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Exhibit C-3
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MECKLERMEDIA CORPORATION,
PENTON MEDIA, INC.,
INTERNET WORLD MEDIA, INC.
AND
XXXX X. XXXXXXX
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AGREEMENT AND PLAN OF MERGER
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Dated as of October 7, 1998
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TABLE OF CONTENTS
ARTICLE I....................................................................................2
SECTION 1.1. THE OFFER. ............................................................2
SECTION 1.2. COMPANY ACTION.........................................................3
SECTION 1.3. DIRECTORS .............................................................4
ARTICLE II...................................................................................6
SECTION 2.1. THE MERGER ............................................................6
SECTION 2.2. EFFECTIVE TIME.........................................................6
SECTION 2.3. EFFECT OF THE MERGER; CLOSING..........................................6
SECTION 2.4. SUBSEQUENT ACTIONS.....................................................6
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS..........7
SECTION 2.6. CONVERSION OF SECURITIES...............................................7
SECTION 2.7. DISSENTING SHARES......................................................8
SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS..............................9
SECTION 2.9. STOCK PLANS AND WARRANT AGREEMENTS....................................10
ARTICLE III..................................................................................11
SECTION 3.1. CORPORATE ORGANIZATION................................................11
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT..................................11
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................12
SECTION 3.4. FINANCING ARRANGEMENTS................................................13
SECTION 3.5. NO PRIOR ACTIVITIES...................................................13
SECTION 3.6. BROKERS ..............................................................13
SECTION 3.7. PROXY STATEMENT.......................................................14
ARTICLE IV...................................................................................14
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..........................15
SECTION 4.2. CAPITALIZATION........................................................15
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT..................................16
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................17
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.....................................17
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS..................................18
SECTION 4.7. LITIGATION ...........................................................19
SECTION 4.8. EMPLOYEE BENEFIT PLANS................................................19
SECTION 4.9. PROXY STATEMENT.......................................................21
SECTION 4.10. BROKERS .............................................................22
SECTION 4.11. CONTROL SHARE ACQUISITION............................................22
SECTION 4.12. CONDUCT OF BUSINESS..................................................22
SECTION 4.13. TAXES ...............................................................23
SECTION 4.14. INTELLECTUAL PROPERTY................................................25
SECTION 4.15. CONTRACTS ............................................................26
SECTION 4.16. ENVIRONMENTAL MATTERS................................................29
SECTION 4.17. REQUIRED VOTE BY COMPANY STOCKHOLDERS................................30
SECTION 4.18. OPINIONS OF FINANCIAL ADVISOR........................................30
SECTION 4.19. AFFILIATE TRANSACTIONS...............................................30
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SECTION 4.21. DISCLOSURE ..........................................................31
ARTICLE V....................................................................................31
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.................31
SECTION 5.2. NO SHOPPING ..........................................................34
ARTICLE VI...................................................................................36
SECTION 6.1. PROXY STATEMENT.......................................................36
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY................................36
SECTION 6.3. ADDITIONAL AGREEMENTS.................................................37
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS.......................................37
SECTION 6.5. ACCESS TO INFORMATION.................................................37
SECTION 6.6. PUBLIC ANNOUNCEMENTS..................................................38
SECTION 6.7. BEST EFFORTS; COOPERATION.............................................38
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.....................................39
SECTION 6.9. EMPLOYEE BENEFITS.....................................................40
SECTION 6.10. RELATED AGREEMENTS...................................................40
SECTION 6.11. TRANSFER TAXES.......................................................41
ARTICLE VII..................................................................................42
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER..........42
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB TO EFFECT
THE MERGER..........................................................42
ARTICLE VIII.................................................................................42
SECTION 8.1. TERMINATION ..........................................................43
SECTION 8.2. EFFECT OF TERMINATION.................................................44
ARTICLE IX...................................................................................45
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS............46
SECTION 9.2. NOTICES ..............................................................46
SECTION 9.3. EXPENSES..............................................................47
SECTION 9.4. CERTAIN DEFINITIONS...................................................47
SECTION 9.5. HEADINGS..............................................................47
SECTION 9.6. SEVERABILITY..........................................................47
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES........................47
SECTION 9.8. ASSIGNMENT............................................................48
SECTION 9.9. GOVERNING LAW.........................................................48
SECTION 9.10. AMENDMENT ............................................................48
SECTION 9.11. WAIVER............................................................... 48
SECTION 9.12. COUNTERPARTS..........................................................49
DISCLOSURE SCHEDULE
EXHIBIT A FORM OF IWORLD AGREEMENT
EXHIBIT B FORM OF SERVICES AGREEMENT
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EXHIBIT C FORM OF LICENSING AGREEMENT
EXHIBIT D FORM OF WARRANT AGREEMENT
EXHIBIT E FORM OF CONSULTING AGREEMENT
EXHIBIT F LIST OF CONSENTS REQUIRED
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TABLE OF DEFINITIONS
Acquisition Transaction......................................................................................5.2(c)
Affiliate....................................................................................................9.4(a)
Agreement..................................................................................................Recitals
Blue Sky.....................................................................................................4.4(b)
Board of Directors.........................................................................................Recitals
Certificates.................................................................................................2.8(b)
Closing.........................................................................................................2.3
Closing Date....................................................................................................2.3
Code............................................................................................................3.8
Company....................................................................................................Recitals
Company Common Stock............................................................................................4.2
Company Material Adverse Effect.................................................................................4.1
Company Preferred Stock.........................................................................................4.2
Company Stockholders' Meeting...................................................................................4.9
Computer Software...........................................................................................4.14(b)
Confidentiality Agreement....................................................................................6.5(b)
Control......................................................................................................9.4(b)
Delaware Law...............................................................................................Recitals
Disclosure Schedule......................................................................................Article IV
Dissenting Shares............................................................................................2.7(a)
Effective Time..................................................................................................4.2
Employee Plans..................................................................................................4.8
ERISA...........................................................................................................4.8
Exchange Act....................................................................................................2.9
Exchange Agent...............................................................................................2.8(a)
HSR Act......................................................................................................3.3(b)
Indemnified Parties..........................................................................................6.8(a)
Independent Directors........................................................................................2.3(a)
Intellectual Property.......................................................................................4.14(c)
Merger.....................................................................................................Recitals
Offer......................................................................................................Recitals
Offer Documents..............................................................................................1.1(c)
Offer to Purchase............................................................................................1.1(c)
Options......................................................................................................2.9(a)
Option Plans.................................................................................................2.9(a)
Per Share Amount...........................................................................................Recitals
Person.......................................................................................................9.4(d)
Proxy Statement.................................................................................................4.9
Purchaser Information...........................................................................................3.7
Purchaser Material Adverse Effect............................................................................3.3(a)
Purchaser Representatives....................................................................................6.5(b)
SEC..........................................................................................................4.5(a)
SEC Reports..................................................................................................4.5(a)
Shares.....................................................................................................Recitals
Subsidiary......................................................................................................4.1
Superior Proposal............................................................................................5.2(c)
Surviving Corporation...........................................................................................2.1
Tax Return..................................................................................................4.13(f)
Taxes.......................................................................................................4.13(e)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 7, 1998
(this "AGREEMENT"), among Mecklermedia Corporation, a Delaware corporation (the
"COMPANY"), Penton Media, Inc., a Delaware corporation (the "PURCHASER"),
Internet World Media, Inc., a Delaware corporation and a wholly owned subsidiary
of the Purchaser ("MERGER SUB") and Xxxx X. Xxxxxxx, an individual (the
"Stockholder").
W I T N E S S E T H
WHEREAS, the Boards of Directors of the Company and the
Purchaser have each determined that it is in the best interests of their
respective stockholders for the Purchaser to acquire the Company upon the terms
and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the
Purchaser will make a cash tender offer (the "OFFER") to purchase all of the
issued and outstanding shares of common stock, $.01 par value, of the Company
(the "SHARES"), for $29.00 per Share (the "PER SHARE AMOUNT"), or such higher
price as may be paid in the Offer, net to the seller in cash; and
WHEREAS, also in furtherance thereof, the Boards of Directors
of the Company, the Purchaser and Merger Sub have each approved the merger (the
"MERGER") of Merger Sub with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("DELAWARE
LAW") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has unanimously resolved to recommend acceptance of the Offer and
the Merger to the holders of Shares and has determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the holders of
such Shares and to recommend that the holders of such Shares accept the Offer
and approve the Merger, this Agreement and the transactions contemplated hereby;
and
WHEREAS, in order to induce Purchaser and Merger Sub to enter
into this Agreement, concurrently with the execution and delivery hereof,
Purchaser, Merger Sub, the Company and the Stockholder (who beneficially owns
approximately 30% of the outstanding Shares), are entering into a Tender, Voting
and Option Agreement dated the date hereof (the "Voting and Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and
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intending to be legally bound hereby, the Company, the Purchaser and Merger Sub
hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be continuing, the Purchaser or
Merger Sub shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") the Offer as promptly as
practicable, but in no event later than five business days following the
execution of this Agreement, and, subject to the conditions of the Offer, shall
use all reasonable efforts to consummate the Offer. The obligation of the
Purchaser to consummate the Offer and to accept for payment any Shares tendered
pursuant thereto shall be subject to the satisfaction of only those conditions
set forth in Annex I. The Purchaser expressly reserves the right to waive any
such condition or to increase the Per Share Amount. The Per Share Amount shall
be net to the seller in cash, subject to reduction only for any applicable
Federal back-up withholding or stock transfer taxes payable by the seller. The
Company agrees that no Shares held by the Company will be tendered pursuant to
the Offer.
(b) Without the prior written consent of the Company, the
Purchaser shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition (as defined in Annex
I) or (iv) impose additional conditions to the Offer or amend any other term of
the Offer in any manner adverse to the holders of Shares; PROVIDED HOWEVER, that
if on the initial expiration date of the Offer, which shall be November 18,
1998 (together with any extensions thereof, if any, the "EXPIRATION DATE"), all
conditions to the Offer shall not have been satisfied or waived, the Purchaser
may extend the Expiration Date up to an additional six (6) business days to the
extent necessary to permit such condition to be satisfied; provided, further,
however, that the Expiration Date may not be extended beyond November 27, 1998,
except with the written consent of the Company. The Purchaser shall, on the
terms and subject to the prior satisfaction or waiver of the conditions of the
Offer, accept for payment and purchase, as soon as permitted under the terms of
the Offer, all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(c) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in Annex I
hereto. As soon as practicable on the date the Offer is commenced, the Purchaser
shall file with the Securities
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and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "SCHEDULE 14D-1")
with respect to the Offer that will comply in all material respects with the
provisions of, and satisfy in all material respects the requirements of, such
Schedule 14D-1 and all applicable Federal securities laws, and will contain
(including as an exhibit) or incorporate by reference the Offer to Purchase and
forms of the related letter of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "OFFER DOCUMENTS").
Each of the Purchaser, Merger Sub and the Company agrees promptly to correct any
information provided by it for use in the Schedule 14D-1 or the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Schedule 14D-1 or the Offer Documents to include any information
that shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and the Purchaser
further agrees to take all steps necessary to cause the Schedule 14D-1, as so
corrected or supplemented, to be filed with the SEC and the Offer Documents, as
so corrected or supplemented, to be disseminated to holders of Shares, in each
case as and to the extent required by applicable Federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC.
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that (i) the Board of Directors, at a meeting duly
called and held on October 7, 1998, at which a majority of the Directors were
present, unanimously and duly approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (such
approval being sufficient to render Section 203 of Delaware Law inapplicable to
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger), recommended that the stockholders of the Company accept the Offer,
tender their Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the Company
and (ii) Xxxxx & Company, Inc., the Company's financial advisor, has rendered to
the Board of Directors its opinion that the consideration to be received by the
holders of Shares, Options and Warrants of the Company pursuant to the Offer and
the Merger is fair to such holders from a financial point of view.
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(b) The Company shall file with the SEC, simultaneously with
(or at such later date as may be mutually agreed between the Company and
Purchaser) the filing by the Purchaser of the Schedule 14D-1 with respect to the
Offer, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
will comply in all material respects with the provisions of all applicable
Federal securities laws. The Company shall mail such Schedule 14D-9 to the
stockholders of the Company along with the Offer Documents promptly after the
commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of the Purchaser and Merger Sub, with respect to written information
supplied by it specifically for use in the Schedule 14D-9, shall promptly notify
the Company of any required corrections of such information and cooperate with
the Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the Company's stockholders to the extent
required by applicable Federal securities laws. The Purchaser and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 before it is filed with the SEC.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish the Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and security
position listings of Shares held in stock depositories, each as of a recent
date, and shall promptly furnish the Purchaser with such additional information,
including updated lists of stockholders, mailing labels and security position
listings, and such other information and assistance as the Purchaser or its
agents may reasonably request for the purpose of communicating the Offer to the
record and beneficial holders of Shares.
SECTION 1.3. DIRECTORS.
(a) Promptly upon the purchase by the Purchaser of any Shares
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by the Purchaser, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
will give the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Board of Directors (giving
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effect to the directors appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) multiplied by
the percentage that the aggregate number of Shares beneficially owned by the
Purchaser or any affiliate of the Purchaser (including for purposes of this
Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares outstanding.
At such times, if requested by the Purchaser, the Company will also cause each
committee of the Board of Directors to include persons designated by the
Purchaser constituting the same percentage of each such committee as the
Purchaser's designees are of the Board of Directors. The Company shall, upon
request by the Purchaser, promptly increase the size of the Board of Directors
or exercise its best efforts to secure the resignations of such number of
directors as is necessary to enable the Purchaser designees to be elected to the
Board of Directors in accordance with the terms of this Section 1.3 and shall
cause the Purchaser's designees to be so elected; PROVIDED, HOWEVER, that, in
the event that the Purchaser's designees are appointed or elected to the Board
of Directors, until the Effective Time (as defined in Section 2.2 hereof) the
Board of Directors shall have at least one director who is a director on the
date hereof and who is neither an officer of the Company nor a designee,
stockholder, affiliate or associate (within the meaning of the Federal
securities laws) of the Purchaser (one or more of such directors, the
"INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of the Purchaser, and such person shall be
deemed to be an Independent Director for purposes of this Agreement.
(b) Subject to applicable law, the Company shall promptly take
all action necessary pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 mailed to stockholders
promptly after the commencement of the Offer (or an amendment thereof or an
information statement pursuant to Rule 14f-1 if the Purchaser has not
theretofore designated directors) such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this Section 1.3. The Purchaser will
supply the Company and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of the Purchaser's
obligations hereunder
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or (iv) take any other action by the Company in connection with this Agreement
required to be taken by the Board of Directors.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. At the Effective Time (as defined in
Section 2.2) and subject to and upon the terms and conditions of this Agreement
and Delaware Law, Merger Sub shall be merged with and into the Company, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "SURVIVING
CORPORATION."
SECTION 2.2. EFFECTIVE TIME. On or as promptly as practicable
after the Closing Date (as defined in Section 2.3), the parties hereto shall
cause the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law (the time
of such filing being the "EFFECTIVE TIME").
SECTION 2.3. EFFECT OF THE MERGER; CLOSING. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation. The
closing of the Merger (the "CLOSING") shall take place at a time and on a date
(the "CLOSING DATE") to be specified by the parties, which shall be no later
than the third Business Day after satisfaction or waiver of the latest to occur
of the conditions precedent set forth in Article VII, at the offices of Xxxxx,
Day, Xxxxxx & Xxxxx, North Point, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx, unless
another time, date or location is agreed to in writing by the parties. "BUSINESS
DAY" means any day other than Saturday, Sunday or a federal holiday.
