Exhibit 3
AGREEMENT TO TERMINATE OPTION AGREEMENT
AND STOCKHOLDERS' AGREEMENT
AND TO AMEND EMPLOYMENT AGREEMENT
This Agreement to Terminate Option Agreement and Stockholders'
Agreement and to Amend Employment Agreement is made and entered into as of the
23rd day of April, 1999, by and between CMP MEDIA INC., a Delaware corporation
(the "Company"), and XXXXXXX X. XXXXX ("Xxxxxxx").
WHEREAS, the Company and Xxxxxxx are parties to an Option Agreement
dated as of November 27, 1996 (the "Option Agreement") under which Xxxxxxx holds
an option to purchase a total of 755,040 shares of Class A Common Stock of the
Company; and
WHEREAS, the Company and Xxxxxxx are parties to an Employment Agreement
dated as of November 27, 1996 (the "Employment Agreement") under which Xxxxxxx
is entitled to be paid severance by the Company in the event his employment with
the Company is terminated by reason of his Dismissal Without Cause or his
Resignation for Good Reason (as defined therein), provided that he complies with
certain restrictive covenants concerning the Company as set forth in the
Employment Agreement; and
WHEREAS, the Company, Xxxxxxx, Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx
are parties to a Stockholders' Agreement dated as of November 27, 1996
(the "Stockholders' Agreement") under which Xxxxxxx holds 566,280 restricted
shares of Class A Common Stock of the Company; and
WHEREAS, the Company is presently exploring strategic alternatives
which may include a merger or sale of the Company resulting in a Change in
Control (as defined in the Option Agreement and the Employment Agreement) (such
merger or sale hereinafter referred to as a "Transaction"); and
WHEREAS, potential parties to a Transaction have indicated that
uncertainty regarding Michael's rights under the Option Agreement following
consummation of a Transaction may present impediments to a proper valuation of
the Company and to a successful consummation of a Transaction; and
WHEREAS, to facilitate the Company's consummation of a Transaction,
Xxxxxxx is willing to waive all his rights under the Option Agreement (including
his right to exercise any options thereunder) and to terminate the Option
Agreement, in exchange for which the Company is willing to modify certain
provisions of the Employment Agreement and terminate the Stockholders'
Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties, the parties
hereto, intending to be legally bound, hereby covenant and agree as follows:
Section 1. TERMINATION OF OPTION AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Option Agreement shall terminate in its entirety immediately
preceding the consummation of such Transaction, and neither Xxxxxxx nor the
Company shall have any further rights or obligations thereunder. In furtherance
but not in limitation of the foregoing, upon the consummation of a Transaction
(a) every option to purchase shares of Class A Common Stock of the Company under
the Option Agreement shall expire and all rights thereunder shall be
extinguished, and (b) Xxxxxxx shall not be subject to any pre- or
post-employment covenants under the terms of the Option Agreement.
Section 2. AMENDMENT OF EMPLOYMENT AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Employment Agreement shall be automatically and without
further action of the parties amended as of the business day immediately
preceding the consummation of such Transaction as follows:
(a) Section 3.3(a)(A) shall be amended to read in its entirety as follows:
"(A) On his own behalf or on behalf of any other person or entity,
(1) participates or is involved in or has direct responsibility for the
day-to-day management or operation of a Competitive Business; (2) owns,
in whole or in part, beneficially or of record, directly or indirectly,
an equity interest (or an interest convertible into equity) in a
Competitive Business; or (3) renders services to a Competitive Business
as a director, officer, employee or independent sales representative or,
to the extent such services relate directly to the activities of such
Competitive Business that compete with a CMP Business, as a consultant,
advisor or agent. (By way of illustration, services rendered to a
Competitive Business as an investment banker would not in themselves be
deemed to relate directly to such activities of such Competitive Business.)"
(b) Section 3.3(a)(D) shall be amended to read in its entirety as follows:
"(D) Employs or causes any person or entity other than the CMP Group to
employ any former employee of the CMP Group within six (6) months after
the voluntary resignation of such former employee from the CMP Group."
