ASSET PURCHASE AGREEMENT
By and Among
KEY3MEDIA ART EVENTS, INC.
B.C.R. ENTERPRISES, INC.
And
XXXXX X. XXXXXXXXX
Dated as of September 10, 2001
TABLE OF CONTENTS
PAGE
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Purchase and Sale of Assets ................................................ 1
1
Consideration .............................................................. 1
2
2.1 Base Purchase Price ................................................ 1
2.2 Payment Dates ...................................................... 2
2.3 No Assumption of Liabilities ....................................... 3
2.4 Escrow Amount ...................................................... 3
2.5 Incentive Compensation ............................................. 4
2.6 Allocation of Consideration ........................................ 4
Purchase Price Adjustment .................................................. 4
3
Closing .................................................................... 5
4
4.1 Documents to be Delivered by Seller and Goldstone to Buyer ......... 5
4.2 Documents to be Delivered by Buyer ................................. 5
4.3 Deposit of Escrow Amount ........................................... 6
4.4 Passage of Title at Closing ........................................ 6
4.5 Assignment of Seller's Contracts ................................... 6
Representations and Warranties of Goldstone and BCR ........................ 6
5
5.1 Corporate Organization ............................................. 7
5.2 Capitalization; Stock Ownership .................................... 7
5.3 Subsidiaries and Other Equity Investments .......................... 7
5.4 Corporate Authority ................................................ 7
5.5 No Violation ....................................................... 7
5.6 Offering Memorandum ................................................ 8
5.7 No Undisclosed Liabilities, Etc. ................................... 8
5.8 Absence of Certain Changes ......................................... 8
5.9 Title to and Condition of Properties and Assets .................... 9
PAGE
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5.10 Certain Properties ................................... 10
5.11 Tax Returns .......................................... 10
5.12 Contracts ............................................ 10
5.13 Litigation ........................................... 11
5.14 Trademarks and Other Intellectual Property ........... 12
5.15 Compliance with Laws ................................. 12
5.16 Environmental Matters ................................ 12
5.17 Governmental Authorizations and Regulations .......... 13
5.18 SEC and Antitrust Filings ............................ 13
5.19 Employee Benefit Plans and Other Arrangements ........ 13
5.20 Certain Transactions ................................. 14
5.21 Foreign Corrupt Practices Act ........................ 14
5.22 Accounting Practices ................................. 14
5.23 Minute Books ......................................... 15
5.24 Insurance ............................................ 15
5.25 Certain Disclosures .................................. 15
5.26 Brokers .............................................. 15
5.27 Conduct of Business .................................. 15
5.28 EBITDA Calculations .................................. 15
5.29 No Untrue Statements ................................. 15
6 Representations and Warranties by Buyer ........................... 16
6.1 Corporate Organization ............................... 16
6.2 Authorization of Agreement; No Violation ............. 16
6.3 litigation ........................................... 16
6.4 Brokers .............................................. 16
6.5 Intent to Grow the Business .......................... 16
6.6 No Untrue Statements ................................. 17
ii
PAGE
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7 Covenants of Seller and Goldstone .......................................... 17
7.1 Access, Information and Documents ............................. 17
7.2 Conduct of Business Pending Closing ........................... 17
7.3 Financial Statements and Certificate .......................... 18
7.4 Audit Expenses ................................................ 19
7.5 Consents and Approvals ........................................ 20
7.6 No Solicitation of Offers ..................................... 20
7.7 Use of Databases .............................................. 20
7.8 Use of Seller's Assets ........................................ 20
7.9 Cooperation in Preparation of Financial Statements ............ 20
8 Covenants of Buyer ......................................................... 20
8.1 Consents and Approvals ........................................ 20
8.2 Joint Marketing Efforts ....................................... 20
8.3 Employee Benefit Matters ...................................... 21
9 Conditions Precedent to Seller's Obligation to Sell the Assets ............. 21
9.1 Buyer's Performance ........................................... 21
9.2 Consents and Approvals ........................................ 21
9.3 Employment Agreement .......................................... 21
9.4 No Adverse Proceedings ........................................ 21
9.5 Escrow Agreement .............................................. 22
9.6 Other ......................................................... 22
9.7 Simultaneous Closing of NGN Transaction ....................... 22
10 Conditions Precedent to Buyer's Obligation to Purchase the Assets .......... 22
10.1 Seller's and Goldstone's Performance .......................... 22
10.2 Opinion of BCR Counsel ........................................ 22
10.3 Consents and Approvals ........................................ 23
10.4 Physical Properties ........................................... 23
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PAGE
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10.5 Employment Agreement ............................................... 23
10.6 No Adverse Proceedings ............................................. 23
10.7 Escrow Agreement ................................................... 24
10.8 Other .............................................................. 24
11 Termination ..................................................................... 24
12 Survival of Representations and Warranties; Indemnification ..................... 24
12.1 Survival of Representations and Warranties ......................... 24
12.2 Seller's Indemnification Obligations ............................... 25
12.3 Buyer's Indemnification Obligations ................................ 25
12.4 Liability for Taxes. ............................................... 26
12.5 Procedure for Indemnification Claims ............................... 26
12.6 Limitation of Liability ............................................ 26
13 Setoff .......................................................................... 27
14 Noncompetition .................................................................. 27
15 Dispute Resolution .............................................................. 28
16 Miscellaneous ................................................................... 29
16.1 Assurance of Further Action ........................................ 29
16.2 Expenses ........................................................... 29
16.3 Waiver ............................................................. 29
16.4 Notices ............................................................ 29
16.5 Entire Agreement ................................................... 30
16.6 Rights Under this Agreement; Nonassignability ...................... 30
16.7 Governing Law, Jurisdiction and Venue .............................. 31
16.8 Knowledge Qualifiers ............................................... 31
16.9 Headings; References to Sections, Exhibits and Schedules ........... 31
16.10 Severability Construction .......................................... 31
16.11 Counterparts ....................................................... 31
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16.12 Press Releases and Announcements ................................................... 31
16.13 No Third Party Beneficiaries ....................................................... 31
Exhibit A Indenture, Xxxx of Sale, Assignment and Assumption Agreement ....................... A-1
Exhibit B Form of Escrow Agreement ........................................................... B-1
Exhibit C B.C.R. Enterprises, Inc. Officer's Certificates .................................... C-1
Exhibit D B.C.R. Enterprises, Inc. Secretary's Certificate ................................... D-1
Exhibit E Key3Media Art Events, Inc. Officer's Certificate ................................... E-1
Exhibit F Key3Media Events, Inc. Key3Media Art Events, Inc Secretary's Certificate ........... F-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 ART EVENTS, INC., a
Delaware corporation ("Buyer"), B.C.R. Enterprises, Inc., an Illinois
corporation (the "Seller") and Xxxxx X. Xxxxxxxxx, an individual ("Goldstone").
RECITALS
--------
WHEREAS, the Seller owns, operates, and produces publications, sponsored
conferences, tradeshows and educational seminars (excluding the conferences and
trade shows commonly known as Next Generation Networks and Next Generation
Network Ventures) (collectively, the "Business");
WHEREAS, Goldstone owns all of the outstanding capital stock of BCR;
WHEREAS, Key3Media Events, Inc. (the "Parent") owns all of the outstanding
stock of Buyer; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all of the properties, assets and business of Seller relating to the
Business, all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
---------
1 PURCHASE AND SALE OF ASSETS
Upon the terms and provisions of this Agreement, Buyer shall purchase and
accept delivery from Seller and Goldstone of, and Seller and Goldstone shall
sell, convey, assign, transfer and deliver to Buyer, at the Closing (as defined
in Section 4), all of Seller's and Goldstone's 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 the Business, including, without limitation, all of
Seller's and Goldstone's goodwill relating to the Business other than, in each
case, the properties, assets and businesses specifically set forth on Schedule 1
(collectively, the "Excluded Assets"). The properties, assets, and business to
be sold by Seller and Goldstone to Buyer pursuant to this Agreement are
collectively referred to as the "Assets."
2 CONSIDERATION
As consideration for the Assets:
2.1 BASE PURCHASE PRICE
Buyer agrees to pay to the Seller for the Assets and the Seller agrees to
accept from Buyer as the base purchase price for the Assets (the "Base Purchase
Price"), the amount equal to nine (9) times the average of the EBITDA (as
hereinafter defined) derived from the audited financial statements (the "Audited
EBITDA") of the Business for the fiscal years ending December 31, 2000 and
December 31, 2001. The Base Purchase Price is subject to adjustment after the
Closing (as defined below) as described in Section 3. For purposes of this
Agreement, EBITDA means (a) the net income of the Business determined in
accordance with generally accepted accounting principles, consistently applied
("GAAP") without giving effect to: (i) extraordinary 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 and (iv) federal, state and local
income tax expense. For the purpose of calculating EBITDA for the years ending
on December 31, 2001 and December 31, 2003, the Buyer shall also exclude any
fees paid to the Parent or an affiliate of the Parent for corporate overhead
with the exception of fees relating to (x) accounting services provided by an
affiliate of the Parent (not to exceed the fair market value of such services);
and (y) Buyer's actual in-house cost for the joint marketing efforts described
in Section 8.2. Further, EBITDA for the years ending on December 31, 2000,
December 31, 2001 and December 31, 2003 shall be calculated using the same
methodology for allocation between the Business and the other business being
sold by BCR to Buyer contemporaneously herewith pursuant to the NGN Agreement
(as defined below) of income and expenses set forth in the Offering Memorandum
for the Business dated May, 2001 provided to the Buyer by XxXxxxx & Xxxxxxxx LLC
(the "Offering Memorandum"). Notwithstanding anything to the contrary in this
Section 2.1, for purposes of determining EBITDA for calendar years ending
December 31, 2001 and December 31, 2003, the audit expenses for the Selected CPA
(as defined below) included in calculating EBITDA shall not be more than $7,078
for each year regardless of the actual audit costs for such years. For purposes
of calculating EBITDA for the calendar year ending December 31, 2000, there
shall be no audit expenses for the Selected CPA, and for purposes of calculating
EBITDA for the calendar years ending December 31, 2000 and 2001 there shall be
no expenses for the Selected CPA for the preparation of the Unaudited Quarterly
Statements (as defined in Section 7.3). In connection with the calculation of
the EBITDA, $212,500 shall be allocated to Goldstone's compensation for each of
2000 and 2001, regardless of actual compensation during such periods. For
purposes of calculating EBIDTA for calendar years 2000 and 2001, there shall be
no profit or loss from the operations set forth in the Discontinued Operations
and Operations under Evaluation Section of the Offering Memorandum.
