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EXHIBIT 10.11
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement, made and entered into on this 27th day of
November, 1996, by and among CMP Media Inc., a Delaware corporation (the
"Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), and ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ ("Lilo").
W I T N E S S E T H:
WHEREAS, ▇▇▇ is a key senior executive of the Company; and
WHEREAS, ▇▇▇▇▇ and Lilo are major stockholders of the Company; and
WHEREAS, the Company, ▇▇▇▇▇ and Lilo desire to create substantial
incentives for ▇▇▇ to (i) cause the Company to grow continuously and
successfully in sales, profits and profitability, (ii) take a long-term view of
the Company's future, (iii) help the Company attain its long-term goals,
including its diversity goals as set forth in its corporate Principles, and (iv)
remain with the Company for the long term; and
WHEREAS, to create such incentives, ▇▇▇▇▇ and Lilo desire to provide
▇▇▇ with the opportunity to purchase shares of the Company's Class A Common
Stock from them, and ▇▇▇ desires to have the opportunity to purchase such shares
of Class A Common Stock from ▇▇▇▇▇ and Lilo; and
WHEREAS, as an inducement to ▇▇▇▇▇ and Lilo to sell him shares of the
Company's Class A Common Stock and as a condition to the closing of such sale,
▇▇▇ desires to enter simultaneously therewith into this Agreement with the
Company, ▇▇▇▇▇ and Lilo;
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NOW, THEREFORE, in consideration of the mutual representations,
warranties, 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 hereby represent,
warrant, covenant and agree, as follows:
ARTICLE I
CONFIDENTIALITY; NON-COMPETITION
▇▇▇ hereby accepts and agrees to the provisions of this Article I and
acknowledges that such provisions are necessary and appropriate for the
reasonable protection of ▇▇▇▇▇ and Lilo's interests and the Company's property,
investments, business relationships, economic advantages and goodwill.
SECTION 1.1. PROTECTION OF COMPANY'S BUSINESS INTERESTS.
As a Key Senior Executive, ▇▇▇ has been intimately involved in the
management of all aspects of the business of the Company and its Affiliates and
has been a major strategist in planning and implementing its business expansion.
In the course of his long employment with the Company, ▇▇▇ has developed special
skills, knowledge and abilities in the publishing field which are of a uniquely
personal nature. He has also acquired detailed knowledge of the internal
operations of the Company and its Affiliates and highly confidential information
concerning the national and international business of the Company and its
Affiliates. In addition, he has been afforded the opportunity to develop special
relationships of confidence and trust with the customers, suppliers,
consultants, employees, officers, directors and stockholders of the Company and
its Affiliates. Because of his continuing responsibilities with the Company and
its Affiliates,
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including his involvement in strategic planning and the evaluation of proposed
investments, it is expected that ▇▇▇ will continue to be entrusted with
confidential information and will continue to have the opportunity to develop
such special relationships. The parties acknowledge and agree that the Company
and ▇▇▇▇▇ and Lilo would be unfairly and irreparably damaged if ▇▇▇ were to take
any of such skills, knowledge, information or relationships, which he has
acquired and developed during the course of his employment with the Company, and
use them to the detriment of the Company and its Affiliates.
SECTION 1.2. NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION.
(a) ▇▇▇ represents, warrants, covenants and agrees that, without the
Company's express or implied consent while employed or, after termination,
without the prior written consent of the Company's chief executive officer or
the Board of Directors, he will not willfully or knowingly at any time directly
or indirectly disclose, communicate or divulge, or use for the benefit of
himself or of any third party, any of the business or trade secrets or other
confidential information of the CMP Group including, solely by way of
illustration but not of limitation, their business strategies, business plans,
budgets, pricing, selling techniques, marketing techniques, operating systems,
financial systems, financial data, procedures, manuals, confidential reports,
personnel records, potential acquisitions, potential business expansions, credit
and financial data of their suppliers and of their present and prospective
customers, data about competitors, new product-development initiatives, custom
research and new product or service concepts and marketing strategy.
(b) Any and all materials of or concerning the CMP Group or their
business or affairs, including without limitation files, memoranda, notes,
correspondence, lists, records, video reproductions, computer tapes and disks,
design and other documents, and
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data storage and retrieval materials (and all copies, compilations and summaries
thereof), and any and all property of the CMP Group, including without
limitation equipment,
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software, keys, business cards and credit cards, that are in Ken's custody or
control shall be delivered to the Company at the time Ken's employment with the
Company terminates for any reason. ▇▇▇ shall not destroy any such materials or
property, shall not retain any copies thereof and shall certify in writing to
the Company upon request that all such materials and property have been
delivered to the Company.
SECTION 1.3. PROTECTION FROM UNFAIR COMPETITION.
(a) For as long as ▇▇▇ is employed by the CMP Group and for the greater
of (i) a period of five (5) years after termination of his employment or (ii) as
long as ▇▇▇ or any Permitted Transferee owns any Restricted Shares, ▇▇▇ shall
not engage in competition with the CMP Group. For the purposes of this
Agreement, ▇▇▇ shall be deemed to engage in competition with the CMP Group if
▇▇▇ does any of the following, whether or not in exchange for consideration,
without the Company's express or implied consent while employed or without the
Company's prior written consent after termination:
(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 Directly Competitive Business, an
Indirectly Competitive Business or any material function thereof (E.G.,
advertising, circulation, production and the like); (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 Directly Competitive Business or a
Direct Competitor; (3) renders services as a director, officer, employee,
consultant, advisor, agent or independent sales representative to a Direct
Competitor; or (4) renders services as a director, officer, employee,
consultant, advisor, agent or independent sales representative to an Indirect
Competitor unless ▇▇▇ has no responsibility for or participation or involvement
in any Indirectly Competitive Business of such Indirect
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Competitor, provided, however, that ▇▇▇ ▇▇▇ have supervisory, advisory,
consulting or sales-representative responsibility over an Indirectly Competitive
Business if the revenue of all Indirectly Competitive Businesses of such
Indirect Competitor over which ▇▇▇ has such responsibility represents no more
than fifteen percent (15%) of the total revenue over which ▇▇▇ has such
responsibility.
(B) Solicits the service of any employee of the CMP Group for
Ken's own benefit or for the benefit of any person or entity other than the CMP
Group, or induces or helps to induce any such employee to leave employment with
the CMP Group.
(C) Assists, induces or helps any employee or former employee
of the CMP Group or any other person or entity to engage in competition with the
CMP Group or any of its business activities, provided that the giving of a
favorable reference by ▇▇▇ on behalf of such former employee shall not be
prohibited by this clause (C).
(D) Employs or causes any person or entity other than the CMP
Group to employ any former employee of the CMP Group within one (1) year after
the resignation of such former employee from the CMP Group.
(E) Willfully induces or attempts to induce any customer,
supplier or contractor of the Company to terminate any agreement or arrangement
with the Company, or willfully induces or attempts to induce any customer,
supplier or contractor, or any potential customer, supplier or contractor, of
the Company not to enter into any agreement or arrangement with the Company.
(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 or any of their former, current or future stockholders, directors,
officers or employees in their capacities as such. For the purpose hereof,
"implied reference" shall mean a reference that does not expressly
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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. It shall not be deemed a
violation of this clause (F) if, after the termination of his employment with
the Company, ▇▇▇ responds to inquiries from the public or the press solely by
stating, in form or substance, "I do not discuss any matters relating to CMP;
please address your inquiries directly to the company" or ▇▇▇ communicates the
fact that he was formerly employed by the Company and identifies the positions
he held and the dates thereof.
