ASSET PURCHASE AGREEMENT
By and Among
XXXXXX.XXX, INC.,
XXXXXX.XXX EUROPE, LTD.,
XXXXXX.XXX ASIA PACIFIC, LTD.,
XXXXXX.XXX CONFERENCES, INC.
XXXXXXX XXXXXX
And
KEY3MEDIA VON EVENTS, INC.
Dated as of September 10, 2001
TABLE OF CONTENTS
Page
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1. PURCHASE AND SALE OF ASSETS ................................. 1
2. CONSIDERATION ............................................... 1
2.1 Purchase Price ..................................... 1
2.2 Payments ........................................... 2
2.3 No Assumption of Liabilities ....................... 4
2.4 Escrow Account ..................................... 4
2.5 Allocation of Consideration ........................ 4
3. WORKING CAPITAL AND PROFIT/LOSS ALLOCATION .................. 5
4. CLOSING ..................................................... 5
4.1 Documents Delivered by Sellers to Buyer ............ 5
4.2 Documents To Be Delivered by Buyer ................. 6
4.3 Passage of Title at Closing ........................ 7
4.4 Assignment of Seller's Contracts ................... 7
5. REPRESENTATIONS AND WARRANTIES BY SELLER AND XXXXXX ......... 7
5.1 Corporate Organization ............................. 7
5.2 Capitalization; Stock Ownership .................... 7
5.3 Subsidiaries and Other Equity Investments .......... 8
5.4 Corporate Authority ................................ 8
5.5 No Violation ....................................... 8
5.6 Financial Statements ............................... 8
5.7 No Undisclosed Liabilities, Etc .................... 9
5.8 Absence of Certain Changes ......................... 9
5.9 Title to and Condition of Properties and Assets .... 11
5.10 Certain Properties ................................. 11
5.11 Tax Returns ........................................ 11
5.12 Contracts .......................................... 12
5.13 Litigation ......................................... 13
5.14 Trademarks ......................................... 13
5.15 Compliance With Laws ............................... 13
5.16 Environmental Matters .............................. 14
5.17 Governmental Authorizations and Regulations ........ 14
5.18 SEC and Antitrust Filings .......................... 14
5.19 EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS ...... 14
5.20 Certain Transactions ............................... 15
5.21 Foreign Corrupt Practices Act ...................... 15
5.22 Accounting Practices ............................... 15
5.23 Minute Books ....................................... 16
5.24 Insurance .......................................... 16
5.25 Certain Disclosures ................................ 16
5.26 Brokers ............................................ 16
5.27 Conduct Of Business ................................ 16
5.28 No Untrue Statements ............................... 16
6. REPRESENTATIONS AND WARRANTIES BY BUYER ..................... 16
6.1 Corporate Organization ............................. 16
6.2 Authorization of Agreement; No Violation ........... 16
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6.3 Litigation .......................................... 17
6.4 Brokers ............................................. 17
6.5 No Untrue Statements ................................ 17
7. COVENANTS OF SELLERS AND XXXXXX ............................. 17
7.1 Key Employee Retention .............................. 17
7.2 Transition Services ................................. 17
7.3 Right of First Refusal .............................. 18
7.4 Von Coalition License Agreement ..................... 18
7.5 2002 Budget for Band ................................ 18
7.6 Cost Reimbursement .................................. 18
7.7 Use of Databases .................................... 18
7.8 Use of Seller's Assets .............................. 18
7.9 Selected CPA Report and Future Accounting Treatment.. 19
8. COVENANTS OF BUYER .......................................... 19
8.1 Timing of the Events ................................ 19
8.2 Use of Databases .................................... 19
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.. 19
9.1 Survival of Representations and Warranties .......... 19
9.2 Sellers' Indemnification Obligations ................ 19
9.3 Limitation of Liability ............................. 20
9.4 Buyer's Indemnification Obligations ................. 21
9.5 Liability for Taxes ................................. 21
9.6 Procedure for Indemnification Claims ................ 21
10. SETOFF ...................................................... 22
11. NONCOMPETITION .............................................. 22
12. DISPUTE RESOLUTION .......................................... 23
13. MISCELLANEOUS ............................................... 24
13.1 Assurance of Further Action ......................... 24
13.2 Expenses ............................................ 24
13.3 Waiver .............................................. 24
13.4 Notices ............................................. 24
13.5 Entire Agreement .................................... 24
13.6 Rights under this Agreement; Nonassignability ....... 24
13.7 Governing Law, Jurisdiction and Venue ............... 25
13.8 Knowledge Qualifiers ................................ 25
13.9 Headings; References to Sections, Exhibits
and Schedules ....................................... 25
13.10 Severability Construction ........................... 25
13.11 Counterparts ........................................ 25
13.12 No Third Party Beneficiaries ........................ 25
13.13 Nature of Obligations ............................... 25
Exhibit A INDENTURE, XXXX OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT ................................ X-0
Xxxxxxx X-0 EXCLUDED ASSETS .................................... A1-1
Exhibit B FORM OF ESCROW AGREEMENT ............................ B-1
Exhibit C Secretary's certificate XXXXXX.XXX, INC. ............ C-1
Exhibit D EMPLOYMENT AGREEMENT ................................ D-1
Exhibit E KEY3MEDIA VON EVENTS, INC. Secretary's Certificate .. E-1
SCHEDULES ........................................................ S-1
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ASSET PURCHASE AGREEMENT
------------------------
This asset purchase agreement (the "Agreement") dated as of this 10th
day of September, 2001 is entered into by and among KEY3MEDIA VON EVENTS, INC.,
a Delaware corporation ("Buyer"), XXXXXX.XXX, INC., a New York corporation
("Xxxxxx.xxx"), XXXXXX.XXX EUROPE, LTD., a New York corporation ("Xxxxxx
Europe"), XXXXXX.XXX CONFERENCES, INC., a New York corporation ("Xxxxxx
Conferences"), XXXXXX.XXX ASIA PACIFIC LTD., a New York corporation ("Xxxxxx
Asia") (Xxxxxx.xxx, Xxxxxx Europe, Xxxxxx Conferences and Xxxxxx Asia are each
referred to individually as a "Seller" and collectively as the "Sellers"), and
Xxxxxxx Xxxxxx, an individual ("Xxxxxx").
RECITALS
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WHEREAS, the Sellers own, operate and produce six tradeshow events
relating to voice on the internet technology: Voice on the Net (VON) Spring,
Voice on the Net (VON) Fall, Voice on the Net (VON) Europe, Voice on the Net
(VON) Asia, VON Developers Conference East and VON Developers Conference West
(collectively, the "VON Events");
WHEREAS, the Sellers own, operate and produce the SIP Summit (the
"Summit" and collectively with the VON Events, the "Events" or the "Business");
WHEREAS, Xxxxxx owns all of the outstanding capital stock of each
Seller; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, substantially all of the properties, assets and business of
Sellers relating to the Business, all upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
---------
1. PURCHASE AND SALE OF ASSETS
Upon the terms and provisions of this Agreement, Buyer agrees to
purchase and accept delivery from Sellers and Xxxxxx, and Sellers and Xxxxxx
agree to sell, convey, assign, transfer and deliver to Buyer, at the Closing (as
defined below) provided for in Section 4, all of Sellers' rights, title and
interest in and to all the then existing properties, assets and business as a
going concern of every kind and nature, real, personal or mixed, tangible or
intangible, wherever located that relate to any of the Events, including,
without limitation, all of Sellers' and Xxxxxx'x goodwill relating to any of the
Events other than, in each case, the properties, assets and businesses
specifically set forth on Exhibit A-1 (collectively, the "Excluded Assets"). The
properties, assets, and business to be sold by Sellers and Xxxxxx to Buyer
pursuant to this Agreement are collectively referred to as the "Assets."
2. CONSIDERATION
As consideration for the Assets:
2.1 Purchase Price. (A) Buyer agrees to pay to Sellers for the Assets and
the Sellers agree to accept from Buyer as the purchase price for the Assets (the
"Purchase Price"), the amount equal to the difference of (x) the product of (i)
the two year average of the EBITDA (as hereinafter defined) derived from the
Audited Financial Statements (as defined below) (the
"Audited EBITDA") of the VON Events for the fiscal year ending December 31,
2000, and the Business for the fiscal year ending December 31, 2001 (less
$100,000) multiplied by (ii) 8.75 minus (y) $291,667. The Purchase Price is
subject to adjustment after the Closing (as described below). "EBITDA", with
respect to any period, shall be defined as (a) the net income of the applicable
Events for such period determined in accordance with generally accepted
accounting principles, consistently applied ("GAAP"), without giving effect to:
(i) extraordinary gains and losses or gains and losses from sales, exchanges and
other dispositions of assets or securities not in the ordinary course of
business, and (ii) nonrecurring items, plus, to the extent deducted in
calculating net income, (b) the sum of, without duplication, (i) depreciation
expense, (ii) amortization expense, (iii) interest expense, (iv) federal,
state, local and foreign income tax expense and (v) and any allocation of the
corporate overhead of Buyer's Affiliates (as defined below) that are unrelated
to the Business.
(B) The Buyer, Xxxxxx and the Sellers acknowledge and agree that for
purposes of calculating Audited EBITDA for the VON Events for the fiscal year
ended 2000, the parties shall include, inter alia, $200,000 as the total
expenses incurred by the VON Events for the following items: (i) the additional
salary of Xxxxxx for the fiscal year ended December 31, 2000; (ii) the costs of
the band hired by Xxxxxx and the Sellers during the fiscal year ended December
31, 2000; and (iii) the legal fees relating to the Business and incurred by
Xxxxxx and the Sellers for the survey commissioned by counsel for the Sellers
(the "Survey") establishing the general public's association of the "VON"
service xxxx with the trade shows and conferences produced by Xxxxxx and the
Sellers. The parties hereto acknowledge that this $200,000 allocation shall
result in $40,000 being added to the $733,198 allocated to the Sellers' general
and administrative expenses set forth in the Audited Financial Statements.
(C) The Buyer, Xxxxxx and the Sellers acknowledge and agree that for
purposes of calculating Audited EBITDA for the Business for the fiscal year
ending December 31, 2001, the parties shall include, inter alia, the total cost
incurred by Xxxxxx and the Sellers during such period for each of the following
items: (i) the Golf Tournament held by Xxxxxx and the Sellers during Spring VON
2001; (ii) the legal fees relating to the Business and incurred by Xxxxxx and
Sellers during the fiscal year ending December 31, 2001 (excluding the legal
costs directly associated with the negotiation of this Agreement); (iii) all
costs (including transportation and housing costs) associated with the bands
hired by Xxxxxx during the fiscal year ending December 31, 2001.
2.2 Payments. The Purchase Price shall be payable in installments as set
forth below:
(A) The estimated amount of the Purchase Price (the "Estimated Payment
Amount") shall be an amount equal to the difference of (x) the product of (i)
Audited EBITDA for the VON Events for the fiscal year ended December 31, 2000
and (ii) 8.75 (the "Estimated Payment Amount") (as adjusted for the estimated
Purchase Price Increase or Purchase Price Reduction, as applicable, set forth in
Section 3 below) minus (y) $291,667 and shall be due and payable to Sellers on
the Closing Date (as defined below); provided, however, that to the extent the
Estimated Payment Amount exceeds $55 million, then the amount of such excess
shall be held in the Escrow Account (as defined in Section 2.4); provided,
further that, in any event, at least $5 million of the Estimated Payment Amount
shall be held in the Escrow Account.
(B) The actual amount of the Purchase Price (the "Actual Payment
Amount") shall be calculated by the Buyer promptly upon the Buyer's receipt of
the Audited Financial Statements for the Business for the fiscal year ending
December 31, 2001 (as adjusted for the final Purchase Price Reduction or
Purchase Price Increase, as applicable, set forth in Section 3
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below). In the event the Actual Payment Amount is less than the Estimated
Payment Amount (such difference, a "Seller Shortfall Amount"), then the Buyer
shall be entitled to immediately receive such Seller Shortfall Amount from the
Escrow Account and Sellers and Xxxxxx shall, within two business days following
the calculation of the Seller Shortfall Amount, also pay to Buyer any additional
amounts required to make up the full amount of the Seller Shortfall Amount. In
the event the Actual Payment Amount is greater than the Estimated Payment Amount
(such difference, a "Buyer Shortfall Amount"), then the Buyer shall, within two
business days of calculation of the Buyer Shortfall Amount, pay the Buyer
Shortfall Amount to the Escrow Account.
(C) The Buyer shall use its commercially reasonable efforts to
complete on or about March 31, 2003 audited financial statements for the
Business held in the fiscal year ending December 31, 2002. In the event Audited
EBITDA for 2002 is greater than Audited EBITDA for 2001 (such difference a "2002
EBITDA Increase"), then the Buyer shall, within two business days following the
calculation of the 2002 EBITDA Increase, pay Sellers an amount equal to the 2002
EBITDA Increase divided by two and multiplied by 8.75 (the "2002 Purchase Price
Installment"). In the event Audited EBITDA for 2002 is less than Audited EBITDA
for 2001 (such difference a "2002 EBITDA Decrease"), then the Buyer shall be
entitled to immediately receive from the Escrow Account an amount equal to the
2002 EBITDA Decrease divided by two and multiplied by 8.75 (the "2002 Purchase
Price Adjustment"); provided, however that Sellers and Xxxxxx shall also pay to
Buyer any additional amounts required to make up the full amount of the 2002
Purchase Price Adjustment. In no event shall the amounts payable by Buyer to
Sellers or by Sellers and Xxxxxx to Buyer pursuant to this Section 2.2(C) exceed
$6 million.
(D) The Buyer shall use its commercially reasonable efforts to
complete on or about March 31, 2004 audited financial statements for the
Business held in the fiscal year ending December 31, 2003. In the event Audited
EBITDA for 2003 is greater than Audited EBITDA for 2001 (such difference a "2003
EBITDA Increase"), then the Buyer shall, within two business days following the
calculation of the 2003 EBITDA Increase, pay Sellers an amount equal to the 2003
EBITDA Increase divided by two and multiplied by 8.75 (the "2003 Purchase Price
Installment"). In the event Audited EBITDA for 2003 is less than Audited EBITDA
for 2001 (such difference a "2003 EBITDA Decrease"), then the Buyer shall be
entitled to immediately receive from the Escrow Account an amount equal to the
2003 EBITDA Decrease divided by two and multiplied by 8.75 (the "2003 Purchase
Price Adjustment"); provided, however that Sellers and Xxxxxx shall also pay to
Buyer any additional amounts required to make up the full amount of the 2003
Purchase Price Adjustment. In no event shall the amounts payable by Buyer to
Sellers or by Sellers and Xxxxxx to Buyer pursuant to this Section 2.2(D) exceed
$6 million.
(E) The Buyer shall use its commercially reasonable efforts to
complete on or about March 31, 2005 audited financial statements for the
Business held in the fiscal year ending December 31, 2004. In the event Audited
EBITDA for 2004 is greater than Audited EBITDA for 2001 (such difference a "2004
EBITDA Increase"), then the Buyer shall, within two business days following the
calculation of the 2004 EBITDA Increase, pay Sellers an amount equal to the 2004
EBITDA Increase divided by two and multiplied by 8.75 (the "2004 Purchase Price
Installment"). In the event Audited EBITDA for 2004 is less than Audited EBITDA
for 2001 (such difference a "2004 EBITDA Decrease"), then the Buyer shall be
entitled to immediately receive from the Escrow Account an amount equal to the
2004 EBITDA Decrease divided by two and multiplied by 8.75 (the "2004 Purchase
Price Adjustment") and the Actual Payment Amount shall be automatically reduced
by such amount; provided, however that Sellers and Xxxxxx shall also pay to
Buyer any additional amounts required to make up the full amount of the 2004
Purchase Price Adjustment. In no event shall the amounts payable by Buyer to
Sellers or by Sellers and Xxxxxx to Buyer pursuant to this Section 2.2(E) exceed
$6 million.