2.2 PAYMENT DATES
The Base Purchase Price shall be payable in installments as set forth
below:
(A) The estimated amount of the Base Purchase Price as of
the Closing Date (the "Estimated Payment Amount")
shall be due and payable to the Seller on the Closing
Date (as defined below) in an amount equal to nine
(9) times the average of the EBITDA for the fiscal
year ended December 31, 2000 and the Seller's
estimate of EBITDA for the fiscal year ending
December 31, 2001; provided, however, that ten
percent (10%) of the Estimated Payment Amount (prior
to calculation of the Purchase Price Adjustment)
shall be held in an Escrow Account (as defined below)
as set forth in Section 2.4 below).
Solely for purposes of determining the Estimated
Payment Amount to be paid on the Closing Date, the
$2,522,000 EBITDA amount for the fiscal year ended
December 31, 2000 set forth in the Offering
Memorandum and the $537,000 estimated EBITDA amount
for the fiscal year ending December 31, 2001 set
forth in the second Re-forecast to the Offering
Memorandum dated July 29, 2001, shall be used by the
parties to calculate an Estimated Payment Amount of
$13,765,500 (subject to adjustment as described in
Section 3 below).
(B) The actual amount (the "Actual Payment Amount") of
the Base Purchase Price shall be due and payable to
the Seller within five days after delivery of audited
financial statements for the Business for the fiscal
year ended December 31, 2001. The Actual Payment
Amount shall be equal to nine (9) times the average
of (i) the Audited EBITDA for the fiscal year ended
December 31, 2000 and (ii) the Audited EBITDA for the
fiscal year ending December 31, 2001, as adjusted for
any reconciliation of the Purchase Price Reduction or
Purchase Price Increase, as the case may be, under
Section 3 below. Buyer and the Seller shall use their
commercially reasonable efforts to cause the audited
financial statements for the year ending December 31,
2001 to be delivered no later than February 28, 2002.
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(C) In the event the Actual Payment Amount is less than the
Estimated Payment Amount including the Escrow Amount
(such difference, a "Seller Shortfall Amount"), then
the Buyer shall be entitled to receive such Seller
Shortfall Amount from the Escrow Account and Seller
shall, on the payment date of the Actual Payment Amount
(as described in Section 2.2B), also pay to the Buyer
any additional amounts required to make up the full
amount of the Seller Shortfall Amount. If the Seller
Shortfall Amount is less than the Escrow Amount, after
payment of the Seller Shortfall Amount from the Escrow
Account to the Buyer the remainder of the Escrow
Account (less any payments for Seller's indemnification
obligations) shall be released to the Seller. In the
event the Actual Payment Amount is greater than the
Estimated Payment Amount, including the Escrow Amount
(such difference, a "Buyer Shortfall Amount"), then the
Escrow Amount shall be released to Seller and the Buyer
shall also pay to the Seller any additional amounts
required to make up the full amount of the Buyer
Shortfall Amount. Any funds received by the Seller or
the Buyer from the Escrow Account shall include
interest earned on said funds. Interest on the Escrow
Amount shall not reduce the Seller Shortfall Amount or
the Buyer Shortfall Amount.
2.3 NO ASSUMPTION OF LIABILITIES
(A) Except with respect to the contractual obligations of
Seller disclosed in Schedule 2.3 (A) to this Agreement
and directly relating to the ownership or operation of
the Assets and 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 Seller, Goldstone, 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 Business prior
to the Closing Date or of the Excluded Assets at any
time.
(B) Without limiting the foregoing, as between the Buyer
and Seller the Seller shall be responsible for any or
all liability (if any) 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
Seller. As to Seller's employees, as between the Buyer
and Seller, Seller shall be responsible for complying
with any obligations and liabilities (if any) arising
under COBRA (including notice and maintaining insurance
for employees who elect continued coverage) as a result
of such employees' loss of coverage under Seller's
health plans. The Seller shall be responsible for all
retiree welfare obligations, if any, arising out of or
attributable to any employee benefit plan of the Seller
in effect prior to or as of the Closing Date, or
agreements relating thereto.
2.4 ESCROW AMOUNT
On the Closing Date, Buyer shall deposit with the Bank of New York (the
"Escrow Agent") an amount equal to ten percent (10%) of the Estimated Payment
Amount (together with any interest earned
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 attached hereto as Exhibit B (the "Escrow Agreement").
3
2.5 INCENTIVE COMPENSATION
In addition to the Base Purchase Price, within five (5) business days
after the receipt by Buyer of audited financial statements for the Business for
the calendar year ended December 31, 2003,which the Buyer anticipates will be on
or before March 31, 2004, Buyer will make an incentive payment (the "Incentive
Payment") to the Seller in an amount equal to (i) the amount (if any) by which
the actual audited revenue of the Business for calendar year 2003 exceeds the
average of the actual audited revenue of the Business for the two calendar years
2000 and 2001 (such difference hereinafter referred to as the "XXX") multiplied
by (ii) the applicable factor as follows:
(a) For that portion of the XXX that is greater than or equal to
$0.00, but less than $3,000,000-the multiple shall be 1.0.
(b) For that portion of the XXX that is equal to or greater than
$3,000,000, but less than $6,000,000 the multiple all be 1.25.
(c) For that portion of the XXX that is equal to or greater than
$6,000,000- the multiple shall be 1.5.
Notwithstanding anything to the contrary above, in the event that (A)
the quotient obtained by dividing the (i) EBITDA for the Business for calendar
year 2003 by (ii) the revenue for the Business for calendar year 2003 is less
than (B) the quotient obtained by dividing (x) the average EBITDA for the
Business for the two calendar years 2000 and 2001 by (y) the average of the
revenue for the Business for the two calendar years 2000 and 2001 then Seller
shall not be entitled to any Incentive Payment.
2.6 ALLOCATION OF CONSIDERATION
The aggregate amount of the Base Purchase Price and the Assumed
Liabilities shall be allocated among the Assets as set forth on Schedule 2.6
attached hereto. The Seller
3 PURCHASE PRICE ADJUSTMENT
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, (iii) prepaid expenses, (iv) security deposits and (v) prepaid
credit card changes is less than the (i) deferred revenue liability, (ii)accrued
bonuses related to the Business, and (iii) accounts payable of the Business as
of the August 31, 2001, then the Estimated Payment Amount shall be adjusted
downward (a "Purchase Price 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 "Purchase Price Increase") by the amount of
the difference between the Working Capital Requirement and the deferred revenue
liability. The Purchase Price Reduction or Purchase Price Increase, as
applicable, is sometimes referred to as the "Purchase Price Adjustment". The
parties will calculate a preliminary Purchase Price Reduction or Purchase Price
Increase, as applicable, on or before, and payable at, the Closing. The final
Purchase Price Reduction or Purchase Price 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 agreement of the parties within 45 days after the Closing. The Base Purchase
Price shall be adjusted by the amount of the final Purchase Price Reduction or
the final Purchase Price Increase, as applicable.
Notwithstanding anything to the contrary in this Agreement, the profit
and loss of the Business shall be transferred to Buyer effective September 1,
2001
4
4 CLOSING
The closing of the purchase and sale of the Assets ("Closing") shall
take place at the office of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (or at such other place as the parties may mutually agree) at five
o'clock (5:00) in the evening, local time, on September 10, 2001 (the "Closing
Date").
4.1 DOCUMENTS TO BE DELIVERED BY SELLER AND GOLDSTONE TO BUYER
At the Closing, Seller and Goldstone will deliver to Buyer:
(A) The Indenture, Xxxx of Sale, Assignment and Assumption
Agreement in the form set forth as Exhibit A;
(B) such specific instruments of sale, conveyance,
assignment, transfer and delivery with full covenants of
warranty as to 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;
(C) all Seller's contracts, books, records, and other data
relating to the Assets and the Business; provided,
however that Seller shall be permitted to deliver copies
of its corporate minute books;
(D) a certificate of Seller in the form of Exhibit C
certifying as to the accuracy of Seller's representations
and warranties when made and on and as of the Closing
Date as if made thereon and that Seller has performed and
complied with all of the terms, provisions, and
conditions to be performed and complied with by Seller at
or before the Closing;
(E) a certificate of Seller in the form of Exhibit D,
certifying as to certain corporate matters, together with
all of the attachments referred to therein;
(F) the BCR Opinion (as defined below):
(G) the Goldstone Employment Agreement (as defined below),
executed by Goldstone;
(H) the Escrow Agreement, executed by Seller and Goldstone;
and
(I) such other certificates and documents as Buyer or its
counsel may reasonably request.
4.2 DOCUMENTS TO BE DELIVERED BY BUYER
At the Closing, Buyer will deliver to Seller:
(A) the Estimated Payment Amount (less the Escrow Amount),as
adjusted pursuant to Section 3, by transfer of
immediately available funds to such account at such two
banks as Seller shall direct;
(B) a certificate of Buyer in the form of Exhibit E
certifying as to the accuracy of Buyer's representations
and warranties when made and as of the Closing Date as if
made thereon and that Buyer has performed and complied
with all of the terms,
5
provisions, and conditions to be performed and complied with
by Buyer at or before the Closing; and
(C) a certificate of Buyer in the form of Exhibit F certifying as
to certain corporate matters, together with all of the
attachments referred to therein;
(D) the Goldstone Employment Agreement, executed by Buyer;
(E) the Indenture, Xxxx of Sale, Assignment and Assumption
Agreement in the form set forth as Exhibit A;
(F) the Escrow Agreement, executed by Buyer and the Escrow Agent;
and
(G) such other certificates and documents as Seller or Seller's
counsel may reasonably request.
4.3 DEPOSIT OF ESCROW AMOUNT
At the Closing, the Buyer shall deposit the Escrow Amount into the Escrow
Account in accordance with Section 2.4 above.
4.4 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, Seller 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 Seller 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 Seller incurred
after the Closing or arising out of any transaction by Seller or any event
occurring with respect to Seller after the Closing, other than liabilities
arising under this Agreement.
4.5 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 the 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 the Seller thereunder. If after the 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 the Seller thereunder, 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 the Seller against such other party
thereto arising out of the breach or cancellation thereof by such other party or
otherwise.