SECTION 2.4. SUBSEQUENT ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Merger Sub acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the
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officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Merger
Sub, all such deeds, bills of sale, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS.
(a) Unless otherwise determined by the Purchaser before the
Effective Time, at the Effective Time the Certificate of Incorporation of Merger
Sub, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation (as the same may be
amended from time to time in the form mutually agreed between Purchaser and the
Company, including any such amendment as shall be required for Purchaser to
comply with Section 6.8(a) of this Agreement) until thereafter amended as
provided by law and such Certificate of Incorporation.
(b) The By-Laws of Merger Sub, as in effect immediately before
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Merger Sub immediately before the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Merger Sub immediately before the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the board of directors of the Surviving Corporation or in
any office of the Surviving Corporation, such vacancy may thereafter be filled
in the manner provided by law.
SECTION 2.6. CONVERSION OF SECURITIES. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 2.6(b)
and any Dissenting Shares (as defined in Section 2.7(a)) shall be canceled and
extinguished and be converted into the right to receive the Per Share Amount in
cash payable to the holder thereof, without interest, upon surrender of the
certificate formerly representing such Share in the manner provided in Section
2.8. All such Shares, when so converted, will no longer be outstanding and will
automatically be canceled
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and retired and will cease to exist, and each holder of a certificate formerly
representing any such Share will cease to have any rights with respect thereto,
except the right to receive the Per Share Amount therefor upon the surrender of
such certificate in accordance with Section 2.8. Any payment made pursuant to
this Section 2.6(a) will be made net of applicable withholding taxes to the
extent such withholding is required by law.
(b) Each Share held in the treasury of the Company and each
Share owned by the Purchaser or any direct or indirect wholly owned subsidiary
of the Purchaser immediately before the Effective Time shall be canceled and
extinguished and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, par value $.Ol per share, of
Merger Sub issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock, par value $.Ol per share, of the Surviving Corporation.
SECTION 2.7. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected his demand
for appraisal of his Shares in accordance with Delaware Law (including but not
limited to ss.262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("DISSENTING SHARES"), shall not
be converted into or represent a right to receive cash pursuant to Section 2.6,
but the holder thereof shall be entitled to only such rights as are granted by
Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any
holder of Shares who demands appraisal of his Shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive cash as provided in Section 2.6(a),
without interest thereon, upon surrender of the certificate or certificates
formerly representing such Shares.
(c) The Company shall give the Purchaser (i) prompt notice of
any written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not voluntarily make any payment with respect to
any demands for appraisal and shall not, except with the prior written consent
of the Purchaser, settle or offer to settle any such demands.
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SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Purchaser shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of Shares in connection with the Merger (the "EXCHANGE AGENT") to
receive the funds necessary to make the payments contemplated by Section 2.6. At
the Effective Time, the Purchaser shall deposit, or cause to be deposited, in
trust with the Exchange Agent for the benefit of holders of Shares the aggregate
consideration to which such holders shall be entitled at the Effective Time
pursuant to Section 2.6.
(b) Each holder of a certificate or certificates representing
any Shares canceled upon the Merger pursuant to Section 2.6(a) (the
"CERTIFICATE(S)") may thereafter surrender such certificate or certificates to
the Exchange Agent, as agent for such holder, to effect the surrender of such
Certificate or Certificates on such holder's behalf for a period ending one year
after the Effective Time. The Purchaser agrees that promptly after the Effective
Time it shall cause the distribution to holders of record of Shares as of the
Effective Time of appropriate materials to facilitate such surrender. Upon the
surrender of Certificates for cancellation, together with such materials, the
Purchaser shall cause the Exchange Agent to pay the holder of such Certificates
in exchange therefor cash in an amount equal to the Per Share Amount multiplied
by the number of Shares represented by such Certificate. Until so surrendered,
each such Certificate (other than Certificates representing Dissenting Shares
and Certificates representing Shares held by the Purchaser or in the treasury of
the Company) shall represent solely the right to receive the aggregate Per Share
Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be
made to a Person other than the Person in whose name a surrendered Certificate
or instrument is registered, it shall be a condition to such payment that the
Certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the Certificate or
instrument surrendered or shall have established to the satisfaction of the
Purchaser or the Exchange Agent that such tax either has been paid or is not
payable.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as
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provided in Section 2.6(a). No interest shall accrue or be paid on any cash
payable upon the surrender of a Certificate or Certificates which immediately
before the Effective Time represented outstanding Shares.
(e) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to the Purchaser all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by the Purchaser or
in the treasury of the Company) may surrender such Certificate to the Purchaser
and (subject to applicable abandoned property, escheat and similar laws) receive
in consideration thereof the aggregate Per Share Amount relating thereto,
without any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 2.8(c), stock transfer
taxes payable by such holder.
(g) In the event any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Per Share Amount
deliverable in respect thereof as determined in accordance with Section 2.6;
provided that the Person to whom the Per Share Amount is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as the Surviving Corporation may direct or otherwise indemnify
the Surviving Corporation in a manner satisfactory to it against any claim that
may be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
SECTION 2.9. STOCK PLANS AND WARRANT AGREEMENTS.
(a) The Company shall use all reasonable efforts (which
include, but are not limited to, satisfying the requirements of Rule 16b-3(e)
which is promulgated under Section 16 of the Exchange Act, without incurring any
liability in connection therewith) to provide that, upon consummation of the
Merger, (i) each then outstanding option to purchase Shares (the "OPTIONS")
granted under any of the Company's stock option plans referred to in Section
4.2, each as amended (collectively, the "OPTION PLANS"), and (ii) each then
outstanding warrant to purchase Shares (the "WARRANTS") granted under any of the
warrant agreements referred to in Section 4.2, each as amended (collectively,
the "WARRANT AGREEMENTS"), whether or not then exercisable or vested, shall be
acquired by the Company for cancellation in consideration of payment to the
holders of such Options and Warrants of an amount in respect thereof equal to
the
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product of (A) the excess, if any, of the Per Share Amount over the per share
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes); provided that the Company
shall obtain any consents required of holders of Options and Warrants to effect
the foregoing. As promptly as practicable following the consummation of the
Offer, the Purchaser shall provide the Company with the funds necessary to pay
in full the consideration payable to holders of Options and Warrants under this
Section 2.9(a).
(b) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company shall cause the Option Plans and Warrant Agreements to
terminate as of the Effective Time and (ii) the Company shall ensure that
following the Effective Time no person, including any holder of Options or
Warrants or any participant in the Option Plans, shall have any right to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND MERGER SUB
The Purchaser and Merger Sub represent and warrant to the
Company as follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of the Purchaser and
Merger Sub 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 and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted.
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. The
execution and delivery of this Agreement by the Purchaser and Merger Sub and the
consummation by the Purchaser and Merger Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser and Merger Sub and no other corporate proceeding is necessary
for the execution and delivery of this Agreement by the Purchaser or Merger Sub,
the performance by the Purchaser or Merger Sub of their respective obligations
hereunder and the consummation by the Purchaser or Merger Sub of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and Merger Sub and, assuming due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding obligation of each such corporation, enforceable against each
of them in accordance with its terms, except that (i) the enforceability hereof
may be subject to applicable bankruptcy, insolvency or other similar
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laws, now or hereinafter in effect, affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Purchaser and Merger Sub do not, and the performance of this Agreement by the
Purchaser and Merger Sub will not, (i) conflict with or violate any law,
regulation, court order, judgment or decree applicable to the Purchaser or
Merger Sub or by which any of their property is bound or affected, (ii) violate
or conflict with either the Certificate of Incorporation or By-Laws of either
the Purchaser or Merger Sub, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination or cancellation of,
or result in the creation of a lien or encumbrance on any of the property or
assets of the Purchaser or Merger Sub pursuant to, any contract, instrument,
permit, license or franchise to which the Purchaser or Merger Sub is a party or
by which the Purchaser or Merger Sub or any of their property is bound or
affected; except in the case of clauses (i) and (iii) for conflicts, violations,
breaches or defaults that individually and in the aggregate would not have or
result in a material adverse effect on the business, results of operations or
financial condition of Purchaser and its Subsidiaries, taken as a whole, or be
reasonably expected to prevent or materially impair or delay the consummation by
Purchaser or Merger Sub of the transactions contemplated hereby (each a
"Purchaser Material Adverse Effect").
(b) Except for applicable requirements, if any, of the
Exchange Act, under Competition Laws (as defined below), and filing and
recordation of appropriate merger documents as required by Delaware Law, neither
the Purchaser nor Merger Sub is required to submit any notice, report or other
filing with any governmental authority, domestic or foreign, in connection with
the execution, delivery or performance of this Agreement or the consummation of
the transactions contemplated hereby, the failure of which to submit would have
a Purchaser Material Adverse Effect. No waiver, consent, approval or
authorization of any governmental or regulatory authority, domestic or foreign,
is required to be obtained or made by either the Purchaser or Merger Sub in
connection with its execution, delivery or performance of this Agreement the
failure of which to obtain or make would have a Purchaser Material Adverse
Effect. "Competition Laws" means statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint
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of trade, and includes the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and, to the extent applicable, equivalent laws of the
European Union or the Member States thereof, Canada and any other country in
which the Company or its Subsidiaries has operations or derives revenue.
SECTION 3.4. FINANCING ARRANGEMENTS. The Purchaser has
received a commitment letter (the "Commitment Letter") from DLJ Capital Funding,
Inc., DLJ Bridge Finance, Inc. and Xxxxxxxxx Lufkin & Xxxxxxxx Securities
Corporation (collectively, "DLJ") dated October 7, 1998, whereby DLJ has
committed, upon the terms and subject to the conditions set forth therein, to
provide debt financing to Purchaser in the amount of up to $325.0 million (the
"Financing"). Purchaser has delivered a complete and correct copy of such letter
as in effect on the date hereof to the Company. As of the date hereof, Purchaser
believes that the aggregate proceeds of the Financing will be sufficient to (i)
pay the Per Share Amount with respect to all outstanding Shares, Options (less
the exercise price thereof) and Warrants (less the exercise price thereof) and
to perform the obligations of Purchaser and Merger Sub hereunder and (ii)
together with cash available to the Surviving Corporation, perform the
obligations of the Surviving Corporation under this Agreement. Neither Purchaser
nor Merger Sub knows of any fact or circumstance that it believes will prevent
it from obtaining the Financing. In addition, Purchaser and Merger Sub represent
and warrant to the Company that the Information (as defined in the Commitment
Letter but excluding Information provided in writing to Purchaser or Merger Sub
by the Company), as supplemented as contemplated by the Commitment Letter, is
(or will be, in the case of Information made available after the date hereof)
complete and correct in all material respects and does not (or will not, as the
case may be) contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were or are
made.
SECTION 3.5. NO PRIOR ACTIVITIES. Except for obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any financing), Merger Sub has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. BROKERS. Except for DLJ, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Purchaser or Merger Sub
that is or will be payable by the Company or any of its Subsidiaries. Purchaser
and Merger Sub are solely responsible for the fees and expenses of DLJ.
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SECTION 3.7. OFFER DOCUMENTS; PROXY STATEMENTS. (a) None of
the information supplied by the Purchaser, Merger Sub, their respective
officers, directors, representatives, agents or employees (the "PURCHASER
INFORMATION"), for inclusion in the Proxy Statement (as defined in Section 4.9),
or in any amendments thereof or supplements thereto, will, on the date the Proxy
Statement is first mailed to stockholders of the Company or at the time of the
Company Stockholders' Meeting (as defined in Section 4.9), contain any statement
which, at such time and in light of the circumstances under which it will be
made, will be false or misleading with respect to any material fact, or will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. Neither the
Offer Documents nor any amendments thereof or supplements thereto will, at any
time the Offer Documents or any such amendments or supplements are filed with
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, the
Purchaser and Merger Sub do not make any representation or warranty with respect
to any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents and any amendments or supplements thereto will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
(b) If required, the Rule 13e-3 Transaction Statement
on Schedule 13E-3 to be filed with the SEC under the Exchange Act and/or mailed
to the stockholders of the Company in connection with the Offer and the Merger
(including any amendment or supplement thereto, the "Schedule 13E-3") (i) will
not, at the date such Schedule 13E-3 is filed with the SEC and/or mailed to the
stockholders of the Company contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (ii) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder; except that no representation is made by Purchaser or Merger Sub
with respect to statements made in the Schedule 13E-3 based on information
supplied by the Company specifically for inclusion therein.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Except as set forth on the Disclosure Schedule to this
Agreement (the "DISCLOSURE SCHEDULE"), the Company hereby represents and
warrants to the Purchaser and the Merger Sub as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority and any necessary governmental authority to own, operate or
lease the properties that it purports to own, operate or lease and to carry on
its business as it is now being conducted, and (ii) is duly qualified as a
foreign corporation to do business, and is in good standing, in each other
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except in the
case of clause (ii) for failures which, when taken together with all other such
failures, would not have a Company Material Adverse Effect (as defined below in
this Section 4.1). Section 4.1 of the Disclosure Schedule lists each of the
Company's Subsidiaries and their respective jurisdictions of incorporation or
organization. The term "SUBSIDIARY" means any corporation or other legal entity
of which the Company (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity. The term "COMPANY MATERIAL ADVERSE EFFECT" means any
change in or effect on the business of the Company that is or can be reasonably
expected to be materially adverse to the business, assets, properties (including
intangible properties), condition (financial or otherwise), results of
operations, prospects (other than changes in general economic conditions but
including changes in the industry in which the Company operates), liabilities or
regulatory status of the Company and the Subsidiaries taken as a whole. The
Company has previously delivered to Purchaser a complete and correct copy of
each of its Certificate of Incorporation and By-Laws, as currently in effect.
SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 35,000,000 shares of common stock, $.01 par value, of
the Company (the "Company Common Stock") and 1,000,000 shares of preferred
stock, $.01 par value, of the Company (the "COMPANY PREFERRED STOCK"). As of the
close of business on the date one business day prior to the date hereof, (i)
9,109,542 shares of Company Common Stock were issued and outstanding, all of
which were duly authorized, validly issued, fully paid and nonassessable, (ii)
260,000 shares of Company Common Stock were held in the treasury of the Company,
(iii) no shares of Company Preferred Stock were issued or outstanding, (iv)
1,200,000 shares of Company Common Stock were reserved for issuance under the
Company's employee stock option plans listed on Schedule 4.2(a) of the
Disclosure Schedule in the
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amounts stated in such schedule and (v) 4,500 shares of Company Common Stock
were reserved for issuance upon the exercise of currently outstanding warrants
issued under the warrant agreements listed on Schedule 4.2(a) of the Disclosure
Schedule. Except as disclosed in the SEC Reports (as defined below) or on
Schedule 4.2(a) of the Disclosure Schedule, there are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other equity interest in, the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interests,
(ii) contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
Subsidiary of the Company or (iii) voting trusts or similar agreements to which
the Company or any of its Subsidiaries is a party with respect to the voting of
the capital stock of the Company or any of its Subsidiaries.
(b) Except as set forth on Schedule 4.2(b) of the
Disclosure Schedule and except for directors' qualifying shares (i) all of the
outstanding shares of capital stock (or equivalent equity interests of entities
other than corporations) of each of the Company's Subsidiaries are beneficially
owned, directly or indirectly, by the Company and (ii) neither the Company nor
any of its Subsidiaries owns any shares of capital stock or other securities of,
or interest in, any other Person, or is obligated to make any capital
contribution to or other investment in any other Person.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
has the necessary corporate power and authority to enter into this Agreement
and, subject to obtaining any necessary stockholder approval of the Merger, to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of the Merger by the
Company's stockholders in accordance with Delaware Law. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Purchaser and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except that (i) the enforceability
hereof may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereinafter in effect, affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought..