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(F) In the event, a 2002 EBITDA Increase occurs, then notwithstanding
anything to the contrary in this Section 2.2, the amounts payable by Buyer to
Sellers or Sellers and Xxxxxx to Buyer pursuant to each of Sections 2.2(D) and
(E) respectively, shall not exceed $ 5 million.
(G) If at any time prior to December 31, 2003 the amount of funds in
the Escrow Account exceeds $10 million, then Xxxxxx shall be entitled to
promptly receive from the Escrow Account such amount in excess of $10 million.
If at any time during the fiscal year ending December 31, 2004, the amount of
funds in the Escrow Account exceeds $ 5 million, then Xxxxxx shall be entitled
to promptly receive from the Escrow Account such amount in excess of $ 5
million. Notwithstanding the foregoing, Xxxxxx and Seller jointly and severally
agree to satisfy all payment obligations of Sellers and Xxxxxx pursuant to this
Section 2.2.
(H) Within five business days of the payment of the 2004 Purchase
Price Installment or the 2004 Purchase Price Adjustment (as the case may be),
the Sellers shall receive from the Escrow Account the remaining unpaid portion
of the Purchase Price (as adjusted pursuant to the terms of this Agreement) held
in the Escrow Account and due Sellers.
(I) Sellers shall receive on a quarterly basis interest on the then
existing amount of funds held in the Escrow Account.
2.3 No Assumption of Liabilities. Except with respect to the contractual
obligations of Sellers disclosed in Schedule 2.3(A) to this Agreement and
directly relating to the ownership or operation of the Assets and the Business
after the Closing Date (the "Assumed Liabilities"), the Buyer is not and will
not assume or be liable for any liabilities or obligations of the Sellers,
Pulver, any of their affiliates or any other person or entity of any kind or
nature, whether absolute, accrued, contingent or otherwise, or whether due or to
become due, directly or indirectly arising out of or relating to the ownership
or operation of the Assets, the Excluded Assets or the Business, including,
without limitation, any such liabilities or obligations not disclosed in
Schedule 2.3(A) to this Agreement or relating to the ownership or operation of
the Assets or the Business prior to the Closing Date or of the Excluded Assets
at any time.
(A) Without limiting the foregoing, the Sellers shall be responsible
for any or all liability incurred prior to or as of the Closing Date for health
benefits under Section 4980B of the Code ("COBRA") for employees and their
"qualified beneficiaries" (as defined in Section 4980B (g) of the Internal
Revenue Code of 1986, as amended (the "Code")) under any employee benefit plans
maintained by the Sellers. As to each Seller's employees, Sellers shall be
responsible for complying with any obligations and liabilities arising under
COBRA (including notice and maintaining insurance for employees who elect
continued coverage) as a result of such employees' loss of coverage under
Sellers' health plans. The Sellers shall be responsible for all retiree welfare
obligations, if any, arising out of or attributable to any employee benefit plan
of the Sellers in effect prior to or as of the Closing Date, or agreements
relating thereto.
2.4 Escrow Account. On the Closing Date, Buyer shall deposit with the Bank
of New York (the "Escrow Agent") into an account (the "Escrow Account") the
payments required to be so deposited pursuant to Section 2 (together with any
interest thereon, the "Escrow Amount"). The Escrow Amount shall be held by the
Escrow Agent pursuant to the terms of an Escrow Agreement substantially in the
form of Exhibit B (the "Escrow Agreement").
2.5 Allocation of Consideration. The Sellers and the Buyer shall (i)
negotiate in good faith and in accordance with the principles set forth in the
attached Schedule 2.5 an allocation of the consideration furnished among the
Assets including the fair market value of each of the
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Assets, (ii) treat the transfers contemplated by this Agreement in a manner
consistent with any agreement reached pursuant to clause (i), (iii) participate
in the joint preparation of Internal Revenue Service Forms 8594 reflecting any
agreement reached pursuant to clause (i), and (iv) deliver any report, document,
form, or certificate reasonably necessary for any agreement reached pursuant to
clause (i) to be given full effect by any relevant taxing authority. For
purposes of the preceding sentence, the Sellers and the Buyer agree that the
"total sales price" or "consideration" for the Assets, as those terms are used
in Internal Revenue Service Form 8594 and the General Instructions thereto, is
the purchase price described in Section 2 of this Agreement, as adjusted by
Section 3 below and increased by the amount of the Assumed Liabilities. The
Sellers and the Buyer agree to promptly inform one another of any proposed
adjustment (and any negotiations relating thereto) or final determination by the
Internal Revenue Service or any other taxing authority regarding tax reporting
pursuant to this Section 2.5.
3. WORKING CAPITAL AND PROFIT/LOSS ALLOCATION
In the event the sum (the "Working Capital Requirement") as of August
31, 2001 of the Business' (i) cash and cash equivalents, (ii) accounts
receivable and (iii) prepaid expenses is less than the deferred revenue
liability of the Business as of August 31, 2001, then the Estimated Payment
Amount shall be adjusted downward (a "Working Capital Reduction") by the amount
of the difference between the Working Capital Requirement and the deferred
revenue liability. In the event that the Working Capital Requirement is greater
than the deferred revenue liability of the Business as of August 31, 2001, then
the Estimated Payment Amount shall be adjusted upward (a "Working Capital
Increase") by the amount of the difference between the Working Capital
Requirement and the deferred revenue liability. The parties will calculate a
mutually agreed upon estimated Working Capital Reduction or Working Capital
Increase, as applicable, on or before, and payable at, the Closing. The final
Working Capital Reduction or Working Capital Increase, as applicable, will be
calculated based upon the Working Capital Requirement and deferred revenue
liability of the Business, in each case, as of August 31, 2001, and reconciled
by the agreement of the parties within 45 days after Closing.
Notwithstanding anything to the contrary in this Agreement, the profit
and loss of the Business shall be transferred to Buyer as of September 1, 2001.
4. CLOSING
The closing of the purchase and sale of the Assets ("Closing") is
taking place at the office of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at five o'clock (5:00) in the evening, local time, on September
10, 2001 ("Closing Date").
4.1 Documents Delivered by Sellers to Buyer. Concurrently with or prior to
the execution of this Agreement, Sellers have delivered to Buyer:
(A) a general instrument of sale, conveyance, assignment, transfer and
delivery with full covenants of warranty as to each Seller's good and marketable
title in and to all the Assets in the form of Exhibit A;
(B) such specific instruments of sale, conveyance, assignment,
transfer and delivery with full covenants of warranty as to each Seller's good
and marketable title in and to such of the Assets included within such general
instrument of sale, conveyance, assignment, transfer, and delivery as Buyer
shall reasonably request;
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(C) all Seller' contracts, books, records, and other data relating to
the Assets and the Business; provided, that Sellers may maintain copies of the
same for purposes of complying with their obligations under this Agreement,
preparing tax returns, operating their other businesses, and other legitimate
purposes not inconsistent with the purpose of this Agreement;
(D) a certificate of each Seller in the form of Exhibit C, certifying
as to certain corporate matters, together with all of the attachments referred
to therein;
(E) an Employment Agreement, executed by Xxxxxx in the form of Exhibit
D (the "Xxxxxx Employment Agreement");
(F) an opinion, dated the Closing date, of Xxxxxxx Xxxx LLP, counsel
for Sellers and Xxxxxx in form and substance satisfactory to Buyer;
(G) The Escrow Agreement, executed by Sellers and Xxxxxx;
(H) The Financial Statements (as defined below), prepared by Xxxxxx
Xxxxxxxx LLP, independent public accountants (the "Selected CPA"), prepared in
accordance with generally accepted accounting principles consistently applied,
together with a report thereon (the "Selected CPA Report");
(I) The Accountant's Letter, dated no earlier than a date ten days
preceding the Closing Date, from the Selected CPA, stating that, based upon:
(i) a reading of the latest available unaudited interim consolidated
financial statements of Sellers;
(ii) discussions with officers and employees of each Seller
responsible for financial and accounting matters; and
(iii) such other procedures and inquiries as may be reasonably
specified by Buyer and described in such letter (which procedures will not
constitute an examination made in accordance with generally accepted
auditing standards), nothing has come to their attention which, in their
judgment, would cause them to believe that any material modifications
should be made to the unaudited financial statements as of and for the six-
month period ended June 30, 2001, for them to be in conformity with
generally accepted accounting principles.
4.2 Documents To Be Delivered by Buyer. Concurrently with or prior to the
Closing, Buyer has delivered to Seller:
(A) the Estimated Payment Amount of the Purchase Price (less the
amount in the Escrow Account) by transfer of immediately available funds to such
account at such bank as Sellers shall direct;
(B) a certificate of Buyer in the form of Exhibit E certifying as to
certain corporate matters, together with all of the attachments referred to
therein;
(C) the Escrow Agreement, executed by Buyer;
(D) the Xxxxxx Employment Agreement (as defined below), executed by
Buyer; and
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(E) an opinion, dated the Closing Date, of Xxxxxxxx & Xxxxxxxx,
counsel for Buyer, in form and substance satisfactory to Sellers.
4.3 Passage of Title at Closing. Upon delivery of the instruments of sale,
conveyance, assignment, transfer and delivery, title in and to the Assets shall
pass to Buyer at the Closing. At the Closing, subject to the provisions of
Section 4.5 hereof, Sellers will put Buyer in full, complete and quiet
possession and enjoyment of all of the Assets and from and after the Closing the
ownership and operation of the Assets and the business of Sellers to be sold to
Buyer pursuant to this Agreement shall be for the account and risk of Buyer.
Buyer shall be under no liability for any debt, liability or obligation of
Sellers incurred after the Closing or arising out of any transaction by Sellers
or any event occurring with respect to Sellers after the Closing.
4.4 Assignment of Seller's Contracts. Nothing in this Agreement shall be
deemed to constitute an assignment or an attempt to assign any contract or other
agreement to which each Seller is a party if the attempted assignment thereof
without the consent of the other party to such contract or agreement would
constitute a breach thereof or affect in any way the rights of each Seller
thereunder. If after each Seller has used its best efforts to obtain the consent
of any such other party to such contract or agreement, such consent shall not be
obtained at or prior to the Closing, or an attempted assignment thereof at the
Closing would be ineffective and would affect the rights of each Seller
thereunder, each Seller will cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such contract or agreement,
including the enforcement, at the cost and for the benefit of Buyer, of any and
all rights of each Seller against such other party thereto arising out of the
breach or cancellation thereof by such other party or otherwise.
5. REPRESENTATIONS AND WARRANTIES BY SELLER AND XXXXXX
Each Seller and Xxxxxx jointly and severally represent and warrant to
Buyer as follows, in each case subject to such exceptions as are set forth in
Sellers' and Xxxxxx'x attached disclosure schedules, contemplated by that
section. . Each exception set forth in Sellers' and Xxxxxx'x disclosure
schedules will be deemed to qualify each representation and warranty of Sellers
and Xxxxxx (i) that is specifically identified (by cross-reference or otherwise)
in its disclosure schedules as being qualified by such exception, or (ii) with
respect to which the relevance of such exception is apparent on the face of the
disclosure of such exception set forth in its disclosure schedules, provided, in
either case, that the relevant facts are set forth in reasonable detail in the
disclosure schedules.
5.1 Corporate Organization. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has the corporate power and authority to carry on its business as now being
conducted and to own and operate the properties and assets now owned and being
operated by it. Each Seller has delivered to Buyer complete and correct copies
of its Certificate of Incorporation and Bylaws as in effect on the date hereof.
Each Seller is duly qualified or licensed to do business and is in good standing
as a foreign corporation in the jurisdictions set forth in Schedule 5.1. Each
Seller is not required to be qualified or licensed to do business as a foreign
corporation in any other jurisdiction except such jurisdictions, if any, in
which the failure to be so qualified or licensed will not, individually or in
the aggregate have a material adverse effect on the condition (financial or
otherwise), operations or business (present or prospective), properties, assets
or liabilities of the Assets or the Business (a "MAE").
5.2 Capitalization; Stock Ownership. Xxxxxx owns all of the issued and
outstanding shares of Sellers, free and clear of all liens, claims, charges,
restrictions, equities or
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encumbrances of any kind. All of such issued shares have been duly authorized
and validly issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other right. Except as set forth in
Schedule 5.2, neither Seller nor Xxxxxx is a party to or bound by any contract,
agreement or arrangement to issue, sell or otherwise dispose of or redeem,
purchase or otherwise acquire any capital stock or any other security of Seller
or any other security exercisable or exchangeable for or convertible into any
capital stock or any other security of Seller, and there is no outstanding
option, warrant or other right to subscribe for or purchase, or contract,
agreement or arrangement with respect to, any capital stock or any other
security of Seller or any other security exercisable or convertible into any
capital stock or any other security of Seller.
5.3 Subsidiaries and Other Equity Investments. Neither Sellers nor Xxxxxx
own, directly or indirectly, any shares of capital stock of any corporation or
any equity investment in any partnership, association or other business
organization related to the Business (other than Xxxxxx'x ownership of the
capital stock of Sellers and his ownership of minority equity interests in
companies that from time to time have been sponsors and/or exhibitors at the
Events).
5.4 Corporate Authority. Each Seller has the corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action of the Board of Directors and shareholders of each Seller and no other
corporate proceeding on the part of each Seller is necessary to authorize the
execution and delivery of this Agreement or the performance of any of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered on behalf of each of Sellers and Xxxxxx and constitutes a legal, valid
and binding obligation of each such party enforceable against them in accordance
with its terms.
5.5 No Violation. Neither the execution, delivery or performance of this
Agreement nor consummation of any of the transactions contemplated hereby (i)
will violate or conflict with the Certificate of Incorporation or Bylaws of each
Seller, or (ii) will result in any breach of or default under any provision of
any contract or agreement of any kind to which each Seller or Xxxxxx is a party
or by which each Seller or Xxxxxx is bound or to which any property or asset of
any of them is subject, (iii) is prohibited by or requires Sellers or Xxxxxx to
obtain or make any consent, authorization, approval, registration or filing
under any statute, law, ordinance, regulation, rule, judgment, decree or order
of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, (iv) will cause any acceleration of maturity
of any note, instrument, or other obligation to which Sellers or Xxxxxx is a
party or by which Sellers or Xxxxxx is bound or with respect to which Sellers or
Xxxxxx is an obligor or guarantor or (v) will result in the creation or
imposition of any lien, claim, charge, restriction, equity or encumbrance of any
kind whatsoever upon or give to any other person any interest or right
(including any right of termination or cancellation) in or with respect to any
of the properties, assets, businesses, agreements or contracts of Sellers or
Xxxxxx, including without limitation the Assets.
5.6 Financial Statements. Sellers have delivered to Buyer copies of the
following financial statements (the "Financial Statements") relating to the
Business:
(A) The audited balance sheets of Sellers relating to the VON Events
as at December 31, 2000, and related statement of income, statement of cash
flow, retained earnings and changes in financial position for the fiscal year
ended on such date, together with supporting schedules and the report thereon of
December 31, 2000, of Sellers' certified public accountants (such balance sheets
and related financial statements are referred to collectively as the "Audited
8
Financial Statements" and December 31, 2000 and are referred to as the "Audited
Financial Statement Date"); and
(B) The unaudited balance sheet of Sellers relating to the Business as
at June 30, 2001 and related statements of income, statements of cash flow,
retained earnings and changes in financial position for the six-month period
ended on such date together with supporting schedules, certified by the
President and Chief Financial Officer of each Seller (such balance sheet and
related financial statements are referred to collectively as the "Unaudited
Financial Statements" and June 30, 2001, is referred to as the "Unaudited
Financial Statement Date).