5 REPRESENTATIONS AND WARRANTIES OF GOLDSTONE AND BCR
The following representations and warranties are qualified by the
statements contained in the Disclosure Schedule attached hereto. The Disclosure
Schedule shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this Section 5. The
disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in this Section 5 only to the extent it
is clear from a reading of the disclosure that such disclosure is applicable to
such other sections and subsections. Goldstone and BCR jointly and severally
represent and warrant to Buyer and Parent as follows:
6
5.1 CORPORATE ORGANIZATION
BCR is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois 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. Goldstone has
delivered to Buyer complete and correct copies of its Certificate of
Incorporation and Bylaws as in effect on the date hereof. BCR 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. BCR 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 upon the condition (financial or otherwise), operations or business
(based upon the present or future conduct of the present Business), properties,
assets, or liabilities of the Assets or Business (a "MAE").
5.2 CAPITALIZATION; STOCK OWNERSHIP
The authorized capital stock of BCR consists of one thousand (1000)
shares of common stock, par value of One Dollar ($1.00) per share ("BCR Stock"),
of which one hundred (100) shares were issued and outstanding and no shares are
held by BCR as treasury shares. 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. Neither BCR nor
Goldstone 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 BCR or any other security exercisable or
exchangeable for or convertible into any capital stock or any other security of
BCR, 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 BCR or any other security exercisable or
convertible into any capital stock or any other security of BCR.
Goldstone owns all of such one hundred (100) outstanding shares of BCR
Stock as set forth in Schedule 5.2 free and clear of all liens, claims, charges,
restrictions, equities or encumbrances of any kind as Trustee under a
Declaration of Trust establishing the Xxxxx X. Xxxxxxxxx Revocable Trust, dated
June 6, 1995.
5.3 SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
Neither BCR nor Goldstone owns, 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.
5.4 CORPORATE AUTHORITY
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
Goldstone, as the sole director and sole shareholder of Seller, and no other
corporate proceeding on the part of the 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 Seller and Goldstone 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 Articles of Incorporation or Bylaws (or
7
any other governing instruments) of the Seller or (ii) will result in any breach
of or default under any provision of any contract or agreement of any kind to
which the Seller or Goldstone is a party or by which the Seller or Goldstone is
bound or to which any property or asset of any of them is subject, (iii) is
prohibited by or requires the Seller or Goldstone 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 the Seller or Goldstone is a party or
by which the Seller or Goldstone is bound or with respect to which the Seller or
Goldstone 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 the Seller or
Goldstone, including without limitation the Assets or relating to the Business.
5.6 OFFERING MEMORANDUM
The financial and other information set forth in the Offering
Memorandum, as amended by the second Re-forecast to the Offering Memorandum
dated July 29, 2001, presents fairly and accurately, in all material respects,
the results of operation of the Business as at, and for periods ending on, the
dates set forth therein with respect to the Assets or relating to the Business.
5.7 NO UNDISCLOSED LIABILITIES, ETC.
Since December 31, 2000, (except for the transactions contemplated by
this Agreement):
(A) Neither Goldstone nor Seller has 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
Offering Memorandum, as amended by the second Re-forecast
to the Offering Memorandum dated July 29, 2001, or the
Unaudited Balance Sheet as defined in Section 7.3 below ,
(ii) set forth in Schedule 5.12 or (iii) incurred in the
ordinary course of business that will not, individually
or in the aggregate, have a MAE; and
(B) To the best of Seller's and Goldstone's knowledge, the
accounts receivables reflected on the Unaudited Balance
Sheet are collectible in accordance with their terms and
without undue effort, and the reserve for uncollectible
accounts set forth on the Unaudited Balance Sheet is
adequate.
5.8 ABSENCE OF CERTAIN CHANGES
Since December 31, 2000 (except for the execution and delivery of this
Agreement), there has not been:
(A) any change that, individually or in the aggregate, would
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
material customer of the Business (which shall be deemed
to include any customer comprising more than three
percent (3%) of the Business' annual revenue) or any
cancellation or threatened cancellation of any material
order; or
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(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's employment by
Buyer) that would, individually, or in the aggregate,
have a MAE.
Since December 31, 2000, neither Seller nor Goldstone has:
(A) incurred or agreed to incur any indebtedness for borrowed
money with respect to the Business;
(B) paid or obligated itself to pay in excess of $100,000 in
the aggregate for fixed assets with respect to the
Business;
(C) 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;
(D) 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;
(E) increased, or agreed to increase, the compensation or
bonuses or special compensation of any kind of any
employees, 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
employee;
(F) entered into any amendment relating to or terminated 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;
(G) made any change in the accounting policies, methods or
practices used with respect to the Business;
(H) entered into any transaction with respect to the Business
not in the ordinary course of its business;
(I) received any notice of audit or inquiry relating to the
Business from any taxing or governmental authority; or
(J) 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
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 Offering Memorandum, as amended by the second Re-forecast
to the Offering Memorandum dated July 29, 2001, (except as sold or otherwise
disposed of in the ordinary course of business subsequent to the date thereof),
and the Assets constitute all the assets and properties necessary and sufficient
for Buyer to conduct the Business after
9
the Closing Date is substantially the same manner and fashion as it is currently
conducted by Seller and/or Goldstone. 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 the lien of
current taxes not yet due and payable. Subsequent to December 31, 2000, neither
Seller nor Goldstone has sold or disposed of any of the Assets or obligated
itself to do so except in the ordinary course of business. To the best knowledge
of Seller and Goldstone, the facilities, machinery, furniture, office and other
equipment included in the Assets are in good operating condition and repair,
subject only to ordinary wear and tear, and the operation of the Business is not
in violation of any material ordinance, regulation, building, zoning,
environmental or other law or regulation applicable to the Business.
5.10 CERTAIN PROPERTIES
Schedule 5.10 sets forth all real estate owned by the Seller and all
personal property and real estate leased to the Seller in each case included in
the Assets and specifies, in the case of real estate, the location of each
property, the use of the facility thereon, the name of the owner or the names of
the lessor and the lessee, the square footage of improvements and the acreage of
land. Seller has delivered to Buyer (i) a copy of each deed or lease by which
the Seller and/or Goldstone acquired title to or its interest in the real estate
described in Schedule 5.10 (ii) a copy of all title abstracts and title
insurance policies Seller has obtained and which are currently in effect for the
real estate described in Schedule 5.10, (iii) a copy of the most recent survey
or surveys the Seller(s) and/or Shareholder(s) has for the real estate described
in Schedule 5.10, (iv) a copy of all certificates of occupancy for the
improvements on the real estate described in Schedule 5.10 and a copy of any
variance granted with respect to any of such real estate described in Schedule
5.10 pursuant to applicable zoning laws or ordinances and (v) a copy of each
lease by which the Seller and/or Goldstone acquired their interest in the
personal property described in Schedule 5.10 of which documents are true and
complete copies thereof (translated into English if the original thereof is in a
foreign language) as in effect of the date hereof. Neither Seller nor Goldstone
has received any written notice from any governmental agency, board, bureau,
body, department or authority of any United States or foreign jurisdiction, with
respect to the use of any of the real estate described in Schedule 5.10. There
is no easement, right-of-way 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 the Seller and/or Goldstone leases any real
or personal property described in Schedule 5.10 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 the Seller and/or Goldstone, or any event that with
notice or lapse of time or both would constitute such a default by the Seller
and/or Goldstone and with respect to which the Seller and/or Goldstone has not
taken adequate steps to prevent such default from occurring; all of such events,
if any, and the aforesaid steps taken by Seller are set forth in Schedule 5.10.
To the best knowledge of the Seller and Goldstone, 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.
5.11 TAX RETURNS
All tax and information returns required to have been filed prior to the
date of this Agreement by Seller and/or the Goldstone 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 Seller and/or Goldstone have
paid or accrued all income, franchise, sales, use, and other taxes due by them
as reflected on said returns. Seller has not (i) agreed to any extension of the
statute of limitations, or (ii) incurred any tax liability related to the
Business as a result of any transaction not in the ordinary course of business.
5.12 CONTRACTS
Neither Seller nor Goldstone is a party to any of the following types of
agreements or instruments relating to the Business, whether written or oral:
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(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 involving more than
$100,000;
(F) any contract with any agent, dealer or distributor;
(G) any standby letter of credit, guarantee or performance bond
and involving more than $ 100,000;
(H) any contract or agreement restricting the ability of any
person (including, but not limited to, Goldstone) from
freely engaging in the 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 upon one year's notice without cost.
Except as set forth in Schedule 5.12, neither Seller nor Goldstone is 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 the Seller and/or Goldstone in accordance with
its terms. Neither Seller nor Goldstone, or, to the best knowledge of Seller and
the Goldstone, any other party is in default in the observance or the
performance of any term or obligation to be observed or performed by such party
under any contract listed in Schedule 5.12. To the best knowledge, of Seller and
Goldstone, no other person is in default in the observance or the performance of
any term or obligation to be observed or performed by such party under any
material contract with the Seller relating to the Business. Neither Seller nor
Goldstone knows of any bid or contract proposal made by the Seller that, if
accepted or entered into, might result in a loss to Seller with respect to the
Business. Seller has 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
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 knowledge of Seller and the Goldstone, threatened or
proposed in any manner, or, to the best knowledge of Seller and Goldstone, any
circumstances which should or could reasonably form the basis of any such
action, suit, proceeding or investigation, involving the Seller or Goldstone or
any of their properties or assets that (i) if asserted and decided adversely to
Seller or Goldstone, could, individually or in the aggregate, have a MAE, or
(ii) questions the validity of this Agreement or the transaction contemplated
hereby, or (iii) seeks to delay, prohibit or restrict in any
11
manner any action taken or contemplated to be taken by the Seller or Goldstone
under this Agreement. There is no arbitration proceeding pending or, to the best
knowledge of Seller and the Goldstone, threatened in any manner under any
agreement or otherwise. Neither Seller Goldstone nor any of their properties or
assets is subject to any judicial or administrative judgment, order, decree or
restraint.
5.14 TRADEMARKS AND OTHER INTELLECTUAL PROPERTY
Except as set forth in Schedule 5.14, and excluding copyright licenses
executed prior to January 1, 2000, neither Seller and/or Goldstone owns any
copyright, registered trademark or trade name, nor has any license to use any
copyright, trademark or trade name been issued to it, nor does the Seller and/or
Goldstone use any copyright, registered trademark or registered trade name in
connection with the operation of the Business, including without limitation, the
operation of tradeshows. Each of the registered trademarks and registered trade
names listed on Schedule 5.14 has been validly issued and is owned by the Seller
and/or Goldstone and they have the exclusive rights to use all such copyrights,
registered trademarks and registered trade names in the Business. Seller and
Goldstone collectively own or have the right to use and can transfer to Buyer
such ownership or right to use all copyrights, trademarks, trade names,
know-how, trade secrets, and other proprietary rights necessary to conduct the
Business and Seller and Goldstone do not know of any claim, or any 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.