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SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate any law, regulation, court order, judgment or
decree applicable to the Company or by which its property is bound or affected,
(ii) violate or conflict with the Certificate of Incorporation or By-Laws of the
Company, or (iii) except as set forth on Exhibit F, result in any breach of or
constitute a default (or an event which with notice or lapse of time of both
would become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company pursuant to, any contract, instrument,
permit, license or franchise to which the Company is a party or by which the
Company or its property is bound or affected, except in the case of clauses (i)
and (iii) for conflicts, violations, breaches or defaults which, individually or
in the aggregate, would not have a Company Material Adverse Effect.
(b) Except for applicable requirements, if any, of
the Exchange Act, under Competition Laws, and filing and recordation of
appropriate merger or other documents as required by Delaware Law, "takeover" or
"blue sky" laws of various states, the Company is not required to submit any
notice, report or other filing with any governmental authority, domestic or
foreign, in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby the
failure of which to submit would have a Company Material Adverse Effect. No
waiver, consent, approval or authorization of any governmental or regulatory
authority, domestic or foreign, is required to be obtained or made by the
Company in connection with its execution, delivery or performance of this
Agreement the failure of which to obtain or make would have a Company Material
Adverse Effect.
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission
("SEC") since January 1, 1995, and has heretofore delivered or made available to
the Purchaser, in the form filed with the SEC, its (i) Annual Reports on Form
10-K SB for the fiscal years ended September 30, 1995, 1996 and 1997, (ii)
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1997, March
31, 1998 and June 30, 1998, (iii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since October 1, 1995
and (iv) all other forms, reports or registration statements (other than reports
on Form 10-Q not referred to in clause (ii) above) filed by the Company with the
SEC pursuant to the Exchange Act since October 1, 1995 (collectively, whether
filed before, on or after
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the date hereof, the "SEC REPORTS"). The SEC Reports (i) were prepared in
accordance with the requirements of the Exchange Act and the Securities Act of
1933 (the "Securities Act"), as the case may be, and the applicable rules and
regulations of the SEC thereunder and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained
in the SEC Reports were prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and changes in financial position of the Company and its Subsidiaries
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which should not be materially adverse to the Company and its Subsidiaries taken
as a whole.
(c) Except as reflected or reserved against in the
consolidated financial statements contained in the SEC Reports filed prior to
the date hereof or otherwise disclosed in the SEC Reports filed prior to the
date hereof, neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which in the aggregate would have a Company Material Adverse Effect
or which would be required to be set forth in consolidated financial statements
in accordance with GAAP.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 1997, except as contemplated by this
Agreement or as set forth in the SEC Reports filed prior to the date hereof, (i)
the Company and its Subsidiaries have conducted their respective operations only
in the ordinary course consistent with past practices; (ii) there has not been:
(a) any change which would have a Company Material Adverse
Effect;
(b) any strike, picketing, work slowdown or other labor
disturbance having a Company Material Adverse Effect;
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company having a Company
Material Adverse Effect;
(d) any redemption or other acquisition of Company Common
Stock by the Company or any declaration or payment of any
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24
dividend or other distribution in cash, stock or property with respect to
Company Common Stock, except for purchases heretofore made pursuant to the terms
of the Company's employee benefit plans before the date hereof;
(e) any change by the Company in accounting principles except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Reports; and
(iii) the Company and its Subsidiaries have not taken action
that if taken after the date hereof would constitute a violation of Section 5.1
hereof.
SECTION 4.7. LITIGATION. Except as disclosed in the SEC
Reports filed prior to the date hereof, there are no claims, actions, suits,
proceedings or investigations of any nature pending or, to the knowledge of the
Company, threatened against the Company, or any properties or rights of the
Company, before any court, administrative, governmental or regulatory authority
or body, domestic or foreign, which are reasonably likely to have a Company
Material Adverse Effect. As of the date hereof, the Company is not subject to
any order, judgment, injunction or decree which has had or would have or result
in a Company Material Adverse Effect.
SECTION 4.8. EMPLOYEE BENEFIT PLANS. (a) Schedule 4.8(a) of
the Disclosure Schedule sets forth a list of all material employee welfare
benefit plans (as defined in Section 3(l) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), employee pension benefit plans (as
defined in Section 3(2) of ERISA) and all other bonus, stock option, stock
purchase, benefit, profit sharing, savings, retirement, disability, insurance,
incentive, deferred compensation and other similar fringe or employee benefit
plans, programs or arrangements for the benefit of, or relating to, any employee
of, or independent contractor or consultant to, the Company or its Subsidiaries
(together, the "EMPLOYEE PLANS") and any employment severance or termination
agreement. The Company has made or will make available to the Purchaser true and
complete copies of all Employee Plans, as in effect, together with all
amendments thereto which will become effective at a later date, as well as the
latest Internal Revenue Service ("IRS") determination letters obtained with
respect to any Employee Plan intended to be qualified under Section 401(a) or
501(a) of Code. True and complete copies of the (i) most recent annual actuarial
valuation report, if any, (ii) last filed Form 5500 together with Schedule A
and/or B thereto, if any, (iii) summary plan description (as defined in ERISA),
if any, and all modifications thereto communicated to employees, (iv) most
recent annual and periodic accounting of related plan assets, if any, and (v)
such other materials with respect to the Employee Plans reasonably requested by
Purchaser in each case, relating to the Employee Plans, have
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been or will be delivered to the Purchaser and are, or will be, correct in all
material respects.
(b) Except to the extent that any of the following, either
alone or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect: (i) neither the Company nor, to the Company's
knowledge, any of its directors, officers, employees or agents has, with respect
to any Employee Plan, engaged in or been a party to any "prohibited
transaction", as such term is defined in Section 4975 of the Code or Section 406
of ERISA, which could result in the imposition of either a penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, in each case applicable to the Company or any Employee Plan; (ii) all
Employee Plans are and have been at all times in compliance in all respects with
the currently applicable requirements prescribed by all statutes, orders, or
governmental rules or regulations currently in effect with respect to such
Employee Plans, including, but not limited to, ERISA and the Code (except for
such requirements that are not required to be adopted as of the effective date
of the applicable requirement) and, to the knowledge of the Company, there are
no pending or threatened claims, lawsuits or arbitrations (other than routine
claims for benefits), relating to any of the Employee Plans, which have been
asserted or instituted against the Company, any Employee Plan or the assets of
any trust for any Employee Plan, nor, to the knowledge of the Company, is there
any basis for one; (iii) each Employee Plan intended to be qualified under
Section 401(a) of the Code, is so qualified, and has heretofore been determined
by the IRS to be so qualified; (iv) neither the Company nor any trade or
business which, together with the Company, is treated as a single employer under
Section 414(t) of the Code (an "ERISA Affiliate") has, or at any time has had,
an obligation to contribute to a "defined benefit plan" as defined in Section
3(35) of ERISA, a pension plan subject to the funding standards of Section 302
of ERISA or Section 412 of the Code, a "multiemployer plan" within the meaning
of Section 3(37) or 4001(a)(13) of ERISA or Section 414(f) of the Code or a
"multiple employer plan" within the meaning of Section 210(a) of ERISA or
Section 413(c) of the Code; (v) with respect to each group health plan
benefiting any current or former employee of the Company, or any ERISA
Affiliate, that is subject to Section 4980B of the Code, the Company and any
ERISA Affiliate, have complied with (A) the continuation coverage requirements
of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA and
(B) the Health Insurance Portability and Accountability Act of 1996; (vi) all
(A) insurance premiums required to be paid with respect to, (B) benefits,
expenses, and other amounts due and payable under, and (C) contributions,
transfers, or payments required to be made to, any Employee Plan prior to the
Effective Time will have been paid, made or accrued on or before the Effective
Time; (vii) with respect to any insurance policy providing funding for benefits
under any Employee Plan, (A) there is no liability of the Company or any of its
Subsidiaries, in the nature of a retroactive rate
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adjustment, loss sharing arrangement, or other actual or contingent liability,
nor would there be any such liability if such insurance policy was terminated on
the date hereof, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
knowledge of the Company, no such proceedings with respect to any insurer are
imminent; (viii) no Employee Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of service or
retirement other than (A) coverage mandated by law, (B) death or retirement
benefits under any qualified Employee Plan, or (C) deferred compensation
benefits reflected on the books of the Company; (ix) except as disclosed in
Schedule 4.8(b), the execution and performance of this Agreement will not (A)
constitute a stated triggering event under any Employee Plan that will result in
any payment (whether of severance pay or otherwise) becoming due from the
Company or any of the Company's Subsidiaries to any officer, employee, or former
employee (or dependents of such employee), or (B) accelerate the time of payment
or vesting, or increase the amount of compensation due to any employee, officer
or director of the Company; (x) except as disclosed in Schedule 4.8(b), any
amount that could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Employee Plan currently in effect
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code); (xi) except as disclosed in Schedule
4.8(b), the disallowance of a deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amount paid or payable by the
Company or any affiliate of the Company under any contract, Employee Plan,
program, arrangement or understanding currently in effect; (xii) neither the
Company nor any ERISA Affiliate has any current or future liability with respect
to any "employee benefit plans" (within the meaning of Section 3(3) of ERISA),
other than the Employee Plans, previously maintained or contributed to by the
Company, any ERISA Affiliate or any predecessor to either thereof, or to which
the Company, any ERISA Affiliate, or any such predecessor previously had an
obligation to contribute.
SECTION 4.9. OFFER DOCUMENTS; PROXY STATEMENT. (a) The proxy
statement to be sent to the stockholders of the Company in connection with the
meeting of the Company's stockholders to consider the Merger (the "COMPANY
STOCKHOLDERS' MEETING") or the information statement to be sent to such
stockholders, as appropriate (such proxy statement or information statement, as
amended or supplemented, is herein referred to as the "PROXY STATEMENT"), at the
date mailed to the stockholders of the Company and at the time of the Company
Stockholders Meeting (i) will comply in all material respects with the
applicable
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requirements of the Exchange Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Schedule 14D-9 will comply in all material respects
with the Exchange Act and the rules and regulations thereunder. Neither the
Schedule 14D-9 nor any of the information relating to the Company or its
affiliates provided by or on behalf of the Company specifically for inclusion in
the Schedule 14D-1 or the Offer Documents will, at the respective times the
Schedule 14D-9, the Schedule 14D-1 and the Offer Documents or any amendments or
supplements thereto are filed with the SEC and are first published, sent or
given to stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. No representation or
warranty is made by the Company with respect to any information supplied by the
Purchaser or Merger Sub specifically for inclusion in the Proxy Statement or the
Schedule 14D-9.
(b) None of the information provided by the Company
specifically for use in any Schedule 13E-3 will at the time the Schedule 13E-3
or any amendments thereto are so filed and/or mailed, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 4.10. BROKERS. Except for Xxxxx & Company
Incorporated, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company. The Company has heretofore furnished to the Purchaser
true and complete information concerning the financial arrangements between the
Company and Xxxxx & Company pursuant to which such firm would be entitled to any
payment as a result of the transactions contemplated hereunder.
SECTION 4.11. CONTROL SHARE ACQUISITION. The Board of
Directors has taken all action necessary to render Section 203 of Delaware Law
inapplicable to the Offer, the Merger, this Agreement, the Voting and Option
Agreement and any of the transactions contemplated hereby and thereby.
SECTION 4.12. CONDUCT OF BUSINESS. (a) Except as disclosed in
the SEC Reports filed prior to the date hereof, the business of the Company is
not being conducted in default or violation of any term, condition or provision
of (i) its Certificate of Incorporation or By-Laws, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease or other
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instrument or agreement of any kind to which the Company is a party or by which
the Company or any of its properties or assets may be bound, or (iii) any
Federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to the Company, except,
with respect to the foregoing clauses (ii) and (iii), defaults or violations
that would not, individually or in the aggregate, have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice, or has knowledge of any claim, alleging any such violation, except for
such violations that individually and in the aggregate would not have or result
in a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all licenses,
permits, variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of any governmental
authority, domestic or foreign, or other Persons necessary for the ownership,
leasing, operation, occupancy and use of their respective property and assets
and the conduct of their respective businesses as currently conducted
("PERMITS"), except where the failure to hold such Permits individually and in
the aggregate would not have or result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received notice that any
Permit will be terminated or modified or cannot be renewed in the ordinary
course of business, and the Company has no knowledge of any reasonable basis for
any such termination, modification or nonrenewal, except for such terminations,
modifications or nonrenewals as individually and in the aggregate would not have
or result in a Company Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewals thereof, except for such violations,
terminations, modifications or nonrenewals thereof as individually and in the
aggregate would not have or result in a Company Material Adverse Effect.
(c) The Company has provided to Purchaser information as to
the standard booth rental rates for space at the Company's 1996, 1997 and 1998
trade shows that, to the best knowledge of the Company, is complete and accurate
in all material respects.
SECTION 4.13. TAXES.
(a) Except as would not, either individually or in the
aggregate, have a material adverse effect, (i) the Company has timely filed with
the appropriate governmental authorities all Tax Returns (as hereinafter
defined) required to be filed by or with respect to the Company, (ii) all Taxes
(as hereinafter defined) shown to be due on such Tax Returns, all Taxes required
to be paid on an estimated or installment basis, and all Taxes
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required to be withheld with respect to the Company have been timely paid or, if
applicable, withheld and paid to the appropriate taxing authority in the manner
provided by law, (iii) the reserve for Taxes set forth on the consolidated
balance sheet of the Company and its Subsidiaries as of September 30, 1997 is
adequate for the payment of all Taxes through the date thereof and no Taxes have
been incurred after September 30, 1997 which were not incurred in the ordinary
course of business, (iv) no Federal, state, local or foreign audits,
administrative proceedings or court proceedings are pending with regard to any
Taxes or Tax Returns of the Company and there are no outstanding deficiencies or
assessments asserted or proposed, and (v) there are no outstanding agreements,
consents or waivers extending the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Company, and the Company
is not a party to any agreement providing for the allocation or sharing of
Taxes.
(b) The Company has not filed a consent to the application of
Section 341(f) of the Code.
(c) The Company is not and has not been a United States real
property holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code.
(e) The Company has not been a member of an affiliated group
filing consolidated or combined Tax Returns other than a federal income tax
group the common parent of which is the Company.
(f) For purposes of this Agreement, "TAXES" means all taxes,
charges, fees, levies or other assessments imposed by any United States Federal,
state, or local taxing authority or by any non-U.S. taxing authority, including
but not limited to, income, gross receipts, excise, property, sales, use,
transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments).
(g) For purposes of this Agreement, "TAX RETURN" means any
return, report, information return or other document (including any related or
supporting information and, where applicable, profit and loss accounts and
balance sheets) with respect to Taxes.
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(h) Purchaser and the Company shall cooperate in the
preparation, execution and filing of all returns, applications or other
documents regarding any real property transfer, stamp, recording, documentary or
other taxes (including, without limitation, any New York State Real Estate
Transfer Tax) and any other fees and similar taxes which become payable in
connection with the Merger (collectively, "TRANSFER TAXES"). From and after the
Effective Date, Purchaser shall pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of Shares, all Transfer
Taxes.
Section 4.14. INTELLECTUAL PROPERTY.
(a) Schedule 4.14 of the Disclosure Schedule contains a true
and complete list of all (i) patents and patent applications, (ii) trademark and
service xxxx registrations and applications, (iii) Computer Software (as
hereinafter defined)(excluding Computer Software generally available for
purchase by the public), (iv) copyright registrations and applications for works
other than the magazines and Web site, and a description of the procedure
followed in registering copyrights in the magazines and Web site, (v) Internet
domain names used or held for use in connection with the business of the Company
and (vi) all material licenses related to the foregoing.