(b) Notwithstanding the provisions of paragraph (a) of this Section
1.3, ▇▇▇ shall not be deemed to be engaged in competition with the CMP Group
solely by reason of Ken's ownership of (i) an equity interest of less than
one-half of one percent (0.5%) in the securities of a Direct Competitor or
Indirect Competitor listed for trading on a national securities exchange or
quoted in the National Market List of NASDAQ or (ii) an interest in a mutual or
other investment fund which owns an interest in a Direct Competitor or Indirect
Competitor, provided that ▇▇▇ has no influence or control over the selection of
such fund's investment decisions.
SECTION 1.4. PRIOR NOTICE; OPPORTUNITY TO CURE.
(a) ▇▇▇ shall give the Company written notice at least twenty (20)
Business Days before entering into any relationship or transaction, or engaging
in any activity, or taking or omitting to take any action, which might
reasonably be deemed a breach of any provision of Section 1.2 or Section 1.3,
such notice to include full and complete particulars as to the proposed
relationship, transaction, activity, action or omission, the services or duties
contemplated and such other facts and circumstances as are reasonably necessary
for the Company to make an informed decision. The Company shall advise ▇▇▇ in
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writing, within ten (10) Business Days after such notice is given, of the Board
of Directors' determination as to whether such relationship, transaction,
activity, action or omission would materially breach any of the provisions of
Section 1.2 or Section 1.3. In the event that, for reasons not within his
control, ▇▇▇ gives the Company less than twenty (20) Business Days' prior
written notice, the Company will endeavor in good faith to advise ▇▇▇ of the
Board of Directors' determination in less than ten (10) Business Days after such
notice is given, provided that the Company's failure to advise ▇▇▇ in less than
ten (10) Business Days shall not be deemed to constitute consent to such
relationship, transaction, activity, action or omission and shall not give rise
to any liability of the Company to ▇▇▇ or to any third party.
(b) Once the Company has advised ▇▇▇ in writing that the Board of
Directors has determined that a proposed relationship, transaction, activity,
action or omission would not materially breach any of the provisions of Section
1.2 or Section 1.3, and ▇▇▇ has thereupon entered into such relationship or
transaction or has begun to engage in such activity or to take or omit to take
such action, the Board of Directors shall have no right to reverse or otherwise
modify its determination; provided, however, that if the nature, scope or terms
of such relationship, transaction, activity, action or omission are to be
modified after such determination is made, then in accordance with paragraph (a)
hereof ▇▇▇ shall give the Company prior written notice of such modification and
the Company shall advise him in writing, within ten (10) Business Days after
such notice is given, of the Board of Directors' determination as to whether
such relationship, transaction, activity, action or omission, as so modified,
would materially breach any of the provisions of Section 1.2 or Section 1.3.
(c) In the event that, without having given the Company prior notice
pursuant to paragraphs (a) or (b) hereof, ▇▇▇ enters into any relationship or
transaction or begins to
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engage in any activity or to take or omit to take any action that the Board of
Directors determines is a material breach of any of the provisions of Section
1.2 or Section 1.3, the Company shall give ▇▇▇ written notice of such
determination and, if such breach is continuing, an opportunity to cure such
breach before the Company seeks remedy or relief by judicial process or
arbitration or exercises its rights under Section 3.4(b), and before ▇▇▇▇▇ or
Lilo exercises his or her rights under Section 4.5. The opportunity to cure
shall be sixty (60) days to the extent such continuing breach consists of
holding an ownership interest in a competitive business and fifteen (15) days
with respect to any other continuing breach.
SECTION 1.5. OTHER COVENANTS.
(a) For as long as ▇▇▇ or any Permitted Transferee owns any Restricted
Shares, ▇▇▇ shall, if requested by the Company, provide information, testimony
and assistance in connection with the prosecution or defense of any claims by or
against the Company arising out of matters of which he acquired knowledge while
an employee of the Company. The Company shall reimburse ▇▇▇ for all reasonable
out-of-pocket expenses he incurs in rendering such assistance.
(b) For as long as ▇▇▇ or any Permitted Transferee owns any Restricted
Shares, ▇▇▇ 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, current or future stockholders,
directors, officers or employees in their capacities as such.
SECTION 1.6. CONFIDENTIALITY OF AGREEMENT.
The terms and conditions of this Agreement shall be kept confidential
by the
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parties, and none of the parties shall disclose them to any non-party unless
such disclosure is necessitated by (a) legal and/or financial requirements of
the Company, in which case the form of such disclosure shall first be mutually
agreed upon by the Company and ▇▇▇, or (b) any arbitration or other legal
proceeding contesting or seeking to enforce any provision or interpretation of
this Agreement (including any deposition or testimony that either party provides
in connection therewith), regardless of whether such proceeding is initiated by
▇▇▇ or the Company. Except as provided in the preceding sentence, and without
limiting the generality of the foregoing, ▇▇▇ shall not respond to or in any way
participate in or contribute to any public discussion, notice or other publicity
concerning or in any way relating to execution of this Agreement or the events
(including any negotiations) which led to its execution, and ▇▇▇ specifically
agrees that he shall not disclose information regarding this Agreement to any
current or former employees of the Company other than those expressly authorized
by the Company to have knowledge hereof. Without limiting the comprehensive
confidentiality agreed to, ▇▇▇ ▇▇▇ disclose this Agreement to his attorneys,
financial advisors and members of his and his spouse's immediate families,
provided he informs them of this confidentiality provision and they agree to
abide by it. ▇▇▇ hereby agrees that any disclosure by him of any of the terms
and conditions of this Agreement in violation of the foregoing shall constitute
and be treated as a material breach of this Agreement and ▇▇▇ shall be
responsible for damages occasioned thereby, including but not limited to
reasonable attorneys' fees incurred by the Company to enforce this Section 1.6.
SECTION 1.7. RELIEF FOR BREACH.
▇▇▇ acknowledges and agrees that any breach or anticipatory breach by
him of any of the provisions of this Article I would cause the Company
irreparable injury not com-
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pensable by monetary damages alone and that, accordingly, in any such event, the
Company shall be entitled to injunctions, both preliminary and permanent,
enjoining or restraining such breach or anticipatory breach (and ▇▇▇ hereby
consents to the issuance thereof without bond by any court of competent
jurisdiction), in addition to monetary damages in such amount as the evidence
may show and such other remedies as may be available at law or in equity. In
addition, in the event of any material breach by ▇▇▇ of any of the provisions of
Section 1.2 or Section 1.3, ▇▇▇ ▇▇▇ be required to sell to the Company or the
holders of the Class B Stock or to ▇▇▇▇▇ and Lilo any or all of the Restricted
Shares then owned by ▇▇▇, in accordance with the provisions of Section 3.4,
Section 3.6 or Section 4.5, as applicable; provided, however, that ▇▇▇ shall not
be required to sell such Restricted Shares unless and until the Company has
first complied with its obligations under Section 1.4.
SECTION 1.8. SEPARATE COVENANTS.
▇▇▇ understands and agrees that the covenants contained in this Article
I constitute a series of separate covenants, one for each applicable state in
the United States and the District of Columbia, and one for each applicable
foreign country. If in any judicial proceeding a court shall hold unenforceable
any of the separate covenants included in this Article I, then such
unenforceable covenant or covenants shall be deemed limited as necessary or
eliminated from the provisions of this Article I for the purpose of such
proceeding to the extent necessary to permit the remaining separate covenants of
this Article I to be enforced in such proceeding, and to permit such
unenforceable covenant or covenants to be enforced as limited.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS OF THE COMPANY.
The Company hereby represents and warrants to ▇▇▇ that (a) it has full
legal right, power and authority to enter into this Agreement and to consummate
the transactions herein contemplated; (b) the execution and delivery of this
Agreement has been duly authorized by all necessary corporate action; (c) this
Agreement constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general principles of equity; and
(d) neither this Agreement nor the consummation of the transactions herein
contemplated will conflict with, violate or infringe any legal restriction,
contract or instrument to which the Company is subject or by which it is bound.