Seller and Goldstone 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
asserted, would have, individually or in the aggregate, a MAE.
5.15 COMPLIANCE WITH LAWS
Seller and Goldstone have complied with and are in compliance with all
federal, state, local and foreign statutes, laws, ordinances, regulations,
rules, permits, judgments, orders or decrees (including any applicable bulk
sales laws) applicable to them or any of their properties, assets, operations
and businesses, relating to the Business and there does not exist any basis for
any claim of default under or violation of any such statute, law, ordinance,
regulation, rule, judgment, order or decree except such defaults or violations,
if any, that, individually or in the aggregate, do not and would not have a MAE.
Neither Seller nor Goldstone has 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, individually or in the aggregate, is or may have a MAE.
Seller and Goldstone 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
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
relating to the Business.
5.16 ENVIRONMENTAL MATTERS
Seller and Goldstone have 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 or 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, except where such noncompliance
would not individually, or in the aggregate, have a MAE. Seller has obtained and
adhered to all necessary permits and other approvals, including interim status
under the Federal Solid Waste Disposal Act, necessary to store, dispose of and
otherwise handle hazardous wastes and has reported, to the extent required by
all federal, state, local and foreign statutes, laws, ordinances,
12
regulations, rules, permits, judgments, orders and decrees, all past and present
sites owned and operated by Seller where hazardous wastes have been treated,
stored or disposed of, except where the failure to so obtain, adhere or report,
that would not individually, or in the aggregate, have a MAE Neither Seller nor
Goldstone knows of any location on any of the property included in the Assets
where hazardous wastes or other harmful substances have entered or are likely to
enter into the soil or groundwater. Seller knows of no on-site or off-site
location to which Seller has transported hazardous wastes or arranged for the
transportation of hazardous wastes, which site is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against Seller, Goldstone or Buyer for any cleanup cost,
remedial work, damage to natural resources or personal injury, including, but
not limited to, claims under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
5.17 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS
Schedule 5.17 lists all licenses, franchises, permits and other
governmental authorizations held by the Seller or Goldstone (or combination
thereof) material to the conduct of the Business. Such licenses, franchises,
permits and other governmental authorizations are valid, and neither Seller nor
Goldstone has received any notice that any governmental authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization. Seller and Goldstone collectively hold all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have, individually or in the aggregate, a MAE. The Business has not
been, is not being conducted, and none of the Assets are owned or are being
used, in violation of any material statute, law, ordinance, regulation, rule or
permit of any governmental entity or any judgment, order or decree.
5.18 SEC AND ANTITRUST FILINGS
Neither Seller nor Goldstone has ever 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 any of them has ever been
registered pursuant to the Securities Exchange Act of 1934, as amended. Neither
Seller nor Goldstone has purchased or sold any security of which it or any
affiliate was the issuer at any time when the information publicly available
relating to it, 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. No party is required to file a notification or a report
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR") or any
other antitrust law in respect of any action pursuant to or contemplated by this
Agreement and the Business does not constitute a partnership for purposes of
HSR.
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 relating to the Business, to which the
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. Seller has furnished Buyer with true and correct copies of (i) all
Benefit Plans, (ii) each summary plan description and summary of material
modification, (iii) the most recently filed IRS Form 5500 and (iv) the
most recently received IRS determination letter.
(B) QUALIFIED RETIREMENT PLANS
13
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 would adversely affect the qualified status of any such
Pension Plan. Neither Seller nor Goldstone has 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
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, nor the Seller nor Goldstone provides or promises
post-retirement health, life or other welfare benefits to current
employees or retirees (or their spouses or dependents), except as
required by Section 4980B of the Code or other applicable law.
(D) OTHER
Neither Seller nor Goldstone has incurred any liability under
Title IV of ERISA relating to the Business 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 reasonably be expected to 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
There is no transaction, and no transaction now proposed, relating to
the Business to which the Seller or Goldstone was or is to be a party and in
which any director or officer of the Seller or any person owning of record or
beneficially more than l0 percent of the outstanding capital stock of any class
of or other equity interest in the Seller or any associate of any such person
had or has a direct or indirect material interest.
5.21 FOREIGN CORRUPT PRACTICES ACT
Neither Seller nor Goldstone nor any director, officer, agent, employee
or other person associated with or acting on behalf of any of them has 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, in each case relating, directly or
indirectly, to the Business.
5.22 ACCOUNTING PRACTICES
The books and records relating to the Business are, in all material
respects, 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 financial statements and to maintain accountability for
the assets, (iii) access to the assets of the Business is permitted only in
14
accordance with management's authorization of the Business , and (iv) the
reported accountability of the assets of the Business is compared with existing
assets of the Business at reasonable intervals.
5.23 MINUTE BOOKS
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 relating to or affecting the Assets or the Business.
5.24 INSURANCE
The Assets are insured for the benefit of Seller, in amounts deemed
adequate by Seller and Goldstone, 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. Seller has delivered to
Buyer true and complete copies of all such policies as in effect on the date
hereof.
5.25 CERTAIN DISCLOSURES
Schedule 5.25 contains a list of all exhibitors for the Business for
the fiscal years ending December 31, 2000 and December 31, 2001 through the date
hereof.
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
Seller and Goldstone 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 Business has been operated during the fiscal year ending December
31, 2001 in the same manner as it was during the fiscal year ended December 31,
2000, and will continue to be so operated until Closing.
5.28 EBITDA CALCULATIONS
The Year 2000 EBITDA set forth in the Offering Memorandum is accurate
in all material respects and the estimated Year 2001 EBITDA set forth in the
second Re-forecast to the Offering Memorandum dated July 29, 2001 was determined
by the Seller and Goldstone in good faith based on assumptions and information
believed reasonable. Seller and Goldstone understand and agree that such EBITDA
amounts are subject to adjustment pursuant to an audit that will determine the
actual Base Purchase Price.
5.29 NO UNTRUE STATEMENTS
No statement by the Seller or Goldstone contained in this Agreement or
any Schedule hereto and no written statement contained in any certificate or
other document required to be furnished by the Seller, Goldstone or any officer,
employee, counsel or other agent of any of them to Buyer pursuant to or in
connection with this Agreement, including without limitation, the Offering
Memorandum, as amended by the second Re-forecast to the Offering Memorandum
dated July 29, 2001, 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.
15
6 REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents and warrants to the Seller and Goldstone 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 now being conducted by Seller and to acquire
and own and operate the Assets and the Business.
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 Seller 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
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. All consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which must be obtained or
satisfied by the Buyer and which are necessary for the consummation of the
transactions contemplated by this Agreement have been, or will be prior to the
Closing Date, obtained and satisfied.
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.
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 Seller and Goldstone 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 INTENT TO GROW THE BUSINESS
Buyer intends to grow the Business, including its revenue and EBITDA,
to a revenue margin, consistent with the growth of the other businesses of the
Parent, subject to economic conditions generally and in the information
technology industry in particular, technological changes and developments,
competition and other factors which the Buyer may or may not be able to control.
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6.6 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
Goldstone pursuant to 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 SELLER AND GOLDSTONE
Seller and Goldstone jointly and severally covenant and agree with
Buyer as follows;
7.1 ACCESS, INFORMATION AND DOCUMENTS
Pending the Closing, Seller and Goldstone will give to Buyer and to its
agents and representatives (including, but not limited to, accountants, lawyers
and appraisers) full and complete access during normal working hours to any and
all of the properties, assets, books, records and other documents of Seller to
enable Buyer to make such examination of the business, properties, assets,
books, records and other documents of Seller and Goldstone as Buyer may
determine, and Seller and Goldstone will furnish to Buyer such information and
copies of such documents and records as Buyer shall reasonably request. As part
of such examination Buyer may, upon prior notice to Seller, make such inquiries
of such persons having business relationships with Seller (including, but not
limited to, exhibitors, licensees and customers) as Buyer shall determine and
Seller and Goldstone shall cooperate fully with Buyer in connection therewith;
provided, however that Seller may require that Seller be present during any such
inquiries.