(b) The term "COMPUTER SOFTWARE" shall mean (i) any and all
computer programs and applications consisting of sets of statements and
instructions to be used directly or indirectly in computer software or firmware
whether in source code or object code form, (ii) databases and compilations,
including without limitation any and all data and collections of data, whether
machine readable or otherwise, (iii) all versions of the foregoing including,
without limitation, all screen displays and designs thereof, and all component
modules of source code or object code or natural language code therefor, and
whether recorded on papers, magnetic media or other electronic or non-electronic
device, (iv) all descriptions, flowcharts and other work product used to design,
plan, organize and develop any of the foregoing and (v) all documentation,
including without limitation all technical and user manuals and training
materials, relating to the foregoing.
(c) Except as set forth in Schedule 4.14(c) of the Disclosure
Schedule, the Company owns or has the valid right to use all intellectual
property used by it in connection with its business, including: (i) trademarks
and service marks (registered or unregistered) and trade names, and all goodwill
associated therewith; (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, processes and computer programs, software and
databases (including source code); (iii) trade secrets and the right to limit
the use or disclosure thereof; (iv) copyrights in all works, including software
programs and mask works; and (v) domain names (collectively "INTELLECTUAL
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PROPERTY"), except where the failure to own or have the valid right to use the
Intellectual Property would not have a Company Material Adverse Effect.
(d) Except as set forth in Schedule 4.14(d) of the Disclosure
Schedule, all grants, registrations and applications for Intellectual Property
that are used in and are material to the conduct of the businesses of the
Company as currently conducted (i) are valid, subsisting, in proper form and
have been duly maintained, including the submission of all necessary filings and
fees in accordance with the legal and administrative requirements of the
appropriate jurisdictions and (ii) have not lapsed, expired or been abandoned.
(e) Except as set forth in Schedule 4.14(e) of the Disclosure
Schedule, to the Company's knowledge, (i) there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Company Material Adverse
Effect, and (ii) the conduct of the businesses of the Company as currently
conducted does not conflict with or infringe any proprietary right of any third
party, which conflict or infringement would have a Company Material Adverse
Effect. Except as set forth in Schedule 4.14(e) of the Disclosure Schedule,
there is no claim, suit, action or proceeding pending or, to the Company's
knowledge, threatened against the Company (i) alleging any such conflict or
infringement with any third party's proprietary rights, or (ii) challenging the
ownership, use, validity or enforceability of the Intellectual Property, except
for claims, suits, actions or proceedings which would not have a Company
Material Adverse Effect.
(f) All consents, filings and authorizations by or with third
parties necessary with respect to the consummation of the transactions
contemplated hereby as they may affect the Intellectual Property have been
obtained, except where the failure to have obtained such consents, filings or
authorizations would not have a Company Material Adverse Effect.
(g) Except as set forth in Schedule 4.14(g) of the Disclosure
Schedule, the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property, except for breaches which would not have a Company
Material Adverse Effect.
(h) Except as set forth in Schedule 4.14(h) of the Disclosure
Schedule, no former or present employees, officers or directors of the Company
hold any right, title or interest directly or indirectly, in whole or in part,
in or to any Intellectual Property.
Section 4.15. CONTRACTS.
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(a) Other than the contracts or agreements of the Company
included as exhibits to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1997, the Company's Quarterly Reports on Form 10-Q for
the fiscal quarters ended December 31, 1997, March 31, 1998 and June 30, 1998,
or any periodic filing made pursuant to the Exchange Act (the "MATERIAL
CONTRACTS"), and contracts or agreements between the Company and its wholly
owned Subsidiaries or between wholly owned Subsidiaries of the Company, each of
the following contracts and agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound (contracts and
agreements of the types described below being "IDENTIFIED CONTRACTS") has been
previously delivered to Purchaser, in each case as such Identified Contract is
in effect on the date hereof:
(i) contracts and agreements for the purchase of inventories,
goods or other materials by, or for the furnishing of services to, the Company
or any of its Subsidiaries that (A) require payments by the Company or any of
its Subsidiaries in excess of $25,000 and (B) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty;
(ii) contracts and agreements for the sale of inventories,
goods or other materials, or for the furnishing of services, by the Company or
any of its Subsidiaries that (A) require payments to the Company or any of its
Subsidiaries in excess of $100,000 and (B) have a term of one year or more and
are not terminable by the Company or Subsidiary party thereto, as the case may
be, on notice of six months or less without penalty;
(iii) manufacturer's representative, sales agency and
distribution contracts and agreements that (A) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty, or (B) are otherwise
material;
(iv) contracts and agreements (A) governing the terms of
indebtedness, or guarantees of indebtedness, of, or secured by assets of, the
Company or any of its Subsidiaries in excess of $100,000 principal amount in the
aggregate, or (B) governing the terms of "synthetic" or capital leases pursuant
to which the Company or any of its Subsidiaries has financial obligations in
excess of $100,000, or (C) providing for all obligations of the Company and its
Subsidiaries in respect of interest rate swap or similar agreements, commodity
swaps or options or similar agreements or foreign currency hedge, exchange or
similar agreements or any other derivative instrument;
(v) shareholder, voting trust or similar contracts and
agreements relating to the voting of shares or other equity or debt interests of
the Company or any of its Subsidiaries;
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(vi) contracts and agreements entered into since January 1,
1995 providing for the acquisition or disposition of assets having a value in
excess of $500,000 other than sales or purchases of inventories in the ordinary
course of business and sales of obsolete equipment;
(vii) all of the leases, subleases, licenses and other
agreements relating to or constituting real property, each with a term of one
year or more and an annual payment obligation in excess of $50,000;
(viii) joint venture agreements, partnership agreements and
other similar contracts and agreements involving a sharing of profits and
expenses;
(ix) contracts and agreements governing the terms of
indebtedness of third parties (A) owed to the Company or any of its
Subsidiaries, other than receivables arising from the sale of goods or services,
or loans or advances not exceeding $60,000 in the aggregate made to employees of
the Company or any of its Subsidiaries, by the Company or such Subsidiary in the
ordinary course of business consistent with past practice, or (B) to or
guaranteed by the Company or any of its Subsidiaries;
(x) contracts and agreements prohibiting or materially
restricting the ability of the Company or any of its Subsidiaries to conduct its
business, to engage in any business or operate in any geographical area or to
compete with any Person, other than (A) distribution (including independent
sales representative) contracts and agreements that have a term of less than one
year or are terminable by the Company or any Subsidiary of the Company party
thereto, as the case may be, on notice of six months or less without penalty,
and, in each case, which are not material to the Company and its Subsidiaries
taken as a whole and (B) supplier and customer agreements relating to
non-disclosure of confidential information of the other party which are not
material to the Company and its Subsidiaries taken as a whole;
(xi) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of the Company
or any of its Subsidiaries; and
(xii) contracts and agreements that are material to the
business, operations, results of operations, condition (financial or otherwise),
assets or properties of the Company and its Subsidiaries taken as a whole.
(b) Each contract or agreement to which the Company or any of
its Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to the
actual knowledge of the Company, any other Person, is in breach of, or default
under, any such contract or agreement, and no event has occurred that with
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notice or passage of time or both would constitute such a breach or default
thereunder by the Company or any of its Subsidiaries, or, to the actual
knowledge of the Company, any other Person, except for such failures to be in
full force and effect and such breaches and defaults as individually and in the
aggregate would not have or result in a Company Material Adverse Effect.
Section 4.16. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the SEC Reports filed prior to the
date hereof or as disclosed on Schedule 4.16(a) of the Disclosure Schedule and
except for those noncompliance matters that have been and are resolved, the
Company and its Subsidiaries are in compliance with all applicable Environmental
Laws (as hereinafter defined).
(b) Except as disclosed in the SEC Reports filed prior to the
date hereof or as disclosed on Schedule 4.16(b) of the Disclosure Schedule,
there are no Environmental Claims (as hereinafter defined) pending or, to the
actual knowledge of the Company, threatened, against the Company or any of its
Subsidiaries that individually or in the aggregate would have or result in a
Company Material Adverse Effect.
(c) The Company has disclosed and, where requested, made
available to Purchaser all material information, including such studies,
analyses and test results, in the possession, custody or control of or otherwise
known and available to the Company or any of its Subsidiaries relating to the
environmental conditions on, under or about any of the properties or assets
owned, leased, or operated by any of the Company and its Subsidiaries or any
predecessor in interest thereto at the present time or in the past.
(d) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the Company or any
of its Subsidiaries by any Person or entity alleging any potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, or
penalties) arising out of, based on, or resulting from the presence, or Release
into the environment, of any Hazardous Substance (as hereinafter defined) at any
location, whether or not owned, leased, operated or used by the Company or its
Subsidiaries;
(ii) the term "Environmental Laws" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous Substances,
or otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental
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Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act, and (2) the Occupational Safety and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and oil and
petroleum products, (2) any substance that is or contains friable asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials, (3) any
substance that requires removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste" or "hazardous substance"
thereunder, or (4) any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous; in
each case in clauses (1)-(4) above which is regulated under any Environmental
Law; and
(iv) the term "Release" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping,
emptying, migration, transporting, placing and the like, including into or upon,
any land, soil, surface water, ground water or air, or otherwise entering into
the environment.
Section 4.17. REQUIRED VOTE BY COMPANY STOCKHOLDERS. The
affirmative vote of the holders of a majority of the outstanding Shares entitled
to vote hereon is the only vote of any class of capital stock of the Company
required by Delaware law or the Certificate of Incorporation or the By-Laws of
the Company to adopt this Agreement and approve the transactions contemplated
hereby. Each of the directors and executive officers of the Company has informed
the Company that he intends to vote any Shares he owns in favor of approval and
adoption of the Merger Agreement.
Section 4.18. OPINIONS OF FINANCIAL ADVISOR. The Company has
received an opinion of Xxxxx & Company Incorporated to the effect that, as of
the date hereof, the consideration to be received by the holders of Shares,
Options and Warrants of the Company pursuant to the Offer and the Merger is fair
to such holders from a financial point of view.
Section 4.19. AFFILIATE TRANSACTIONS. Schedule 4.19 of the
Disclosure Schedule contains a complete and correct list of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business, to
or by which the Company or any of its Subsidiaries, on the one hand, and
Stockholder or any of his affiliates (other than the Company or any of its
Subsidiaries), on the other hand, are or have been a party or otherwise bound or
affected, and that (i) are currently pending or in effect or (ii) involve
continuing liabilities and obligations that, individually or in the aggregate,
have been,
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are or will be material to the Company and its Subsidiaries taken as a whole.
Section 4.20. OPTION AGREEMENTS. Each outstanding option
agreement executed in connection with an option grant pursuant to the Option
Plans is in substantially the form attached as an exhibit to the Company's 1995
Stock Option Plan.
Section 4.21. DISCLOSURE. To the actual knowledge of the
Company, this Agreement and each certificate or other instrument required to be
furnished by or on behalf of the Company to Purchaser or Merger Sub pursuant
hereto at or prior to the Closing, taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. CONDUCT OF BUSINESS PENDING THE MERGER. (i) The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time or earlier termination of this Agreement, unless the Purchaser
shall otherwise consent in writing:
(a) the business of the Company shall be conducted only in,
and the Company s all not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company will
use its reasonable efforts to preserve substantially intact the business
organization of the Company, to keep available the services of the present
officers, employees and consultants of the Company and to preserve the present
relationships of the Company with customers, suppliers and other Persons with
which the Company has significant business relations.
(b) the Company will not amend its Certificate of
Incorporation or By-Laws;
(c) the Company will not declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock; and neither the Company nor any of its Subsidiaries will
(i) issue, sell, transfer, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class of the Company or any of its Subsidiaries, other than (A) issuances
of Shares pursuant to securities, options, warrants, calls, commitments or
rights existing at the date hereof and previously disclosed to the
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Purchaser in writing (including as disclosed in the SEC Reports) or (B)
issuances to employees pursuant to any of the Option Plans of stock options to
purchase in the aggregate up to 10,000 shares of Common Stock which options are
exercisable at a price (which price shall be set no earlier than after the tenth
trading day following the date of this Agreement) equal to or greater than fair
market value (as defined in the relevant Option Plan) on the date of grant; (ii)
incur any long-term indebtedness (whether evidenced by a note or other
instrument, pursuant to a financing lease, sale-leaseback transaction, or
otherwise) or incur short-term indebtedness other than under lines of credit
existing on the date hereof; (iii) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock or other securities; or (iv)
enter into, amend, terminate, renew or fail to use reasonable efforts to renew
in any material respect any (x) Material Contract or (y) Identified Contract
except in the ordinary course of business consistent with past practice;
(d) except as set forth on Schedule 5.1(d) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries will, except for
normal increases in the ordinary course of business consistent with past
practice or pursuant to employment contracts in effect on the date hereof, (i)
grant any increase in the compensation or benefits payable or to become payable
by the Company or any of its Subsidiaries to any employee; (ii) adopt, enter
into, amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries;
(e) neither the Company nor its Subsidiaries will change the
accounting principles used by it unless required by GAAP (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting principles);
(f) except as set forth on Schedule 5.1(f) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or
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vendors in the ordinary course of business consistent with past practice) for an
amount that in the aggregate is material, individually or in the aggregate, to
the Company and its Subsidiaries, taken as a whole;
(g) except as set forth on Schedule 5.1(g) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets except in the ordinary
course of business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall
release any third party from its obligations (i) under any existing standstill
agreement or arrangement relating to a proposed Acquisition Transaction (as
defined in Section 5.2(c)), unless the Board determines in its good faith,
reasonable judgment, after consultation with its financial advisors and outside
legal counsel, that the failure to do so would create a reasonable possibility
of a breach of the fiduciary duties of the Board of Directors under applicable
law, or (ii) otherwise under any confidentiality or other similar agreement,
except for modifications of any such obligations under existing commercial
arrangements in the ordinary course of business consistent with past practice;
(i) except as set forth on Schedule 5.1(i) of the Disclosure
Schedule, the Company and its Subsidiaries shall not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets;
(j) neither the Company nor its Subsidiaries shall compromise,
settle, grant any waiver or release relating to or otherwise adjust any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any Litigation, except for any such
compromise, settlement, waiver, release or adjustment (x) in the ordinary course
of business consistent with past practice, or involving a payment by the Company
or any of its Subsidiaries not in excess of $50,000 in the aggregate, or (y) set
forth on Schedule 5.1(j) of the Disclosure Schedule, following prior notice to
and consultation with the Purchaser; and
(k) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing.
(ii) Purchaser and Merger Sub covenant and agree that, between
the date of consummation of the Offer and the Effective Time or earlier
termination of this Agreement, the business of iWorld shall be conducted only
in, and neither Purchaser nor Merger Sub shall take any action except in, the
ordinary course of business (as in effect with respect to the iWorld Assets (as
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defined in Section 6.10) as of the date of consummation of the Offer) and in a
manner consistent with iWorld's past practice; and Purchaser and Merger Sub will
use their reasonable efforts to preserve substantially intact the business
organization of iWorld, to keep available the services of the present officers,
employees and consultants of the Company with respect to iWorld and to preserve
the present relationships of iWorld with customers, suppliers and other Persons
with which iWorld has significant business relations.