SECTION 2.2. REPRESENTATIONS OF ▇▇▇.
▇▇▇ hereby represents and warrants to each of the Company, ▇▇▇▇▇ and Lilo
that (a) he has full legal right, power and authority to enter into this
Agreement and to consummate the transactions herein contemplated; (b) this
Agreement constitutes the valid and binding obligation of ▇▇▇, enforceable in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity; and (c) neither
this Agreement nor the consummation of the transactions herein contemplated will
conflict with, violate or infringe any legal restriction, contract or instrument
to which ▇▇▇ is subject or by which he is bound.
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SECTION 2.3. REPRESENTATIONS OF ▇▇▇▇▇ AND LILO.
Each of ▇▇▇▇▇ and Lilo hereby represents and warrants to ▇▇▇ that (a)
each of them has full legal right, power and authority to enter into this
Agreement and to consummate the transactions herein contemplated; (b) this
Agreement constitutes the valid and binding obligation of each of them,
enforceable in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general principles of equity; and
(c) neither this Agreement nor the consummation of the transactions herein
contemplated will conflict with, violate or infringe any legal restriction,
contract or instrument to which either of them is subject or by which either of
them is bound.
ARTICLE III
TRANSFERABILITY OF SHARES AT TIME WHEN
COMPANY IS PRIVATELY HELD AND THERE IS NO PUBLIC MARKET
SECTION 3.1. GENERAL RESTRICTION ON TRANSFER.
At any time when the Company is privately held and there is no public
market for the Class A Stock, ▇▇▇ shall not, voluntarily or involuntarily, by
operation of law or otherwise, sell, mortgage, pledge, hypothecate, assign as
security, grant or permit to exist or continue a security interest in, or in any
way transfer by gift, will, trust or intestate succession any of the Restricted
Shares, except to a Permitted Transferee as provided in Section 9.2(a) or except
as specifically provided in this Article III. Any attempt by ▇▇▇ to do any of
the aforementioned acts or otherwise to alienate or dispose of any Restricted
Shares, except in accordance with this Agreement, shall be null and void.
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SECTION 3.2. SALE AFTER DECEMBER 31, 2005.
During each and any calendar year beginning with the calendar year
2006, ▇▇▇ shall have the right, exercisable upon notice to the Company given
during the first three (3) months of such calendar year, to require the Company
to purchase up to five hundred twenty-eight (528) shares of his Class A Stock
(which number of shares equals approximately one percent (1%) of the number of
shares of the Company's Common Stock issued and outstanding as of the date
hereof), including both Restricted Shares and Option Shares, at the price
provided in Section 3.5 (a).
SECTION 3.3. SALE AFTER DEATH OR PERMANENT DISABILITY.
In the event that Ken's employment with the Company terminates as a
result of his death or the Company terminates his employment by reason of his
Permanent Disability (whether before or after December 31, 2005), then and in
that event, notwithstanding the provisions of Section 3.2, the parties shall
have the following rights:
(a) RIGHTS OF ▇▇▇ TO SELL. ▇▇▇ or his representative and/or successors
in interest shall have the right, exercisable upon notice to the Company given
no later than one hundred eighty (180) days after such termination of employment
occurs and/or during the first three (3) months of any succeeding calendar year,
to require the Company to purchase any or all of the Restricted Shares then
owned by ▇▇▇ or his successors in interest, at the price provided in Section 3.5
(a).
(b) RIGHTS OF COMPANY TO PURCHASE. The Company shall have the right,
exercisable upon notice to ▇▇▇ or his representative and/or successors in
interest given during the first three (3) months of the third calendar year
after the year in which such termination of employment occurs and/or during the
first three (3) months of any succeeding calendar year, to require ▇▇▇ or his
representative and/or successors in
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interest to sell to the Company any or all of the Restricted Shares then owned
by ▇▇▇ or any successor in interest, at the price provided in Section 3.5 (a).
SECTION 3.4. SALE AFTER TERMINATION OF EMPLOYMENT OR COMPETITION.
In the event that (a) Ken's employment with the Company terminates for
any reason other than death or Permanent Disability or (b) ▇▇▇ materially
breaches any of the provisions of Section 1.2 or Section 1.3 (whether before or
after the termination of his employment for any reason) and, if the Company has
given him notice to cure, fails to cure such breach on a timely basis, then and
in that event, in addition to any rights that ▇▇▇ has under Section 3.2 (but
subject to the provisions of Section 4.2(c) of the Employment Agreement), the
Company shall have the right, exercisable upon notice to ▇▇▇ given at any time
or times after such event occurs (whether before or after December 31, 2005), to
require ▇▇▇ to sell to the Company any or all of the Restricted Shares then
owned by ▇▇▇, at the price provided in Section 3.5 (a). The death or Permanent
Disability of ▇▇▇ occurring subsequent to the termination of his employment or
such breach of any of the provisions of Section 1.2 or Section 1.3 shall not
modify or affect the rights and obligations of the parties as set forth in this
Section 3.4.
SECTION 3.5. PURCHASE PRICE OF RESTRICTED SHARES.
(a) PRICE TO BE PAID FOR RESTRICTED SHARES. The purchase price for any
Restricted Shares to be purchased pursuant to this Article III shall be the Fair
Market Value of such Restricted Shares, except that the purchase price for any
Restricted Shares to be purchased by reason of Ken's breach of any of the
provisions of Section 1.2 or Section 1.3 shall be the lower of the Original
Price of such Restricted Shares or the Fair Market Value of such Restricted
Shares.
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(b) DETERMINATION OF FAIR MARKET VALUE. Within sixty (60) days after ▇▇▇
has given the Company notice of intent to sell Restricted Shares or the Company
has given ▇▇▇ notice of intent to purchase Restricted Shares pursuant to this
Article III, the Company and ▇▇▇ shall negotiate in good faith in an effort to
reach mutual agreement as to the Fair Market Value of such Restricted Shares. If
the Company and ▇▇▇ are unable to reach agreement as to the Fair Market Value of
such Restricted Shares within such 60-day period, the Fair Market Value of such
Restricted Shares shall be determined by an appraisal process as follows. Each
of the Company and ▇▇▇ shall designate, within thirty (30) days after the
conclusion of the 60-day negotiation period referred to above, an independent
and experienced appraiser familiar with the business in which the Company is
then engaged (each individually an "Appraiser" and collectively the
"Appraisers"). The Appraisers shall be instructed to complete their respective
determinations of the Fair Market Value of such Restricted Shares and to deliver
their written reports on such determinations no later than sixty (60) days after
both of such Appraisers have been appointed. If the determination of one of the
Appraisers does not exceed the determination of the other Appraiser by more than
fifteen percent (15%) of the lower of the two determinations, the Fair Market
Value of such Restricted Shares shall be equal to the average of the two
determinations. If the higher determination exceeds the lower determination by
more than fifteen percent (15%) of the lower determination, then the two
Appraisers shall jointly appoint a third, independent and similarly experienced
Appraiser within fifteen (15) days after both of such two Appraisers have
delivered their reports. Such third Appraiser shall deliver his report on his
determination of the Fair Market Value of such Restricted Shares within sixty
(60) days after his appointment, and his determination of Fair Market Value
shall be conclusive and binding on the parties for all purposes hereof. The cost
of all such appraisals shall be borne one-half by the
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Company and one-half by ▇▇▇.
(c) PAYMENT OF PURCHASE PRICE.
(i) LUMP SUM OR INSTALLMENTS. The purchase price for Restricted
Shares shall be paid by the Company in full at the closing or, at the election
of the Company, in equal annual installments, together with interest payable
quarterly at the rate of interest announced publicly on the first day of each
calendar quarter by a major United States money market bank, selected by the
Company, as such bank's base rate, over a number of years to be determined by
the Company but in no event exceeding five (5) years if the purchase is pursuant
to Section 3.2, or ten (10) years if the purchase is pursuant to Section 3.3 or
Section 3.4.