(C) Except as set forth on Schedule 5.6, each of the Financial
Statements presents fairly and accurately the financial condition, results of
operation and cash flows of the Business as at and for the periods ending on the
dates set forth therein of said balance sheets and the results of operations and
changes in financial position of Sellers for the respective periods then ended
in accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding periods. Except as set forth in Schedule
5.6, no uncollectible accounts receivable are reflected on any of said balance
sheets without provision for an adequate reserve for uncollectible amounts; and
as at June 30, 2001, there was no liability of any nature or in any amount that
should properly be reflected or reserved against in a balance sheet prepared in
conformity with generally accepted accounting principles applied on a basis
consistent with that of the preceding periods which is not fully reflected or
reserved against in the balance sheet of Sellers referred to in this Section
5.6. There are no matters of material importance relating to the condition
(financial or otherwise), results of operations, business, property, assets or
liabilities of Sellers, which have not been appropriately reflected or reserved
against in the Financial Statements. The provisions for taxes due by each Seller
in said financial statements are sufficient for all unpaid federal, state, and
local taxes, whether or not disputed, in respect of their businesses and
operations for all periods ended prior to or on June 30, 2001. Except as set
forth on Schedule 5.6, neither Sellers nor Xxxxxx know of any question relating
to any of the tax or information returns of Seller which if determined adversely
to Sellers would result in the assertion of any tax deficiency.
5.7 No Undisclosed Liabilities, Etc. Since December 31, 2000, (except (i)
for the transactions contemplated by this Agreement and (ii) as set forth in
Schedule 5.7):
(A) With respect to the Business, Sellers and Xxxxxx have not incurred
any liability or obligation (absolute, accrued, contingent or otherwise) of any
nature relating to the Business, other than liabilities and obligations (i)
reflected in the Financial Statements or (ii) incurred subsequent to the date of
the most recent balance sheet date reflected in the Financial Statements in the
ordinary course of business that would not, individually or in the aggregate,
have a MAE; and
(B) No accounts receivable acquired by the Business which are not
reserved against in the applicable Financial Statements are believed by Xxxxxx
or Sellers to be uncollectible, and the frequency and amounts of payments
received by Sellers with respect to the accounts receivable reflected on the
consolidated balance sheet of Sellers referred to in Section 5.6, do not, in
retrospect, render inadequate the reserve for uncollectible accounts set forth
on such balance sheet.
5.8 Absence of Certain Changes. Since December 31, 2000 (except (i) for the
execution and delivery of this Agreement and (ii) as set forth in Schedule 5.8),
there has not been:
9
(A) any change that, individually or in the aggregate, will have a
MAE;
(B) any damage, destruction or loss of physical property (whether or
not covered by insurance) that, individually or in the aggregate, will have
a MAE;
(C) any material loss or waiver of any material right with respect to
the Business; including any loss of any major customer of the Business
(i.e. comprising more than 3% of the Business' annual revenue) or any
cancellation or threatened cancellation of any material order; or
(D) any resignation or termination of employment of any of the key
employees of the Business or threatened resignation or termination of such
employment (other than as a result of such officer's or employee'
employment by Buyer) that, individually or in the aggregate, would have a
MAE.
Since December 31, 2000 (except (i) for the execution and delivery of
this Agreement and (ii) as set forth in Schedule 5.8), the Sellers have
not:
(E) incurred or agreed to incur any indebtedness for borrowed money
with respect to the Business;
(F) paid or obligated itself to pay in excess of $ 100,000 in the
aggregate for fixed assets with respect to the Business;
(G) suffered any loss or waived any right with respect to the Business
that would, individually or in the aggregate, have a MAE;
(H) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets relating to the Business
(other than Excluded Assets) having a fair market value at the time of
sale, transfer or disposition of $ 100,000 or more in the aggregate, or
canceled, or agreed to cancel, any debts or claims, other than in the
ordinary course of business;
(I) mortgaged, pledged or subjected to any charge, lien, claim or
encumbrance, or agreed to mortgage, pledge or subject to any charge, lien,
claim or encumbrance, any of the Assets;
(J) increased, or agreed to increase, the compensation or bonuses or
special compensation of any kind of any of the Key Employees (as defined
below), over the rate being paid to them on December 31, 2000, other than
normal merit and/or cost-of-living increases pursuant to customary
arrangements consistently followed, or adopted or increased any benefit
under any insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any such officer, employee or agent;
(K) made or permitted any amendment or termination of any material
contract, agreement or license relating to the Business and to which it is
a party or by which the Assets are subject or bound other than in the
ordinary course of business;
(L) made any change in the accounting policies, methods or practices
used with respect to; the Business;
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(M) entered into any transaction with respect to the Business not in
the ordinary course of its business;
(N) Received any notice of audit or inquiry relating to the Business
from any taxing or governmental authority; or
(O) Made any change in its tax reporting policies, methods or
practices with respect to the Business.
5.9 Title to and Condition of Properties and Assets. Each Seller has good
and marketable title in and to all the Assets, including, without limitation,
(i) all those used in the operation of the Business and (ii) those reflected in
the Unaudited Financial Statement (except as sold or otherwise disposed of in
the ordinary course of business subsequent to the date thereof), and such Assets
constitute all the assets and properties necessary and sufficient for Buyer to
conduct the Business after the Closing Date is substantially the same manner and
fashion as they are currently conducted by Each Seller and/or Xxxxxx. The Assets
are subject to no mortgage, pledge, conditional sales contract, lien, security
interest, right of possession in favor of any third party, claim, or other
encumbrance, except (i) the lien of current taxes not yet due and payable and
(ii) as set forth in Schedule 5.9. Neither Sellers nor Xxxxxx have sold or
disposed of any of the Assets or obligated itself to do so except in the
ordinary course of business. To the best of Sellers' and Xxxxxx'x knowledge, the
equipment and other tangible Assets of Sellers that are used in the operation of
the Business are in good operating condition and repair, subject only to the
ordinary wear and tear, and neither Sellers nor any Asset owned or leased by it
is in violation of any ordinance, regulation or building, zoning, environmental
or other law or regulation applicable to the Business.
5.10 Certain Properties. Sellers own no real estate used in connection with
the operation of the Business. Schedule 5.10 sets forth all personal property
(other than personal property with a value less than $100,000, individually, or
$250,000, in the aggregate) and real estate leased to Sellers in connection with
the operation of the Business. Each Seller has delivered to Buyer (i) a copy of
each lease by which each Seller acquired its interest in the real estate
described in Schedule 5.10, and (ii) a copy of each lease by which each Seller
acquired its interest in the personal property described in Schedule 5.10 of
which documents are true and complete copies thereof (as in effect of the date
hereof. Except as set forth in Schedule 5.10, there is no agreement, license,
sublease, occupancy agreement, or like instrument with respect to any of the
real estate described in Schedule 5.10. Each lease pursuant to which Sellers
lease any real or personal property is in full force and effect and is valid and
enforceable in accordance with its terms. There is not under any such lease any
default by Sellers, or any event that with notice or lapse of time or both would
constitute such a default by Sellers and with respect to which Sellers have not
taken adequate steps to prevent such default from occurring; all of such events,
if any, and the aforesaid steps taken by Sellers are set forth in Schedule 5.10.
To the best of each Seller's knowledge, there is not under any such lease any
default by any other party thereto or any event that with notice or lapse of
time or both would constitute such a default thereunder by such party. Each
property used in the business of Sellers is reflected in the Unaudited Financial
Statement in the manner and to the extent required by GAAP.
5.11 Tax Returns. All tax and information returns required to have been
filed prior to the date of this Agreement by each Seller and/or Xxxxxx (with
respect to the Business) with any governmental agency, board, bureau, body,
department or authority of any United States or foreign jurisdiction have been
duly filed, and each such return correctly reflects the income, franchise,
sales, use or other tax liability and all other information required to be
reported thereon, and each Seller and/or Xxxxxx has paid or accrued all income,
franchise, sales, use, and other
11
taxes due by it as reflected on said returns. The provisions for taxes due by
each Seller and/or Xxxxxx in the balance sheet of Sellers referred to in Section
5.6 are sufficient for all unpaid United States, state, local, and foreign
taxes, whether or not disputed, in respect of their businesses and operations
for the period then ended and all prior periods. There is no question, known to
Sellers or Xxxxxx relating to any such return that, if determined adversely to
Sellers, would result in the assertion of any deficiency for any tax or interest
or penalties in connection therewith. Sellers have not (i) agreed to any
extension of the statute of limitations, or (ii) incurred any tax liability as a
result of any transaction not in the ordinary course of business that was not
fully reflected or reserved against in the consolidated balance sheet of Sellers
referred to in Section 5.6. Federal income tax returns of Sellers have been
audited and the audits thereof completed or the statute of limitations has run
for all fiscal years ending on or prior to December 31, 2000.
5.12 Contracts. Except as set forth in Schedule 5.12, neither Sellers nor
Xxxxxx are a party to any of the following types of agreements or instruments
relating to the Business, whether written or oral:
(A) any contract with any labor union;
(B) any employment or consulting contract or other contract for
services relating to the Business involving a payment of more than $25,000
annually;
(C) any lease whether as lessor or lessee with respect to any
property, real or personal involving a payment of more than $25,000 annually;
(D) any loan agreement or instrument relating to any debt;
(E) any contract of purchase or sale relating to the Business
involving more than $100,000;
(F) any contract with any agent, dealer or distributor;
(G) any standby letter of credit, guarantee or performance bond
relating to the Business and involving more than $ 100,000;
(H) any contract or agreement restricting the ability of any person
(including, but not limited to, Xxxxxx) from freely engaging in any business or
competing anywhere in the world;
(I) any contract relating to the lease of exhibition, trade show or
exposition space whether as lessor, sublessor or lessee;
(J) any contract not made in the ordinary course of business involving
more than $ 25,000; or
(K) any other contract, except insubstantial contracts for supplies or
services not involving more than $25,000 and which can be terminated within one
year without cost.
Except as set forth in Schedule 5.12, neither Sellers nor Xxxxxx are a
party to any contract with any governmental authority that relates to the
Business or that, individually, or in the aggregate, would have a MAE. Each
contract or other agreement listed in Schedule 5.12 is in full force and effect
and is valid and enforceable by each Seller in accordance with its terms.
Neither Sellers nor, to the best of Sellers' and Xxxxxx'x knowledge, any other
party is in default in the observance or the performance of any term or
obligation to be performed by it under any contract listed in Schedule 5.12. To
the best of Sellers' and Xxxxxx'x knowledge, no other person is in default in
the
12
observance or the performance of any term or obligation to be performed by
it under any material contract with Sellers. Neither Sellers nor Xxxxxx know of
any bid or contract proposal made by Sellers that, if accepted or entered into,
might result in a loss to Sellers with respect to the Business. Sellers have
delivered to Buyer true and complete copies of all contracts listed in Schedule
5.12 as in effect on the date hereof.
5.13 Litigation. Except as set forth in Schedule 5.13, there are no
actions, suits, proceedings, mediations, arbitrations or investigations, either
at law or in equity, or before any commission or other administrative authority
in any U.S. or foreign jurisdiction, of any kind now pending or, to the best of
Sellers' and Xxxxxx'x knowledge, threatened or proposed in any manner, or, to
the best of the Sellers' and Xxxxxx'x knowledge, any circumstances which should
or could reasonably form the basis of any such action, suit, proceeding or
investigation, involving Sellers or Xxxxxx or any of their properties or assets
that (i) if asserted and decided adversely to Sellers or Xxxxxx, could,
individually or in the aggregate, have a MAE, or (ii) questions the validity of
this Agreement or the transactions contemplated hereby, or (iii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated to be taken
by Sellers or Xxxxxx under this Agreement. Except as set forth in Schedule 5.13,
there is no arbitration proceeding pending or threatened or proposed in any
manner under any agreement or otherwise. None of Sellers or Xxxxxx or any of
their properties or assets is subject to any judicial or administrative
judgment, order, decree or restraint.
5.14 Trademarks. Except as set forth in Schedule 5.14, neither Sellers nor
Xxxxxx own any copyright, registered trademark or trade name relating to the
Business, nor has any license to use any copyright, trademark or trade name
relating to the Business been issued to it, nor do Sellers and/or Xxxxxx use any
copyright, registered trademark or trade name in connection with the operation
of the Business (other than trademarks and trade names of sponsors and
exhibitors at Events used with the permission of the owners thereof). Each of
the registered trademarks, and trade names (if any) listed on Schedule 5.14 has
been validly issued and is owned by Sellers and/or Xxxxxx, and Sellers and/or
Xxxxxx have the exclusive rights to use all such copyrights, registered
trademarks and trade names in their business. Except as set forth in Schedule
5.14, each Seller owns all copyrights, trademarks, trade names, know-how, trade
secrets, and other proprietary rights necessary to conduct its operations and
businesses and each Seller and Xxxxxx does not know of any claim, or any
reasonable basis of any claim, that any of them has infringed any patent,
copyright, trademark, trade name, know- how, trade secret or other proprietary
right of any other person. Sellers and Xxxxxx do not know of any potential claim
of infringement of any patent, copyright, trademark, trade name, know-how, trade
secret or other proprietary right of any other person that has not been asserted
but that, if successfully asserted, would, individually or in the aggregate,
have a MAE.
5.15 Compliance With Laws. Each Seller and Xxxxxx has complied with and is
in compliance with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees applicable
to it or any of its properties, assets, operations and businesses relating to
the Business, and there does not exist any reasonable basis for any claim of
default under or violation of any such statute, law, ordinance, regulation,
rule, judgment, order or decree; in each case, except for such defaults or
violations, if any, that individually or in the aggregate do not and will not
have a MAE. Neither Sellers nor Xxxxxx have received any opinion or memorandum
or legal advice from any legal counsel to the effect that it is exposed to any
liability or disadvantage that is or may be material to Sellers. Sellers and
Xxxxxx are in compliance with (i) all applicable requirements of all United
States and foreign governmental authorities with respect to environmental
protection, including, without limitation, regulations
13
establishing quality criteria and standards for air, water, land and hazardous
materials, (ii) all applicable requirements of the Occupational Safety and
Health Act of 1970 within the United States and comparable workplace-safety laws
of all other jurisdictions and all rules, regulations and orders thereunder and
(iii) all applicable laws and related rules and regulations of all United States
and foreign jurisdictions affecting labor union activities, civil rights or
employment, including without limitation, in the United States, the Civil Rights
Act of 1964, the Age Discrimination in Employment Act of 1967, the Equal
Employment Opportunity Act of 1972, the Employee Retirement Income Security Act
of 1974, the Equal Pay Act and the National Labor Relations Act in each case, to
the extent relating to the Business.
5.16 Environmental Matters. Each Seller has complied with and is in
compliance with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders and decrees
applicable to it or any of its respective properties, assets, operations and
businesses relating to environmental protection including, without limitation,
standards relating to air, water, land and the generation, storage,
transportation, treatment or disposal of solid wastes and hazardous wastes.
5.17 Governmental Authorizations and Regulations. Schedule 5.17 lists all
licenses, franchises, permits and other governmental authorizations held by
Sellers or Xxxxxx material to the conduct of the Business. Such licenses,
franchises, permits and other governmental authorizations are valid, and Sellers
and Xxxxxx have not received any notice that any governmental authority intends
to cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization. Each Seller holds all licenses, franchises, permits
and other governmental authorizations the absence of any of which could,
individually or in the aggregate, have a MAE. Except as set forth in Schedule
5.17, the Business has not been, is not being conducted, and no properties or
assets of Sellers relating thereto are owned or are being used by Sellers, in
violation of any statute, law, ordinance, regulation, rule or permit of any
governmental entity or any judgment, order or decree.
5.18 SEC and Antitrust Filings. Sellers have never issued any security
covered by a registration statement filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended or the Investment
Company Act of 1940, as amended, and no security issued by Sellers has ever been
registered pursuant to the Securities Exchange Act of 1934, as amended. Sellers
have not purchased or sold any security of which it or any affiliate was the
issuer at any time when the information publicly available relating to Sellers,
at the time and in light of the circumstances under which it was made, was false
or misleading with respect to any material fact or omitted to state any material
fact necessary in order to make the statements made therein not false or
misleading. Neither Sellers nor Xxxxxx are required to file a Schedule 13E-3
Transaction Statement or a report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 ("HSR") or any other antitrust law in respect of the
entering into, execution or performance of this Agreement or any action pursuant
to or contemplated by this Agreement due to Xxxxxx'x failure to meet the "size
of person" test set forth in HSR and the regulations issued pursuant thereto.