(c) Section 3.3(a)(F) shall be amended to read in its entirety as follows:
(F) Communicates publicly (other than pursuant to subpoena in a legal
proceeding) or to the press, or writes or produces for publication in any
medium, on the subject of, or with express or implied reference to, the
CMP Group in a manner intended to disparage the CMP Group or any of their
former or current stockholders, directors, officers or employees in their
capacities as such. For the purpose hereof, "implied reference" shall
mean a reference that does not expressly name the CMP Group or any of
their former, current or future stockholders, directors, officers or
employees but that nevertheless would be understood by the average reader
or audience-member to refer thereto. Notwithstanding the foregoing, if
the CMP Group or any of their former or current stockholders, directors,
officers or employees publicly disparage Xxxxxxx, it shall not be deemed
a violation of this clause (F) for Xxxxxxx to communicate publicly in
reasonable response to such disparagement.
(d) Section 3.3(b) shall be amended to read in its entirety as follows:
"(b) Notwithstanding the provisions of paragraph (a) of this Section 3.3,
Xxxxxxx shall not be deemed to be engaged in competition with the CMP
Group solely by reason of Michael's ownership of (i) a direct or indirect
equity interest of five percent (5%) or less in the securities of a
Competitive Business or (ii) an interest in a mutual fund which owns an
interest in a Competitive Business, provided that Xxxxxxx has no
influence or control over the selection of such mutual fund's investment
decisions."
(e) Section 3.5(c) shall be amended to read in its entirety as follows:
"(c) During the period in which the Company is making payments to Xxxxxxx
pursuant to Article IV, Xxxxxxx shall, at such times as the Company may
reasonably request and as do not unreasonably interfere with Michael's
other permitted business activities or commitments, provide information,
testimony and assistance in connection with the prosecution or defense of
any claims by or against the Company (other than any claims with respect
to which Xxxxxxx is an adverse party) arising out of matters of
which he acquired knowledge while an employee of the Company. The Company
shall reimburse Xxxxxxx for all reasonable out-of-pocket expenses he
incurs in rendering such assistance."
(f) Section 3.5(d) shall be amended to read in its entirety as follows:
"(d) During the period in which the Company is making payments to Xxxxxxx
pursuant to Article IV, Xxxxxxx shall not willfully make any oral or
written statement which reflects adversely upon the character, honesty,
credit, efficiency or business practices of the CMP Group or its former
or current stockholders, directors, officers or employees in their
capacities as such. Notwithstanding the foregoing, if the CMP Group makes
any oral or written statement which reflects adversely upon the
character, honesty, credit, efficiency or business practices of Xxxxxxx,
it shall not be deemed a violation of this paragraph (d) for Xxxxxxx to
communicate publicly in reasonable response thereto."
(g) Section 4.1 shall be amended in its entirety as follows:
"(a) In the event that Michael's employment with the Company terminates
by reason of his Dismissal Without Cause or his Resignation For Good
Reason, the Company shall, in consideration of Michael's compliance with
the restrictive covenants set forth in Article III and in lieu of any
other severance obligations to Xxxxxxx, provide the following:
(i) The Company shall pay Xxxxxxx through the period ending
on the earlier of (A) the third anniversary of the date of his
termination of employment or (B) the date Xxxxxxx attains the age of
sixty-five (65) (the "Severance Period"), an annual amount of
$1,849,840. Payments shall be made in bi-weekly installments or on
such other periodic basis as the Company then makes salary payments
to its employees generally.
(ii) If Xxxxxxx elects to receive continued healthcare
coverage from the Company pursuant to the provisions of Section 601
et seq. of ERISA ("COBRA"), the Company shall continue to pay a share
of the applicable premiums for such COBRA coverage so that the cost to
Xxxxxxx (excluding any tax benefits provided by the Company Code
Section 125 premium conversion plan) shall be no greater than the cost
to Xxxxxxx for healthcare coverage while he was actively employed
immediately prior to his termination of employment. To the extent that
the Severance Period extends beyond the COBRA period and Xxxxxxx elects
to convert to an individual insurance policy at the end of the COBRA
period, the Company shall pay a portion of the conversion premium
through the balance of the Severance Period so that the net cost to
Xxxxxxx (excluding any tax benefits provided by the Company Code
Section 125 premium conversion plan)
shall be no greater than the cost to Xxxxxxx for healthcare coverage
while he was actively employed immediately prior to his termination of
employment. The obligation of the Company with respect to healthcare
coverage hereunder shall terminate in the event that Xxxxxxx becomes
covered under the group healthcare plan of another person or entity
providing comparable benefits.