(ii) INITIAL INSTALLMENT. In the event the Company elects to pay for
Restricted Shares hereunder on an installment basis, all annual installments
shall be equal in principal amount except as follows:
(A) The initial installment for any such sale of Restricted
Shares, other than a sale occurring by reason of Ken's death, Dismissal For
Cause or breach of any of the provisions of Section 1.2 or Section 1.3, shall be
not less than the amount, if any, of Ken's additional income tax liability
(federal, state and local) actually occasioned as a result of such sale,
provided that such amount shall have been certified to the Company in writing by
Ken's tax accountant.
(B) The initial installment for the first sale of shares of
Class A Stock that ▇▇▇ makes under this Agreement or the Option Agreement, other
than a sale occurring by reason of Ken's death, Dismissal For Cause or breach of
any of the provisions of Section 1.2 or Section 1.3, shall be at least (1) the
amount due under clause (A) above plus the amount of one million dollars
($1,000,000) or (2) if less, the total purchase price for such Restricted
Shares.
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(C) The initial installment for any sale of Restricted Shares
occurring by reason of Ken's death shall be not less than the amount of the
estate and succession tax liability (federal and state) occasioned as a result
of the inclusion of the Restricted Shares in Ken's estate (giving effect to any
deferral permitted by law or regulation in the payment thereof) together with
any and all costs and expenses of administration of Ken's estate as reasonably
estimated by Ken's representative, all as certified to the Company in writing by
Ken's representative.
(iii) CASH FLOW LIMITATIONS. Notwithstanding any other provision of
this Article III, in the event that the amount due from the Company in payment
for Restricted Shares purchased hereunder (including both principal and
interest) in any one fiscal year of the Company (other than a purchase occurring
by reason of Ken's death) exceeds fifty percent (50%) of the Company's Free Cash
Flow for the preceding year, then and in that event the Company in its sole
discretion may elect to defer payment of any portion of such principal and/or
interest to the extent that payment would require the Company to pay more than
fifty percent (50%) of its Free Cash Flow for such preceding year, provided that
any such deferred amounts shall continue to earn interest as described in
Section 3.5 (c)(i) until paid; and provided further that in any event all
principal and interest shall be paid in full no later than five (5) years or ten
(10) years, as the case may be, after the date of the closing. If, in the same
fiscal year, the Company is also required to pay any persons or entities other
than ▇▇▇ for shares of Class A Stock that such persons or entities acquired from
▇▇▇▇▇ and/or Lilo as of the date hereof or pursuant to options granted by the
Company and/or is required to make payment to ▇▇▇ and/or any other persons under
any comparable long-term senior executive compensation plan in effect from time
to time, the amounts due to such other persons or entities in such fiscal year
shall be aggregated with the amount due with respect to the Restricted Shares in
such
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fiscal year and, if the aggregate amount due exceeds fifty percent (50%) of the
Company's Free Cash Flow for the preceding fiscal year, then and in that event
the Company in its sole discretion may elect to defer payment of any portion of
such aggregate amount (principal and/or interest) to the extent that it would
exceed fifty percent (50%) of the Company's Free Cash Flow for the preceding
year, and payments and deferments shall be effected among ▇▇▇ and such other
persons or entities in proportion to the amounts (both principal and interest)
then due and owing to each, subject to any provisions in such plans as to
priority of payment.
(d) CLOSING OF TRANSACTION. The closing of any purchase of Restricted
Shares hereunder shall be held no later than ninety (90) days after the final
determination of the Fair Market Value of such Restricted Shares, at such time
and place as the Company may reasonably designate. At the closing, ▇▇▇ shall
deliver or cause to be delivered to the Company the stock certificates
representing such Restricted Shares, duly endorsed for transfer in blank or with
duly executed stock powers attached, and with signature guaranteed, in exchange
for which the Company shall deliver to ▇▇▇ the amount of the purchase price then
due, together with the Company's promissory note evidencing the Company's
obligation to pay the balance, if any, of the purchase price in accordance with
the terms of Section 3.5(c). All payments to ▇▇▇ hereunder shall be made in cash
or by Company check, bank draft or wire transfer.
SECTION 3.6. ASSIGNMENT AND DELEGATION BY THE COMPANY TO CLASS B
STOCKHOLDERS.
The Company shall have the right, exercisable upon notice to ▇▇▇, to
assign any or all of its rights and/or delegate any or all of its obligations
under this Article III to the holders of the Class B Stock, in proportion to
their respective ownership interests or as they may otherwise unanimously agree,
provided that the Company shall not be relieved
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of its obligation to purchase from ▇▇▇ in accordance herewith any Restricted
Shares duly tendered and not purchased and paid for by such holders of the Class
B Stock.
SECTION 3.7. TAG-ALONG RIGHTS -- DRAG-ALONG RIGHTS.
(a) In the event the Controlling Stockholders of the Company determine
to dispose of all or a portion of their shares of Common Stock, with the result
that they will no longer control the Company, then and in that event the Company
shall give ▇▇▇ a notice (a "Tag-Along Notice") of such proposed sale (a
"Tag-Along Sale") and the material terms of the Tag-Along Sale (the "Material
Terms") no later than thirty (30) days prior to the consummation of the
Tag-Along Sale. If, within twenty (20) days after a Tag-Along Notice is given
to ▇▇▇ (or within ten (10) days after any notice of a change in the Material
Terms is given to ▇▇▇), the Company receives from ▇▇▇ a written request (a
"Tag-Along Request") to include in the Tag-Along Sale any of the Restricted
Shares held by him, such Restricted Shares (in the same proportion as the total
number of shares of the Common Stock held by the Controlling Stockholders bears
to the number of shares being sold by the Controlling Stockholders) shall be
included in the Tag-Along Sale on the same terms and conditions and subject to
the same obligations as the sale by the Controlling Stockholders, taking into
account the proportionate ownership of the Controlling Stockholders and ▇▇▇. The
Company shall give ▇▇▇ prompt notice of any change in the Material Terms and, in
such event, ▇▇▇ shall have the opportunity, for a period of ten (10) days after
such notice has been given, to submit a Tag-Along Request if ▇▇▇ did not
previously submit a Tag-Along Request or to withdraw or modify a Tag-Along
Request previously made.
(b) Ken's rights hereunder to participate in a Tag-Along Sale shall be
contingent on Ken's compliance with each of the provisions hereof, Ken's
acceptance of a
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proportionate delegation of any duties or obligations related to the Tag-Along
Sale, including any indemnification obligations, and Ken's execution of such
documents in connection with the Tag-Along Sale as may be reasonably requested
by the Controlling Stockholders.
(c) In connection with any proposed sale of shares of Common Stock by
the Controlling Stockholders to a non-affiliated person or entity in an
arms-length transaction, if ▇▇▇ has not exercised his rights to sell Restricted
Shares as contemplated under paragraph (a) of this Section 3.7, the Company
shall have the right, exercisable upon notice to ▇▇▇, to require that ▇▇▇ sell
to the purchaser of the shares of the Controlling Stockholders the same
proportion of the Restricted Shares then owned by ▇▇▇ as are being sold by the
Controlling Stockholders, on the same terms and conditions and subject to the
same obligations including any indemnification obligations, as the sale by the
Controlling Stockholders, taking into account the proportionate ownership of the
Controlling Stockholders and ▇▇▇. ▇▇▇ agrees that he will cooperate with the
Company and the Controlling Stockholders in taking all such actions, including
executing all such documentation, as the Company and/or the Controlling
Stockholders may reasonably request.
ARTICLE IV
TRANSFERABILITY OF SHARES AT TIME COMPANY SHARES ARE PUBLICLY TRADED
SECTION 4.1. GENERAL RESTRICTION ON TRANSFER.