7.2 CONDUCT OF BUSINESS PENDING CLOSING
From the date hereof until the Closing, except as consented to by Buyer
in writing:
(A) Seller will maintain itself at all times as a corporation or sole
proprietorship duly organized, validly existing and in good
standing under the laws of the jurisdiction under which it is
incorporated;
(B) Seller and Goldstone will conduct the business and operations of
the Business in a good and diligent manner on an arm's-length
basis and substantially in the manner carried on as of the date
hereof and Seller will not engage in any activity or transaction
or make any commitment to purchase or spend other than in the
ordinary course of its business as heretofore conducted; provided,
however, without the written consent of Buyer, Seller will not
make any commitment to purchase or spend involving $ 50,000 or
more;
(C) Seller and Goldstone will not declare, authorize or pay any
distribution or dividend to Goldstone and Seller and Goldstone
will not redeem, purchase or otherwise acquire, or agree to
redeem, purchase or otherwise acquire or agree to redeem purchase
or otherwise acquire, any shares of its stock;
(D) Seller and Goldstone will not pay or obligate themselves to pay
any compensation, commission or bonus to any director, officer,
employee or independent contractor as such, except for the regular
compensation and commissions payable to such director, officer,
employee or independent contractor at the rate in effect on the
date of this Agreement;
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(E) Seller will continue to carry insurance insuring the Assets and
Business, in amounts reasonably deemed adequate by their
managements, 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;
(F) Seller and Goldstone will use their best efforts to preserve the
Business intact, to keep available to Buyer the services of its
employees (and to compensate such employees consistent with past
practices) and independent contractors and to preserve for Buyer
its relationships with exhibitors, advertisers, customers,
attendees, suppliers, licensees, distributors, and customers and
others having business relationships with it; provided, however
that nothing herein shall give any employee the right to become an
employee of Buyer for any specific time after the Closing Date;
(G) Seller and Goldstone will not, and will not obligate themselves
to, sell or otherwise dispose of or pledge or otherwise encumber
any of the Assets except in the ordinary course of business and
Seller and Goldstone will maintain their facilities, machinery and
equipment related to the Business in good operating condition and
repair, subject only to ordinary wear and tear;
(H) Seller will not amend its Articles of Incorporation or Bylaws;
(I) Seller and Goldstone will not, with respect to the Business,
engage in any activity or transaction other than in the ordinary
course of its business as heretofore conducted;
(J) Without limiting the foregoing, Seller and Goldstone will consult
with Buyer regarding all significant developments, transactions,
and proposals relating to the Business or the Assets;
(K) Seller and Goldstone will keep in full force and effect all
material rights, franchises, intellectual property rights and
goodwill relating or pertaining to the Business;
(L) Seller and Goldstone will maintain the books, accounts and records
pertaining to the Business consistent with past practices;
(M) Seller and Goldstone will promptly inform the Buyer in writing of
any variances from the representations and warranties contained in
Section 5;
(N) Seller and Goldstone will not enter into any contract, agreement
or commitment without the prior consent of Buyer which, if entered
into prior to the date of this Agreement, would be required to be
disclosed on one or more Schedules referred to in Section 5,
except for contracts entered into in the regular course of
business (i) for speakers and instructors and (ii) relating to the
leasing of exhibition, trade show or exposition space, as lessor;
7.3 FINANCIAL STATEMENTS AND CERTIFICATE
The Seller has prepared and delivered to Buyer (i) unaudited statements
of income, on a combined basis, of the Business and the other businesses
operated by Seller (the "BCR Business") for the quarters ending September 30,
2000, December 31, 2000, March 31, 2001 and June 30, 2001 and (ii)
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an unaudited pro forma balance sheet of the Business as of August 31, 2001 (the
"Unaudited Balance Sheet"), a copy of which is attached as Schedule 7.3. As soon
as possible but in no event later than sixty (60) days following the Closing,
Seller will prepare and deliver to Buyer (i) a balance sheet of the Business and
the related statements of income, retained earnings and cash flows (the "Audited
Balance Sheet") of the Business prepared in accordance with GAAP as at December
31, 2000 (the "Audited Balance Sheet Date") and for the year then ended audited
by Certified Public Accountants selected by Buyer (the "Selected CPA") and
accompanied by a signed copy of the audit report thereon by the Selected CPA and
(ii) unaudited balance sheets and related statements of income, retained
earnings and cash flows of the Business for the quarters ending March 31, 2000,
June 30, 2000, September 30, 2000, December 31, 2000, March 31, 2001 and June
30, 2001 (the "Unaudited Quarterly Statements"), all of which shall be in form
and substance satisfactory to Buyer. Seller and Goldstone will deliver to Buyer
at the time of the delivery to Buyer of the Audited Balance Sheet a certificate
executed by each of them in which each shall represent and warrant to Buyer
that:
(A) the Audited Balance Sheet presents fairly and accurately, in all
material respects, the financial position of the Business as of
the Audited Balance Sheet Date and the results of its operations
and its cash flows for the year then ended in conformity with GAAP
consistently applied;
(B) to the best of Seller's and Goldstone's knowledge, the provision
for uncollectible accounts set forth in the Audited Balance Sheet
are adequate;
(C) as at December 31, 2000, there was no material liability that
should properly be reflected or reserved against in a financial
statement prepared in conformity with GAAP which is not fully
reflected or reserved against in the Audited Balance Sheet;
(D) there are no matters of material importance relating to the
condition (financial or otherwise), operations or business (based
upon the present or future conduct of the present Business),
properties, assets or liabilities of the Business required by GAAP
to be reflected or reserved against in the Audited Balance Sheet
which are not reflected or reserved against in the Audited Balance
Sheet in accordance with GAAP;
(E) the Seller has good and marketable title to all of their
properties and assets reflected in the Audited Balance Sheet
(except as sold or otherwise disposed of in the ordinary course of
business since the date of such Audited Balance Sheet), subject to
no mortgage, pledge, conditional sales contract, lien or other
encumbrance, except the lien of current taxes not yet due and
payable; and
(F) neither Seller nor Goldstone knows of any question relating to any
of the tax or information returns of Seller which if determined
adversely to Seller would result in the assertion of any tax
deficiency against the Buyer.
7.4 AUDIT EXPENSES
Buyer and Seller shall each pay fifty percent (50%) of the fees paid to
the Selected CPA for preparing the Unaudited Quarterly Statements. Seller shall
pay for the audit of the Business as of December 31, 2000 and for the year then
ended, and Buyer shall pay for the audit of the Business as of December 31, 2001
and for all subsequent years and for the years then ended.
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7.5 CONSENTS AND APPROVALS
Seller and Goldstone shall use their commercially reasonable efforts to
obtain prior to the Closing all consents, authorizations, and approvals under
all statutes, laws, ordinances, regulations, rules, judgments, decrees, and
orders of any court or governmental agency, board, bureau, body, department or
authority or of any other person required to be obtained by it in connection
with the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby.
7.6 NO SOLICITATION OF OFFERS
Until the earlier of Closing or termination of this Agreement, neither
Seller nor Goldstone shall, directly or indirectly, through any officer,
director, employee, agent or otherwise, (i) solicit, initiate or encourage the
submission of proposals or offers from any person relating to any acquisition or
purchase of the Assets or the Business (an "Acquisition Proposal"), or (ii)
participate in any discussion or negotiation regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any way with
or assist, facilitate or encourage, any Acquisition Proposal by any other
person.
7.7 USE OF DATABASES
Seller and Goldstone 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. Seller and Goldstone 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
Seller's principal executive office, Seller' and Goldstone shall grant Buyer a
perpetual non-revocable license and permission to continue to use any assets
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 COOPERATION IN PREPARATION OF FINANCIAL STATEMENTS
Seller and Goldstone 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 CONSENTS AND APPROVALS
Buyer shall use its best efforts to obtain prior to the Closing all
consents, authorizations and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees, and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by Buyer in connection with the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
8.2 JOINT MARKETING EFFORTS
The Buyer shall cooperate with the Seller in joint marketing efforts to
be mutually agreed upon for the Business, including access and use of the
Parent's marketing resources, mailing lists, general promotion of the Business
and cross-promotion at the Parent's Networld-Interop ("N+I") show in Xxxxxxx,
00
Xxxxxxx (e.g., e-mails, show daily, show guide, possible N+I discount to attend
the events sponsored by the Business, public relations and, web site promotions.
The Buyer shall charge the Business for this joint marketing activity based upon
its actual in-house costs.
8.3 EMPLOYEE BENEFIT MATTERS
For purposes of determining eligibility to participate, vesting and
entitlement to benefits where length or tenure of service is relevant under any
benefit plan or arrangement (other than a defined benefit plan or stock option
plan) of Buyer or any of its affiliates, all employees of the Seller that are
employed by Buyer or any of its affiliates for a period commencing on the
Closing Date and ending three months thereafter (the "Continuing Employees")
shall receive service or tenure credit with respect to Buyer's and its
affiliates' benefit plans to the same extent such credit would have been granted
if such employees had been employed by Buyer or its affiliates rather than
Seller during such employees' continuous tenure or service with Seller prior to
the Closing Date. Buyer shall provide benefits to the Continuing Employees that
are comparable to the benefits provided to similarly situated employees of
Parent. Notwithstanding the foregoing, the parties acknowledge and agree that
Buyer shall have no obligation to increase the number of benefit plans nor
(except with respect to tenure and service credits for Seller's employees)
modify the Buyer's existing benefit plans. The Buyer's health benefit plans for
each Continuing Employee shall commence on the date of employment of such
Continuing Employee.
9 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO SELL THE ASSETS
The obligation of Seller to sell the Assets is subject to the
fulfillment prior to or at the Closing of the following conditions:
9.1 BUYER'S PERFORMANCE
There shall not be any material error, misstatement or omission in the
representations and warranties made by Buyer in this Agreement; all
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer to Seller or Goldstone pursuant to this
Agreement shall be true when made and at and as of the Closing as though such
representations and warranties were made at and as of said time (except (i) as
contemplated by this Agreement and (ii) to the extent, if any, the Seller and
Goldstone shall waive the same); and Buyer shall have performed and complied
with all the terms, provisions, and conditions of this Agreement to be performed
and complied with by Buyer at or before the Closing.
9.2 CONSENTS AND APPROVALS
Except as provided in Schedule 9.2, Buyer shall have obtained all
consents, authorizations and approvals under all statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any court or governmental
agency, board, bureau, body, department or authority or of any other person
required to be obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
9.3 EMPLOYMENT AGREEMENT
Buyer shall have executed an Employment Agreement with Goldstone on
substantially the terms set forth in Exhibit G to the NGN Agreement (the
"Goldstone Employment Agreement").
9.4 NO ADVERSE PROCEEDINGS
No order, decree or injunction of any court or agency of competent
jurisdiction shall be in effect, and no law, statute or regulation shall have
been enacted or adopted, that enjoins, prohibits or makes illegal consummation
of any of the transactions contemplated hereby provided, however, that Buyer,
Seller
21
and Goldstone shall use their best efforts to prevent any such rule,
regulation, injunction, decree or other order, and to appeal as promptly as
possible any injunction, decree or other order that may be entered.
9.5 ESCROW AGREEMENT
Buyer and Escrow Agent shall have executed the Escrow Agreement.
9.6 OTHER
Seller and Goldstone shall have received all of the items required to
be delivered to them pursuant to Section 4.2.
9.7 SIMULTANEOUS CLOSING OF NGN TRANSACTION
The separate Asset Purchase Agreement dated as of the date hereof among
the Buyer, Parent, Seller, Xxxx X. XxXxxxxxx, XxXxxxxxx Ventures, and Goldstone
(the "NGN Agreement") shall have been, or shall simultaneously be, consummated.
10 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE ASSETS
The obligation of Buyer to purchase the Assets is subject to the
fulfillment prior to or at the Closing of the following conditions:
10.1 SELLER'S AND GOLDSTONE'S PERFORMANCE
All representations and warranties by the Seller or Goldstone contained in this
Agreement or in any written statement delivered by the Seller or Goldstone to
Buyer pursuant to this Agreement shall be true and correct when made at and as
of the Closing as though such representations and warranties were made at and as
of said time (except (i) as contemplated by this Agreement and (ii) to the
extent, if any, Buyer shall waive the same); and the Seller and Goldstone shall
have performed and complied with all the terms, provisions and conditions of
this Agreement to be performed and complied with by the Seller and Goldstone at
or before the Closing.
