corporation are 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 securities of the Corporation, all of the voting securities or
other ownership interests of the entity or entities, if any, that succeed
to the business of the Corporation); or
(d) the Corporation combines with another company 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 securities of the
combined company (there being excluded from the number of shares held by
such shareholders, but not from the voting securities of the combined
company, any shares received by Affiliates of such other company in
exchange for stock of such other company).
SECTION 1.4 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.5 - COMMITTEE
"Committee" shall mean the Compensation Committee of the
Corporation.
SECTION 1.6 - DIMINUTION
"Diminution" shall have the same meaning as in the Employment
Agreement.
SECTION 1.7 - DISABILITY
"Disability" shall have the same meaning as in the Employment
Agreement.
SECTION 1.8 - EMPLOYMENT AGREEMENT
"Employment Agreement" shall mean the employment agreement between
the Corporation and the Optionee dated October 29, 2000.
SECTION 1.9 - GOOD REASON
"Good Reason" shall have the same meaning as in the Employment
Agreement.
SECTION 1.10 - GRANT DATE
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"Grant Date" shall mean the date on which the Option provided for in
this Agreement was granted.
SECTION 1.11 - PLAN
"Plan" shall mean the 2001 PRIMEDIA Inc. Stock Incentive Plan.
SECTION 1.12 - RETIREMENT
"Retirement" shall mean retirement at age 65 or over (or such other
earlier date as the Committee may approve) after having been employed by the
Corporation or any Subsidiary or Affiliate for at least three years after the
Grant Date.
SECTION 1.13 - SECRETARY
"Secretary" shall mean the Secretary of the Corporation.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
For good and valuable consideration, on and as of the date hereof,
the Corporation irrevocable grants to the Optionee an Option to purchase [____]
shares of Common Stock upon the terms and condition set forth in this Agreement.
SECTION 2.2 - EXERCISE PRICE
Subject to Section 2.4, the exercise price of the shares of Common
Stock covered by the Option shall be $[ ] per share.
SECTION 2.3 - CONTINUED EMPLOYMENT
Nothing in which Agreement or in the Plan shall confer upon the
Optionee any right to continue in the employ of the Corporation or any
Subsidiary or Affiliate or shall interfere with or restrict in any way the
rights of the Corporation and its Subsidiaries or Affiliates, which are hereby
expressly reserved, to terminate the employment of the Optionee at any time for
any reason whatsoever, with or without Cause.
SECTION 2.4 - ADJUSTMENTS IN OPTION PURSUANT TO MERGER, CONSOLIDATION, ETC.
Subject to Section 8 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number of kind of shares of the Corporation or other
securities by reason of a merger, consolidation, recapitalization,
reclassification, change of control, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number of kind of shares or securities and/or the amount of
consideration as to which or for which, as the case may be, such Option, or
portions thereof then unexercised, shall
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be exercisable. Any such adjustment made by the Committee shall be final and
binding upon the Optionee, the Corporation and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) The Option granted hereby shall become exercisable with respect
to 25% of the Shares subject to the Option on and after the first
anniversary of the Grant Date. The Option shall become exercisable with
respect to an additional 25% of the Shares subject to the Option on each
anniversary thereafter.
(b) Notwithstanding the foregoing, the Option shall become
immediately exercisable (A) as to 100% of the shares of Common Stock
subject to such Option upon the Optionee's termination of employment (i)
by the Corporation without Cause, (ii) due to the Optionee's death or
Disability or (iii) due to the Optionee's resignation with Good Reason
(but only to the extent such option has not otherwise terminated or become
exercisable) and (B) as to 50% of the shares of Common Stock subject to
such option that have not otherwise become exercisable upon a termination
of employment by the Optionee due to a Diminution (but only to the extent
such option ahs not otherwise been terminated). Upon any other termination
of employment, no Option shall become exercisable as to any additional
shares of Common Stock. Any option which is non-exercisable as of the
Optionee's termination of employment shall be immediately canceled.
(c) Notwithstanding the foregoing, the Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject
to such option immediately prior to a Change of Control (but only to the
extent such option has not otherwise terminated or become exercisable).