Section 5.2. NO SHOPPING. (a) The Company and its subsidiaries
will not, directly or indirectly, through any officer, director, agent,
financial adviser, attorney, accountant or other representative or otherwise,
solicit, initiate or encourage submission of proposals or offers from any Person
relating to, or that could reasonably be expected to lead to, an Acquisition
Transaction or participate in any negotiations or discussions regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek an Acquisition
Transaction; PROVIDED, that, prior to the purchase of and payment for Shares by
Purchaser pursuant to the Offer and prior to such time as Purchaser shall have
nominated and the Company shall have caused Purchaser's nominees to constitute a
majority of the Board of Directors (provided that the Company has complied with
the requirements set forth in Section 1.3 of this Agreement), the Company may,
in response to an unsolicited written proposal with respect to an Acquisition
Transaction from a third party that the Board of Directors determines, in its
good faith and reasonable judgment, after consultation with and the receipt of
the advice of its financial advisor and outside counsel, is a Superior Proposal,
(i) furnish information to, and negotiate, explore or otherwise engage in
substantive discussions with such third party, only if the Board of Directors
determines, in good faith and reasonable judgment after consultation with its
financial advisors and outside legal counsel, that failing to take such action
would create a reasonable possibility of a breach of the fiduciary duties of the
Board of Directors under applicable law and (ii) take and disclose to the
Company's stockholders a position with respect to the Merger or another
Acquisition Transaction proposal, or amend or withdraw such position, pursuant
to Rules 14d-9 and 14e-2 under the Exchange Act.
(b) Except as expressly permitted by this Section 5.2(b),
neither the Board of Directors nor any committee thereof may (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Purchaser or Merger Sub, the approval or recommendation by the Board of
Directors or such committee of the Offer, the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Transaction, or (iii) cause the Company to enter into any letter of
intent, agreement in
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principle, acquisition agreement or other similar agreement related to any
Acquisition Transaction (each, an "ACQUISITION AGREEMENT"). Notwithstanding the
foregoing, prior to the purchase of and payment for Shares by Purchaser pursuant
to the Offer and prior to such time as Purchaser shall have nominated and the
Company shall have caused Purchaser's nominees to constitute a majority of the
Board of Directors (provided that the Company has complied with the requirements
set forth in Section 1.3 of this Agreement), in response to an unsolicited
Acquisition Transaction proposal, if the Board of Directors determines, in its
good faith, reasonable judgment, after consultation with and the receipt of the
advice of its financial advisor and outside counsel, that such proposal is a
Superior Proposal and that failure to do any of the actions set forth in clauses
(i), (ii) or (iii) above would create a reasonable possibility of a breach of
the fiduciary duties of the Board of Directors under applicable law, the Board
of Directors may withdraw or modify its approval or recommendation of the Offer,
the Merger or this Agreement, approve or recommend an Acquisition Transaction,
cause the Company to enter into an Acquisition Agreement or terminate this
Agreement pursuant to Section 8.1(d)(iii); PROVIDED, however, that the Merger
Agreement may not be terminated until after the expiration of the Offer.
(c) The Company will (i) immediately (and in any event, no
later than one business day after receipt) advise Purchaser in writing of the
receipt of request for information or any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 5.2(a),
specifying the material terms and conditions of such proposed Acquisition
Transaction and (ii) keep Purchaser reasonably informed of the status of any
such request or proposed Acquisition Transaction. If any such inquiry or
proposal is in writing, the Company shall promptly deliver to Purchaser a copy
of such inquiry or proposal.
(d) For purposes of this Agreement, (i) "ACQUISITION
TRANSACTION" means (other than the transactions contemplated by this Agreement)
(x) a merger, consolidation or other business combination, share exchange, sale
of shares of capital stock, tender offer or exchange offer or similar
transaction involving the Company or any of its Subsidiaries, (y) acquisition in
any manner, directly or indirectly, of a material interest in any voting
securities of, or a material equity interest in a substantial portion of the
assets of, the Company or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions which is structured to
permit a third party to acquire beneficial ownership of a majority or greater
equity interest in the Company, or (z) the acquisition in any manner, directly
or indirectly, of any material portion of the business or assets (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale) of the Company and (ii) "SUPERIOR PROPOSAL"
means a proposed Acquisition Transaction involving at least 50% of the shares of
capital stock or a material portion of the assets of
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the Company that the Board of Directors determines, after consulting with the
Company's financial advisors and outside counsel, to be more favorable to the
Company's stockholders than the Merger.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT. (a) If required by applicable
law in order to consummate the Merger, as promptly as practicable after the
purchase of and payment for Shares by Purchaser pursuant to the Offer, the
Company shall prepare and file with the SEC, and shall use all reasonable
efforts to have cleared by the SEC, and promptly thereafter shall mail to its
stockholders, the Proxy Statement. The Proxy Statement shall contain the
recommendation of the Board of Directors that stockholders of the Company
approve and adopt this Agreement and approve the Merger and the other
transactions contemplated hereby. The Company agrees not to mail the Proxy
Statement to its stockholders until Purchaser confirms that the information
provided by Purchaser continues to be accurate. If at any time prior to the
Company Stockholders Meeting any event or circumstance relating to the Company
or any of its Subsidiaries or affiliates, or its or their respective officers or
directors, should be discovered by the Company that is required to be set forth
in a supplement to the Proxy Statement, the Company shall promptly inform
Purchaser and Merger Sub, so supplement the Proxy Statement and mail such
supplement to its stockholders.
(b) If required, the Company, Purchaser and Merger Sub shall
cooperate with one another in the preparation and filing of the Schedule 13E-3
and shall use all reasonable efforts to promptly obtain and furnish the
information required to be included in the Schedule 13E-3 and to respond
promptly to any comments or requests made by the SEC with respect to the
Schedule 13E-3. Each party hereto shall promptly notify the other parties of the
receipt of comments of, or any requests by, the SEC with respect to the Schedule
13E-3, and shall promptly supply the other parties with copies of all
correspondence between such party (or its representatives) and the SEC (or its
staff) relating thereto. The Company, Purchaser and Merger Sub each agrees to
correct any information provided by it for use in the Schedule 13E-3 which shall
have become, or is false or misleading..
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY. (a) If
required by applicable law in order to consummate the Merger, following the
purchase of and payment for Shares by Purchaser pursuant to the Offer, the
Company shall promptly take all action necessary in accordance with Delaware Law
and its Certificate of Incorporation and By-Laws to convene the Company
Stockholders Meeting. The Company shall use its best efforts to
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solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of the
Purchaser, advisable to secure any vote or consent of stockholders required by
Delaware Law to effect the Merger. The Purchaser agrees that it shall vote, or
cause to be voted, in favor of the Merger all Shares directly or indirectly
beneficially owned by it.
(b) Notwithstanding Section 6.2(a) hereof, in the event that
Purchaser, the Merger Sub or any other Subsidiary of Purchaser acquires at least
90% of the outstanding Shares pursuant to the Offer or otherwise, the parties
hereto agree, at the request of Purchaser or Merger Sub, to take all necessary
and appropriate action to cause the Merger to become effective in accordance
with Section 253 of Delaware Law without a meeting of stockholders of the
Company as soon as practicable after the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer.
SECTION 6.3. ADDITIONAL AGREEMENTS. The Company, the Purchaser
and Merger Sub will each comply in all material respects with all applicable
laws and with all applicable rules and regulations of any governmental authority
in connection with its execution, delivery and performance of this Agreement and
the transactions contemplated hereby. Each of the parties hereto agrees to use
all reasonable efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to the Purchaser, and the Purchaser shall give prompt
notice to the Company, of (i) the occurrence or non-occurrence of any event
whose occurrence or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (B) any condition set forth in Annex I to be unsatisfied in
any material respect at any time from the date hereof to the date the Purchaser
purchases Shares pursuant to the Offer and (ii) any material failure of the
Company, the Purchaser or Merger Sub, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.4
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.5. ACCESS TO INFORMATION.
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(a) From the date hereof to the Effective Time, the Company
shall, and shall cause each of its subsidiaries, its officers, directors,
employees, auditors and agents to, afford the Purchaser Representatives (as
defined in Section 6.5(b)) reasonable access at all reasonable times to its
officers, employees, agents, properties, offices and other facilities and to all
books and records, and shall furnish the Purchaser and Merger Sub with all
financial, operating and other data and information as the Purchaser or Merger
Sub, through the Purchaser Representatives, may reasonably request.
(b) The Purchaser agrees that it shall, and shall cause its
affiliates and each of their respective officers, directors, employees,
financial advisors, agents and other authorized representatives (the "PURCHASER
REPRESENTATIVES"), to hold in strict confidence all data and information
obtained by them from the Company (unless such information is or becomes
publicly available without the fault of any of the Purchaser Representatives or
public disclosure of such information is required by law in the opinion of
counsel to the Purchaser) and shall insure that the Purchaser Representatives do
not disclose such information to others without the prior written consent of the
Company. Notwithstanding anything herein to the contrary, the terms of the
Confidentiality Agreement, dated September 23, 1998 (the "CONFIDENTIALITY
AGREEMENT"), executed by the Purchaser shall remain in full force and effect.
(c) In the event of the termination of this Agreement, the
Purchaser shall, and shall cause its affiliates to, return promptly every
document furnished to them by the Company or any of its representatives in
connection with the transactions contemplated hereby and any copies thereof
which may have been made, and shall cause the Purchaser Representatives to whom
such documents were furnished promptly to return such documents and any copies
thereof any of them may have made, other than documents filed with the SEC or
otherwise publicly available.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. The Purchaser and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer or the Merger
and shall not issue any such press release or make any such public statement
before such consultation, except as may be required by law or applicable stock
exchange rules.
SECTION 6.7. BEST EFFORTS; COOPERATION. Upon the terms and
subject to the conditions hereof, each of the parties hereto agrees to use its
best efforts to take or cause to be taken all actions and to do or cause to be
done all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and shall use its best efforts to obtain all
necessary waivers, consents and approvals, and to effect all necessary filings
under the Exchange Act and the HSR Act. The parties shall cooperate in
responding to inquiries
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from, and making presentations to, regulatory authorities. In addition,
Purchaser and Merger Sub shall use all reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable to consummate the Financing.
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.
(a) The Certificate of Incorporation and By-Laws of
the Surviving Corporation shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who as of the date hereof
were directors, officers, employees, fiduciary, agents of the Company or
otherwise entitled to indemnification under the Certificate of Incorporation,
By-Laws or indemnification agreements (the "INDEMNIFIED PARTIES") and such
Certificate of Incorporation of the Surviving Corporation shall include
provisions providing for advancement of expenses to such Indemnified Parties in
accordance with Article VII of the Company's certificate of incorporation and in
accordance with Section 145 of Delaware Law. It is understood and agreed that
the Company shall, to the fullest extent permitted under Delaware law and
regardless of whether the Merger becomes effective, indemnify, defend and hold
harmless, and after the Effective Time, the Purchaser will cause the Surviving
Corporation, to the fullest extent permitted under Delaware Law, to indemnify,
defend and hold harmless, each Indemnified Party against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, including without limitation
liabilities arising out of this transaction, to the extent that it was based on
the fact that such Indemnified Party is or was a director, officer or employee
of the Company and arising out of actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time, and in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Company or the Surviving Corporation, as
applicable, shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation will cooperate in
the defense of any such matter; PROVIDED, HOWEVER, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
FURTHER, PROVIDED, that neither the Company nor the Surviving Corporation shall
be obliged pursuant to this Section 6.8 to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single action except to
the extent that, in the opinion of counsel for the Indemnified Parties, two or
more of such Indemnified Parties have conflicting interests in the
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outcome of such action. For six years after the Effective Time, the Surviving
Corporation shall be required to maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently covered
by the Company's officers and directors liability insurance policy on terms not
less favorable than those in effect on the date hereof in terms of coverage and
amounts; provided, however, that the Surviving Corporation will not be required
to expend in any year an amount in excess of 200% of the annual aggregate
premiums currently paid by the Company for such insurance; and provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation will be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of its Board of Directors,
for a cost not exceeding such amount. This Section 6.8 shall survive the
consummation of the Merger. The Purchaser shall cause Surviving Corporation to
reimburse all expenses, including reasonable attorney's fees and expenses,
incurred by any person to enforce the obligations of the Purchaser and the
Surviving Corporation under this Section 6.8. Notwithstanding Section 9.7
hereof, this Section 6.8 is intended to be for the benefit of and to grant third
party rights to Indemnified Parties whether or not parties to this Agreement,
and each of the Indemnified Parties shall be entitled to enforce the covenants
contained herein.
(b) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.8.
Section 6.9. EMPLOYEE BENEFITS. At the Effective Time, the
Surviving Corporation shall continue as the Plan Sponsor of each Employee Plan.
Each of the parties hereto agrees that participants' rights to the
employer-provided benefits for nonunion employees under the Employee Plans as in
effect as of the Effective Time shall be continued under the same or an
equivalent plan and shall not be reduced for at least one year following the
Effective Time, except (i) to the extent provided in Section 2.9 hereof or (ii)
as required by applicable law (including as required to preserve any favorable
tax treatment afforded such benefits as of the Effective Time). Thereafter, such
participants shall in any event be credited with their service with the Company
in determining their right to participate and vesting under any successor
Employee Plans.
Section 6.10. RELATED AGREEMENTS. At the Effective Time, (i)
Purchaser shall cause (A) all assets (the "iWorld Assets") of iWorld
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
to be contributed to a newly formed Delaware limited liability company
("iWorld") and
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(B) the acquisition by the Stockholder and/or one or more Persons under his
control (such acquisition to be structured by the parties hereto so as to comply
with the Securities Act) of 80.1% of the equity interests in iWorld for an
aggregate purchase price of $18.0 million and (ii) (A) the agreement in
substantially the form attached hereto as Exhibit A (the "iWORLD AGREEMENT"),
(B) the Services Agreement between iWorld and Purchaser in substantially the
form attached hereto as Exhibit B, (C) the Trademark Licensing Agreement between
iWorld and Purchaser in substantially the form attached hereto as Exhibit C, (D)
the Warrant Agreement between Purchaser, the Stockholder and iWorld in
substantially the form attached hereto as Exhibit D and (E) the Consulting
Agreement between Purchaser and the Stockholder in substantially the form
attached hereto as Exhibit E shall each be duly executed and delivered by the
parties thereto. Schedule 6.10 sets forth a substantially complete list of the
iWorld Assets. The Purchaser and the Company shall each use their best efforts
to reach a definitive agreement regarding which of the Company's assets shall
constitute all of the iWorld Assets.
Section 6.11. TRANSFER TAXES. The Purchaser and the Company
shall cooperate in the preparation, execution and filing of all returns,
applications or other documents regarding any real property transfer, stamp,
recording, documentary or other taxes (including, without limitation, any New
York State Real Estate Transfer Tax) and any other fees and similar taxes which
become payable in connection with the Merger (collectively, "TRANSFER TAXES").
From and after the Effective Date, the Purchaser shall pay or cause to be paid,
without deduction or withholding from any amounts payable to the holders of
Shares, all Transfer Taxes.
Section 6.12. FINANCIAL STATEMENTS; FINANCING. (a) The
Company shall provide to the Purchaser, no later than October 20, 1998,
unaudited financial statements (without accompanying notes) for the Company's
fiscal year ended September 30, 1998, and shall provide to the Purchaser, no
later than November 15, 1998, audited financial statements (including
accompanying notes) for such fiscal year.
(b) Upon request of the Purchaser and subject to Section 6.5
of this Agreement, the Company shall provide to the Purchaser or its
representatives such documentation and information as may reasonably be required
in connection with the Purchaser obtaining the Financing (including, if DLJ
deems it necessary, participation in road show presentations).
Section 6.13. Tax Indemnity. The Stockholder agrees to pay and
indemnify Purchaser for any liabilities arising from the Company's failure to
withhold amounts in respect of income taxes due as a result of the Stockholder's
exercise of options to purchase Company Common Stock.
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ARTICLE VII.