5.19 EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS.
(A) Disclosure. Schedule 5.19 lists all employee benefit plans (as defined in
Section 3(3) of ERISA and all bonus pay, stock option, restricted stock,
deferred and incentive compensation, supplemental retirement, stock purchase,
severance, vacation pay, sick pay, fringe benefit or other plans, programs or
arrangements, to which each Seller contributes, has an obligation to contribute,
maintains or sponsors (the "Benefit Plans"). Each of the Benefit Plans has been
administered in compliance with its terms and all filing, reporting, disclosure,
funding and other applicable requirements of ERISA and the Code. Each Seller has
furnished Buyer with true and
14
correct copies of (i) all Benefit Plans, (ii) each summary plan description and
summary of material modification, (iii) the most recently filed IRS From 5500
and (iv) the most recently received IRS determination letter.
(B) Qualified Retirement Plans. None of the Benefit Plans which is a
"pension plan" (as defined in Section 3() of ERISA (the "Pension Plans") is a
multi-employer plan as defined in Section 3(37) of ERISA, or is subject to the
requirements of Title IV of ERISA, Section 302 of ERISA or Section 412 of the
Code. Each Pension Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a determination letter from the IRS that
it is so qualified, and no fact or event has occurred since the date of such
determination letter that could adversely affect the qualified status of any
such Pension Plan. Each Seller has not incurred any liability for any penalty or
tax under Section 4971, 4072, 4075, 4979 or 4980 of the Code or Section 502 of
ERISA.
(C) Welfare Benefit Plans. (1)Each of the Benefit Plans which is a
"welfare plan" (as defined in Section 3(1) of ERISA) (the "Welfare Plans")
has at all times been in compliance with the provision of Section 4980B of
the Code any applicable state continuation coverage laws. None of the
Welfare Plans, or the Sellers provides or promise post-retirement health,
life or other welfare benefits to current employees or retirees (or their
spouses or dependents).
(D) Other. Sellers have not incurred any liability under Title IV of
ERISA including, without limitation, any liability in connection with the
termination, or reorganization of any pension plan subject to Title IV of ERISA,
or withdrawal from any multiemployer plan, and no fact or event exists which
could give rise to any such liability. All contributions, premiums, or payments
required to be made with respect to any Benefit Plan have been made on or before
their due date.
5.20 Certain Transactions. Except as set forth in Schedule 5.20, there is
no transaction, and no transaction now proposed, to which any Seller was or is
to be a party and in which any director or officer of any Seller or any person
owning of record or beneficially more than l0 percent of the outstanding capital
stock of any class of any Seller or any associate of any such person had or has
a direct or indirect material interest.
5.21 Foreign Corrupt Practices Act. Neither Sellers nor any director,
officer, agent, employee or other person associated with or acting on behalf of
Sellers have used any corporate funds for any unlawful contribution, gift,
entertainment or other expense relating to political activity or made any direct
or indirect unlawful payment to any U.S. or foreign government official or
employee from corporate funds or violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977 or paid or made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment.
5.22 Accounting Practices. The books and records relating to the Business
are accurate and reflect the assets of the Business and have been maintained in
accordance with internal accounting controls that provide reasonable assurance
that (i) transactions are executed with management's authorization, (ii) for the
Business transactions are recorded as necessary to permit preparation of
Sellers' financial statements and to maintain accountability for the assets of
Seller, (iii) access to the assets of the Business is permitted only in
accordance with management's authorization, and (iv) the reported accountability
of the assets of Seller is compared with existing assets at reasonable
intervals.
15
5.23 Minute Books. Each Seller's minute books contain complete and accurate
records of all meetings and other corporate actions of its stockholders and
Boards of Directors and committees thereof.
5.24 Insurance. The Assets are insured for, the benefit of each Seller, in
amounts deemed adequate by its Boards of Directors or management, against all
risks usually insured against by persons operating similar properties or
conducting similar operations in the localities where such properties are
located or such operations are conducted under valid and enforceable policies
issued by insurers of recognized responsibility. Schedule 5.24 lists all such
policies.
5.25 Certain Disclosures. Schedule 5.25 contains a list of all of
exhibitors for the Business for the fiscal years ending December 31, 2000, and
December 31, 2001.
5.26 Brokers. Except as set forth in Schedule 5.26, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by each Seller and Xxxxxx directly with Buyer and without the
intervention of any other person and in such manner as not to give rise to any
valid claim against any of the parties or the Assets for any finder's fee,
brokerage commission or like payment.
5.27 Conduct Of Business. The Events have been operated during the fiscal
year commencing January 1, 2001 in the same manner as it was for the fiscal year
ended December 31, 2000, and will continue to be so operated until Closing.
5.28 No Untrue Statements. No statement by Sellers or Xxxxxx contained in
this Agreement and no written statement contained in any certificate or other
document required to be furnished by Sellers, Xxxxxx or any officer, employee,
counsel or other agent of Sellers to Buyer pursuant to or in connection with
this Agreement contains or will contain any untrue statement of a material fact,
or omits or will omit to state a material fact necessary in order to make the
statements therein contained not misleading.
6. REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents and warrants to the Sellers and Xxxxxx as follows:
6.1 Corporate Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to carry on the business of the Business and
to acquire and own and operate the Assets.
6.2 Authorization of Agreement; No Violation. Buyer's Board of Directors
has duly authorized the execution and delivery of this Agreement and the
purchase and the consummation of the other transactions contemplated hereby.
Buyer has delivered to Sellers a true and complete copy, certified by its
Secretary, of the resolutions, which have been duly adopted by its Board of
Directors authorizing such execution and delivery and such purchase and the
consummation of such other transactions. This Agreement and all such other
agreements and written obligations entered into and undertaken in connection
with the transactions contemplated hereby constitute the valid and legally
binding obligations of the Buyer, enforceable against the Buyer in accordance
with their respective terms. Neither the execution, delivery or performance of
this Agreement by Buyer nor the consummation of any of the transactions
contemplated hereby (i) will violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of Buyer or (ii) will result in any
breach of or default under any provision of any contract or agreement of any
kind to which Buyer is a party or by which Buyer is bound or to which the
16
properties or assets of Buyer are subject. Buyer has delivered to Seller copies
of its Certificate of Incorporation and all amendments thereto and a copy of its
Bylaws, which are true and complete copies of such instruments as in effect on
the date of this Agreement.
6.3 Litigation. There are no actions, suits, proceedings or investigations,
either at law or in equity, or before any commission or other administrative
authority in any United States or foreign jurisdiction, of any kind now pending
or threatened or proposed in any manner, or any circumstances which should or
could reasonably form the basis of any such action, suit, proceeding or
investigation, involving Buyer or any of its properties or assets that (i)
questions the validity of this Agreement or (ii) seeks to delay, prohibit or
restrict in any manner any action taken or contemplated to be taken by Buyer
under this Agreement; or (iii) may interfere with the performance by Buyer of
its obligations hereunder or the consummation of the transactions contemplated
hereby.
6.4 Brokers. Except as set forth in Schedule 6.4, all negotiations relative
to this Agreement and the transactions contemplated hereby have been carried on
by Buyer directly with Sellers and Xxxxxx and without the intervention of any
other person and in such manner as not to give rise to any valid claim against
any of the parties for a finder's fee, brokerage commission or like payment.
6.5 No Untrue Statements. No statement by Buyer contained in this Agreement
and no written statement contained in any certificate or other document required
to be furnished by any officer, employee, counsel or other agent of Buyer to
Seller or Xxxxxx pursuant to or in connection with this Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary in order to make the statements therein
contained not misleading.
7. COVENANTS OF SELLERS AND XXXXXX
Sellers and Xxxxxx, jointly and severally, covenant and agree with
Buyer as follows:
7.1 Key Employee Retention. In the event the seven (7) individuals
occupying the following positions with the Sellers as of the date of this
Agreement (the "Key Employees") refuse to become employees of the Buyer on the
Closing Date: (i) Xxxxx Xxxxxxx (Vice President of Conference Operations); (ii)
Xxxxxxx Xxxxxxx (Exhibit Salesperson); (iii) Xxxxxx Xxxxxx (Registration Clerk);
(iv) Xxxxx Xxxxxxxx (Registration Manager); (v) Xxxxx Xxxxxx (Speaker
Coordinator), (vi) Xxx Xxxxxx (Speaker Coordinator); and (vii) Xxxxx Xxxx
(Accountant), then Sellers shall retain such employees to work exclusively on
the Business and Buyer shall reimburse Sellers in a timely manner for all actual
payroll, payroll tax and benefit related expenses; provided, however that
Sellers shall not increase the salary or benefits for any such Key Employees
without the prior written consent of Buyer.
7.2 Transition Services. Until December 31, 2005, Sellers and Xxxxxx shall
use their best efforts to promote the Business in a manner consistent with past
practice. During such time period and through and until the fifth anniversary of
the Closing Date, Xxxxxx shall, without limitation, lend his name and presence
to the Business and assist with Buyer's branding and marketing efforts. Until
the fifth anniversary of the Closing Date, Sellers and Xxxxxx shall (i) maintain
on the xxx.xxxxxx.xxx homepage a hypertext link (in size and prominence
consistent with past practice) to each of the Events and (ii) include the Events
in the Xxxxxx Report in a manner consistent with past practice. Except as set
forth herein, Buyer shall not be required to pay Sellers or Xxxxxx any
additional compensation for the transition services described in this
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paragraph 7.2; provided however, Buyer shall promptly reimburse Sellers for all
actual expenses directly related to the production of the Events. Xxxxxx and
Sellers shall grant to Buyer a nonexclusive, royalty-free and perpetual license
for Buyer to use Sellers' registration system software (the "Registration System
Software") for the Business. Buyer will bear the costs of any enhancements to
the Registration System Software solely necessary for its use by Buyer pursuant
to this Section.
7.3 Right of First Refusal. For a period of five years after the Closing
Date, Sellers and Xxxxxx shall xxxxx a right of first refusal for Buyer, upon
Sellers and/or Xxxxxx'x decision to sell, to purchase, on the same terms and
conditions (e.g., 8.75 x EBITDA) as this transaction, any other tradeshow,
conference or other IP communications related event business controlled or owned
by Sellers, Xxxxxx or any of their affiliates; provided, however that Buyer
shall be granted at least 60 days prior written notice to exercise such right of
first refusal. Without limiting the foregoing, Xxxxxx shall negotiate in good
faith with Buyer for the sale and purchase of the following tradeshows currently
owned by Sellers: Broadband Home, Soft Switch Expo and the PIM Tradeshow.
7.4 Von Coalition License Agreement. Xxxxxx and Sellers shall use their
best efforts to modify the license agreement between Xxxxxx.xxx and VON
Coalition, Inc. dated June 16, 2000 to permit Buyer to terminate said license
"for cause" in the event VON Coalition, Inc. uses the "VON" service xxxx in a
manner unrelated to the promotion of the political interests of the video and
voice activated technology industry.
7.5 2002 Budget for Band. Xxxxxx shall have the right to continue to throw
his traditional "All-Conference Party" at each VON Event. In addition, Buyer
shall reimburse Xxxxxx for up to $160,000 in expenses (including travel
expenses) incurred to hire a band for Xxxxxx'x party to be held during the VON
2002 Events; provided, however that such reimbursement shall be included as an
expense for purposes of calculating EBITDA for 2002.
7.6 Cost Reimbursement. Commencing January 1, 2002 and ending on December
31, 2002, Buyer shall on a quarterly basis reimburse Sellers for fifty percent
(50%) of all general and administrative overhead expenses (excluding payroll)
incurred and properly allocated to the Business after the Closing Date with
respect to services performed by or on behalf of Buyer at Sellers' offices
("Sellers' Overhead Expenses"). Commencing January 1, 2003, Buyer shall on a
quarterly basis reimburse Sellers for one hundred (100%) of Sellers' Overhead
Expenses. If Buyer disputes Sellers' allocation of Sellers' Overhead Expenses,
then Sellers and Buyer shall retain a mutually acceptable independent auditor to
review the allocated expenses and establish a final determination of the amount
to be reimbursed by Buyer pursuant to this Section 7.6; provided further,
however, that such reimbursement shall be included as an expense for purposes of
calculating EBITDA.
7.7 Use of Databases. Sellers and Xxxxxx acknowledge and agree that all
databases (the "Databases") consisting of lists of exhibitors, conference and
tradeshow attendees, customers, suppliers and other information previously
utilized by the Business are Assets transferred to the ownership of Buyer
pursuant to the terms of this Agreement. Sellers and Xxxxxx shall not utilize
the Databases for any business directly or indirectly in competition with the
Business or sell, rent, assign, sublicense, or otherwise convey their interest
in the Databases to or permit the use of the Databases by any third parties.
7.8 Use of Seller's Assets. So long as Buyer conducts any of its operations
at the address of Sellers' principal executive office, Sellers and Xxxxxx shall
xxxxx Buyer a perpetual non-revocable license and permission to continue to use
any assets (including the Registration
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System Software) previously utilized in connection with the Business (but not
transferred by the terms of this Agreement) in a manner consistent with past
practice.
7.9 Selected CPA Report and Future Accounting Treatment. Sellers and Xxxxxx
shall use their commercially reasonable efforts to cause the Selected CPA to
grant Buyer and its affiliates permission to include the Financial Statements
and the Selected CPA Report in documents filed from time to time with the
Securities and Exchange Commission. Sellers and Xxxxxx shall cooperate with
Buyer's accountant in the preparation of quarterly audited and unaudited
financial statements for the Business for the periods preceding the Closing Date
as such financial statements may be required by applicable state and federal
securities laws.
8. COVENANTS OF BUYER
8.1 Timing of the Events. Buyer agrees not to hold the Events on those
Jewish holidays specified by Xxxxxx.
8.2 Use of Databases. Buyer agrees to xxxxx Xxxxxxx a non-exclusive
perpetual license to continue to use the Databases for Sellers' businesses which
are unrelated to and do not compete with the Business; provided, however that
the Sellers shall not sell, rent, assign, sublicense, or otherwise convey their
interest in the Databases to or permit the use of the Databases by any third
parties. If the Sellers breach the terms of this Section 8.2, then, in addition
to any other remedies Buyer may have under this Agreement, such license and
permission shall immediately terminate.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival of Representations and Warranties. All statements contained in
any certificate or other instrument delivered by or on behalf of Sellers, Xxxxxx
or Buyer, respectively, pursuant to this Agreement shall be deemed
representations and warranties hereunder by the party delivering such
certificate or instrument. All representations and warranties set forth in
Sections 5 and 6, made by Sellers, Pulver, or Buyer in this Agreement or
pursuant hereto shall survive the Closing for a period of 26 months; provided,
however that such survival period shall not be affected by any knowledge of or
investigation by the other parties; provided further, however that if a claim
for indemnification hereunder is made prior to the end of the applicable
survival period, such claim shall survive until finally resolved.
Notwithstanding the foregoing, any representations, warranties and agreements
with respect to taxes shall survive for the applicable statute of limitations
and with respect to title ownership of the Assets shall survive indefinitely.