SECTION 3.2 - EXPIRATION OF OPTION
Except as otherwise provided in this Agreement, the Option may not
be exercised to any extent by the Optionee after the first to occur of the
following events:
(a) the tenth anniversary of the Grant Date; or
(b) the first anniversary of the date of the Optionee's termination
of employment by reason of death, Disability or Retirement; or
(c) the 90th business day after termination of employment of the
Optionee for any reason other than for Cause, death, Disability or
Retirement; or
(d) the date of an Optionee's termination of employment by the
Corporation for Cause; or
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(e) if the Committee so determines pursuant to Section 9 of the
Plan, the effective date of either the merger or consolidation of the
Corporation into another Corporation, or the exchange or acquisition by
another corporation of all or substantially all of the Corporation's
assets or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of the
Corporation. At least ten (10) days prior to the effective date of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, the Committee shall give the
Employee notice of such event if the Option has then neither been fully
exercised nor becomes unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of an Option may, prior to the time when an Option becomes unexercisable under
Section 3.2, be exercised by his 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.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; PROVIDED, HOWEVER, that any partial exercise shall be for whole shares of
Common Stock only.
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised
solely be delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) full payment (in cash, by check or by a combination thereof) of
the Option Price for the shares with respect to which such Option or
portion thereof is exercised;
(c) a bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares or stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the
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Corporation against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Corporation if any sale or
distribution o the shares by such person in contrary to the representation
and agreement referred to above; PROVIDED, HOWEVER, that the Committee
may, in its absolute discretion, take whatever addition actions it deems
appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Act and any
other federal or state securities laws or regulations;
(d) full payment to the Corporation of all amounts which, under
federal, state or local law, it is required to withhold upon exercise of
the Option; and
(e) in the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option.
Without limiting the generality of the foregoing, the Committee may
require an opinion of counsel acceptable to it to the effect that any subsequent
transfer of shares acquired on exercise of an Option does not violate the Act,
and may issue stop-transfer orders covering such shares. The written
representation and agreement referred to in subsection (c) above shall, however,
not be required if the shares to be issued pursuant to such exercise have been
registered under the Act, and such registration is then effective in respect of
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of
subsection (c) above and the agreements herein.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Corporation. Such shares
shall be fully paid and nonassessable. The Corporation shall not be required to
issue or deliver any certificate or certificates for shares of stock purchased
upon the exercise of the Option or portion thereof prior to fulfillment of all
of the following conditions:
(a) the obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) the lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Corporation in respect of any shares
purchasable upon the exercise of the Option or any portion thereof unless and
until certificates representing such shares shall have been issued by the
Corporation to such holder.
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ARTICLE V
MISCELLANEOUS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
applicable 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, the
Corporation and all other interested person. 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 the Option. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and Agreement.
SECTION 5.2 - OPTION NOT TRANSFERABLE
Except as otherwise provided by the Committee, neither the Option
nor any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest 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 by operation of law by judgment, 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; PROVIDED,
HOWEVER, that this Section 5.2 shall not prevent transfers made by will or by
the applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Corporation shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the
Corporation shall be addressed to the Corporation in case of its Secretary, and
any notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which 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 the Corporation of
his status and address by written notice under this Section 5.4. Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
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SECTION 5.6 - APPLICABILITY OF PLAN
The Option and the shares of Common stock issued to the Optionee
upon exercise of the Option shall be subject to all of the terms and provisions
of the Plan. In the event of any conflict between this Agreement and the Plan,
the terms of the Plan shall control.
SECTION 5.7 - AMENDMENT
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Delaware (or if the Corporation
reincorporates in another state, the laws of that state) shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
SECTION 5.9 - JURISDICTION
Any suit, action or proceedings against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
(or if the Corporation reincorporates in another state, in that state), as the
Corporation may elect in its sole discretion, and the Optionee hereby submits to
the non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. The Optionee hereby irrevocably waives any
objections which he may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any court of competent jurisdiction in the State of Delaware (or if the
Corporation reincorporates in another sate, in that state), and hereby further
irrevocably waives any claim that any such suit, action or proceedings brought
in any such court has been brought in any inconvenient forum. No suit, action or
proceedings against the Corporation with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the State
of Delaware (or if the Corporation reincorporates in another state, in that
state), and the Optionee hereby irrevocably waives any right which he may
otherwise have had to bring such an action in any other court, domestic or
foreign, or before nay similar domestic or foreign authority. The Corporation
hereby submits to the jurisdiction of such courts for the purpose of any such
suit, action or proceeding.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
PRIMEDIA INC.
___________________________
Optionee
By_____________________________
___________________________ Name:
Title:
___________________________
Address
Optionee's Taxpayer
Identification Number:
________________________
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