(iii) For a period of six (6) months from the date of
Michael's termination of employment (or from such later date as, at the
Company's request, he continues to have use of the Company's voice-mail
and e-mail systems), (A) Xxxxxxx xxx continue to use the mailboxes in
the Company's voice-mail system which were assigned to him during his
employment, and (B) the Company shall cause all e-mails which are sent
to the mailboxes in the Company's e-mail system which were assigned to
him during his employment to be forwarded to such e-mail mailboxes
outside the Company's email systems as he may designate, provided that
he shall promptly forward to such person as the Company may designate
any e-mail communications he receives which relate to the business of
the Company. Xxxxxxx shall be entitled to retain the Company laptop
computer (including software other than network access software), Palm
Pilot, home fax machine and home printer which he is using as of the
date of his termination of employment, provided that he first gives the
Company access to the laptop computer so that the Company may remove
any Company confidential information resident thereon.
"(b) In addition, the Company shall have the right, but not the
obligation, to require Michael's continued compliance with the
restrictive covenants set forth in Article III for up to two (2) years
after the expiration of the period for which the Company is obligated
to pay Xxxxxxx under paragraph (a) of this Section 4.1, in
consideration of which the Company shall continue to pay Xxxxxxx,
during the period of time elected by the Company, on the same basis and
in the same manner as set forth in paragraph (a) of this Section 4.1.
Such right shall be exercisable by the Company by giving Xxxxxxx
written notice of exercise no later than six (6) months after
termination of his employment with the Company."
(h) The definition of "CMP Business" in Article VII shall be amended to read in
its entirety as follows:
"`CMP BUSINESS' shall mean any publication, product or service that, on
the
date of the Transaction, (a) the CMP Group publishes, produces or
provides or (b) the CMP Group has a bona fide plan or intention to
publish, produce or provide within the succeeding 12-month period, the
research and development of which the CMP Group has devoted substantive
time and attention to, and which plan or intention Xxxxxxx has actual
knowledge of before he engages in any activity competitive with such
CMP Business as contemplated by clause (A) of Section 3.3(a)."
(i) The definition of "CMP Group" in Article VII shall be amended to read in its
entirety as follows:
"`CMP GROUP' shall mean the Company or any subsidiary in which it holds
a majority interest."
(j) A definition of "Competitive Business" shall be inserted in Article VII to
read in its entirety as follows:
"`COMPETITIVE BUSINESS' shall mean (a) any publication, product or
service that competes directly with a CMP Business or (b) any business
more than 15% of the gross revenue of which is earned from one or more
publications, products or services that compete directly with one or more
CMP Businesses."
(k) The definitions of "Direct Competitor", "Directly Competitive Company",
"Indirect Competitor" and "Indirectly Competitive Company" shall be deleted from
Article VII in their entirety.
Section 3. TERMINATION OF STOCKHOLDERS' AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, and, in connection therewith, Xxxxxxx xxxxx the restricted shares
of Class A Common Stock which he holds under the Stockholder' Agreement, the
Stockholders' Agreement shall terminate in its entirety immediately upon his
sale of such shares, and no party thereto shall have any further rights or
obligations thereunder. In furtherance but not in limitation of the foregoing,
following his sale of such shares Xxxxxxx shall not be subject to any pre- or
post-employment covenants under the terms of the Stockholders' Agreement.
Section 4. EFFECTIVENESS OF AGREEMENT.
This Agreement shall remain in full force and effect until the earlier
of the date on which a Transaction is consummated or the close of business on
March 1, 2000. If a Transaction has not been consummated on or before March 1,
2000, then this Agreement shall be null and void as of its inception, and
Xxxxxxx and the Company shall have all of their respective rights and
obligations under the Option
Agreement and the Employment Agreement as if this Agreement had never existed.
Section 5. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, representatives, successors and permitted
assigns. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to its
principles regarding choice or conflicts of law. This Agreement shall survive
any merger, sale or other disposition of the Company and shall survive the
termination of Michael's employment with the Company.
IN WITNESS WHEREOF, Xxxxxxx has executed this Agreement and the Company
has caused this Agreement to be executed by an officer thereunto duly authorized
on the day and year first above written.
CMP MEDIA INC.
By /s/ Xxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx XXXXXXX X. XXXXX
Title: Executive Vice President
President of International
Attest:
[CORPORATE SEAL]
/s/ Xxxxxx X. Xxxxxxxxx
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