9.2 Sellers' Indemnification Obligations. Subject to the terms and
conditions of this Section 9.2, Sellers and Xxxxxx, jointly and severally, agree
to indemnify and hold Buyer, Buyer's affiliates, and their respective officers,
directors, employees, agents, successors and assigns harmless against and in
respect of any and all damages, claims, obligations, liabilities, interest,
penalties, and expenses (including reasonable legal fees and other expenses)
arising out of, connected with or related to the following:
(A) any and all debts, liabilities, and obligations of Sellers or
Xxxxxx of any nature, whether absolute, accrued or, contingent or otherwise
other than the Assumed Liabilities including, without limitation, any such debt,
liabilities and obligations existing or incurred on or prior to the Closing
Date, or arising out of any transaction or event occurring on or prior to the
Closing Date;
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(B) any breach of any representation, warranty, covenant or agreement
of the Sellers or Xxxxxx contained in this Agreement or certificate or other
statement to be delivered or caused to be delivered by Sellers or Xxxxxx
pursuant to this Agreement;
(C) any and all debts, liabilities, and obligations of Sellers and/or
Xxxxxx arising out of (i) the failure of Sellers or Xxxxxx to comply with the
Bulk Sales Law of the State of New York or any similar laws of any other
jurisdiction and (ii) the failure of Sellers and Xxxxxx to provide Buyer with
timely notice to file Form DTF-17 or any other required form with the New York
Tax Department;
(D) any and all expenses, taxes, debts, liabilities, and obligations
of Sellers or Xxxxxx incurred or to be incurred by Sellers or Xxxxxx in the
preparation of this Agreement and the performance of the terms and provisions of
this Agreement; and
(E) any and all actions, suits, demands, assessments or judgments with
respect to any claim arising out of or relating to the subject matter of the
indemnification.
9.3 Limitation of Liability. Notwithstanding any other provision of this
Agreement:
(A) Threshold. Neither Buyer nor Sellers and Xxxxxx will be liable for
indemnification hereunder until such time as the aggregate amount of
indemnification for which they are otherwise obligated hereunder exceeds the
threshold amount of $500,000, at which time, subject to the other limitations on
indemnification set forth in this Agreement, such parties will be liable for the
full amount of indemnification owing by them hereunder, without reference to
such threshold amount. Notwithstanding, the foregoing, the threshold requirement
shall not apply to indemnification for any liability arising from the failure of
Sellers and Xxxxxx to provide Buyer with timely notice to file Form DTF-17 or
any other applicable form with the New York Tax Department.
(B) Maximum Liability. The maximum liability of Buyer, on the one
hand, or Sellers and Xxxxxx, on the other hand, for indemnification hereunder
will be limited to the sum of the Purchase Price plus the aggregate amount of
the Assumed Liabilities.
(C) Time Limit. No party will be liable for any indemnification
hereunder unless a written claim for indemnification is given by the party or
parties claiming indemnification to the indemnifying party within the applicable
survival period (as indicated in Section 9.1 hereof) for the provision hereof
giving rise to such claim for indemnification.
(D) Exclusive Remedies. From and after the Closing Date, the remedies
contemplated by this Section 9 shall be the sole recourse of the parties hereto
and their respective affiliates for all monetary damages relating to or arising,
directly or indirectly, out of this Agreement or the transactions contemplated
hereby (other than those specifically contemplated by the Xxxxxx Employment
Agreement), and each party hereto hereby waives any and all rights, claims,
causes of action and other remedies for monetary damages such party or its
affiliates may have against the other parties hereto relating to the subject
matter of this Agreement (other than with respect to the Xxxxxx Employment
Agreement) other than the remedies expressly provided in this Section 9;
provided, however, that notwithstanding the foregoing, nothing contained in this
Agreement or otherwise shall in any way limit (i) any claim, suit, cause of
action or remedy that may be available to any party based on fraud or
intentional misrepresentation or (ii) any equitable remedy that may be available
to any party based upon equitable principles, including without limitation,
specific performance and injunctive relief.
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9.4 Buyer's Indemnification Obligations. Subject to the terms and
conditions of this Section 9, Buyer agrees to indemnify and hold Sellers and
Xxxxxx and their respective affiliates, officers, directors, employees, agents,
successors and assigns harmless against and in respect of any and all damages,
claims, obligations, liabilities, interest, penalties and expenses (including,
without limitation, reasonable legal fees and other expenses), arising out of,
connected with or resulting from:
(A) any misrepresentation or breach of warranty of Buyer contained in
this Agreement or in any Schedule of Buyer or in any certificate delivered by
Buyer at the Closing
(B) any breach of any covenant or agreement of Buyer contained in this
Agreement; and
(C) and any and all actions, suits, demands, assessments or judgments
with respect to any claim arising out of or relating to the subject matter of
the indemnification.
9.5 Liability for Taxes. Sellers and Xxxxxx, jointly and severally, shall
be liable for, shall indemnify and hold the Buyer, Buyer's affiliates, and their
respective officers, directors, employees, agents, successors and assigns
harmless from and against, and shall make payment of, any and all of the
following, in each case to the extent, but only to the extent, that they relate
to taxes attributable to the operations of Sellers (including without limitation
the operations of the Business by Sellers prior to or on the Closing Date): (i)
any federal, state, local or foreign income, sales, use, franchise, property,
value added, license, excise, transfer, employment, occupation, pension plan,
Social Security, payroll withholding, withholding or any other tax together with
any penalties and interest imposed on the Buyer attributable to any tax period
ending prior to or on the Closing Date (the "Pre-Closing Period"), (ii) any
income taxes for a Pre-Closing Period resulting from or attributable to the
transactions described in this Agreement, (iii) any income taxes for which Buyer
is or may be liable under a transferee liability or similar theory, (iv) with
respect to any income tax periods that began before but end after the Closing
Date, income taxes imposed for the portion of such periods that are deemed to
close on the Closing Date, and (v) any foreign tax attributable to any
Pre-Closing Period.
9.6 Procedure for Indemnification Claims. In the case of any claim or
demand of a third party that may give rise to a claim for indemnification by the
Buyer or Sellers, as the case may be hereunder (in such capacity, the
"Indemnified Party"), or if the Indemnified Party obtains knowledge of any
circumstance that may give rise to such a claim for indemnification hereunder,
such Indemnified Party shall give prompt written notice of such claim, demand or
circumstance (described in reasonable detail) to the Buyer or Sellers, as the
case may be (in such capacity, the "Indemnifying Party"); provided that the
failure to provide such notice shall not affect the obligation of the
Indemnifying Party hereunder except to the extent, if any, that the lack of
prompt notice adversely affects the ability of the Indemnifying Party to defend
against or diminish the losses arising out of such claim, demand or
circumstance. The Indemnifying Party shall have the right to defend and to
direct the defense against any such claim or demand, in its name or in the name
of the Indemnified Party, as the case may be, at the expense of the Indemnifying
Party, and with counsel mutually approved by the Indemnifying Party and
Indemnified Party unless (i) such claim or demand seeks an order, injunction or
other equitable relief against the Indemnified Party or (ii) the Indemnified
Party shall have reasonably concluded that there is a conflict of interest
between the Indemnified Party and the Indemnifying Party in the conduct of the
defense of such claim or demand. Notwithstanding anything in this Agreement to
the contrary, the Indemnified Party shall, at the expense of the Indemnifying
Party, cooperate with the Indemnifying Party, and keep the Indemnifying Party
fully informed, in the defense of such claim or demand. The Indemnified Party
shall have the right to participate in the defense of any claim
21
or demand with counsel employed at its own expense; provided, however, that, in
the case of any claim or demand described in clause (i) or (ii) above or as to
which the Indemnifying Party shall not in fact have employed counsel to assume
the defense against such claim or demand, the reasonable fees and disbursements
of such counsel shall be at the expense of the Indemnifying Party. The
Indemnifying Party shall have no indemnification obligations with respect to any
such claim or demand which shall be settled by the Indemnified Party without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any action in any manner
that would materially and adversely affect the Indemnified Party.
10. SETOFF
If from time to time and at any time Buyer shall be entitled to be
paid any amount under the provisions of this Agreement, Buyer shall be entitled,
if it so elects, to set off such amount against the Actual Payment Amount or the
then unpaid amount of the Purchase Price held in the Escrow Account. Such right
of set off shall be in addition to and not in substitution of any other rights
Buyer shall be entitled to under the provisions of either Section 9 or
otherwise.
11. NONCOMPETITION
Neither the Sellers, Xxxxxx nor any of their Affiliates (as defined
below) will, without the prior written consent of the Buyer, (a) for a period of
five years after the Closing Date, directly or indirectly, anywhere in the world
engage in any promotional enterprise or activity which competes with the
Business as now conducted by Sellers or anything reasonably related thereto (the
"Prohibited Operations"), or directly or indirectly (a) solicit the services in
any capacity of any person who is or becomes an employee of Buyer; or (b) use
for its own benefit or divulge or convey to any third party, any confidential
information relating to the Business, including, without limitation, exhibitor,
advertiser, customer, attendee and supplier lists, formulae, trade know-how,
secrets, consultant contracts, pricing information, marketing plans, product
development plans, business acquisition plans and all other information relating
to the operation of the Business not in the public domain or otherwise publicly
available. An "Affiliate" of a person or entity is any other person or entity
controlled by, controlling or under common control with such person or entity.
Information that enters the public domain or is publicly available loses its
confidential status hereunder so long as neither the Sellers nor their
affiliates directly or indirectly cause such information to enter the public
domain. Notwithstanding the foregoing, the Sellers, Xxxxxx and their Affiliates
may, in the aggregate, invest in securities of any issuer engaged in Prohibited
Operations if (i) such securities are listed on any national or regional
securities exchange or have been registered under the Securities Exchange Act of
1934 and (ii) such investment does not exceed, in the case of any class of the
capital stock of any one issuer, 5% of the issued and outstanding shares, or, in
the case of other securities, 5% of the aggregate principal amount thereof
issued and outstanding. Further, the Sellers, Xxxxxx and their Affiliates may,
in the aggregate, invest in securities of any issuer engaged in Prohibited
Operations if revenues from the Prohibited Operations constitute less than 5% of
the revenues of such issuer provided that the Prohibited Operations are
transferred or terminated by such issuer as soon as practicable after the
Sellers or their Affiliates acquire control of such issuer. Buyer acknowledges
and agrees that the following events and publications as currently produced by
Sellers on the date hereof do not constitute Prohibited Operations: Softswitch
Expo, The Broadband Home, Presence and Instant Messaging, IP Communications
Industry Executive Summit, The Broadband Home Report, The Location Based
Services Report, The Location Based Services Summit, The Presence and Instant
Messaging Report, Welcome to the Resolution: The xxxxxx.xxx Telecom Policy
Summit and the Xxxxxx Report.
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The Sellers and Xxxxxx acknowledge that the restrictions contained in
this Section 11 are reasonable and necessary to protect the legitimate interests
of the Buyer and that any breach by the Sellers or Xxxxxx of any provision
hereof will result in irreparable injury to the Buyer. The Sellers or Xxxxxx
acknowledge that, in addition to all remedies available at law, the Buyer shall
be entitled to equitable relief (without the necessity of posting any bond),
including injunctive relief, and an equitable accounting of all earnings,
profits or other benefits arising from such breach and shall be entitled to
receive such other damages, direct or consequential, arising from such breach as
may be appropriate.
In the event that any court or other body of competent jurisdiction
determines that the duration, geographic scope, or both, of this Section 11 are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that this Section 11 shall remain in full force and effect
for the greatest time period and in the greatest areas that would not render it
unenforceable.
12. DISPUTE RESOLUTION
If Sellers dispute the Buyer's calculation of the Actual Payment
Amount or the Purchase Price Adjustment, Sellers shall notify the Buyer in
writing (the "Dispute Notice") of each disputed item (each, a "Disputed Item"),
specifying the amount thereof in dispute and setting forth, in detail, the basis
for such dispute, within thirty business days of the Sellers' receipt of the
payment reflecting Buyer's calculation of such Disputed Item. In the event of
such a dispute, each of the Buyer and the Sellers shall negotiate in good faith
to resolve all of the Disputed Items. If the Buyer and the Sellers are unable to
resolve all of the Disputed Items within twenty business days of the Buyer's
receipt of the Dispute Notice, either the Buyer or the Sellers may, within five
business days after the end of such twenty business days, request that any
unresolved Disputed Items be resolved by means of a mediation conducted pursuant
to this Section 12 ("Mediation").
Any request for a Mediation shall be made in writing to an independent
accounting firm of recognized national standing that is mutually agreeable to
Buyer and Sellers. The firm to which such request is made shall, upon agreeing
in writing to resolve the Disputed Items submitted to it in accordance with the
terms of this Agreement, be the "Mediator," as that term is used in this
Agreement.
If the Buyer and Sellers are unable to agree upon the selection of a
Mediator, then each of Buyer and Sellers may select an independent accounting
firm of national prominence and such firms shall mutually agree upon the
selection of a third independent accounting firm of national prominence which
shall serve as the Mediator.
Upon being selected, the Mediator shall conduct a Mediation to
determine, acting as an expert and not as an arbitrator with regard to each of
the Disputed Items that were submitted to the Mediator whether the Purchase
Price, Actual Payment Amount or the Purchase Price Adjustments (as set forth in
Section 2), as the case may be, was prepared in accordance with the requirements
of this Agreement and, if not, the dollar amount of any adjustment that may be
required in order for the Disputed Item in question to conform to the
requirements of this Agreement. The Mediator shall make such determination
subsequent to conducting the Mediation and shall set forth such determination in
a written ruling, which ruling shall be rendered within 90 days of the date on
which the Mediator was selected and shall be delivered to the Buyer and the
Sellers. The locale of all hearings conducted by the Mediator in connection with
the Mediation shall be the Los Angeles, California office of the Mediator.
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The determination of the Mediator shall be final, binding, and
conclusive on the Buyer and the Sellers. The fees and disbursements of the
Mediator shall be allocated between the Sellers on the one hand and the Buyer on
the other hand in the same proportion that the aggregate amount of such Disputed
Items so submitted to the Mediator that is unsuccessfully disputed by each such
party (as finally determined by the Mediator) bears to the total amount of such
Disputed Items so submitted.
This Section 12 shall only apply to the resolution of disputes
relating to the calculation of the Actual Payment Amount, the Purchase Price or
the Purchase Price Adjustment and shall not limit the parties right to judicial
remedies for the resolution of any other disputes or the enforcement of any
other rights under this Agreement, including indemnification rights.
13. MISCELLANEOUS
13.1 Assurance of Further Action. From time to time after the Closing and
without further consideration from Buyer, but at Buyer's expense, Sellers and
Xxxxxx shall execute and deliver, or cause to be executed and delivered, to
Buyer such further instruments of sale, conveyance, assignment, transfer and
delivery and take such other action as Buyer may reasonably request in order to
more effectively sell, convey, assign, transfer and deliver and reduce to the
possession of Buyer any and all of the Assets and consummate the transactions
contemplated hereby.
13.2 Expenses. Each of the parties will pay all of its own legal and
accounting fees and other expenses incurred in the preparation of this Agreement
and the performance of the terms and provisions of this Agreement. Sellers shall
bear all expenses and commission resulting from its sales and marketing efforts
for the sale of the Business. In addition, Sellers shall pay all transfer,
income and other taxes incurred by Sellers in connection with the sale of the
Assets and the Business pursuant to the terms of this Agreement
13.3 Waiver. The parties hereto may by written agreement (i) extend the
time for or waive or modify the performance of any of the obligations or other
acts of the parties hereto or (ii) waive any inaccuracies in the representations
and warranties contained in this Agreement or in any document delivered pursuant
to this Agreement.
13.4 Notices. All notices, requests or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or mailed
first class certified mail postage prepaid addressed as follows: if to Buyer, to
Xxxxxxx Xxxxx, Key3Media Group, Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000, (with a copy to, Xxx Xxxxxxxxx, Esq.); if to Sellers or
Xxxxxx, to Xxxxxxx Xxxxxx, Xxxxxx.xxx, Inc., 000 Xxxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, XX 00000 (with a copy to Xxxxx Xxxxxx, Xxxxxxx Xxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxxxxx, XX 02110); or to such other address as may have been furnished
in writing to the party giving the notice by the party to whom notice is to be
given.