CONDITIONS OF MERGER
Section 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all of which may be waived by the parties hereto in
writing, in whole or in part, to the extent permitted by applicable law):
(a) OFFER. The Purchaser shall have made, or caused to be
made, the Offer and shall have purchased, or caused to be purchased, the Shares
pursuant to the Offer; PROVIDED, that this condition shall be deemed to have
been satisfied with respect to the obligation of the Purchaser and Merger Sub to
effect the Merger if the Purchaser fails to accept for payment or pay for Shares
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
(b) STOCKHOLDER APPROVAL. The Merger and this Agreement shall
have been approved and adopted by the requisite vote of the stockholders of the
Company, if required by Delaware Law.
(c) NO CHALLENGE. No statute, rule, regulation, judgment,
writ, decree, order or injunction (whether temporary, preliminary or permanent)
shall have been promulgated, enacted, entered or enforced, and no other action
shall have been taken, by any government or governmental, administrative or
regulatory authority or by any court of competent jurisdiction, that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
Section 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER
SUB TO EFFECT THE MERGER. The obligations of Purchaser and Merger Sub to effect
the Merger shall be further subject to the satisfaction or waiver of the
following condition prior to the Effective Time:
(a) The Company shall have performed in all material respects
all obligations and complied in all material respects with all agreements and
covenants of the Company required to be performed or complied with by it under
this Agreement, including, without limitation, its obligations under Section 5.1
hereof.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
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SECTION 8.1. TERMINATION. This Agreement may be terminated at
any time before the Effective Time, whether before or after stockholder
approval:
(a) By mutual written consent of the Boards of Directors of
the Purchaser and the Company; or
(b) By either the Purchaser or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use their best
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
(c) By either the Purchaser or the Company if the Offer has
not been consummated within 120 days of the date of this Agreement (unless
otherwise extended by the parties hereto); PROVIDED, that no party may terminate
this Agreement pursuant to this paragraph (c) if such party's failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date; or
(d) By the Company (i) if there shall be a material breach of
any of the Purchaser's or Merger Sub's representations, warranties or covenants
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by Purchaser from the Company, (ii) there shall have
been a material breach on the part of Purchaser or Merger Sub of any of their
respective covenants or agreements hereunder, which breach shall not have been
cured within ten days of the receipt of written notice thereof by Purchaser from
the Company, or (iii) in accordance with Section 5.2(b); PROVIDED that the
termination described in this clause (iii) shall not be effective unless and
until the Company shall have paid to the Purchaser the fee described in Section
8.2(b) hereto; PROVIDED, FURTHER, that this Agreement may not be terminated
pursuant to this clause (iii) until after the Expiration Date of the Offer; or
(e) By the Purchaser, if (i) there shall be a material breach
of any of the Company's representations, warranties or covenants hereunder,
which breach shall not have been cured within ten days of the receipt of written
notice thereof by the Company from Purchaser or (ii) there shall have been a
material breach on the part of the Company of any of its covenants or agreements
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by the Company from Purchaser; or
(f) By the Purchaser, at any time prior to the purchase of and
payment for the Shares pursuant to the Offer, if (i) the Board of Directors
shall withdraw, modify or change its
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recommendation or approval in respect of this Agreement, the Offer or the
Merger, (ii) the Board of Directors shall have recommended any proposal other
than by the Purchaser in respect of an Acquisition Transaction, (iii) any Person
or group (as defined in Section 13(d)(3) of the Exchange Act) other than the
Purchaser, Merger Sub or any of their respective subsidiaries or affiliates
shall have become the beneficial owner of more than 25% of the outstanding
Shares (either on a primary or a fully diluted basis); provided, however, that
this provision shall not apply to any Person that owns more than 25% of the
outstanding Shares on the date hereof or (iv) in the case of clauses (i) and
(ii), the Board of Directors shall have resolved to take any such action; or
(g) By either the Purchaser or the Company if the Offer
expires or is terminated or withdrawn pursuant to its terms without any Shares
being purchased thereunder by the Purchaser as a result of the occurrence of any
of the events set forth in Annex I; PROVIDED that the termination described in
this Section 8.1(g) shall not be effective unless and until the Company shall
have paid to the Purchaser the fee described in Section 8.2(b) hereof, if
payable pursuant to such provision.
SECTION 8.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided
in Section 8.1 hereof, this Agreement shall forthwith become void and there
shall be no liability on the part of the Purchaser, Merger Sub or the Company,
except (i) as set forth in Sections 6.5 (b) and (c), 8.2(b) and 9.3 hereof and
(ii) nothing herein shall relieve any party from liability for any breach of
this Agreement.
(b) (i) If this Agreement is terminated at such time that this
Agreement is terminable pursuant to Section 8.1(e) other than as a result of the
occurrence of an act of God that causes the Company to be in such breach, then
(A) the Company shall promptly (but not later than two business days after
receipt of notice from Purchaser) pay to Purchaser an amount equal to the
Purchaser's actual and reasonably documented Expenses, not to exceed $6.0
million; PROVIDED, HOWEVER, that, if this Agreement is terminated by Purchaser
as a result of a willful breach by the Company, Purchaser may pursue any
remedies available to it at law or in equity and shall, in addition to its
Expenses (which shall be paid as specified above and shall be limited to $6.0
million), be entitled to recover such additional amounts as Purchaser may be
entitled to receive at law or in equity; and (B) if (x) at the time of the
Company's willful breach of this Agreement, there shall have been a third-party
offer or proposal with respect to an Acquisition Transaction which at the time
of such termination shall not have been rejected by the Company and the Board of
Directors and withdrawn by the third party, and (y) within thirteen months of
any
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termination by the Purchaser, the Company or an affiliate thereof becomes a
subsidiary of such offeror or a subsidiary of an affiliate of such offeror or
accepts a written offer to consummate or consummates an Acquisition Transaction
with such offeror or an affiliate thereof, then the Company (jointly and
severally with its affiliates), upon the signing of a definitive agreement
relating to such an Acquisition Transaction, or, if no such agreement is signed
then at the closing (and as a condition to the closing) of the Company becoming
such a subsidiary or of such Acquisition Transaction, will pay to the Purchaser
a fee equal to $10.0 million in cash; provided that in no event shall the
termination fee provided for in Section 8.2(b)(ii) be payable if the termination
fee referred to in this Section 8.2(b)(i)(B) has been paid.
(ii) If (A) the Purchaser shall have terminated this Agreement
pursuant to Section 8.1(f), (B) the Company shall have terminated this Agreement
pursuant to Section 8.1(d)(iii) or (C) this Agreement is terminated as a result
of the Company's material breach of Section 6.2, then in any such case the
Company shall promptly, but in no event later than two business days after the
date of such termination or event, pay the Purchaser a termination fee of $10.0
million in cash plus an amount, not in excess of $6.0 million, equal to the
Purchaser's actual and reasonably documented Expenses, which amount shall be
payable by wire transfer to such account as the Purchaser may designate in
writing to the Company. No fee or expense reimbursement shall be paid pursuant
to this Section 8.2(b) if the Purchaser shall be in material breach of its
obligations hereunder.
(iii) This Section 8.2(b) will survive any termination of this
Agreement. The term "Expenses" means all out-of-pocket fees, costs and other
expenses incurred or assumed by Purchaser or Merger Sub or incurred on their
behalf in connection with this Agreement or any of the transactions contemplated
hereby, including but not limited to in connection with the negotiation,
preparation, execution and performance of this Agreement, the structuring and
financing of the Merger and the other transactions contemplated hereby, or any
commitments or agreements relating to such financing, including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other Persons and their respective agents and
counsel for arranging, committing to provide or providing any financing for the
Merger and any other transactions contemplated hereby or structuring,
negotiating or advising with respect to such transactions or such financing, and
all fees and expenses of counsel, accountants, experts and environmental,
actuarial, insurance and other consultants to Purchaser or Merger Sub.
ARTICLE IX.
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GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.8 and Section 6.10 shall survive the Effective
Time indefinitely and those set forth in Sections 6.5(b), 6.5(c), 8.2(b) and 9.3
shall survive termination indefinitely.
SECTION 9.2. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made (i) as of the date delivered or sent by facsimile if
delivered personally or by facsimile, and (ii) on the third business day after
deposit in the U.S. mail, if mailed by registered or certified mail (postage
prepaid, return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to the Purchaser or the Merger Sub:
Penton Media, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: 000-000-0000
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company:
Mecklermedia Corporation
00 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: 000-000-0000
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With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Facsimile: (000) 000-0000
SECTION 9.3. EXPENSES. Except as expressly set forth in
Section 8.2(b), all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
SECTION 9.4. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "CONTROL" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise; and
(c) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or any unincorporated
organization.
SECTION 9.5. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.6. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement, the Voting and Option Agreement, the iWorld Agreement, the
Services Agreement, the Warrant
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Agreement, the Trademark Licensing Agreement, the Consulting Agreement and the
Confidentiality Agreement constitute the entire agreement and supersede any and
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and, except
as otherwise expressly provided herein, this Agreement is not intended to confer
upon any other Person any rights or remedies hereunder.
SECTION 9.8. ASSIGNMENT. This Agreement shall not be assigned
by operation of law or otherwise, except that the Purchaser and Merger Sub may
assign all or any of their rights hereunder to any affiliate of the Purchaser
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State.
SECTION 9.10. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by the Purchaser and Merger Sub, and by action
taken by or on behalf of the Company's Board of Directors at any time before the
Effective Time and at any time before or after approval by the stockholders of
the Company; PROVIDED, HOWEVER, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share will be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.11. WAIVER. At any time before the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only as against such party
and only if set forth in an instrument in writing signed by such party. Any such
waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative
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and none is exclusive of any other, or of any rights or remedies that any party
may otherwise have at law or in equity.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
MECKLERMEDIA CORPORATION
By: /S/ XXXX X. XXXXXXX
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
PENTON MEDIA, INC.
By: /s/ XXXXXX X. XXXX
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
INTERNET WORLD MEDIA, INC.
By: /s/ XXXXXX X. XXXX
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: President
XXXX X. XXXXXXX, solely with respect
to Sections 6.10(ii) and 6.13 of this
Agreement
/s/ XXXX X. XXXXXXX
---------------------------------------
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ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for (A) unless the following conditions shall have been
satisfied: (i) there shall be validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Company Common Stock which,
together with the shares of Company Common Stock to be acquired by Purchaser
from the Stockholder pursuant to Section 7 or Section 11 of the Voting and
Option Agreement, represents at least a majority of the number of Shares
outstanding on a fully diluted basis (assuming the exercise of all outstanding
Options and Warrants) (the "MINIMUM CONDITION"), (ii) any applicable waiting
period under the HSR Act shall have expired or been terminated prior to the
expiration of the Offer, (iii) Purchaser shall have received the proceeds of the
Financing or otherwise obtained funds sufficient to pay the Per Share Amount
multiplied by the number of shares tendered and not validly withdrawn pursuant
to the Offer and (iv) the Company shall have obtained the consent or approval of
each person identified on Exhibit F in connection with the Offer, except those
for which the failure to obtain would not have or give rise to a Company
Material Adverse Effect or (B) if at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer,)
any of the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of competent
jurisdiction or a statute, rule, regulation, executive order or other action
shall have been promulgated, enacted, taken or threatened by a governmental
authority or a governmental, regulatory or administrative agency or commission
of competent jurisdiction which in any such case (i) restrains or prohibits the
making or consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by the Purchaser (or any of
its affiliates or subsidiaries) of any material portion of its or the Company's
business or assets, or compels the Purchaser (or any of its affiliates or
subsidiaries) to dispose of or hold separate any material portion of its or the
Company's business or assets, (iii) imposes material limitations on the ability
of the Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by the Purchaser on all
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matters properly presented to the stockholders of the Company, (iv) imposes any
material limitations on the ability of the Purchaser or any of its affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company or (v) which otherwise would have a Company Material
Adverse Effect; or
(b) there shall be instituted or pending any action or
proceeding before any governmental, regulatory or administrative agency or
commission of competent jurisdiction seeking any injunction, order, decree,
judgment or ruling having any effect set forth in (a) above; or
(c) this Agreement shall have been terminated by the Company
or the Purchaser in accordance with its terms; or
(d) (i) any representation or warranty made by the Company in
this Agreement shall not have been true and correct in all material respects
when made, or shall have ceased to be true and correct in all material respects
as of the Expiration Date (as defined in the Offer Documents) as if made as of
such date, or (ii) as of the Expiration Date the Company shall not in all
material respects have performed any obligation or agreement and complied with
its material covenants to be performed and complied with by it under this
Agreement; or
(e) there shall have occurred (i) any suspension or limitation
of trading in securities generally on the New York Stock Exchange (not including
any suspension or limitation of trading in any particular security as a result
of computerized trading limits or any intraday suspension due to "circuit
breakers") or any setting of minimum prices for trading on such exchange, (ii)
any banking moratorium declared by the U.S. Federal or New York authorities or
any suspension of payments in respect of banks in the United States, or (iii) a
decline by 15% or more in the S&P 500 from the level of such index on the date
of this Agreement; or
(f) the Purchaser and the Company shall have agreed that the
Purchaser shall amend the Offer to terminate the Offer or postpone the payment
for Shares pursuant thereto; or
(e) there shall have occurred any event that, individually or
when considered together with any other matter, has had or is reasonably likely
in the future to have a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the circumstances
(including any action or inaction by the Purchaser) giving rise to any such
conditions and may be waived by the Purchaser in whole or in part at any time
and from time to time, in each case, in the exercise of the good faith judgment
of the Purchaser and
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subject to the terms of this Agreement. The failure by the Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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EXHIBIT A
FORM OF iWORLD AGREEMENT
60
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
IWORLD LLC
A DELAWARE LIMITED LIABILITY COMPANY
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
IWORLD LLC, a Delaware limited liability company (the "Company"), dated as of
_____, 1998, by and among Xxxx X. Xxxxxxx ("Xxxxxxx"), Internet World Media,
Inc. ("Internet World") and the additional persons and entities listed on
EXHIBIT A hereto (the "Members").
W I T N E S E T H:
WHEREAS, Internet World (the "Original Member") has formed a
limited liability company pursuant to the provisions of the Delaware Limited
Liability Company Act, DEL. CODE tit. 6, Section 18-101, ET SEQ., as amended
from time to time (the "Act");
WHEREAS, pursuant to that certain [Purchase Agreement] dated
as of ____, 1998 (the "Purchase Agreement"), the Original Member has agreed to
sell an 80.1% interest in the Company to Xxxxxxx under the terms and conditions
set forth therein;
WHEREAS, effective immediately upon consummation of the
transactions described in the Purchase Agreement, the Original Member wishes to
amend and restate the Agreement to (i) admit Xxxxxxx as the Managing Member;
(ii) reduce the Interest of the Original Member; and (iii) provide for the
affairs of the Company to be conducted as set forth herein; and
WHEREAS, the Members hereby constitute themselves a limited
liability company for the purposes and on the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the
parties hereto, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed by and among
the parties hereto as follows:
ARTICLE I.
INTRODUCTORY PROVISIONS
Section 1.1. CERTAIN DEFINITIONS. As used herein:
"ACT" shall have the meaning set forth in the preamble.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account Balance
of a Member increased by such Member's share of "partner
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minimum gain" and "partner nonrecourse debt minimum gain" as determined pursuant
to Treasury Regulations ss. 1.704-2.
"AFFILIATE" shall mean, with respect to any Person, any other
Person who directly or indirectly controls, is controlled by or is under common
control with such Person, or, in the case of a natural person, any immediate
family member of such Person.
"AGREEMENT" shall mean this Amended and Restated Limited
Liability Company Agreement of iWorld LLC, as originally executed and as
amended, modified or supplemented pursuant to the provisions hereof.