In the event that shares of the Class A Stock become listed on a national
securities exchange or quoted in the National Market List of NASDAQ, then and in
that event the provisions of Article III shall cease to be operative, and ▇▇▇
shall not, voluntarily or involuntarily, by operation of law or otherwise, sell,
mortgage, pledge, hypothecate,
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assign as security, grant or permit to exist or continue a security interest in,
or in any way transfer by gift, will, trust or intestate succession any of the
Restricted Shares, except to a Permitted Transferee as provided in Section
9.2(a) or except as specifically provided in this Article IV. Any attempt by ▇▇▇
to do any of the aforementioned acts or otherwise to alienate or dispose of any
Restricted Shares, except in accordance with this Agreement, shall be null and
void.
SECTION 4.2. SALE ON OR BEFORE DECEMBER 31, 2005.
Except as otherwise provided in Section 4.4 and Section 4.6, from
January 1, 1998 through December 31, 2005, ▇▇▇ shall have the right to sell
Restricted Shares on the public market, subject to the following conditions:
(a) MINIMUM MARKET CAPITALIZATION. ▇▇▇ ▇▇▇ not sell any Restricted
Shares under this Section 4.2 unless the market capitalization of the Company as
of the Business Day immediately preceding the date of sale is greater than three
hundred forty million dollars ($340,000,000). The market capitalization of the
Company shall be determined by multiplying the Fair Market Value of a share of
Class A Stock by the total number of shares of the Common Stock then issued and
outstanding.
(b) MAXIMUM NUMBER OF SHARES.
(i) The maximum number of shares of Class A Stock (including both
Restricted Shares and Option Shares) that ▇▇▇ ▇▇▇ sell in any single calendar
year shall be five hundred twenty-eight (528) shares of Class A Stock (which
number of shares equals approximately one percent (1%) of the number of shares
of the Company's Common Stock issued and outstanding as of the date hereof); and
(ii) the maximum number of Restricted Shares that may be included in
such shares of Class A Stock sold in any single calendar year shall be the
smaller of (A) the
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number of Restricted Shares whose Fair Market Value as of the Business Day
immediately preceding the date of sale does not exceed $500,000 or (B)
fifty-three (53) Shares (which number equals approximately 1/10 of one percent
(0.1%) of the number of shares of the Company's Common Stock issued and
outstanding as of the date hereof).
SECTION 4.3. SALE AFTER DECEMBER 31, 2005.
Except as otherwise provided in Section 4.4 and Section 4.6, after
December 31, 2005, ▇▇▇ shall have the right to sell Restricted Shares on the
public market, provided only that the maximum number of shares of Class A Stock
(including both Restricted Shares and Option Shares) that ▇▇▇ ▇▇▇ sell in any
single calendar year shall be five hundred twenty-eight (528) shares of Class A
Stock (which number of shares equals approximately one percent (1%) of the
number of shares of the Company's Common Stock issued and outstanding as of the
date hereof).
SECTION 4.4. SALE AFTER DEATH OR PERMANENT DISABILITY.
(a) Notwithstanding the provisions of Section 4.2, in the event that
Ken's employment terminates as a result of his death or the Company terminates
his employment by reason of his Permanent Disability, then and in that event (i)
the precondition to sales on or before December 31, 2005, which is set forth in
Section 4.2(a) with respect to the Company's minimum market capitalization,
shall not apply, and ▇▇▇ and/or his representative and/or his successors in
interest shall have the right to sell Restricted Shares pursuant to Section 4.2
on or before December 31, 2005 irrespective of the market capitalization of the
Company; and (ii) the limitation set forth in Section 4.2(b)(ii) shall not apply
and, instead, the maximum number of Restricted Shares that may be included in
the shares of Class A Stock sold in any calendar year by ▇▇▇ and/or
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his representative and/or successors in interest, as a group, shall be two
hundred sixty-four (264) Restricted Shares.
(b) Notwithstanding the provisions of Section 4.2, Section 4.3 and
Section 4.4 (a)(ii), in the event that Ken's employment terminates as a result
of his death, Ken's representative and/or successors in interest shall have the
right to sell in any calendar year up to such number of shares of Class A Stock
(including both Restricted Shares and Option Shares) as shall equal the greater
of (i) the number of such shares that is permitted to be sold under Section 4.2
or Section 4.3, as applicable, or (ii) the number of such shares that is
necessary in order for the proceeds of such sale to equal the amount of the
estate and succession tax liability (federal and state), including any interest
thereon, due in such year as a result of the inclusion of such shares of Class A
Stock in Ken's estate (giving effect to any deferral permitted by law or
regulation in the payment thereof), together with any and all costs and expenses
of administration of Ken's estate for such year as reasonably estimated by Ken's
representative, all as certified to the Company in writing by Ken's
representative.
SECTION 4.5. SALE AFTER COMPETITION.
In the event that ▇▇▇ materially breaches any of the provisions of
Section 1.2 or Section 1.3 (whether before or after the termination of his
employment for any reason) and, if the Company has given him notice to cure,
fails to cure such breach on a timely basis, then and in that event, in addition
to any other rights that the parties have under this Article IV (but subject to
the provisions of Section 4.2(c) of the Employment Agreement), ▇▇▇▇▇ and Lilo
shall have the following rights:
(a) Each of ▇▇▇▇▇ and Lilo shall have the right, exercisable upon
notice to ▇▇▇ given at any time or times after such event occurs, to require ▇▇▇
to sell back to him
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or her, as the case may be, all of the Restricted Shares then owned by ▇▇▇ which
he purchased from ▇▇▇▇▇ or Lilo, as the case may be, under the Share Purchase
Agreement. The purchase price for Restricted Shares re-purchased hereunder shall
be the lower of (i) the Original Price of such Restricted Shares or (ii) the
Fair Market Value of such Restricted Shares as of the date of such notice.
(b) If ▇▇▇▇▇ and/or Lilo exercise any rights hereunder, the closing of
their respective purchases of Restricted Shares shall be held no later than
ninety (90) days after their respective notices of exercise are given and at
such time and place as they may reasonably designate. At the closing, ▇▇▇ shall
deliver or cause to be delivered to ▇▇▇▇▇ and/or Lilo, as the case may be, the
stock certificates representing such Restricted Shares, duly endorsed for
transfer in blank or with duly executed stock powers attached, and with
signature guaranteed, in exchange for which the purchasers shall deliver to ▇▇▇
the full amount of their respective purchase prices in cash or by check, bank
draft or wire transfer.
(c) To the extent, if any, that ▇▇▇▇▇ and Lilo have not exercised their
rights to purchase any or all of Ken's Restricted Shares in accordance with
paragraph (a) of this Section 4.5, ▇▇▇ shall continue to have the right to sell
such unpurchased Restricted Shares subject to and in accordance with the other
provisions of this Article IV.
(d) Each of ▇▇▇▇▇ and Lilo shall have the right, exercisable upon
notice to ▇▇▇, to assign any or all of his or her rights and/or delegate any or
all of his or her obligations under this Section 4.5 to the holders of the Class
B Stock or their children, in proportion to the respective ownership interests
of the holders of the Class B Stock or as they may otherwise unanimously agree.
(e) In the event that the Company makes a determination that ▇▇▇ has
not materially breached any of the provisions of Section 1.2 or Section 1.3,
such
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determination shall be binding upon ▇▇▇▇▇ and Lilo for the purposes of this
Agreement.
SECTION 4.6. TENDER, MERGER, CONSOLIDATION.
In the event the Controlling Stockholders of the Company determine to
dispose all or a portion of their shares of Common Stock in a tender, merger,
consolidation or similar type of transaction, with the result that they no
longer control the Company, then and in that event, ▇▇▇ shall have the right,
but not the obligation, to dispose of a proportionate number of shares of his
Class A Stock in any such transaction.