13.5 Entire Agreement. This Agreement, the schedules and exhibits attached
hereto embody the entire agreement among the parties and there have been and are
no agreements, representations or warranties, oral or written among the parties
other than those set forth or provided for in this Agreement. This Agreement may
not be modified or changed, in whole or in part, except by a supplemental
agreement signed by each of the parties.
13.6 Rights under this Agreement; Nonassignability. This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by any party without the
prior written consent of the other parties; provided,
24
however, that Buyer may assign all or any part of its rights under this
Agreement and delegate all or any part of its obligations under this Agreement
to one or more corporations all or substantially all of the capital stock or
equity interests of which are owned by Buyer, in which event all of the rights
and powers of Buyer, and remedies available to it hereunder shall extend to and
be enforceable by each such subsidiary. In the event Buyer delegates all or any
part of its obligations under this Section 13.6, the Buyer shall remain jointly
liable to Sellers and Xxxxxx with respect to such obligations.
Nothing contained in this Agreement is intended to confer upon any
person, other than the parties to this Agreement and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
13.7 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to its conflict of laws rules. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising directly or
indirectly out of this Agreement which are brought pursuant to judicial
proceedings shall be litigated in a Federal or state court located in the State
of California or the State of New York. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons and
complaint or other process or papers may be made by registered or certified mail
addressed to the relevant party at the address to which notices are to be sent
pursuant to this Agreement. The parties hereto waive any claim that a Federal or
state court located in the State of California or the State of New York is an
inconvenient forum or an improper forum based on lack of venue.
13.8 Knowledge Qualifiers. Whenever a provision in this Agreement refers to
the best of a party's knowledge, such provision shall refer to a party's
knowledge after due and reasonable inquiry has been made with respect to the
matters referenced thereby.
13.9 Headings; References to Sections, Exhibits and Schedules. The headings
of the Sections, paragraphs and subparagraphs of this Agreement are solely for
convenience and reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references herein to
Sections, Exhibits and Schedules, unless otherwise indicated, are references to
sections of and exhibits and schedules to this Agreement.
13.10 Severability Construction. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction. The language used
in this Agreement shall be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction shall be applied
against any party.
13.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together constitute
one and the same instrument.
13.12 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
13.13 Nature of Obligations. All of the respective obligations of any
Seller and/or Xxxxxx under this Agreement or any agreement, instrument,
certificate, or other document executed and delivered by any of them pursuant to
this Agreement or in connection with the
25
transactions contemplated hereby shall be joint and several obligations for
which each of them is fully liable as a primary obligor.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
KEY3MEDIA VON EVENTS, INC.
By
-----------------------------
Name:
Title:
XXXXXX.XXX, INC.
By
-----------------------------
Jeffrey Pulver
XXXXXX.XXX EUROPE, LTD.
By
-----------------------------
Xxxxxxx Xxxxxx, President
XXXXXX.XXX CONFERENCES, INC.
By
-----------------------------
Xxxxxxx Xxxxxx, President
XXXXXX.XXX ASIA PACIFIC, LTD.
By
-----------------------------
Xxxxxxx Xxxxxx, President
--------------------------------
Xxxxxxx Xxxxxx, as an individual
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media VON Events, Inc. contained in
this Agreement.
KEY3MEDIA VON EVENTS, INC.
By:
-----------------------------
Name:
Title:
26
Exhibit A
---------
INDENTURE, XXXX OF SALE, ASSIGNMENT AND ASSUMPTION
AGREEMENT
THIS INDENTURE, XXXX OF SALE, ASSIGNMENT, AND ASSUMPTION AGREEMENT is
made, executed and delivered as of September 10, 2001 by Xxxxxx.xxx, Inc.,
Xxxxxx.xxx Europe, Ltd., Xxxxxx.xxx Conferences, Inc. and Xxxxxx.xxx Asia
Pacific, Ltd., each of which is a New York corporation (herein called
"Grantors") and Key3Media VON Events, Inc., a Delaware corporation (herein
called "Grantee"). All capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Asset Purchase Agreement dated
September 10,, 2001 by and among the Grantors and Grantee (the "Asset Purchase
Agreement").
W I T N E S S E T H:
WHEREAS, the Grantors and Grantee are parties to the Asset Purchase
Agreement providing for, among other things, the transfer and sale to the
Grantee of the Assets, for consideration in the amount and on the terms and
conditions provided in the Asset Purchase Agreement; and
WHEREAS, all of the terms and conditions precedent provided in the
Asset Purchase Agreement have been met and performed by the respective parties
thereto, and the parties now desire to carry out, in part, the intent and
purpose of the Asset Purchase Agreement by the Grantors' execution and delivery
to the Grantee of this agreement evidencing the vesting in the Grantee of all of
the properties, assets, rights, goodwill and business of Grantors relating to
the Business hereinafter described, other than the "Excluded Assets" referred to
below.
NOW, THEREFORE, in consideration of the premises and of other valuable
consideration to Grantors in hand paid by Grantee, at or before the execution
and delivery hereof, the receipt and sufficiency of which by Grantors is hereby
acknowledged, Grantors have conveyed, granted, bargained, sold, transferred, set
over, assigned, aliened, remised, released, delivered and confirmed; and by this
Indenture and Xxxx of Sale do convey, grant, bargain, sell, transfer, set over,
assign, alien, remise, release, deliver and confirm unto Grantee, its successors
and assigns forever, all the Assets, except with respect to the assets set forth
on Exhibit A-1 to the Asset Purchase Agreement (the "Excluded Assets"). The
Assets so conveyed, granted, bargained, sold, transferred, set over, assigned,
aliened, remised, released, delivered and confirmed hereby are, without limiting
the generality of the foregoing, more particularly described as follows (in each
case, excluding the Excluded Assets):
(a) all rights and interests of Grantors in, to and under all
contracts, commitments, agreements, options and other arrangements of every
kind and description relating to the Business including all supply
contracts, purchase contracts, exhibition contracts, sponsorship contracts
and service contracts relating to the Business and listed in Schedule
2.3(A) to the Asset Purchase Agreement;
(b) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all rights and interests
of Grantors in, to and under all domestic or foreign patents, patent
applications, trademarks, trademark registrations and applications
therefore, all domestic or foreign trade names, labels and other trade
rights relating to the Business;
(c) all debts, accounts, bills and notes receivable, commercial paper
and acceptances, and other evidences of indebtedness owned by Grantors and
relating to the Business; all bills of lading, trust receipts, warehouse
receipts and other documents of title of whatever kind and description
relating to the Business; all rights and claims under policies of insurance
and fidelity or other bonds relating to the Business; all other claims,
demands, judgments, rights, equities, chattel mortgages, security
agreements and choses in action, and the proceeds thereof relating to the
Business; and all permits and memberships in clubs and cooperatives
relating to the Business;
(d) all Grantors' goodwill and trade connections and Grantors' rights
to use the name "VON" and "SIP Summit" and any part or variant thereof;
(e) any prepaid expenses relating to the Business;
(f) all intangible assets of Grantors, including customer lists, trade
secrets and similar information generally described as "know how" with
respect to the patents and patent applications aforesaid and related to the
Business;
(g) all research, engineering, marketing and other data relating to
the Business;
(h) all the goodwill existing between Grantors and each of its
customers, suppliers, agents and others relating to the Business;
(i) all rights, claims, and causes of action of Grantors relating to
the Business arising after the date hereof against any officer, former
officer, employee or former employee other person arising out of the
disclosure or use, or threatened disclosure or threatened use, of any
proprietary information including, without limitation, any invention,
process, method, formula treatment, discovery or improvement or application
thereof, or other know how, or compilation of information, list of
customers or suppliers, document or record with respect thereto or
contained therein;
(j) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all other property
relating to the Business in which Grantors have any interest whatsoever,
real, personal or mixed, whether tangible or intangible, of every kind and
description and wherever situated, including contingent and unknown
interests, claims, rights and properties, whether or not specifically
mentioned or described herein and whatever may be the nature or location of
said assets, properties or business.
TO HAVE AND TO HOLD all of the Assets.
Section 1. The Grantee hereby assumes and agrees to pay, perform and
discharge, as and when due, all of the Assumed Liabilities (as defined in the
Asset Purchase Agreement).
Section 2. Grantors hereby constitute and appoint Grantee, its
successors and assigns, Grantors' true and lawful attorney, with full power
of substitution, in Grantors' name and stead, but on behalf and for the benefit
of Grantee, its successors and assigns, to demand and receive any and all of the
Assets, and to give receipts and releases for and in respect of the same, and
any part thereof, and from time to time to institute and prosecute in Grantors'
name, or otherwise, for the benefit of Grantee, its successors and assigns, any
and all proceedings at law, in equity or otherwise, which Grantee, its
successors or assigns, may deem proper for the
collection or reduction to possession of any of the Assets or for the
collection and enforcement of any claim or right of any kind hereby sold,
conveyed, transferred or assigned, or intended so to be, and to do all acts and
things in relating to the Assets which Grantee, its successors or assigns shall
deem desirable, Grantors hereby declaring that the foregoing powers are coupled
with an interest and are and shall be irrevocable by Grantors or by its
dissolution or in any other manner or for any reason whatsoever.
Section 3. Grantors hereby covenant that, from time to time after the
delivery of this agreement, at Grantee's request and without further
consideration, Grantors will do, execute, acknowledge, and deliver, or will
cause to be done, executed, acknowledged and delivered, all and every such
further acts, deeds, conveyances, transfers, assignments, powers of attorney and
assurances as reasonably may be required more effectively to convey, transfer to
and vest in Grantee, and to put Grantee in possession of, any of the Assets and,
in the case of contracts and rights, if any, which cannot be effectively
transferred to Grantee without the consent of third parties, to endeavor to
obtain such consents promptly and if any be unobtainable, to use its best
efforts to assure to Grantee the benefits thereof.
Section 4. Nothing in this agreement, express or implied, is intended
or shall be construed to confer upon, or give to, any person, firm or
corporation other than Grantee and its successors and assigns, any remedy or
claim under or by reason of this agreement or any terms, covenants or condition
hereof, and all the terms, covenants and conditions, promises and agreements in
this agreement contained shall be for the sole and exclusive benefit of Grantee
and its successors and assigns.
Section 5. This agreement is executed by, and shall be binding upon,
Grantors and Grantee, their successors and assigns, for the uses and purposes
above set forth and referred to, effective immediately upon its delivery to
Grantee.
Section 6. This agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of law thereof.
IN WITNESS WHEREOF, Grantors and Grantee have caused this Indenture
Xxxx of Sale, Assignment and Assumption Agreement to be signed by their
respective President on the date first above written.
KEY3MEDIA VON EVENTS, INC.
By
----------------------------------------------
Name:
Title:
XXXXXX.XXX, INC.
By
----------------------------------------------
Xxxxxxx Xxxxxx, President
XXXXXX.XXX EUROPE, LTD.
By
----------------------------------------------
Xxxxxxx Xxxxxx, President
XXXXXX.XXX CONFERENCES, INC.
By
----------------------------------------------
Xxxxxxx Xxxxxx, President
XXXXXX.XXX ASIA PACIFIC, LTD.
By
----------------------------------------------
Xxxxxxx Xxxxxx, President
STATE OF NEW YORK )
) ss.
COUNTY OF )
BE IT REMEMBERED that on ______________, 2001, before me, the
subscriber, a Notary Public of the State of New York personally appeared Xxxxxxx
Xxxxxx, to me known, who being by me duly sworn according to law, on his oath
did depose and swear that he is the President of each of XXXXXX.XXX, INC.
XXXXXX.XXX EUROPE, LTD. XXXXXX.XXX CONFERENCES, INC., AND XXXXXX.XXX ASIA
PACIFIC, LTD, respectively, the corporation named in and which executed the
foregoing agreement; and that as such President he did sign and deliver said
agreement, and declared that he signed and delivered the same as the voluntary
act and deed of said corporation, by virtue of such authority.
------------------------------
Notary Public
My commission expires:
----------
Exhibit A-1
EXCLUDED ASSETS
. Cash Accounts and Cash Equivalents
. Investment and Retirement Accounts
. Prepaid Expenses (other than those prepaid expenses related to direct
conference expenses relating to Business)
. Receivables (other than trade accounts receivables from direct conference
operations relating to Business)
. Inter-company Accounts
. Organizational Costs
. Leasehold Improvements (Including all artwork)
. Office space lease
. Equipment
. Computer Equipment
. Computer Software, including conference registration system software licensed
to Buyer
. Furniture and Fixtures
. Trademarks (all except for: VON (U.S.) (41) (Registered xxxx, VOICE ON THE NET
(41) (application), VON (Israel) (38) (application), VON (European Union)
(application), VON (Israel) (42) (application), VON (Community Trademark)
(38,41) (application).
. Website Domains: (all except for: xxxxxxxxxxxxx.xxx and xxx.xxx)
. Venue License Agreement, dated as of May, 25, 2001, by and between Atlanta
Concerts, Inc., and Xxxxxx.xxx Productions, Inc.
A1-1
Exhibit B
FORM OF ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of September 10, 2001 (this "Agreement"), by and
among Key3Media VON Events, Inc., a Delaware corporation ("Buyer"), Xxxxxx.xxx,
Inc., Xxxxxx.xxx Europe, Ltd., Xxxxxx.xxx Asia Pacific, Ltd., Xxxxxx.xxx
Conferences, Inc., each a New York corporation (collectively, the "Sellers") and
The Bank Of New York, a New York banking corporation, as escrow agent (the
"Escrow Agent').
W I T N E S S E T H
WHEREAS, pursuant to the Asset Purchase Agreement, dated as of September
10, 2001 (the "Purchase Agreement") by and among Buyer, Sellers and Xxxxxxx
Xxxxxx, an individual ("Xxxxxx"), Buyer has agreed to acquire the Assets from
Sellers, upon the terms and subject to the conditions set forth in the Purchase
Agreement;
WHEREAS, the Purchase Agreement provides that the Buyer is to deposit with
the Escrow Agent the sum of five million dollars ($5,000,000) in cash and such
other amounts as may be required to be deposited by Buyer from time to time
pursuant to the terms of the Purchase Agreement (such sum, together with amounts
earned thereon as herein provided, the "Escrow Funds") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Escrow Agent is willing to act as escrow agent, upon the
express terms and subject to express conditions of this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the Parties hereby agree as follows:
1. Definitions.
1.1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the respective meanings set forth
in the Purchase Agreement, The following terms shall have the
respective meanings given thereto in the Sections indicated below.
Term Reference in this Agreement
---- ---------------------------
Agreement Preamble
Buyer Preamble
Escrow Agent Preamble
Escrow Funds Recitals
Purchase Recitals
Sellers Preamble
Successor Section 5.11
B-1
2. Appointment of Escrow Agent. Buyer and Sellers hereby appoint the Escrow
Agent to act as agent on their behalf pursuant to this Agreement and the
Escrow Agent hereby consents to its appointment in such capacity on the terms
and conditions of this Agreement.
3. Deposit and Investment of Escrow Funds
(i) Buyer shall deposit with the Escrow Agent the sum of $5,000,000
and any additional funds required to be deposited by Buyer from
time to time pursuant to the Purchase Agreement (if applicable)
by wire transfer as follows: The Bank of New York, ABA #021 0000
18, A/C#GLA 111-565, for further credit to A/C #196066 (Key3Media
VON Events, Inc.) Attn: Xxxxxx Xxxxx. The Escrow Funds shall be
held by the Escrow Agent for the benefit of Sellers and Buyer in
accordance with the terms of and conditions of the Purchase
Agreement and this Agreement.
(ii) The Escrow Agent shall invest and reinvest without distinction
between principal and interest, the Escrow Funds in such savings
accounts, certificates of deposit, money market and stable value
funds, treasury securities, mutual funds, holding treasury
securities and such other similar investments as Buyer and
Sellers shall instruct in writing from time to time.