10.2 OPINION OF BCR COUNSEL
Buyer shall have received an opinion, dated the Closing Date, of Xxxxx
& Xxxxxxx, P.C., counsel for Seller and Goldstone, in form and substance
reasonably satisfactory to Buyer, to the effect, that (the " Opinion"):
(A) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Illinois and has the
corporate power and authority to carry on its business as now
being conducted and to own and operate the property and assets now
owned and being operated by it;
(B) Goldstone owns of record all of the issued and outstanding shares
of stock of Seller as Trustee under a Declaration of Trust
establishing the Xxxxx X. Xxxxxxxxx Revocable Trust, dated June 6,
1995;
(C) This Agreement and each instrument of sale, conveyance,
assignment, transfer, and delivery referred to in Section 5.12 is
a valid and binding obligation of Goldstone and Seller enforceable
against them in accordance with its terms, except (a) as the same
may be limited by bankruptcy, insolvency, reorganization or other
laws or equitable principles relating to or affecting the
enforcement of creditors' rights and (b) that the granting of
specific performance is subject to the
22
discretion of a court of equity, and (c) with respect to any
provision contained in this Agreement relating to noncompetition
or nonsolicitation;
(D) All corporate proceedings required to be taken by Seller at or
before the Closing in connection with this Agreement and the
transactions contemplated hereby have been duly taken;
(E) Neither the execution, delivery or performance of this Agreement
nor consummation of any of the transactions contemplated hereby
(i) will result in any breach of or default under any provision of
any contract or agreement of any kind to which Goldstone or Seller
is a party or by which Goldstone or Seller is bound or to which
any property or asset of any of them is subject and is listed on
Schedule 5.12, or (ii) is prohibited by or requires Goldstone or
Seller 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 known to us;
(F) No authorization, approval or consent of, or any action by, any
United States federal or state court or regulatory authority or by
any court or regulatory authority of any foreign jurisdiction that
has not been obtained or taken is required for the execution,
delivery or performance of this Agreement by the Seller and
Goldstone, including the sale of the Assets; and
(G) Such counsel knows of no litigation, proceeding or investigation
pending, or threatened involving Goldstone or Seller or the Assets
or the Business or which questions the validity of this Agreement
or any action taken or to be taken by Goldstone or Seller under
this Agreement.
10.3 CONSENTS AND APPROVALS
Seller and the Goldstone shall have obtained all consents,
authorization and approvals under all statutes, laws, ordinances, regulations,
rules, judgments, decrees and orders of any court or governmental agency, board,
bureau, body, department or authority or of any other person required to be
obtained by Seller or Goldstone in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
10.4 PHYSICAL PROPERTIES
There shall have occurred no damage to or destruction or loss of
(whether or not covered by insurance) any tangible personal property included in
the Assets that, individually or in the aggregate, would have a MAE.
10.5 EMPLOYMENT AGREEMENT
Goldstone shall have executed the Goldstone Employment Agreement.
10.6 NO ADVERSE PROCEEDINGS
No order, decree or injunction of any court or agency of competent
jurisdiction shall be in effect, and no law, statute or regulation shall have
been enacted or adopted, that enjoins, prohibits or makes illegal consummation
of any of the transactions contemplated hereby provided, however, that Buyer,
Seller and Goldstone shall use their best efforts to prevent any such rule,
regulation, injunction, decree or other order, and to appeal as promptly as
possible any injunction, decree or other order that may be entered.
23
10.7 ESCROW AGREEMENT
Seller, Goldstone and Escrow Agent shall have executed the Escrow
Agreement.
10.8 OTHER
The Buyer shall have received all of the items required to be delivered
to it pursuant to Section 4.1.
11 TERMINATION
This Agreement may be terminated at any time prior to Closing as
follows:
(A) by mutual consent of the Seller and the Buyer;
(B) by either the Seller or the Buyer if the other party shall breach
any of its respective representations, warranties or agreements
contained in this Agreement; or
(C) by either the Seller or the Buyer if the transactions contemplated
by this Agreement shall not have been consummated on or before
September 30, 2001, (or such later date as may be agreed upon in
writing by the parties hereto), provided that the terminating
party has otherwise complied with all its obligations under this
Agreement.
If this Agreement is terminated pursuant to Section 11, all rights and
obligations of the Seller and the Buyer hereunder shall terminate and neither
party shall have any liability to the other party hereunder, except that nothing
herein will relieve any party from liability for any breach of this Agreement
prior to such termination.
12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements contained in any certificate or other instrument
delivered by or on behalf of the Seller, Goldstone or Buyer, respectively,
pursuant to this Agreement shall be deemed representations and warranties
hereunder by the party delivering such certificate or instrument. All
representations, warranties, and agreements made by the Seller or Goldstone or
Buyer in this Agreement or pursuant hereto shall survive the Closing for a
period of eighteen (18) months beginning on the day immediately following the
Closing Date; provided, however that such survival period shall not be affected
by any knowledge of or investigation by the other parties; provided further,
however, if a claim is properly made prior to the end of the applicable survival
period, such claim shall survive until finally resolved by the parties in
accordance with Section 12.5 hereof. 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 and
ownership of the Assets shall survive indefinitely. From and after the Closing
Date, the remedies contemplated by this Section 12 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 Goldstone 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
Goldstone Employment Agreement) other than the remedies expressly provided in
this Section 12; provided, however, that notwithstanding the foregoing, nothing
contained in this Agreement or otherwise shall in any way limit any claim, suit,
cause of action or remedy that may be available to any party based
24
on fraud or intentional misrepresentation; provided, however, that nothing
contained herein shall limit the availability of equitable relief for violations
of Section 14 and for violations of the provisions of the Goldstone Employment
Agreement.
12.2 SELLER'S INDEMNIFICATION OBLIGATIONS
Subject to the terms and conditions of this Section 12.2, Seller and
Goldstone agrees to indemnify and hold Buyer, Parent, Parent's affiliates, and
their respective officers, directors, employees, agents, successors and assigns
harmless against and in respect of any and all damages, claims, debts,
obligations, liabilities, interest, penalties, and expenses (including
reasonable legal fees, expert witness fees and other expenses) (collectively,
"Damages") arising out of, connected with or related to the following:
(A) any and all debts, liabilities, and obligations arising out of or
relating to the Business or the Assets of any nature, whether
absolute, accrued or contingent or other than the Assumed
Liabilities 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;
(B) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of the Seller or Goldstone
contained in the Offering Memorandum, as amended by the second
Re-forecast to the Offering Memorandum dated July 29, 2001, this
Agreement, or certificate or other statement to be delivered or
caused to be delivered by the Seller or Goldstone pursuant to this
Agreement; or (ii) failure to perform any covenant or agreement of
the Seller or Goldstonecontained in this Agreement or certificate
or other statement to be delivered or caused to be delivered by
the Seller or Goldstone pursuant to this Agreement; and
(C) 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.
Notwithstanding the foregoing, no claim for indemnity shall be made for
any breach to the extent that the Base Purchase Price has been adjusted as a
result of such breach. Without limiting the foregoing, Goldstone personally
guarantees the repayment of one hundred percent (100%) of any or all of the
Estimated Payment Amount to which the Seller is not entitled pursuant to the
terms of this Agreement (without any right of set off or defenses)
12.3 BUYER'S INDEMNIFICATION OBLIGATIONS
Subject to the terms and conditions of this Section 12, Buyer agrees to
indemnify and hold Seller and Goldstone and their respective affiliates,
officers, directors, employees, agents, successors and assigns harmless against
and in respect of any and all Damages arising out of, connected with or related
to the following:
(A) any and all debts, liabilities, and obligations arising out of or
relating to the Business or the Assets of any nature, whether
absolute, accrued or contingent, existing or incurred after the
Closing Date or arising out of any transaction or event occurring
after the Closing Date;
(B) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of Buyer contained in this
Agreement or certificate or other statement to be delivered or
caused to be delivered by Buyer pursuant to this Agreement; or
(ii) any failure to perform any covenant or agreement of Buyer
contained in this
25
Agreement; or certificate or other statement to be delivered or
caused to be delivered by Buyer pursuant to this Agreement; and
(C) 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.
12.4 LIABILITY FOR TAXES.
Seller and Goldstone, 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 (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.
12.5 PROCEDURE FOR INDEMNIFICATION CLAIMS
In the case of any claim or demand notice of a claim or demand of a
third party that may give rise to a claim for indemnification by the Buyer or
Parent or Goldstone or Seller, or any of their related indemnified parties, as
the case may be hereunder (in such capacity, the "Indemnified Party"), such
Indemnified Party shall give prompt written notice of such claim, demand or
circumstance (described in reasonable detail) to the party against whom
indemnification may be sought hereunder (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 selected by the Indemnifying Party and reasonably
acceptable to the 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 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.
12.6 LIMITATION OF LIABILITY
In no event shall the aggregate monetary liability of Buyer under this
Agreement exceed one hundred percent (100%) of the total amounts to be paid to
Seller by the Buyer for the purchase of the
26
Assets and the Business (including the Incentive Payment, but excluding any
payments made pursuant to the Goldstone Employment Agreement). In no event shall
the aggregate monetary liability of the Seller under this Agreement exceed one
hundred percent (100%) of the total amounts paid to such Seller by the Buyer for
the purchase of the Assets and the Business (including the Incentive Payment,
but excluding any payments made pursuant to the Goldstone Employment Agreement).
No Indemnifying Party shall be liable for monetary damages arising from a
misrepresentation or breach of warranty by such Indemnified Party to an
Indemnified Party until and unless the aggregate monetary damages incurred by
such Indemnified Party from all misrepresentations or breaches of warranty by
such Indemnified Party exceeds $250,000, at which time such liability shall
revert back to the full amount of any such damages provided, however that such
limitation of liability shall not be applicable to any Damages arising from
Seller's defaults as set forth on Schedule 5.12 (IV) or with respect to Seller's
potential pension plan liability as referenced in Schedule 5.19. Nothing in this
Section 12.5 shall limit the availability of equitable relief for violations of
Section 14 and for violations of the provisions of the Goldstone Employment
Agreement. Upon making any payment to an Indemnified Party for any
indemnification claim pursuant to this Section 12, the Indemnifying Party shall
be subrogated, to the extent of such payment, to any rights that the Indemnified
Party may have against any other persons with respect to the subject matter
underlying such indemnification claim and the Indemnified Party shall take such
actions as the Indemnifying Party may reasonably require to perfect such
subrogation or to pursue such rights against such other persons as the
Indemnified Party may have; provided that no such right of subrogation shall
exist unless and until the Indemnified Party's Damages with respect to the
subject matter underlying such indemnified claim are paid in full. If an
Indemnified Party receives payment from a third party in respect of Damages for
which an Indemnifying Party has provided indemnification, then the Indemnified
Party shall reimburse the Indemnifying Party to the extent of such payment (up
to the amount of the indemnification provided by the Indemnifying Party).
13 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 then unpaid amount of the
Purchase Price. 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 12 or otherwise.