SECTION 4.7. COMPLIANCE WITH SECURITIES LAWS.
Neither ▇▇▇ nor his representative will sell or attempt to sell any
shares of Class A Stock under this Article IV except in accordance with all
applicable federal and state securities laws, all applicable rules and
regulations of the Securities and Exchange Commission, and any applicable
underwriters' limitations and restrictions.
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ARTICLE V
FUTURE CHANGES IN CAPITAL STRUCTURE AND REDEMPTION OF SHARES
SECTION 5.1. CHANGES IN CAPITAL STRUCTURE.
If the Company hereafter declares a dividend payable in, or subdivides
or combines, shares of the Class A Stock, or if the Company engages in a
recapitalization, reorganization, merger, consolidation, split-up, transfer of
assets, combination or exchange of shares of Common Stock, or if any other event
shall occur which in the judgment of the Board of Directors calls for action by
way of adjusting the number of Restricted Shares, the Board of Directors shall
forthwith take such action as in its judgment shall be necessary or appropriate
to preserve Ken's rights with respect to the Restricted Shares substantially
proportionate to his rights existing prior to such event. The decision of the
Board of Directors with respect to any matter referred to in this Section 5.1
shall be conclusive and binding upon ▇▇▇. Nothing in this Agreement is intended
to preserve Ken's equity interest in the Company against dilution resulting from
the issuance of securities by the Company in the future.
SECTION 5.2. REDEMPTION OF CLASS B STOCK.
If and when any shares of the Class B Stock owned by any member of the
Leeds Family are redeemed by the Company in accordance with the terms and
provisions of the Shareholders' Agreement, then, in order to ensure that Ken's
percentage interest in the Company will remain the same as his interest would
have been but for such redemption (the "Class B Stock Redemption"), the Company
shall, promptly following the Class B Stock Redemption, redeem at a price equal
to their par value (currently $.10 per share) a
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number of the Restricted Shares such that (a) the ratio of (i) the number of
Restricted Shares outstanding immediately after such redemption of Restricted
Shares (the "Class A Stock Redemption") to (ii) the total number of shares of
Common Stock outstanding immediately after the Class A Stock Redemption is the
same as (b) the ratio of (i) the number of Restricted Shares outstanding
immediately prior to the Class B Stock Redemption to (ii) the total number of
shares of Common Stock outstanding immediately prior to the Class B Stock
Redemption.
ARTICLE VI
PROCEDURE TO BE FOLLOWED IN CASE OF
DISMISSAL FOR CAUSE
In the event the Company terminates Ken's employment as a Dismissal For
Cause, the Company shall give ▇▇▇ at least ten (10) Business Days' prior written
notice specifying in reasonable detail the specific conduct of ▇▇▇ that it
considers grounds for Dismissal For Cause and the specific provision of the
definition of "Dismissal For Cause" upon which it relies. Ken's employment with
the Company shall terminate as of the tenth Business Day after such notice is
given, or such other date as the parties mutually agree. Should ▇▇▇ dispute the
basis for such termination in a written notice given to the Company on or before
his termination date, the parties shall meet and endeavor to resolve the dispute
amicably within twenty (20) Business Days after Ken's notice is given. If they
cannot so resolve the dispute within such twenty (20) Business Days after Ken's
notice is given, ▇▇▇ and the Company shall submit the dispute to binding
arbitration in accordance with Section 7.1. The decision rendered in such
arbitration shall be final and binding on both ▇▇▇ and the Company for all
purposes. If the arbitrators determine that
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the Company did not have a proper basis on which to terminate Ken's employment
as a Dismissal For Cause within the meaning of this Agreement, the termination
of Ken's employment shall be treated for all purposes of this Agreement as a
Dismissal Without Cause. In addition to any other rights which a party may have,
the party prevailing in such arbitration proceeding shall be entitled to recover
from the losing party any and all of the expenses incurred by the prevailing
party in such proceeding, including reasonable attorney's fees.
ARTICLE VII
RESOLUTION OF DISPUTES
SECTION 7.1. ARBITRATION.
Except as provided in Section 7.2, all controversies arising out of or
relating to this Agreement or the breach hereof shall be settled by arbitration
in the County of Nassau, State of New York, in accordance with the rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Any
arbitration hereunder shall be before three (3) arbitrators.
SECTION 7.2. EQUITABLE REMEDIES.
Notwithstanding the provisions of Section 7.1, any proceeding for
injunctive relief or specific performance in connection with this Agreement
shall be commenced in Supreme Court of the State of New York, County of Nassau,
and each of the parties hereby accepts the exclusive jurisdiction of such Court
for such purpose; provided, however, that the petitioner may commence such
proceeding in such other court as may
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be necessary, in the petitioner's judgment, in order to more effectively or
expeditiously obtain personal jurisdiction over the respondent.
ARTICLE VIII
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliates" shall mean all entities controlling, controlled by or
under common control with the Company.
"Appraiser" or "Appraisers" shall have the meaning specified in Section
3.5(b).
"Board of Directors" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day on which the Company is scheduled to
be open for business.
"Class A Stock" shall mean the Class A Common Stock of the Company.
"Class A Stock Redemption" shall have the meaning specified in Section
5.2.
"Class B Stock" shall mean the Class B Common Stock of the Company.
"Class B Stock Redemption" shall have the meaning specified in Section
5.2.
"Closing Price" shall mean the last-quoted price at which shares of
Class A Stock were traded at the close of business on a national securities
exchange or NASDAQ on any day on which shares of the Class A Stock were publicly
held.
"CMP Business" shall mean any publication, product, service or business
(a) which the CMP Group publishes, produces, provides or engages in or (b) which
the CMP Group has a bona fide plan or intention to publish, produce, provide or
engage in within the succeeding 12-month period, the research and development of
which the CMP Group
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has devoted substantive time and attention to, and which plan or intention ▇▇▇
has actual knowledge of before he engages in any activity competitive with such
CMP Business as contemplated by clause (A) of Section 2.3(a).
"CMP Group" shall mean the Company or any of its Affiliates.
"Common Stock" shall mean all the classes of the Common Stock of the
Company collectively.
"Controlling Stockholders" shall mean the members of the Leeds Family
who hold shares of capital stock of the Company collectively representing a
majority of the votes that may be cast on any matter on which stockholders of
the Company shall be entitled to vote.
"Direct Competitor" shall mean a business enterprise that produces or
operates, or owns directly or indirectly an interest of twenty percent (20%) or
more in, one or more Directly Competitive Businesses.
"Directly Competitive Business" shall mean any competitive publication,
product, service or business (a) the target audience of which is substantially
the same as the target audience of a CMP Business or (b) forty percent (40%) or
more of the annual revenue of which is derived from substantially the same
customers as a CMP Business derives twenty percent (20%) or more of its annual
revenue.
"Dismissal For Cause" shall mean the termination of Ken's employment
with the Company by the Board of Directors for (i) the willful and continued
failure of ▇▇▇ substantially to perform his duties as an officer and employee of
the Company or comply with the written policies of the Company after the Company
has delivered to ▇▇▇ a written demand for substantial performance or compliance
that specifies such failure in reasonable detail; (ii) illegal conduct or gross
misconduct by ▇▇▇, in either case that is willful and results (or is reasonably
likely to result) in material damage to the business or
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reputation of the Company; or (iii) the resignation by ▇▇▇ from his employment
following his act or omission which would constitute grounds for Dismissal For
Cause hereunder. No act or failure to act on the part of ▇▇▇ (other than
non-compliance with lawful instructions given to ▇▇▇ by the Company) shall be
considered "willful" unless it is done or omitted to be done by him in bad faith
or without reasonable belief that his action or omission was in the best
interests of the Company. Any act or failure to act that is pursuant to
resolution duly adopted by the Board of Directors shall be conclusively presumed
to be done or omitted to be done by ▇▇▇ in good faith and in the best interests
of the Company.