Simultaneously with the execution and delivery of this Agreement,
Buyer and Sellers shall deliver an initial investment instruction
to the Escrow Agent, substantially in the form annexed as Annex I
hereto. The Escrow Agent shall have no liability for any loss
arising from or related to any such investments. The Escrow Agent
shall present for redemption any obligation so purchased or sell
any such obligation, as may be necessary in order to fulfill the
provisions of this Agreement. Obligations so purchased as an
investment of the Escrow Funds shall be deemed at all times to be
a part of the Escrow Funds, and the interest accruing thereon
shall be credited to the person to which the Escrow Funds are
delivered pursuant hereto. The Escrow Agent may, but shall not be
obligated to, make any and all investments permitted by this
paragraph (ii) through its own bond or investment department.
4. Release of Escrow Funds
4.1. Authorized Disbursements. Subject to the provisions of Section 5.1(b)
the Escrow Agent is hereby authorized to disburse the Escrow Funds as
follows:
(i) upon receipt of and in accordance with joint written instructions
signed by Buyer and Sellers; or
(ii) in accordance with the binding order of a court of competent
jurisdiction delivered to the Escrow Agent together with a
certificate by Buyer or Sellers (upon which certificate the
Escrow Agent shall conclusively rely and act) certifying that
said order represents a final determination of the rights of the
parties.
B-2
5. Escrow Agent
5.1. Duties of Escrow Agent. (a) The Escrow Agent shall treat the Escrow
Funds with such degree of care as it treats it own similar property.
It is agreed that the duties of the Escrow Agent are only such as are
herein specifically provided, and the Escrow Agent shall have no other
duties, implied or otherwise. The Escrow Agent's duties are as a
depository only, and the Escrow Agent shall incur no responsibility or
liability whatsoever, except for it's willful misconduct or gross
negligence. The Escrow Agent may consult with counsel of its choice
and shall not be responsible or liable for any action taken, suffered
or omitted to be taken by it in good faith in accordance with the
advice of such counsel (subject to the exception set forth above in
the prior sentence). Except where the terms of this Agreement
expressly refer thereto, the Escrow Agent shall not be bound in any
way by any of the terms of the Purchase Agreement or any other
agreement to which one or more of, Buyer or Sellers are parties,
whether or not the Escrow Agent has knowledge thereof, and the Escrow
Agent shall not in any way be required to determine whether or not the
Purchase Agreement or any other agreement has been complied with by
Buyer or Sellers or any other party thereto. In the event that the
Escrow Agent shall be uncertain as to any of its duties or rights
hereunder, it shall be entitled to refrain from taking action other
than to keep safely all property held in escrow until it shall be
directed otherwise pursuant to a joint written notice from and
executed by Buyer and Sellers or a court order, and the Escrow Agent
shall not be responsible or liable for any damages while waiting for
such joint written notice or court order. This Agreement shall not
create any fiduciary duty of the Escrow Agent to Buyer or Sellers or
any other person or entity whatsoever. The Escrow Agent shall provide
monthly statements identifying transactions, transfers or holdings of
the Escrow Funds and each such statement shall be deemed to be correct
and final upon receipt thereof by the parties hereto unless the Escrow
Agent is notified in writing to the contrary within thirty (30)
business days of the date of such statement.
(v) As security for the due and punctual performance of any
and all obligations to the Escrow Agent hereunder, now
or hereafter arising, Sellers and Buyer, individually
and collectively, hereby pledge, assign and grant to
the Escrow Agent a continuing security interest in, and
a lien on, the Escrow Funds and all distributions
thereon or additions thereto (whether such additions
are the result of deposits or the investment of the
Escrow Funds). The security interest of the Escrow
Agent shall at all times be valid, perfected and
enforceable by the Escrow Agent against Sellers, Buyer
and all third parties in accordance with the terms of
this Agreement. If any fees, expenses or costs incurred
by, or any obligations owed to, the Escrow Agent
hereunder are not promptly paid when due, the Escrow
Agent may reimburse itself therefore from the Escrow
B-3
Funds and may sell, convey or otherwise dispose of any
investment of the Escrow Funds for such purpose.
5.2. Reliance by Escrow Agent on Written Notices. The Escrow Agent may
conclusively rely and shall be fully authorized and protected in
relying upon any written notice, demand, certificate, advice, opinion
or document which it, in good faith believes to be genuine. Set forth
in Schedule 5.2 hereto is a list of the names of the persons
authorized to act for each of the parties under this Agreement. Any
officer of either party shall, from time to time, certify to the
Escrow Agent the names of any other person or persons authorized to
act for such party under the Agreement. The Escrow Agent may
conclusively rely on and shall be authorized and fully protected in
acting or failing to act upon this written, facsimile or
electronically delivered instructions of any person named on Schedule
5.2 or by certification of an officer of a party with respect to any
matter relating to the Escrow Agent acting as the Escrow Agent.
5.3. Risk to Escrow Agent. None of the provisions of this Agreement shall
require the Escrow Agent to expend or risk its own funds or otherwise
to incur any liability, financial or otherwise, in the performance of
any of its duties hereunder, or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing that
repayment of such funds or indemnification satisfactory to it against
such risk or liability is not assured to it. In no event shall the
Escrow Agent be liable (i) for any consequential, punitive or special
damages, (ii) for the acts or omissions of its nominees,
correspondents, designees, subagents or sub custodians, or (iii) for
an amount in excess of the value of the Escrow Funds, valued as of the
date of deposit. The Escrow Agent shall not incur any liability for
not performing any act or fulfilling any duty, obligation or
responsibility hereunder by reason of any occurrence beyond the
control of the Escrow Agent (including but not limited to any act or
provision of any present or future law or regulation or governmental
or telex or other wire or communication facility.
5.4. No Investigation by Escrow Agent. The Escrow Agent shall not be
required or bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, entitlement order, approval or other
paper or document.
5.5. Escrow Agent's Execution of Power. The Escrow Agent may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, attorneys, custodians, or nominees
appointed with due care, and shall not be responsible or liable for
any willful misconduct or gross negligence on the part of any agent,
attorney, custodian or nominee so appointed as finally determined by a
non-appealable order of a court of competent jurisdiction.
5.6. Legal Proceedings. The Escrow Agent shall not be required to institute
legal proceedings of any kind.
5.7. Escrow Agent Reporting. Notwithstanding anything to the contrary
herein, except as required by law, in no event shall the Escrow Agent
be under a duty to file any reports or withhold or deduct any amounts
in respect of taxes due for payments made pursuant to this Agreement.
B-4
5.8. Fees of Escrow Agent. Sellers and Buyer severally covenant and agree
to pay to the Escrow Agent from time to time, and the Escrow Agent
shall be entitled to, the fees and expenses set forth on Schedule 5.8
and will further pay or reimburse the Escrow Agent upon its request
for all reasonable expenses, disbursements and advances incurred or
made by the Escrow Agent in accordance with any of the provisions
hereof or any other documents executed in connection herewith
(including the reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all persons not regularly in its
employ), other than periodic reports and audits and other actions
requested by any party pursuant to the last sentence of Section 5.1
(a) hereof, which related expenses, disbursements and advances shall
be paid by the requesting party, as set forth therein. All fees and
amounts payable to the Escrow Agent under this Section 5.8 shall be
payable fifty percent (50%) by Sellers and fifty percent (50%) by
Buyer. The obligations of Sellers and Buyer under this Section 5.8 to
compensate the Escrow Agent and to pay or reimburse the Escrow Agent
for reasonable expenses, disbursements and advances shall survive the
satisfaction and discharge of this Agreement or the earlier
resignation or removal of the Escrow Agent.
5.9. Indemnification of the Escrow Agent. Sellers and Buyer severally agree
to be responsible to indemnify and hold the Escrow Agent and its
directors, employees, officers, agents, successors and assigns
harmless from and against any and all losses, claims, damages,
liabilities and expenses, including without limitation, reasonable
costs of investigation and reasonable counsel fees and expenses which
may be imposed on the Escrow Agent or incurred by it in connection
with its acceptance of this appointment as the escrow agent hereunder
or the performance of its duties hereunder, except as a result of the
Escrow Agent's negligence or willful misconduct. Such indemnity
includes, without limitation, all losses, damages, liabilities and
expenses (including reasonable counsel fees and expense) incurred in
connection with any litigation (whether at the trial or appellate
levels) arising from this Agreement or involving the subject matter
hereof. The foregoing indemnification obligations shall be borne fifty
percent (50%) by Sellers and fifty percent (50%) by Buyer. The
indemnification provisions contained in this Section 5.9 are in
addition to any other rights any of the indemnified parties may have
by law or otherwise and shall survive the termination of this
Agreement or the resignation or removal of the Escrow Agent.
5.10. Successor to Escrow Agent. Any corporation or other entity whatsoever
into which the Escrow Agent may be merged or converted or with which
it may be consolidated, any corporation or other entity whatsoever
resulting from any merger, conversion or consolidation to which the
Escrow Agent shall be a party or any corporation or other entity
whatsoever succeeding to the business of the Escrow Agent shall be the
success of the Escrow Agent hereunder with the execution or filing of
any paper with any party hereto except where an instrument of transfer
or assignment is required by law to effect such succession.
5.11. Resignation of Escrow Agent. If the Escrow Agent at any time, in its
sole discretion, deems it necessary or advisable to resign as the
Escrow Agent hereunder, it may do so by giving prior written notice of
such event to Buyer and Sellers and thereafter delivering the Escrow
Funds to any other escrow agent mutually agreed upon by Buyer and
Sellers as notified to the Escrow Agent in
B-5
writing, and if no such escrow agent shall be designated by Buyer and
Sellers within sixty (60) calendar days of such written notice, then
the Escrow Agent shall seek the appointment of its successor as
prescribed by the clerk or other proper officer of a court of
competent jurisdiction located within the State of New York to the
extent permitted by law (any such successor to the Escrow Agent,
whether designated by Buyer and Sellers or pursuant to the clause
above or otherwise, is hereinafter referred to as the "Successor
Agent"). The costs and expenses (including reasonable attorney's fees
and expenses) incurred by the Escrow Agent in connection with such
proceeding for the appointment of a Successor Agent shall be paid by,
and be deemed a joint and several obligation of Buyer and Sellers,
Buyer and Sellers may, at any time after the date hereof, upon thirty
(30) days prior written notice to the Escrow Agent agree in writing to
appoint a Successor Agent for the resigning or removed Escrow Agent,
whereupon the Escrow Agent shall deliver the Escrow Funds to such
Successor Agent as provided below. The fees of any Successor Agent
shall be borne severally by Buyer and Sellers. Upon receipt of the
identity of the Successor Agent, the Escrow Agent shall either deliver
the Escrow Agent's fees, costs and expenses or other obligations owed
to the Escrow Agent, or hold such Escrow Funds (or any portion
thereof), pending distribution, until all such fees, costs and expense
or other obligations are paid. Upon delivery of the Escrow Funds to
the Successor Agent, (i) the Escrow Agent shall be discharged from any
and all responsibility or liability with respect to the Escrow Funds
(except as otherwise provided herein) and (ii) all references herein
to the "Escrow Agent" shall, where applicable, be deemed to include
such Successor Agent and such Successor Agent shall thereafter become
the Escrow Agent for all purposes of this Agreement.
6. Miscellaneous.
6.1. Construction: Interpretation. The heading contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement, Article, Section,
schedule, exhibit, recital and party references are to this Agreement
unless otherwise stated. No party, nor its counsel, shall be deemed
the drafter of this Agreement for purposes of construing the
provisions of this Agreement, and all provisions of this Agreement
shall be construed in accordance with their fair meaning and not
strictly for or against any party.
6.2. Amendments and Modifications. No party hereto shall be bound by any
modification, amendment, termination, cancellation, rescission or
replacement of this Agreement unless the same shall be in writing and
signed by it.
6.3. Notices. All notices and other communication hereunder shall be in
writing and shall be effective when actually received by the party to
which such notice is sent (which in the case of the Escrow Agent is
its Corporate Trust Department), as follows:
B-6
If to Buyer, to: Copy to:
(Which shall not constitute notice)
Xxxxxxx Xxxxx Xxx X. Xxxxxxxxx
Key3Media Events, Inc. Key3Media Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx 0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000 Xxxxx 000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to Sellers, to: Copy to:
(Which shall not constitute notice)
Xxxxxxx Xxxxxx Brian Keeler
Xxxxxx.xxx Xxxxxxx Xxxx LLP
000 Xxxxxxxxxxx Xxxx 000 Xxxxxxx Xxxxxx
Xxxxx 000 Xxxxxx, XX 00000
Xxxxxxxx, Xxx Xxxx 00000
If to Escrow Agent, to: Copy to:
(Which shall not constitute notice)
The Bank of New York
Insurance Trust and
Escrow Xxxx
000 Xxxxxxx Xxxxxx, 0X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
or to such other address as the person to whom notice is being given
may have previously furnished to the other parties in writing in the
manner set forth above.
6.4. Assignment. Subject to Section 5.10, neither this Agreement nor any of
the rights, interests or obligation hereunder shall be assigned by any
party (whether by operation of law or otherwise) without the prior
written consent of Buyer, Sellers and the Escrow Agent; provided that
either Sellers or Buyer may assign its rights to any affiliate, but no
such assignment shall relieve the assignor of its obligations
hereunder. This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successor
and permitted assigns.
6.5. Termination of Agreement. This Agreement shall terminate upon the
mutual written express agreement of Buyer and Sellers. In any event,
this Agreement shall terminate when all the Escrow Funds have been
delivered according to the terms of this Agreement.
6.6. Representation. Each of the parties hereby represents and warrants (a)
that this Agreement has been duly authorized, executed and delivered
on its behalf and constitutes its legal, valid and binding obligation
and (b) that the execution,
B-7
delivery, and performance of this Agreement by it does not violate any
application law or regulation.
6.7. Other Miscellaneous Provisions. (a) This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(i) Whenever under the terms hereof the time for giving a notice or
performing an act falls upon a Saturday, Sunday, or banking
holiday, such time shall be extended to the next day on which
Escrow Agent is open for business.
(ii) This Agreement shall be interpreted, construed, enforced and
administered in accordance with the internal substantive laws
(and not the choice of law rules) of the State of New York.
Unless provided otherwise by an order of the Court, each of the
parties hereto hereby submits to the personal jurisdiction of and
each agrees that all proceedings relating hereto to which the
Escrow Agent is a plaintiff or named party shall be brought in
courts located within the City and State of New York, Los
Angeles, California or elsewhere as the Escrow Agent may select.
Each of the parties hereto hereby waives the right to trial by
jury in any such proceedings. To the extent that in any
jurisdiction any party may be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment (whether
before or after judgment) or other legal process, such party
hereby irrevocably agrees not to claim, and hereby waives, such
immunity.
(iii) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which
mentions "The Bank of New York by name or the rights, powers, or
duties of the Escrow Agent under this Agreement shall be issued
by any other parties hereto, or on such party's behalf, without
the prior written consent of the Escrow Agent.
(iv) The Escrow Agent does not have any interest in the Escrow Funds
but is serving as escrow holder only and having only possession
thereof. Sellers and Buyer shall pay or reimburse the Escrow
Agent upon request for any transfer taxes or other taxes relating
to the Escrow Funds incurred in connection herewith and shall
indemnify and hold harmless the Escrow Agent for any amounts that
it is obligated to pay in the way of such taxes. Any payments of
income in respect of the Escrow Funds shall be subject to
withholding regulations then in force with respect to United
States taxes. The parties hereto will provide the Escrow Agent
with the appropriate form for tax I.D. number certifications. It
is understood that the Escrow Agent shall be responsible for
income reporting only with respect to income received on
investment of funds, which are a part of the Escrow Funds and is
not responsible for any other reporting as provided in Section
5.7 hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK-
THE NEXT PAGE IS THE SIGNATURE PAGE]
B-8
IN WITNESS WHEREOF, each of the parties has caused this Escrow
Agreement to be executed by a duly authorized officer as of the day and year
first written above.
KEY3MEDIA VON EVENTS, INC.
By
-----------------------------------------
Xxxxx Xxxxxxx, Executive Vice President
XXXXXX.XXX, INC.