14 NONCOMPETITION
Neither Seller, Goldstone nor any of their Affiliates (as defined
below) will, except as permitted by the last sentence of this paragraph, without
the prior written consent of the Buyer, (a) for a period beginning on the
Closing Date and ending on the later of two years after the Closing Date or
termination of the employment relationship between Goldstone and Buyer, directly
or indirectly, anywhere in the world engage in any promotional enterprise or
activity which competes with the Business as now conducted by Seller or the
Business as conducted by Buyer as it evolves (the "Prohibited Operations"), or
directly or indirectly employ, engage, contract for or solicit the services in
any capacity of any person who is employed by Seller in the operation of the
Business on the date hereof; or (b) after the Closing Date, 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 Seller, Goldstone nor their
Affiliates directly or indirectly cause such information to enter the public
domain. Notwithstanding the foregoing, the Seller, Goldstone 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
27
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 Seller, Goldstone and their Affiliates may, in the
aggregate, invest any amount 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
Seller, Goldstone or their Affiliates acquire control of such issuer. Buyer
acknowledges and agrees that Seller and Goldstone 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, none of which shall constitute Prohibited Operations.
The Seller and Goldstone acknowledge that the restrictions contained in
this Section 14 are reasonable and necessary to protect the legitimate interests
of the Buyer and that any breach by the Seller or Goldstone of any provision
hereof will result in irreparable injury to the Buyer. The Seller or Goldstone
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 14 are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that this Section 14 shall remain in full force and effect
for the greatest time period and in the greatest areas that would not render it
unenforceable.
15 DISPUTE RESOLUTION
If the Seller disputes the Buyer's calculation of the Actual Payment
Amount, the Incentive Payment or the Purchase Price Adjustment , the Seller
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
Seller's 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 Seller shall
negotiate in good faith to resolve all of the Disputed Items. If the Buyer and
the Seller 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 Seller 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 15 ("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 Seller. 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 Seller are unable to agree upon the selection of a
Mediator, then each of Buyer and Seller 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 Actual
Payment Amount, the Incentive Payment or the Purchase Price Adjustment , 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
28
rendered within 90 days of the date on which the Mediator was selected and shall
be delivered to the Buyer and the Seller. The locale of all hearings conducted
by the Mediator in connection with the Mediation shall be the Los Angeles,
California office of the Mediator.
The determination of the Mediator shall be final, binding, and
conclusive on the Buyer and the Seller; The fees and disbursements of the
Mediator shall be allocated between the Seller 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 15 shall only apply to the resolution of disputes relating
to the calculation of the Actual Payment Amount, the Incentive Payment 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.
16 MISCELLANEOUS
16.1 ASSURANCE OF FURTHER ACTION
From time to time after the Closing and without further consideration
from Buyer, but at Buyer's expense, Seller and Goldstone 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.
16.2 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. Seller shall bear all
expenses and commission resulting from its sales and marketing efforts for the
sale of the Business. In addition, Seller shall pay all transfer, income and
other taxes incurred by Seller in connection with the sale of the Assets and the
Business pursuant to the terms of this Agreement.
16.3 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.
16.4 NOTICES
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly delivered four business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent for next business day delivery via
a reputable nationwide overnight courier service, in each case to the intended
recipient as set forth below:
29
If to the Buyer or Parent: Copy to:
Xxxxxxx Xxxxx Xxx X. Xxxxxxxxx, Esq.
Key3Media Group, 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 Goldstone or BCR: Copy to:
Xxxxx X. Xxxxxxxxx Brien X. Xxxxx, Esq.
B.C.R. Enterprises, Inc. Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxx Xxxxx 000 Xxxxx Xxxx Xxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
16.5 ENTIRE AGREEMENT
This Agreement, the Schedules and Exhibits attached hereto and the
Confidentiality Information Agreement dated May 14, 2001 executed by Key3Media
Events, Inc. 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.
16.6 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,
however, that Buyer may, in connection with a merger, consolidation or transfer
of all or substantially all of the assets that constitute the Business at that
time, assign its rights and obligations under this Agreement to any corporation
all or substantially all of the capital stock or equity interests of which are
owned directly or indirectly by Parent, in which event all of the rights and
powers of Buyer, and remedies available to it hereunder shall extend to and be
enforceable by such subsidiary.
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.
30
16.7 GOVERNING LAW, JURISDICTION AND VENUE
This Agreement shall be governed by and construed in accordance with
the laws of the State of California 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. 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
is an inconvenient forum or an improper forum based on lack of venue.
16.8 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 conscious awareness after due
and reasonable inquiry has been made with respect to the matters referenced
thereby.
16.9 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.
16.10 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.
16.11 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. This Agreement may be executed and delivered by facsimile.
16.12 PRESS RELEASES AND ANNOUNCEMENTS
None of the parties shall issue any press release or public
announcement relating to the subject matter of this Agreement without the prior
written approval of the other parties; provided, however, that any party may
make any public disclosure it believes in good faith is required by applicable
law, regulation or stock market rule (in which case the disclosing party shall
use reasonable efforts to advise the other parties and provide them with a copy
of the proposed disclosure prior to making the disclosure).
16.13 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.
31
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
KEY3MEDIA ART EVENTS , INC.
By ________________________________________
President
B.C.R. ENTERPRISES, INC.
By ________________________________________
Xxxxx X. Xxxxxxxxx, President
___________________________________________
Xxxxx X. Xxxxxxxxx, in his individual
capacity
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc. set forth
in this Agreement.
KEY3MEDIA EVENTS, INC.
By:________________________________________
Name:
Title:
32
EXHIBIT A
INDENTURE, XXXX OF SALE,
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS INDENTURE, XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT,
is made, executed and delivered as of September10, 2001 by B.C.R. Enterprises,
Inc., an Illinois corporation ("Grantor") to Key3Media Art 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 Grantor, Grantee,
and Xxxxx X. Xxxxxxxxx (the "Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Grantor and Grantee are parties to the Agreement providing
for, among other things, the transfer and sale to the Grantee of all of the
properties, assets, rights, goodwill and business of Grantor, all as more fully
described in the Agreement, for consideration in the amount and on the terms and
conditions provided in the Agreement; and
WHEREAS, all of the terms and conditions precedent provided in the
Agreement have been met and performed (or a waiver thereof has been obtained) by
the respective parties thereto, and the parties now desire to carry out, in
part, the intent and purpose of the Agreement by the Grantor's execution and
delivery to the Grantee of this instrument evidencing the vesting in the Grantee
of all of the properties, assets, rights, goodwill and business of Grantor
relating to the Business hereinafter described.
NOW, THEREFORE, in consideration of the premises and of other
valuable consideration to Grantor in hand paid by Grantee, at or before
the execution and delivery hereof, the receipt and sufficiency of which
by Grantor is hereby acknowledged, Grantor has conveyed, granted,
bargained, sold, transferred, set over, assigned, aliened, remised,
released, delivered and confirmed; and by this instrument does convey,
grant, bargain, sell, transfer, set over, assign, alien, remise,
release, deliver and confirm unto Grantee, its successors and assigns
forever, all the businesses, franchises, rights, privileges, properties
and assets of the Grantor relating to the Business of every nature and
description, tangible and intangible, real or personal, wherever
located, including Grantor's goodwill and all trademarks and trade
names which are owned by Grantor for the purpose of conducting the
Business (as defined in the Agreement) of the Grantor, except with
respect to the assets set forth on Schedule 1 to the Agreement (the
"Excluded Assets"). The assets so conveyed, granted, bargained, sold,
transferred, set over, assigned, aliened, remised, released, delivered
and confirmed hereby are referred to collectively herein as the
"Assets" and are, without limiting the generality of the foregoing,
more particularly described as follows:
(a) all rights and interests of Grantor 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;
(b) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all rights and
interests of Grantor 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, in each case relating to the Business;
(c) all debts, accounts, bills and notes receivable, commercial paper
and acceptances, and other evidences of indebtedness owned by Grantor
relating to the Business; all bills
A-1
of lading, trust receipts, warehouse receipts and other documents of
title relating to the Business of whatever kind and description; all
rights and claims under policies of insurance and fidelity or other
bonds; all shares of stock and other securities of all kinds owned by
Grantor (including the contents of all safe deposit boxes and the
securities and other items held in custody accounts); all other claims,
demands, judgments, rights, equities, chattel mortgages, security
agreements and choses in action relating to the Business, and the
proceeds thereof; and all permits and memberships in clubs and
cooperatives;
(d) all books, records and other data, but excluding the minute books
and stock books and corporate records;
(e) all Grantor's goodwill and trade connections relating to the
Business and Grantor's rights to use the trademarks and service marks
listed in Schedule 5.14 to the Agreement;
(f) any prepaid expenses relating to the Business;
(g) all intangible assets of Grantor relating to the Business,
including customer lists, trade secrets and similar information
generally described as "know-how" with respect to the patents and
patent applications aforesaid;
(h) all research, engineering, marketing and other data relating to the
Business;
(i) all the goodwill existing between Grantor and each of its
customers, suppliers, agents and others relating to the Business;
(j) all rights, claims, and causes of action of Grantor relating to the
Business arising after the date hereof against any officer, former
officer, employee or former employee or other person arising out of the
disclosure or use, or threatened disclosure or threatened use, of any
proprietary information relating to the Business 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; and
(k) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all other property
in which Grantor has any interest whatsoever, real, personal or mixed,
whether tangible or intangible, of every kind and description relating
to the Business 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 but not including the
Excluded Assets.
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 Agreement).
Section 2. Grantor hereby constitutes and appoints Grantee, its
successors and assigns, Grantor's true and lawful
attorney, with full power of substitution, in
Grantor's 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 Grantor's
A-2
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, Grantor hereby declaring that the
foregoing powers are coupled with an interest and are and
shall be irrevocable by Grantor or by its dissolution or
in any other manner or for any reason whatsoever.
Section 3. Grantor hereby covenants that, from time to time after
the delivery of this instrument, at Grantee's request and
without further consideration, Grantor 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 instrument, 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 instrument or any terms, covenants
or condition hereof, and all the terms, covenants and
conditions, promises and agreements in this instrument
contained shall be for the sole and exclusive benefit of
Grantee and its successors and assigns.
Section 5. This instrument is executed by, and shall be binding
upon, Grantor 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 instrument shall be governed by and construed in
accordance with the laws of the State of California
without giving effect to the principles of conflicts of
law thereof.
Section 7. The sale, transfer, conveyance and assignment has been
executed and delivered by the Grantor in accordance with
the Agreement and is expressly made subject to those
liabilities, obligations and commitments which the
Grantee has expressly assumed and agreed to pay, perform
and discharge pursuant to Section 1 above.