"Dismissal Without Cause" shall mean the termination of Ken's
employment by the Company on any grounds other than grounds for Dismissal For
Cause or as a result of his Permanent Disability.
"Employment Agreement" shall mean that certain Employment Agreement
entered into as of the date hereof by and between the Company and ▇▇▇.
"Fair Market Value" shall mean the fair market value of a share of
Class A Stock, which shall be the Closing Price on the trading day immediately
preceding the date of determination of fair market value or, if the Company is
privately held, the best estimate of the fair market value of a share of Class A
Stock as of the last day of the month immediately preceding the month in which
notice to buy or sell a share of Class A Stock is given, as determined with
reference to publicly held companies comparable to the Company.
"Financial Statements" shall mean the combined or consolidated
financial statements of the Company and its Affiliates prepared in accordance
with generally accepted accounting principles and audited by the Company's
independent certified public accountants.
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"Free Cash Flow" of the Company with respect to any fiscal year shall
mean the combined or consolidated net income of the Company for such year as
reflected in the Financial Statements, adjusted so as (a) to exclude the amount,
if any, that, in determining such combined or consolidated net income,
represented (i) an expense for depreciation and/or amortization or (ii) a
provision or credit for federal, state, local or foreign income taxes; and (b)
to include the amount, if any, of cash payments that the Company actually made
in such fiscal year (i) for federal, state, local and foreign income taxes owed
by the Company (and, if the Company is an S Corporation, in distributions to its
stockholders for the payment of federal, state, local and foreign taxes owed by
such stockholders with respect to the Company's income), (ii) for capital
expenditures, (iii) pursuant to the Company's 1988 Equity Appreciation Plan or
(iv) as required under the terms of the Company's then-existing financing
arrangements to reduce the principal amount of indebtedness. The Company's
determination of Free Cash Flow shall be conclusive and binding for all purposes
of this Agreement provided that the Company's certified public accountants
render a written opinion that such determination presents fairly, in all
material respects, the Free Cash Flow of the Company as herein defined. (A
hypothetical illustration of the calculation of Free Cash Flow is set forth on
Schedule VIII hereto.)
"Indirect Competitor" shall mean a business enterprise that does not
produce or operate, or own directly or indirectly an interest in, any Directly
Competitive Businesses but produces or operates, or owns directly or indirectly
an interest of twenty percent (20%) or more in, one or more Indirectly
Competitive Businesses.
"Indirectly Competitive Business" shall mean any competitive or
potentially competitive publication, product, service or business which derives
from twenty percent (20%) to but not including forty percent (40%) of its annual
revenue from substantially the same customers as a CMP Business derives twenty
percent (20%) or more of its
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annual revenue.
"Key Senior Executive" shall mean a Company employee holding a position
of responsibility no lower than that currently titled President of Publishing,
or a position with a comparable level of responsibility (but in any case a level
of responsibility higher than the position currently titled Senior Vice
President/Group Publisher).
"Leeds Family" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Leeds, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-Leeds and ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇▇.
"Negative Pledge Agreement" shall mean that certain Negative Pledge
Agreement originally dated as of July 15, 1993 by and among ▇▇▇▇▇, Lilo and
Fleet National Bank (f/k/a/ Shawmut Bank Connecticut, National Association), as
most recently amended and confirmed by Gerry, Lilo, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇ to Fleet National Bank and The Chase Manhattan Bank on November 14,
1996.
"Option Agreement" shall mean that certain Option Agreement entered
into as of the date hereof by and between the Company and ▇▇▇.
"Option Shares" shall mean the shares of Class A Stock owned by ▇▇▇
pursuant to the Option Agreement.
"Original Price" shall mean the per-share price at which ▇▇▇ shall have
purchased the Restricted Shares from ▇▇▇▇▇ and Lilo, as adjusted to take into
account any changes in the Company's capital structure and any stock redemptions
that may have occurred subsequent to the purchase of such Restricted Shares by
▇▇▇ hereunder.
"Permanent Disability" shall mean a physical or mental impairment, as a
result of which ▇▇▇ shall have been unable, with or without reasonable
accommodation, to perform the essential functions of his employment position for
a period of at least sixteen (16) weeks during any 12-month period.
"Permitted Transferee" shall mean a spouse, child, or grandchild of
▇▇▇, or an
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entity (e.g., a trust, corporation or partnership) in which ▇▇▇ has the majority
voting interest and of which the beneficiaries are a spouse and/or one or more
children or grandchildren of ▇▇▇.
"Restricted Shares" shall mean the shares of Class A Stock which ▇▇▇
shall have purchased from ▇▇▇▇▇ and Lilo pursuant to the Share Purchase
Agreement, plus any additional shares of Class A Stock that may be issued from
time to time with respect to such Restricted Shares as a result of any changes
in the Company's capital structure as contemplated in Section 5.1, and less any
Restricted Shares that may be canceled or redeemed from time to time as a result
of any such changes in the Company's capital structure or of any stock
redemptions as contemplated in Section 5.2.
"Share Purchase Agreement" shall mean that certain Share Purchase
Agreement entered into as of the date hereof by and among ▇▇▇▇▇, Lilo and ▇▇▇.
"Shareholders' Agreement" shall mean that certain Shareholders'
Agreement entered into as of June 30, 1991 by and among the Company, certain of
the Affiliates and the members of the Leeds Family.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. LEGEND ON CERTIFICATES.
Upon the execution of this Agreement, each certificate evidencing any
of the Restricted Shares held by ▇▇▇ shall be endorsed as follows:
The shares of stock evidenced by this certificate are subject to the
restrictions of and are transferable only upon compliance with the
provisions of a certain Stockholders' Agreement entered into by and among
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and the Company. A
copy of such Agreement is on file in the office of the Company.
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In addition, all such certificates shall bear such other legends as, in the
opinion of the Company's counsel, are necessary or appropriate to ensure
compliance with all applicable federal and state securities laws.
SECTION 9.2. PERMITTED TRANSFEREES; REPRESENTATIVE AND SUCCESSORS IN
INTEREST.
(a) PERMITTED TRANSFEREES. Subject to Section 9.4 but notwithstanding
any other provision of this Agreement, ▇▇▇ shall be permitted to sell, give or
bequeath all or any portion of the Restricted Shares or interest therein, or
pass such Restricted Shares or interest by means of intestate succession or
otherwise, either outright or in trust, to a Permitted Transferee, provided that
such transfer shall be implemented in a manner acceptable to legal counsel for
the Company. In case of any such transfer by ▇▇▇, each Permitted Transferee
shall receive and hold the transferred Restricted Shares subject to all the
terms and conditions of this Agreement, and there shall be no further transfer
of such Restricted Shares except by such Permitted Transferee to another
Permitted Transferee in accordance with the terms of this Agreement. Before ▇▇▇
transfers any Restricted Shares to a Permitted Transferee, and before any
Permitted Transferee transfers any Restricted Shares to another Permitted
Transferee, ▇▇▇ or the transferring Permitted Transferee, as the case may be,
shall give the Company written notice of such intended transfer. Any Permitted
Transferee shall, to the extent of the Restricted Shares transferred, succeed to
all the rights and obligations of the transferor under this Agreement and shall
become bound by all the terms and conditions hereof; provided that, as a
condition precedent to a Permitted Transferee's exercising any rights under this
Agreement and to the Company's obligation to change its records to reflect the
record ownership of such Restricted Shares in the name of such Permitted
Transferee, the Permitted Transferee shall execute such
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documents and instruments as may reasonably be required by legal counsel to the
Company. Unless otherwise expressly provided in this Agreement, any reference
herein to a right or obligation of ▇▇▇ to sell or receive payment for any shares
of Class A Stock shall be deemed to refer equally to any Permitted Transferee,
and any limitations herein with respect to the number or category of shares of
Class A Stock which ▇▇▇ shall have a right or obligation to sell in any calendar
year shall apply to ▇▇▇ and all Permitted Transferees as a group.