XXXXXX.XXX EUROPE, LTD.
XXXXXX.XXX ASIA PACIFIC, LTD.
XXXXXX.XXX CONFERENCES, INC.
By
-----------------------------------------
Xxxxxxx Xxxxxx, President
THE BANK OF NEW YORK,
as Escrow Agent
By:
----------------------------------------
Name:
Title:
B-9
SCHEDULE 5.8
ESCROW AGENT FEE
Escrow Agent shall be paid Five Thousand Dollars ($5,000) for its
services hereunder.
B-10
Exhibit C
Secretary's Certificate
XXXXXX.XXX, INC.
XXXXXX.XXX, INC.
XXXXXX.XXX EUROPE, LTD.
XXXXXX.XXX CONFERENCES, INC.
XXXXXX.XXX ASIA PACIFIC, LTD.
I, Xxxxxxx Xxxxxx, Secretary of each of XXXXXX.XXX, INC., XXXXXX.XXX
EUROPE, LTD. XXXXXX.XXX CONFERENCES, INC., and XXXXXX.XXX ASIA PACIFIC, LTD.,
respectively, each of which is a New York corporation (each a "Seller," and
collectively the "Sellers"), hereby certify that:
(a) Attached hereto as Annex A is a true and correct copy of the
Certificate of Incorporation of each Seller and all amendments thereto
(if any), certified by the New York Secretary of State on the
respective dates indicated thereon in Annex A, and a Certificate of
Good Standing of each Seller issued by the New York Secretary of State
on the respective dates indicated thereon in Annex A. No amendment or
other document relating to or affecting the Certificate of
Incorporation of each Seller has been filed in the office of the New
York Secretary of State since the respective date of incorporation of
each Seller, except with respect to Xxxxxx.xxx, Inc., as to which no
amendment or other document relating to or affecting its Certificate
of Incorporation has been filed in the office of the New York
Secretary of State since July 16, 1996. No action has been taken by
the Sellers or their stockholders, directors, or officers in
contemplation of the filing of any such amendment or other document
or in contemplation of the liquidation or dissolution of the Sellers.
(b) Attached hereto as Annex B is a true and complete copy of the By-laws
of each Seller, as in full force and effect since the initial adoption
thereof in connection with the incorporation of such Seller to and
including the date hereof.
(c) Attached hereto as Annex C are true copies of resolutions duly adopted
by the Board of Directors and sole stockholder of each Seller by
unanimous written consent as of the respective dates indicated thereon
in Annex C; such resolutions have not been amended, modified, or
rescinded and remain in full force and effect; and such resolutions
are the only resolutions adopted by each Seller's Board of Directors
or any committee thereof or its stockholders relating to the Asset
Purchase Agreement dated as of September 10, 2001, among the Sellers,
their sole stockholder, and Key3Media VON Events, Inc., or the
transactions contemplated thereby.
C-1
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
corporate seal of each Seller.
----------------------------- -----------------------------
Date Xxxxxxx Xxxxxx, Secretary
C-2
Exhibit D
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 10, 2001, by and between Key3Media VON
Events, Inc. (the "Company") and Xxxx Xxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. Definitions. The following terms shall have the indicated meanings when
used in this Agreement, unless the context requires otherwise:
(a) "Base Salary Amount" shall mean $ 175,000 per full Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick pay, retirement,
pension, profit sharing, welfare, medical, dental, disability, life
insurance, deferred compensation, incentive compensation, stock issuance
and option or other employee benefit plan, program or arrangement of any
kind or nature whatsoever, if any.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Cause" shall have the meaning ascribed to that term in Section 7.
(e) "Common Stock" shall mean the Common Stock, no par value, of the
parent of the Company, Key3Media Group, Inc. ("Group").
(f) "Covenant Period" shall have the meaning ascribed to that term in
Section 9(a).
(g) "Contract Year" shall mean each year during the term hereof
commencing on the date of Closing of the Asset Purchase Agreement between
Executive, the Company Xxxxxx.xxx, Inc., Xxxxxx.xxx Europe, Ltd.,
Xxxxxx.xxx Conferences, Inc. and Xxxxxx.xxx Asia Pacific, Ltd. (the "Asset
Purchase Agreement"), and ending on the immediately following December 31.
(h) "Customer" shall have the meaning ascribed to that term in Section
9(c).
(i) "Disability" shall have the meaning ascribed to that term in
Section 6(a).
(j) "Disability Period" shall have the meaning ascribed to that term
in Section 6(a).
D-1
(k) "Proprietary Information of the Company" shall have the meaning
ascribed to that term in Section 10.
2. Employment. The Company hereby employs Executive, and Executive hereby
accepts employment with the Company, on the terms and subject to the conditions
set forth herein.
3. Term of Employment. The term of employment hereunder shall be for a
period commencing on the date of Closing of the Asset Purchase Agreement, and
ending on December 31, 2004, subject to early termination as herein provided.
4. Position and Duties. Executive shall serve as President of the Company.
Subject solely to the authority of the Board of Directors, the Executive shall
have all of the powers and duties incident to the office of [President] and such
other powers and duties as may from time to time be prescribed by the Board of
Directors of the Company.
5. Exclusive Duties. During Executive's employment by the Company,
Executive shall devote at least the same amount of his entire working time,
attention and energies to the business of the Company as he devoted to the
Events (as defined in the Asset Purchase Agreement) and will not take any
actions of the kind described in Sections 9(a), 9(b) and 9(c).
6. Compensation and Other Benefits.
(a) Base Salary. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be subject to increase, at the sole discretion of the Chief
Executive Officer or the Compensation Committee of the Board of Directors
of the Company, as applicable, on or around each anniversary date of the
execution of this Agreement. The Base Salary Amount shall be paid to
Executive in accordance with the Company's regular payroll practices with
respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the reasonable opinion of the Board of Directors,
based upon competent medical advice, he can no longer perform the duties of
[President] of the Company (a "Disability"), the Company shall only be
obligated to continue to pay the Base Salary Amount to Executive for the
120-day period immediately following the date of Disability (the
"Disability Period"). The right to receive salary payments during the
Disability Period, if applicable, shall survive any termination of
employment by virtue of Disability pursuant to Section 7.
(b) Expenses. Executive shall receive prompt reimbursement from the
Company for all documented business expenses incurred by him in the
performance of his duties hereunder, provided that Executive properly
accounts therefore in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence as
reasonably requested by the Company.
(c) Vacations. During the term hereof, Executive shall be entitled to
sick leave and paid holidays consistent with the Company's sick leave and
holiday policy for senior management and up to three weeks paid vacation
during each Contract Year (or such other vacation time as is consistent
with the Company's policy for senior management).
D-2
(d) Stock Options. Executive shall be entitled to a grant of 300,000
options to purchase the common stock of Group, at the fair market value of
said stock on the date of grant, vesting over a four year period, subject
to the terms and conditions set forth in Group's stock option plan and the
accompanying stock option agreement.
(e) Religious Holidays. Executive shall not be required to work on
those Jewish holidays specified by Executive consistent with Executive's
prior observance of those holidays when he owned the Events.
7. Termination. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) for a period of no less than 120 days during any consecutive twelve-month
period. The Company may also terminate the employment of Executive hereunder
upon Executive's death or for Cause. For purposes hereof, "Cause" shall mean (i)
fraud, theft, misappropriation of funds or conviction of a felony, (ii)
Executive's engagement in illegal conduct tending to place Executive or the
Company in disrepute, (iii) dereliction or gross misconduct in Executive's
performance of his duties as an employee of the Company or the failure of
Executive to perform his duties in a manner consistent with the reasonable
instructions of the Board of Directors or the Chief Executive Officer of the
Company or (iv) violation by Executive of any of his material covenants
contained in this Agreement, including, without limitation, Section 10. Upon the
termination of Executive's employment for any reason, Executive shall be
entitled to receive all compensation for the then current Contract Year through
the date of such termination plus all accrued but unreimbursed expenses. In
addition, upon the termination of Executive's employment for any reason other
than for or by virtue of Cause, death, Disability or Executive's voluntary
termination of employment, the Company shall continue to be responsible for the
payment of all Base Salary Amount for the remainder of the term hereof;
provided, however, that Executive shall have a duty to mitigate (as to a new
position comparable to Executive's position hereunder) commencing on the first
anniversary of the date of termination; and, further provided that Executive
shall perform his covenants, duties and obligations under Sections 9(a), 9(b)
and 9(c) during the remainder of the term hereof. Termination of Executive's
employment for any reason whatsoever shall not affect Executive's ability to
exercise stock options that have vested prior to the date of termination.
8. Developmental Rights. Executive agrees that any developments by way of
invention, design, copyright, trademark or other matters which may be developed
or perfected by him during the term hereof, and which relate to the Business (as
defined in the Asset Purchase Agreement) or anything reasonably related thereto,
shall be the property of the Company without any interest therein by Executive,
and he will, at the request and expense of the Company, apply for and prosecute
letters patent thereon in the United States or in foreign countries if the
Company so requests, and will assign and transfer the same to the Company
together with any letters patent, copyrights, trademarks and applications
therefore; provided, however, that the foregoing shall not apply to an invention
that Executive develops entirely on his own time without using the Company's
equipment, supplies, facilities or trade secret information except for those
inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Business (as defined in the Asset Purchase Agreement) or
anything reasonably related thereto, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. COVENANTS.
D-3
(a) Covenant Not to Compete. Executive shall not, without the prior
written consent of the Company, (a) for a period (the "Covenant Period")
ending on the later of two years after the closing date of the Asset
Purchase Agreement or termination of this Agreement, directly or
indirectly, anywhere in the world engage in any Prohibited Operations (as
defined in the Asset Purchase Agreement). Notwithstanding the foregoing,
the Executive may, in the aggregate, invest in securities of any issuer
engaged in Prohibited Operations if (i) such securities are listed on any
national or regional securities exchange or have been registered under the
Securities Exchange Act of 1934 and (ii) such investment does not exceed,
in the case of any class of the capital stock of any one issuer, 5% of the
issued and outstanding shares, or, in the case of other securities, 5% of
the aggregate principal amount thereof issued and outstanding. Further, the
Executive may, in the aggregate, invest in securities of any issuer engaged
in Prohibited Operations if revenues from the Prohibited Operations
constitute less than 5% of the revenues of such issuer provided that the
Prohibited Operations are transferred or terminated by such issuer as soon
as practicable after the Executive acquires control of such issuer. Buyer
acknowledges and agrees that Executive may engage in any activity unrelated
to the ownership, management or active involvement with (including, but not
limited to, employment or consulting services) networking conferences and
tradeshows.
The Executive acknowledges that the restrictions contained in this Section
9 are reasonable and necessary to protect the legitimate interests of the
Buyer and that any breach by the Executive of any provision hereof will
result in irreparable injury to the Company. The Executive acknowledges
that, in addition to all remedies available at law, the Company shall be
entitled to equitable relief (without the necessity of posting any bond),
including injunctive relief, and an equitable accounting of all earnings,
profits or other benefits arising from such breach and shall be entitled to
receive such other damages, direct or consequential, arising from such
breach as may be appropriate.
(b) Solicitation of Employees. During the Covenant Period, Executive
shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Business (as defined in the Asset Purchase Agreement)
provided, however that Executive may at any time employ Xxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx.
(c) Non-Solicitation of Customers. During the Covenant Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who contracts with the Company or any of
its subsidiaries or affiliates in connection with the Business.
10. Confidentiality. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all
D-4
information known or intended to be known only to employees of the Company or
any of its subsidiaries or affiliates in a confidential relationship with the
Company or any of its subsidiaries or affiliates relating to technical matters
pertaining to the business of the Company or any of its subsidiaries or
affiliates, but shall not include any information within the public domain.
Executive agrees not to remove any documents, records or other information from
the premises of the Company or any of its subsidiaries or affiliates containing
any such proprietary information, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, and acknowledges that such
documents, records and other information are the exclusive property of the
Company or its subsidiaries or affiliates. Upon termination of Executive's
employment, Executive shall immediately return all Proprietary Information of
the Company and all copies thereof to the Company.
11. General Provisions.
(a) Expenses. All costs and expenses incurred by either of the parties
in connection with this Agreement and any transactions contemplated hereby
shall be paid by that party.
(b) Notices. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
(i) If to the Company:
Key3Media VON Events, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: General Counsel
(ii) If to Executive:
Jeffrey Pulver
Xxxxxx.xxx, Inc.
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
With a copy to:
Xxxxx Xxxxxx
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
(c) Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
D-5
(d) Successors; Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a community
property state or a state that has adopted the Uniform Marital Property Act
or equivalent or if Executive is domiciled in a state that grants to hi
spouse any other marital rights in Executive's assets (including, without
limitation, dower rights or a right to elect against Executive's will or to
claim a forced share of Executive's estate), this Agreement shall also
inure to the benefit of, and shall also be binding upon, his spouse. If
Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's designee or, if there be no such designee, to
Executive's heirs, devisees, legatees or executors or administrators of
Executive's estate, as appropriate.
(e) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) Entire Agreement. This Agreement, the Asset Purchase Agreement and
any applicable option agreements pursuant to Section 6(f)) constitute the
entire agreement of the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements and understandings,
both written and oral, between the Company and Executive with respect to
the subject matter hereof and thereof.
(g) Assignment. This Agreement and the rights and duties hereunder are
not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) Amendment; Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
D-6
(i) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, applicable to
contracts executed in and to be performed entirely within that state.
(j) Jurisdiction and Venue. The parties hereto agree that all actions
or proceedings initiated by either party hereto and arising directly or
indirectly out of this Agreement which are brought pursuant to judicial
proceedings shall be litigated in a Federal or state court located in the
State of New York. The parties hereto expressly submit and consent in
advance to such jurisdiction and agree that service of summons and
complaint or other process or papers may be made by registered or certified
mail addressed to the relevant party at the address to which notices are to
be sent pursuant to Section 11(b) of this Agreement. The parties hereto
waive any claim that a Federal or state court located in the State of New
York is an inconvenient forum or an improper forum based on lack of venue.
(k) Equitable Relief. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company, in
addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
D-7
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
Key3Media VON Events, Inc.
By:
---------------------------------
Name:
Title:
-------------------------------------
Xxxxxxx Xxxxxx
D-8
Exhibit E
KEY3MEDIA VON EVENTS, INC
Secretary's Certificate
I, Xxx Xxxxxxxxx, Secretary of Key3Media VON Events, Inc., a Delaware
corporation (the "Company"), hereby certify that:
(a) (a)Attached hereto as Annex A is a true and correct copy of the Articles of
Incorporation of the Company and all amendments thereto, certified by the
Delaware Secretary of State on the date indicated thereon in Annex A, and a
Certificate of Good Standing issued by the Delaware Secretary of State on
the date indicated thereon in Annex A. No amendment or other document
relating to or affecting the Certificate of Incorporation of the Company
has been filed in the office of the Delaware Secretary of State since date
of incorporation of the Company, and no action has been taken by the
Company or its stockholders, directors or officers in contemplation of the
filing of any such amendment or other document or in contemplation of the
liquidation or dissolution of the Company;
(b) (b)Attached hereto as Annex B is a true and complete copy of the By-laws of
the Company, as in full force and effect since, the initial adoption
thereof, to and including the date hereof;
(c) (c)Attached hereto as Annex C are true copies of resolutions duly adopted
by the Board of Directors and Stockholders of the Company by unanimous
written consent as of as of the respective dates set forth thereon; such
resolutions have not been amended, modified or rescinded and remain in full
force and effect; and such resolutions are the only resolutions adopted by
the Company's Board of Directors or any committee thereof or the
Stockholders relating to the Asset Purchase Agreement, dated as of
September 10, 2001, between the Company and Xxxxxx.xxx, Inc. or the
transactions contemplated thereby.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Company.
---------------------
(Date)
------------------------------
Xxx Xxxxxxxxx, Secretary
X-0
XXXXXXXXX
X-0