The Grantor, by its execution of this instrument, and the Grantee, by
its acceptance of this instrument, each hereby acknowledgees and agrees that
neither the representations and warranties nor the rights and remedies of any
party under the Agreement shall be deemed to be enlarged, modified or altered in
any way by this instrument.
A-3
IN WITNESS WHEREOF, Grantor has caused this Xxxx of Sale to be signed
by its President and its Secretary and its corporate seal to be affixed hereto
on date.
B.C.R. ENTERPRISES, INC.
By______________________________
Name: Xxxxx X. Xxxxxxxxx
Title: President
KEY3MEDIA ART EVENTS, INC.
By______________________________
ATTEST:
________________________
Name:
Title: Secretary
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc. set forth in
this Instrument.
KEY3MEDIA EVENTS, INC.
By:_____________________________
Name:
Title:
A-4
EXHIBIT B
Form of Escrow Agreement
This ESCROW AGREEMENT, dated as of September 10, 2001 (this
"Agreement"), by and among Key3Media Art Events, Inc., a Delaware corporation
("Buyer"), B.C.R. Enterprises, Inc., an Illinois corporation ("Seller"), 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, Seller, and
Xxxxx X. Xxxxxxxxx, an individual, Buyer has agreed to acquire the Assets from
Seller, 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 One Million Three Hundred Seventy Six Thousand
Five Hundred Fifty Dollars ($1,376,550.00) in cash (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 oft 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 Agreement Recitals
Seller Preamble
Successor Agent Section 5.11
2. Appointment of Escrow Agent. Buyer and Seller hereby appoint the
---------------------------
Escrow Agent to act as agent on their behalf pursuant to this Agreement and the
Escrow Agent hereby consent to its appointment in such capacity on the terms and
conditions of this Agreement.
B-1
3. Deposit and Investment of Escrow Funds.
--------------------------------------
(i) Buyer shall deposit with the Escrow Agent the sum of
$1,376,550.00 by wire transfer as follows: The Bank of New York, ABA
#021 000 108, A/C#:to come, for further credit ________________ Attn:
Xxxxxx Xxxxx. The Escrow Funds shall be held by the Escrow Agent for
the benefit of Sellerand 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 Seller shall
instruct in writing from time to time. Simultaneously with the
execution and delivery of this Agreement, Buyer and Seller 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 3(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 Seller, or
(ii) in accordance with the binding order of a court of
competent jurisdiction delivered to the Escrow Agent (upon which order
the Escrow Agent shall conclusively rely and act).
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
Seller 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
Seller 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 Seller 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
B-2
any fiduciary duty of the Escrow Agent to Buyer or Seller 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.
(b) As security for the due and punctual performance of any
and all obligations to the Escrow Agent hereunder, now or hereafter
arising, Seller 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 Seller, 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 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.
B-3
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.
5.8 Fees of Escrow Agent. Seller 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 Seller and fifty percent (50%) by Buyer.
The obligations of Seller 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. Seller and Buyer jointly and
-----------------------------------
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 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 even to
Buyer and Seller and thereafter delivering the Escrow Funds to any other escrow
agent mutually agreed upon by Buyer and Seller as notified to the Escrow Agent
in writing, and if no such escrow agent shall be designated by Buyer and Seller
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 Seller 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 Seller, Buyer and Seller 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
B-4
borne severally by Buyer and Seller. 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:
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 Xxxxx Xxxxxxxxx or B.C.R. Copy to:
Enterprises, Inc. (Which shall not constitute
notice)
Xxxxx X. Xxxxxxxxx Brien X. Xxxxx, Esq.
B.C.R. Enterprises, Inc. Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxx Xxxxx 000 Xxxxx Xxxx Xx.
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
X-0
Xxx Xxxx xx Xxx Xxxx
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, Seller and the Escrow Agent; provided that either Seller 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 Seller. 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, 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.
(b) 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.
(c) 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.
(d) 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,
B-6
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.
(e) The Escrow Agent does not have any interest in the Escrow
Funds but is servings as escrow holder only and having only possession
thereof. Seller 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 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-7
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 ART EVENTS , INC.
By _____________________________________
President
B.C.R. ENTERPRISES, INC.
By _____________________________________
Xxxxx X. Xxxxxxxxx, President
THE BANK OF NEW YORK,
as Escrow Agent
By:_____________________________________
Name:
Title:
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc. set forth in
this Agreement.
KEY3MEDIA EVENTS, INC.
By:_____________________________________
Name:
Title:
B-8
SCHEDULE 5.2
AUTHORIZED SIGNATORIES
For B.C.R. Enterprises, Inc.:
----------------------------
The authorized signatory for B.C.R. Enterprises, Inc. is Xxxxx X. Xxxxxxxxx.
For Key3Media Art Events, Inc.
-----------------------------
The authorized signatories for Key3Media Art Events, Inc. are Xxxxxxx X. Xxxxx,
Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxx.
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
B.C.R. ENTERPRISES, INC.
Officer's Certificates
----------------------
I, Xxxxx X. Xxxxxxxxx, President of B.C.R. Enterprises, Inc., an
Illinois corporation (" Company"), pursuant to 4.14.1(E) of the Asset Purchase
Agreement, dated as of September 10, 2001 (the "Agreement"), between the
Company, Xxxxx X. Xxxxxxxxx and Key3Media Art Events, Inc., a Delaware
corporation, hereby certify, for and on behalf of the Company that:
1. All representations and warranties made by the Company in the
Agreement, as they relate to the Company, are true and correct on the
date hereof as though such representations and warranties were made as
of this date, and the Company has duly performed or complied with all
of the covenants, obligations and conditions to be performed or
complied with by it under the terms of the Agreement on or prior to the
Closing Date.
2. All authorizations, consents or approvals or other action required to
be obtained or taken by the Company in connection with the execution,
delivery and performance of the Agreement by the Company and the
consummation by the Company of the transactions contemplated thereby
have been obtained or taken
IN WITNESS WHEREOF, the undersigned, in his capacity as President, of
the Company has executed this Certificate for and on behalf of the Company as of
this 10th day of September, 2001.
____________________________
Name: Xxxxx X. Xxxxxxxxx
President
C-1
Exhibit D
B.C.R. ENTERPRISES, INC.
Secretary's Certificate
-----------------------
Pursuant to Section 4.1 of the Asset Purchase Agreement dated as of
September 10, 2001, (the "Agreement") by and between Key3Media Art Events, Inc.,
a Delaware corporation (the "Company"), B.C.R. Enterprises, Inc., and Xxxxx X.
Xxxxxxxxx, I, Xxxxxxxxx Xxxxxxxxx, Secretary of the Company, hereby certify
that:
(a) Attached hereto as Annex A is a true and correct copy of the
Certificate of Incorporation of the Company and all amendments thereto,
certified by the Secretary of State of Illinois on August 28, 2001, and
a Certificate of Good Standing issued by the Secretary of State of
Illinois on August 28, 2001. No amendment or other document relating to
or affecting the Certificate of Incorporation of the Company has been
filed in the office of the Secretary of State of Illinois since a
change of registered agent office was filed on May 17, 2000, 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) 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, April 1, 1981, to
and including the date hereof;
(c) Attached hereto as Annex C are true copies of resolutions duly adopted
by the Sole Director and Sole Shareholder of the Company by unanimous
written consent as of September 10, 2001; such resolutions have not
been amended, modified or rescinded and remain in full force and effect
as of the date hereof; and such resolutions are the only resolutions
adopted by the Company's Sole Director or Shareholder or any committee
thereof relating to the Agreement or the transactions contemplated
thereby.
IN WITNESS WHEREOF, I have hereunto signed my name on this 10/th/ day
of September, 2001.
______________________________
Xxxxxxxxx Xxxxxxxxx, Secretary
D-1
Exhibit E
KEY3MEDIA ART EVENTS, INC.
Officer's Certificate
---------------------
I, Xxx Xxxxxxxxx, Executive Vice President of Key3Media Art Events,
Inc., a Delaware corporation ("KAE"), pursuant to Section 4.2 (B) of the Asset
Purchase Agreement, dated as of September 10, 2001, (the "Agreement"), by and
among KAE, B.C.R. Enterprises, Inc., and Xxxxx X. Xxxxxxxxx do hereby certify,
for and on behalf of KAE that:
1. All representations and warranties made by KAE in the
Agreement, as they relate to KAE, are true and correct on the
date hereof as though such representations and warranties were
made as of this date, and KAE has duly performed or complied
with all of the covenants, obligations and conditions to be
performed or complied with by it under the terms of the
Agreement on or prior to the Closing Date.
2. All authorizations, consents or approvals or other action
required to be obtained or taken prior to the Closing Date in
connection with the execution, delivery and performance of the
Agreement by KAE and the consummation by KAE of the
transactions contemplated thereby have been obtained or taken.
IN WITNESS WHEREOF, the undersigned, in his capacity as Executive Vice
President, of KAE has executed this Certificate for and on behalf of KAE as of
this 10th day of September, 2001.
___________________________
Xxx Xxxxxxxxx
Executive Vice President
E-1
Exhibit F
KEY3MEDIA EVENTS, INC.
KEY3MEDIA ART EVENTS, INC
Secretary's Certificate
-----------------------
I, Xxx Xxxxxxxxx, Secretary of Key3Media Art Events, Inc., a Delaware
corporation, and Key3Media Events, Inc., a Delaware corporation, (the
"Companies"), hereby certify that:
(a) Attached hereto as Annex A is are true and correct copies of the
Certificates of Incorporation of the Companies and all amendments
thereto, certified by the Delaware Secretary of State on the respective
dates set forth therein, and a Certificate of Good Standing for each of
the Companies issued by the Delaware Secretary of State on the
respective dates set forth therein. No amendment or other document
relating to or affecting the Certificates of Incorporation of the
Companies has been filed in the office of the Delaware Secretary of
State since September 7, 2001, and no action has been taken by the
Companies 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 Companies;
(b) Attached hereto as Annex B is a true and complete copy of the By-laws
of the Companies, as in full force and effect since, September 7, 2001,
to and including the date hereof;
(c) Attached hereto as Annex C are true copies of resolutions duly adopted
by the Boards of Directors and Stockholders of the Companies by
unanimous written consent as of August 29, 2001; 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
Companies' Board of Directors or any committee thereof or the
Stockholders relating to the Asset Purchase Agreement, dated as of
September 10, 2001, between Key3Media Art Events, Inc., and Xxxxx X.
Xxxxxxxxx and B.C.R. Enterprises, Inc. or the transactions contemplated
thereby.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Company as of September 10, 2001.
___________________________
Xxx Xxxxxxxxx, Secretary
F-1