(b) REPRESENTATIVE AND SUCCESSORS IN INTEREST. Except as may be
otherwise specifically provided in this Agreement, in the event of Ken's death
or incapacity his representative and/or successors in interest shall succeed to
all his rights and obligations under this Agreement and be bound by all the
terms and conditions hereof, and they shall be entitled to exercise such rights,
and shall be required to fulfill such obligations, in the same manner and to the
same extent that ▇▇▇ would have been so entitled or required but for his death
or incapacity.
SECTION 9.3. FURTHER ASSURANCES.
Each of the parties hereto, upon request of another party, shall take all
such actions and execute and deliver all such further instruments of sale,
assignment, conveyance, transfer and exchange, and all such other documents and
agreements, as may be necessary or appropriate to assure, complete and evidence
the full and effective sale, assignment, transfer, conveyance and exchange of
the Restricted Shares as herein required and as may otherwise be necessary or
appropriate to comply with the terms and conditions of this Agreement. In the
event a party shall not take all such actions or execute or deliver all such
further instruments, then and in that event each such party hereby appoints the
Company such party's agent and attorney-in-fact for the purpose of executing and
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delivering (a) any and all documents necessary to convey and/or exchange the
Restricted Shares pursuant to the provisions of this Agreement, any conveyance
or exchange so made fully divesting the party whose interest is so conveyed of
all right, title or equity in or to the Restricted Shares formerly owned by such
party, and (b) any and all other documents, instruments, agreements and other
writings necessary to effectuate the terms of this Agreement. The powers of
attorney herein granted, being coupled with an interest, are irrevocable and
shall not be revoked by the death, dissolution or incapacity of any party hereto
or for any other reason. Each party hereto hereby releases any other party who
conveys or exchanges the Restricted Shares formerly owned by such party as
provided in this Section 9.3 from any and all claims and liabilities for or
resulting from the conveying or exchanging of such Restricted Shares.
SECTION 9.4. S CORPORATION.
It is intended that for federal income tax purposes the Company will
continue to qualify as an "S Corporation" as defined in Section 1361 of the
Internal Revenue Code or any successor provision of the federal income tax laws.
Accordingly, the Company and ▇▇▇ shall execute and keep in full force and effect
the consent described in Section 1362(a)(2) of the Internal Revenue Code or any
successor provision until such time as the Company and the Controlling
Stockholders determine not to continue to qualify the Company as an S
Corporation. In addition, notwithstanding the provisions of any other Section of
this Agreement, no transfer of any shares of Class A Stock shall be made to any
person or entity, nor shall ▇▇▇ by action or inaction cause any circumstances to
exist, which would disqualify the Company as an S Corporation.
SECTION 9.5. CREDIT FACILITIES.
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It is understood and acknowledged that one or more banks or lending
institutions of the Company may from time to time require, as a condition to
extending or continuing to extend credit to the Company, that persons who are
both stockholders and members of management of the Company execute and deliver
to such banks or lending institutions certain assurances and agreements such as
the Negative Pledge Agreement. For as long as he is a Key Senior Executive, ▇▇▇
shall, if requested by the Company, promptly take all such actions and execute
and deliver all such documents containing such assurances and agreements (other
than personal guarantees) as may be reasonably required by such banks or lending
institutions, on the same basis and in substantially the same form and manner as
other persons who are both stockholders and members of management of the
Company.
SECTION 9.6. OTHER TRANSFERS.
In the event of any transfer of any Restricted Shares by ▇▇▇, his
representative, any successor in interest or any Permitted Transferee, by
operation of law (other than transfers occasioned by an individual's death) or
court order, including but not limited to any foreclosure, adjudication in
bankruptcy, appointment of a receiver of the assets of ▇▇▇, or ▇▇▇▇ and
execution, ▇▇▇ shall give immediate notice thereof to the Company, including in
such notice the date and circumstances of such transfer and the name and address
of the transferee. ▇▇▇▇▇ and Lilo or their designees, at their option, upon
giving sixty (60) days' prior written notice to such transferee, shall have the
right to purchase such Restricted Shares at the Original Price. The purchase
price for any such Restricted Shares shall be paid in full at the closing, which
shall not be later than thirty (30) Business Days after such notice to purchase
is given, at such time and place as the purchaser(s) may designate.
SECTION 9.7. ENTIRE AGREEMENT; BINDING EFFECT.
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This Agreement contains all of the terms agreed upon by the parties
with respect to the subject matter hereof and replaces and supersedes any and
all prior agreements, written or oral, between the parties relating to the
Restricted Shares (except for the Option Agreement to the extent its terms are
not inconsistent herewith). No promises, agreements or representations with
respect to the matters herein contained shall be binding upon any of the parties
unless set forth herein. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, representatives, successors
and permitted assigns.
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SECTION 9.8. AMENDMENT.
No provision of this Agreement may be amended or waived except by a
writing making reference to this Agreement and signed by the party against whom
the enforcement of such amendment or waiver is sought.
SECTION 9.9. APPLICABLE LAW.
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, and in accordance with and
consistent with the Company's election to be treated as an S Corporation.
SECTION 9.10 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law and
the Company's S Corporation election, but if any provisions hereof shall be
prohibited by or invalid under any such law or the Company's S Corporation
election, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating or nullifying the remainder of such
provision or any other provision of this Agreement.
SECTION 9.11. NO WAIVER.
No delay or omission by any party in exercising or enforcing any right
hereunder shall operate as a waiver of such right, and a waiver on one occasion
shall not be construed as a waiver of any right or remedy on any future
occasion.
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SECTION 9.12. NOTICES.
All notices, requests, consents, designations and demands required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when personally delivered to an individual
party or to an authorized officer of a corporate party, whether by messenger,
courier or other person, (b) on the second Business Day after the date it is
sent by certified or registered mail, return receipt requested, or (c) on the
next Business Day after the date it is sent via telefacsimile (provided it is
actually received and is not materially illegible), as follows:
If to the Company:
CMP Media Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
CMP Media Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to ▇▇▇ at his last known address as reflected on the records
of the
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Company
If to ▇▇▇▇▇:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o CMP Media Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lilo:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o CMP Media Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other mail or facsimile address as the recipient party shall have
last designated by notice given to the other in accordance herewith.
SECTION 9.13. ASSIGNMENT.
Except as expressly provided in this Agreement, no party may assign any
rights or delegate any obligations or liabilities hereunder without the prior
written consent of the other parties, except that each of ▇▇▇▇▇ and Lilo may
assign any of his or her rights and delegate any of his or her obligations or
liabilities to the other, and the Company may assign any of its rights and
delegate any of its duties to an entity that controls, is controlled by or is
under common control with the Company; provided, however, that no such
assignment or delegation shall relieve such assignor from his, her or its
obligations or liabilities hereunder.
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SECTION 9.14. SURVIVAL.
This Agreement shall survive any merger, sale or other disposition of the
Company.
SECTION 9.15. GENDER AND NUMBER.
Except when otherwise indicated by the context, references herein to one
gender shall include the other genders, and references herein to the plural
shall include the singular.
SECTION 9.16. DATES.
If any date referenced in this Agreement falls on a day that is not a
Business Day, the next succeeding Business Day shall be deemed substituted for
such date.
SECTION 9.17. HEADINGS.
The headings herein are for convenience of reference only and shall not be
considered in construing this Agreement.
SECTION 9.18. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed as an original and all of which shall together constitute
one and the same instrument.
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IN WITNESS WHEREOF, the individual parties have 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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attest:
Title: President /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_______________________
(CORPORATE SEAL)
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
_______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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