"BOOK VALUE" shall have the meaning given to it in
SECTION 2.2.
"BOARD" shall have the meaning given to it in SECTION 3.2.
"CAPITAL ACCOUNT" has the meaning specified in SECTION 4.1.
"CAPITAL CONTRIBUTION" means a contribution by a Member to the
capital of the Company pursuant to this Agreement. A Capital Contribution may be
in cash or in such other form, including tangible and intangible assets, at such
valuation as shall be established by the Board.
"CERTIFICATE" means the Certificate of Formation of the
Company as filed with the Secretary of State of Delaware, as it may be amended
from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended.
Any reference to a section of the Code shall include a reference to any
amendatory or successor provision thereto.
"FISCAL YEAR" has the meaning specified in SECTION 4.3.
"INDEMNIFIED PERSONS" has the meaning specified in
SECTION 3.3.
"MANAGING MEMBER" shall mean Xxxxxxx.
"NET PROFITS" and "NET LOSSES" means the income and loss of
the Company as determined in accordance with the accounting methods followed by
the Company for Federal income tax purposes but including as an item of profit
income exempt from tax and described in Code Section 705(a)(1)(B), treating as
deductions items of expenditure described in, or under Treasury Regulations
deemed described in, Code Section 705(a)(2)(B) and treating as an item of gain
(or loss) both any increase (decrease) in the Book Value of the Partnership's
property under Section 2.2(c) and the excess (deficit), if any, of the fair
market value (taking Section 7701(g) of the Code into account) of
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distributed property over (under) its Book Value. Depreciation, depletion,
amortization, income and gain (or loss) with respect to Company assets shall be
computed with reference to their Book Value rather than to their adjusted bases
in an amount consistent with Treasury Regulations ss. 1.704-1(b)(2)(iv)(g).
Profit or loss resulting from the disposition of assets shall be determined by
reference to Book Value rather than adjusted tax basis.
"NOTICES" has the meaning specified in SECTION 8.1(A).
"OWNERSHIP PERCENTAGE" means the percentage that is equal to
the number of Units held by a Member divided by the total number of Units
outstanding, each as specified on EXHIBIT A hereto, as such Exhibit may be
amended from time to time.
"PERSON" means an individual, corporation, association,
limited liability company, limited liability partnership, partnership, estate,
trust, unincorporated organization or a government or any agency or political
subdivision thereof.
"TRANSFER" has the meaning specified in SECTION 2.6(A).
"TREASURY REGULATIONS" means the regulations promulgated by
the U.S. Department of the Treasury under the Code.
"UNIT" has the meaning set forth in SECTION 2.1.
Section 1.2. NAME. The name of the Company shall be
"iWorld LLC."
Section 1.3. PRINCIPAL PLACE OF BUSINESS. The Company's
principal place of business shall be at such place as the Managing Member shall
designate from time to time.
Section 1.4. PURPOSES. The purposes of the Company shall be to
conduct the Business (as hereinafter defined), as well as any other lawful
business, purpose or activity related to the Internet industry and otherwise
permitted under the laws of the State of Delaware, and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of such purposes. For purposes of this Agreement,
the Company's "Business" consists of an Internet web site that contains the
latest news and resources for the Internet industry, directories of Internet
products and services, back issues of Internet World's print publications and
information about Internet World's Internet World trade shows and conferences.
Section 1.5. DURATION. The Company was formed upon the filing
of a Certificate of Formation with the Office of the Secretary of State of
Delaware pursuant to the Act and shall continue until dissolved pursuant to
SECTION 7.1.
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Section 1.6. LIMITATION OF LIABILITY. All debts, obligations
and liabilities of the Company shall be debts, obligations and liabilities of
the Company as an entity, and shall be paid or satisfied from the assets of the
Company. In no event shall any of the debts, obligations or liabilities of the
Company be payable in whole or in part by (a) any Member, employee, agent,
advisor or other representative of the Company; (b) any direct or indirect
member, general or limited partner or shareholder in, or ultimate beneficial
owner of, a Member, or any other Affiliate (other than the Company itself) of a
Member; or (c) any board member, managing director, officer, employee, agent,
advisor or other representative of any of the Persons referred to in the
preceding clause (b).
ARTICLE II.
CAPITAL CONTRIBUTIONS; OTHER FINANCING;
UNITS
Section 2.1. CAPITAL CONTRIBUTIONS; UNITS. (a) The Capital
Contributions of each Member shall be represented by membership units or
fractions thereof ("Units," and each, a "Unit"). At the initial date of this
Agreement, the number of Units and the corresponding Capital Contribution (which
shall, in the case of Xxxxxxx and his Affiliates, be equal to the amount paid by
Xxxxxxx and his Affiliates to Internet World for their respective interests in
the Company) and Ownership Percentage for each Member shall be as set forth on
Exhibit A attached hereto. Exhibit A shall be amended from time to time in
accordance with the terms hereof to reflect (i) the admission of new Members and
(ii) appropriate adjustments to such Ownership Percentages and Capital
Contributions.
(b) Except as provided in SECTION 2.7 or SECTION 3.2, no
Person (including any Member) shall be required or permitted to make any
additional Capital Contribution to the Company.
Section 2.2. DETERMINATION OF BOOK VALUE OF COMPANY ASSETS.
(a) BOOK VALUE. Except as set forth below, Book Value of any
Company asset is its adjusted basis for federal income tax purposes.
(b) INITIAL BOOK VALUE. The initial Book Value of any assets
contributed by a Member to the Company shall be the gross fair market value of
such assets at the time of such contribution.
(c) ADJUSTMENTS. The Book Values of all of the Company's
assets shall be adjusted by the Company to equal their
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respective gross fair market values, as determined by the Board by unanimous
vote, as of the following times: (a) the admission of a new Member to the
Company or the acquisition by an existing Member of an additional interest in
the Company from the Company; (b) the distribution by the Company of money or
property to a retiring or continuing Member in consideration for all or a
portion of such Member's interest in the Company; (c) the liquidation of the
Company; and (d) such other times as determined by the Board by unanimous vote.
(d) DEPRECIATION AND AMORTIZATION. The Book Value of a Company
asset shall be adjusted (i) for the depreciation and amortization of such asset
taken into account in computing Net Profits and Net Losses and (ii) for Company
expenditures and transactions that increase or decrease the asset's Federal
income tax basis.
Section 2.3. WITHDRAWAL OF CAPITAL; LIMITATION ON
DISTRIBUTIONS. No Member shall be entitled to withdraw any part of its Capital
Contributions to, or to receive any distributions from, the Company except as
provided in SECTION 6.1 and SECTION 7.2. No Member shall be entitled to demand
or receive (i) interest on its Capital Contributions or (ii) any property from
the Company other than cash except as provided in SECTION 7.2(a).
Section 2.4. ALLOCATION OF NET PROFITS AND NET LOSSES.
(a) (i) Net Profits shall first be allocated in the order of,
in proportion to, and to the extent of, the excess of prior allocations of Net
Losses under SECTION 2.4(b)(ii) below over prior allocations of Net Profits
under this SECTION 2.4(a)(i) and, then, (ii) among the Members in proportion to
their Ownership Percentages.
(b) (i) Net Losses shall first be allocated among the Members
in proportion to their Ownership Percentages until the Capital Account of any
Member is reduced to zero, then (ii) among the Members in proportion to, and to
the extent of, their positive Capital Account balances and, finally, (iii) to
the Members in proportion to their Ownership Percentages.
(c) Tax credits shall be allocated among the Members in
proportion to their Ownership Percentages or as otherwise required by the Code
or Treasury Regulations.
(d) When the Book Value of a Company asset differs from its
basis for Federal or other income tax purposes, solely for purposes of the
relevant tax and not for purposes of computing Capital Account balances, income,
gain, loss, deduction and credit shall be allocated among the Members under the
traditional method without curative allocations under Treasury Regulations ss.
1.704-3(b).
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(e) Notwithstanding the foregoing, allocations of Net Profit
and Net Loss in the taxable year of the Company in which winding up of the
Company commences, and in all subsequent years, shall be made to make the
Adjusted Capital Accounts of the Members stand in proportion to their respective
Ownership Percentages.
Section 2.5. SPECIAL ALLOCATIONS. Notwithstanding the general
allocation rules set forth in SECTION 2.4, the following special allocation
rules (the "Regulatory Allocations") shall apply under the circumstances
described therein:
(a) DEFICIT CAPITAL ACCOUNT AND NONRECOURSE DEBT RULES. The
special rules in this SECTION 2.5(a) apply, in the following order, to take into
account the possibility of Members having deficit Capital Account balances for
which they are not economically responsible and the effect of the Company or any
entity taxed as a partnership in which the Company has an ownership interest
incurring nonrecourse debt.
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. If there is a net
decrease in "partnership minimum gain" during any year, to be determined in
accordance with Treasury Regulations ss. 1.704-2, including the tiered
partnership rules of Treasury Regulations ss. l.704-2(k), each Member shall be
allocated items of income and gain for such year equal to such Member's share of
the net decrease in partnership minimum gain within the meaning of Treasury
Regulations ss. l.704-2(g)(2), except to the extent not required by Treasury
Regulations ss. 1.704-2(f). To the extent that this SECTION 2.5(a)(i) is
inconsistent with Treasury Regulations ss. l.704-2(f) or 1.704-2(k) or
incomplete with respect to such regulations, the minimum gain chargeback
provided for herein shall be applied and interpreted in accordance with such
regulations.
(ii) PARTNERSHIP MINIMUM GAIN CHARGEBACK. If there is a net
decrease in "partner nonrecourse debt minimum gain" during any year, within the
meaning of Treasury Regulations ss. 1.704-2(i)(2), each Member who has a share
of the partner nonrecourse debt minimum gain attributable to such partner
nonrecourse debt, determined in accordance with Treasury Regulations ss.
1.704-2(i)(5), shall be allocated items of income and gain for such year (and,
if necessary, subsequent years) equal to such Member's share of the net decrease
in partner nonrecourse debt minimum gain. This allocation will be made in
accordance with Treasury Regulations ss. 1.704-2(i)(4) and 1.704-2(f)(5). To the
extent that this SECTION 2.5(a)(ii) is inconsistent with Treasury Regulations
ss. 1.704-2(i) or 1.704-2(k) or incomplete with respect to such regulations, the
partner nonrecourse debt minimum gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulations.
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(iii) DEFICIT CAPITAL ACCOUNT CHARGEBACK AND QUALIFIED INCOME
OFFSET. If any Member has a deficit balance in its Capital Account at the end of
any year, including a deficit balance for such Member caused or increased by an
adjustment, allocation or distribution described in Treasury Regulations ss.
1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Member shall be allocated items of
income and gain (consisting of a pro rata portion of each item of Company
income, including gross income and gain) in an amount and manner sufficient to
eliminate such deficit balance in its Capital Account as quickly as possible to
the extent required by Treasury Regulations ss. 1.704-1(b)(2)(ii). This SECTION
2.5(a)(iii) is intended to constitute a "qualified income offset" pursuant to
Treasury Regulations ss. 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(iv) PARTNER NONRECOURSE DEDUCTIONS. Any partner nonrecourse
deductions for any year or other period shall be allocated to the Member who
bears the economic risk of loss with respect to the partner nonrecourse debt to
which such partner nonrecourse deductions are attributable in accordance with
Treasury Regulations ss. 1.704-2(i) or 1.704-2(k).
(v) CURATIVE ALLOCATIONS. The Regulatory Allocations described
in this SECTION 2.5(a) may not be consistent with the manner in which the
Members intend to divide Net Profits, Net Losses and similar items. Accordingly,
Net Profits, Net Losses and other items will be reallocated among the Members
(in the same year and to the extent necessary, in subsequent years) in a manner
consistent with Treasury Regulations ss. 1.704-1(b) and 1.704-2 so as to prevent
the Regulatory Allocations from distorting the manner in which Net Profits, Net
Losses and other items are intended to be allocated among the Members pursuant
to SECTION 2.4 and in making such reallocations, account shall be taken of
future Regulatory Allocations that will in all likelihood occur.
(vi) SECTION 754 ADJUSTMENTS. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Treasury Regulations ss.
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of profit (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such profit or loss shall be specially
allocated to the Member in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such section of the
Treasury Regulations.
(b) CHANGE IN MEMBER'S INTEREST. If there is a change in any
Member's share of the Company's Net Profits, Net Losses or other items during
any year, allocations among the Members shall be made in accordance with their
interests in the Company from time to time during such year in accordance with
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Section 706 of the Code, using the closing-of-the-books method, except that
depreciation, amortization and similar items shall be deemed to accrue ratably
on a daily basis over the entire year during which the corresponding asset is
owned by the Company for the entire year, and over the portion of a year after
such asset is placed in service by the Company if such asset is placed in
service during the year.
(c) NONRECOURSE DEBT SHARING. For purposes of this Agreement,
the Members shall be deemed to be allocated nonrecourse deductions, within the
meaning of Treasury Regulations ss. 1.704-2(b)(1), in accordance with their
proportionate number of Units. Solely for purposes of determining an Member's
proportionate share of the "excess nonrecourse liabilities" of the Company
within the meaning of Treasury Regulations ss. 1.752-3(a)(3), each Member's
interest in the Company profits is equal to the number of Units owned by such
Member divided by the number of outstanding Units.
Section 2.6. RESTRICTIONS ON TRANSFERS.
(a) TRANSFER OF UNITS. (i) Except as expressly provided in
this Agreement, a Member may not sell, exchange, transfer, assign, pledge,
hypothecate or otherwise dispose of all or any portion of any of such Member's
Units or any interest therein (a "Transfer") (except for a Transfer by Internet
World to any Person or by any Member to a Permitted Transferee) without the
written consent of the Board, which consent may be withheld for any reason. The
Company shall not register any Transfer of a Member's Units or any interest
therein, and any such Transfer or registration of Transfer shall be null and
void, without the written consent of the Board. An assignee who has not been
admitted as a Member shall be entitled only to allocations and distributions
with respect to such interest in accordance with this Agreement, and shall have
no right to any information or, to the fullest extent permitted by law,
accounting of the affairs of the Company, shall not be entitled to inspect the
books or records of the Company and shall not have any of the rights of a Member
under the Act or this Agreement, but shall otherwise assume in writing prior to
such Transfer, other than a pledge (in respect of which such compliance shall be
required after sale or foreclosure), all obligations of the assignor hereunder
as if such assignee were the assignor; no such assignment shall be valid unless
the assumption of obligations described in this sentence has been executed.
Neither a Transfer of Units nor the admission of the Transferee thereof as a
Member shall discharge the transferor from any obligation hereunder.
(ii) The restrictions contained in this SECTION 2.6(a) shall
not apply with respect to any Transfer of Units or any part thereof by any
Member (a) among its Affiliates, (b) to any lender to whom a Member's Units or
any part thereof are assigned or pledged pursuant to a loan agreement, (c) to
any Member's spouse or children or to a trust or the trustee or
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trustees of a trust directly or indirectly for the benefit of the Member's
spouse, children or a charitable organization, (d) to the Member's executors,
administrator, testamentary trustee, legatees or beneficiaries upon the Member's
death, or (e) by gift (all such transferees shall be collectively referred to as
the "Permitted Transferees"); PROVIDED, that the Permitted Transferee shall
execute a counterpart of this Agreement; and PROVIDED, FURTHER that the
restrictions contained in this Agreement shall continue to apply to the Units
after such Transfer by reference to the original Member; and PROVIDED, FURTHER,
that the transferor shall remain liable for all of its obligations under this
Agreement that survive.
(b) RIGHTS OF FIRST REFUSAL. (i) In addition to the
restrictions contained in SECTION 2.6(A), no Member shall Transfer its Units or
any part thereof (other than to a Permitted Transferee) or exercise any
Drag-Along Right unless the Member desiring to make the Transfer or exercise
such Drag-Along Right (hereinafter referred to as the "Transferor") shall have
first made the offers to sell to the other Members (the "Other Members") as
contemplated by SECTION 2.6(b)(ii) through 2.5(b)(vii), and such offers shall
not have been accepted.
(ii) OFFER BY TRANSFEROR. Copies of the Transferor's offer
shall be given to all Other Members and shall consist of an offer to sell to
such Other Members all of the Units then proposed to be transferred by the
Transferor (the "Subject Units") pursuant to a bona fide offer of a third party,
other than an Affiliate of the Transferor, to which copies shall be attached a
statement of intention to Transfer to such third party, the name and address of
the prospective third party transferee, the portion of the Units involved in the
proposed Transfer, and terms of such Transfer which must include (A) all
consideration payable at closing and (B) that the offer is not contingent on any
event other than the non-acceptance of the Transferor's offer by the Other
Members.
(iii) ACCEPTANCE OF OFFER. Within 20 days after the receipt of
the offer described in SECTION 2.6(b)(ii), one or more of the Other Members (the
"Participating Other Members") may, at their option, elect to purchase all, but
not less than all, of the Subject Units, in such proportion per Participating
Other Member as shall be determined by the Participating Other Members;
PROVIDED, that should the Participating Other Members be unable to determine the
proportion of the Subject Units to be purchased by each within 20 days after the
receipt of the offer, each Participating Other Member which has not withdrawn
its election to purchase shall purchase a proportion of the Subject Units equal
to the Subject Units multiplied by the Ownership Percentage of such
Participating Other Member. The Participating Other Members shall exercise such
option by giving notice thereof to the Transferor within such 20-day period. The
notice required to be given by the Participating Other Members (the
"Purchasers") shall specify a date for the closing of the purchase which shall
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not be more than 30 days after the date of the giving of such notice. In the
event that any party shall initiate an appraisal procedure pursuant to SECTION
2.6(b)(v) and (vi), such 20-day period shall be suspended as of (and including)
the date immediately following the date on which notice of such appraisal
procedure is given pursuant to SECTION 2.6(b)(v) and shall resume on (and
including) the date on which the appraisal procedure is completed pursuant to
SECTION 2.6(b)(vi).
(iv) PURCHASE PRICE. The purchase price for the Subject Units
shall be the price for the Subject Units offered to be paid by the prospective
transferee described in the offer, which price shall be paid in cash or, if
described in the offer of the prospective transferee, cash plus deferred
payments of cash in the same proportions, and with the same terms of deferred
payments, as therein set forth.
(v) CONSIDERATION OTHER THAN CASH. If the offer of a Subject
Units under this SECTION 2.6(b) is for consideration other than cash or cash
plus deferred payments of cash, the Purchaser shall pay the cash equivalent of
such other consideration. If the Transferor and the Purchaser cannot agree on
the amount of such cash equivalent within 10 days after the beginning of the
20-day period under SECTION 2.6(b)(iii), any of such parties may, by three days'
written notice to the other, initiate appraisal proceedings under SECTION
2.6(b)(vi) for determination of the cash equivalent. The Purchaser may give
written notice to the Transferor revoking an election to purchase the Subject
Units within 10 days after determination of the appraised value, if it chooses
not to purchase the Subject Units.
(vi) APPRAISAL PROCEDURE. If any party shall initiate an
appraisal procedure to determine the amount of the cash equivalent of any
consideration for a Subject Units under SECTION 2.6(b)(v), then the Transferor,
on the one hand, and the Purchaser, on the other hand, shall each promptly, but
in no event later than 10 days following written notice of such appraisal
procedure pursuant to SECTION 2.6(b)(v), appoint as an appraiser an individual
who shall be a member of a nationally-recognized investment banking firm. Each
appraiser shall, within 30 days of appointment, separately investigate the value
of the consideration for the Subject Units as of the proposed transfer date and
shall submit a notice of an appraisal of that value to each party. Each
appraiser shall be instructed to determine such value without regard to income
tax consequences to the Transferor as a result of receiving cash rather than
other consideration. If the appraised values of such consideration (the "Earlier
Appraisals") vary by less than 10%, the average of the two appraisals shall be
controlling as the amount of the cash equivalent. If the appraised values vary
by more than 10%, the appraisers, within 10 days of the submission of the last
appraisal, shall appoint a third appraiser who shall be a member of a nationally
recognized investment banking firm. The third appraiser shall, within 30 days of
his appointment, appraise the
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value of the consideration for the Subject Units (without regard to the income
tax consequences to the Transferor as a result of receiving cash rather than
other consideration) as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser shall be
controlling as the amount of the cash equivalent unless the value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control.
If any party fails to appoint an appraiser or if one of the two initial
appraisers fails after appointment to submit his appraisal within the required
period, the appraisal submitted by the remaining appraiser shall be controlling.
The cost of the foregoing appraisals shall be shared one-half by the Transferor
and one-half by the Purchaser.
(vii) CLOSING OF PURCHASE. The closing of the purchase shall
take place at the office of the Company or such other location as shall be
mutually agreeable and the purchase price, in cash, shall be paid at the
closing. At the closing, the Transferor shall deliver to the Purchaser or
Purchasers documentation reasonably satisfactory to the Purchaser or Purchasers
evidencing the transfer of ownership of the Subject Units from the Transferor to
the Purchaser or Purchasers.
(c) RIGHT OF CO-SALE. In the event Xxxxxxx intends to Transfer
(i) all or part of his equity interest in the Company pursuant to an offering
registered under the Securities Act of 1933, as amended (the "Securities Act")
or (ii) Transfer at least 30% of his Units in any other transaction, other than
to a Permitted Transferee, Xxxxxxx shall notify each other Member, in writing,
of such Transfer and its terms and conditions. Within twenty (20) days of the
date of such notice, each Member shall notify Xxxxxxx if it elects to
participate in such Transfer. Each Member that so notifies Xxxxxxx shall have
the right to sell, at the same price and on the same terms as Xxxxxxx, a
percentage of such Member's Units equal to the percentage of Xxxxxxx'x Units
that the third party actually proposes to purchase. For purposes of this SECTION
2.6(c) only, the term "Xxxxxxx" shall include Xxxxxxx and/or his Permitted
Transferees or Affiliates and/or their Permitted Transferees or Affiliates, as
the case may be, and the term "Member" shall not include Xxxxxxx or his
Affiliates.
(d) DRAG ALONG RIGHT. (i) Subject to SECTION 2.6(b), if, at
any time and from time to time after the date of this Agreement, Xxxxxxx wishes
to Transfer in a bona fide arms' length sale (for purposes of this SECTION
2.6(d), the "Proposed Transfer") 30% or more of his Units to any Person or
Persons who are not Affiliates of Xxxxxxx (for purposes of this SECTION 2.6(d),
the "Proposed Transferee"), Xxxxxxx shall have the right (for purposes of this
SECTION 2.6(d), the "Drag-Along Right") to require each Member to sell to the
Proposed Transferee all or a
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ratable portion of each such Member's Units, as the case may be, (for the same
proportional consideration received by Xxxxxxx, taking into account all
consideration received by Xxxxxxx under related agreements) then owned by such
Member. Each Member agrees to take all steps necessary to enable him or it to
comply with the provisions of this SECTION 2.6(d). For purposes of this SECTION
2.6(d) only, the term "Xxxxxxx" shall include Xxxxxxx and/or his Permitted
Transferees or Affiliates and/or their Permitted Transferees or Affiliates, as
the case may be, and the term "Member" shall not include Xxxxxxx or his
Affiliates, but only to the extent that Xxxxxxx or his Affiliates do not
participate in the Proposed Transfer.
(ii) To exercise a Drag-Along Right, Xxxxxxx shall comply with
SECTION 2.6(b) and, if the Other Members do not exercise their rights
thereunder, give each Member a written notice (for purposes of this SECTION
2.6(d), a "Drag-Along Notice") containing (i) the name and address of the
Proposed Transferee and (ii) the proposed purchase price, terms of payment and
other material terms and conditions of the Proposed Transferee's offer. Subject
to SECTION 2.6(b), each Member shall thereafter be obligated to sell its Units
subject to such Drag-Along Notice, PROVIDED, THAT the sale to the Proposed
Transferee is consummated within ninety (90) days of delivery of the Drag-Along
Notice. If the sale is not consummated within such 90-day period, then each
Member shall no longer be obligated to sell such Member's shares pursuant to
that specific Drag-Along Right but shall remain subject to the provisions of
this SECTION 2.6(d).
(iii) Notwithstanding anything contained in this SECTION
2.6(d), in the event that all or a portion of the purchase price consists of
securities and the sale of such securities to the Members would require either a
registration under the Securities Act or the preparation of a disclosure
document pursuant to Regulation D under the Securities Act (or any successor
regulation) or a similar provision of any state securities law, then, at the
Managing Member's option, the Members may receive, in lieu of such securities,
the fair market value of such securities in cash, as determined in good faith by
the Board.
Section 2.7. MANAGEMENT UNIT INCENTIVES. The Company may
authorize Units for grant or sale to key employees of the Company other than
Xxxxxxx (the "Option Units"), in such amounts and in such manner -- including
incentive and non-qualified Unit options, restricted Unit grants, Unit bonuses
or other option or incentive programs -- as the Managing Member shall determine
from time to time; PROVIDED, HOWEVER, that in no event shall the outstanding
Option Units exceed 4% of the Units outstanding on a fully diluted basis; and
provided, FURTHER, that it shall be a condition to the issuance of any Option
Units that the employee or other recipient, as the case may be, execute and
deliver to the Company and each party hereto a counterpart of this
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Agreement. Upon such execution and delivery, Exhibit A hereto shall be deemed to
be amended to include the name of such employee or other recipient, as the case
may be, and such employee or other recipient, as the case may be, shall be
deemed to be a Member for all purposes hereof. In the event a Member ceases to
own beneficially Option Units, such Member shall no longer be deemed a Member
for any purpose hereunder. The Ownership Percentage of each Member shall be
diluted proportionally by the issuance of any additional Units pursuant to this
SECTION 2.7.
ARTICLE III.
MANAGEMENT
Section 3.1. MANAGEMENT BY THE MEMBERS.
(a) GENERAL PROVISIONS. The management of the Company shall be
vested in the Managing Member. Except as otherwise provided in this Agreement,
the Managing Member shall have all authority, rights and powers in the
management of the Company business to do any and all acts and things necessary,
proper, appropriate, advisable, incidental or convenient to effectuate the
purposes of this Agreement. Any action taken by the Managing Member on behalf of
the Company in accordance with the foregoing provisions shall constitute the act
of and shall serve to bind the Company.
(b) BOARD. (i) Certain actions by the Company, as further set
forth herein, shall be taken by the Company only upon approval by the Managing
Board (the "Board"), which shall be composed of three persons, consisting of (A)
two Persons (one of whom may be Xxxxxxx, and neither of whom need be Members)
designated by Xxxxxxx and (B) one Person (who need not be a Member) designated
by Internet World (collectively, "Board Members"). Each of Xxxxxxx and Internet
World shall reserve the right to remove and replace at any time any Board Member
that they have designated to sit on the Board pursuant to this SECTION
3.1(b)(i).
(ii) Meetings of the Board shall be held either within or
without the State of Delaware at such times and locations as may be determined
by the Managing Member. Notice of each meeting shall be given by the Managing
Member to each Board Member and shall state the place, date and time of the
meeting. Notice of such meeting shall be mailed, postage prepaid, to each Board
Member addressed to him at his address or usual place of business by first class
mail, at least two (2) days before the day on which such meeting is to be held,
or shall be sent addressed to such Board Member at such place by facsimile,
overnight courier, telex, or be delivered to him personally or by telephone, at
least twenty-four (24) hours before the time at which such meeting is to be
held.
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(iii) A majority of the Board Members shall constitute a
quorum for the transaction of business. If a quorum shall not be present at any
meeting of the Board, the Board Members present thereat may adjourn the meeting
to another time and place. Notice of such time and place of the adjourned
meeting shall be given to all of the Board Members unless such time and place
were announced at the meeting at which the adjournment was taken, in which case
such notice shall only be given to the Board Members who were not present
thereat. At such adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally
called. Wherever approval by the Board is required by this Agreement, such
approval shall, except as otherwise set forth herein, consist of the affirmative
vote of a majority of the Board Members.
(iv) (A) Any action required or permitted to be taken by the
Board may be taken without a meeting if all the Board Members consent in
writing, and (B) one or more Board Members may participate in any meeting of the
Board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation in the meeting pursuant to this SECTION 3.1(b)(iv)(b) shall
constitute presence in person at the meeting.
(c) DELEGATION OF POWERS. The Managing Member may by
instrument in writing delegate its powers, but not its responsibilities, to
officers or agents or employees of the Company or of any Member or to any other
Person; PROVIDED, HOWEVER, that no Person shall be entitled to rely on such
delegation unless presented with a copy of such written instrument.
(d) BANK ACCOUNTS. The Managing Member shall cause the Company
to open and maintain bank accounts, and all funds of every kind and nature
received by the Company shall be deposited in such accounts. Signatories for
such accounts shall be authorized from time to time by the Managing Member.
Section 3.2. ADMISSION OF NEW MEMBERS; SALE OF ADDITIONAL
UNITS.
(a) Subject to SECTION 3.2(b), the Company may sell additional
Units on such terms and conditions as the Board shall from time to time
determine. The Ownership Percentage of each Member shall be diluted
proportionally by the issuance of any additional Units. All persons to whom
additional Units are sold shall be admitted as Members. In the event of the
admission of new or additional Members, EXHIBITS A and B hereto shall be amended
accordingly.
(b) In the event that the Company determines to issue any
Units, other than (i) pursuant to SECTION 2.7, (ii) the
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issuance of additional Units and admittance of additional Members in connection
with any acquisition, merger, reorganization or other business combination by or
involving the Company or (iii) in connection with any initial public offering of
the securities of the Company pursuant to a registration statement filed under
the Securities Act, the Company shall first offer to each Member the right to
subscribe for a portion of such Units in an amount equal to the product of (i)
the total number of Units to be issued by the Company pursuant to this SECTION
3.2(b) and (ii) a fraction, the numerator of which is the number of Units held
by such Member prior to such issuance, and the denominator of which is the total
number of Units held prior to such issuance by all Members other than Members
that acquired their interest pursuant to SECTION 2.7. For a period of 30 days
after such offer, each Member shall have the right, but not the obligation, to
acquire such Units. After the expiration of such 30 day period, the Company
shall have the right, during the 90 days after the expiration of the 30 day
period, to sell the unsubscribed portion of such Units to any third party on
terms (including payment terms) not less favorable to the Company than those on
which the Units were offered to the Members. If the Company is able to sell the
unsubscribed Units to third parties, or if all of the offered Units are
subscribed by Members, then each subscribing Member shall be obligated to, and
shall, purchase its subscribed portion of the offered Units. If the Company is
not able to sell the unsubscribed Units to third parties, or if all of the
offered Units are not subscribed by Members, respectively, then each subscribing
Member shall have the right, but not the obligation, to purchase its subscribed
portion of the offered Units on the terms of its subscription.
(c) Internet World may exercise its rights under the [Warrant
Agreement] dated ____, 1998 by and among Internet World, Xxxxxxx and the Company
(the "Warrant Agreement"). SECTION 3.2(b) shall not apply to any interest
acquired by Internet World pursuant to the Warrant Agreement.
Section 3.3. INDEMNIFICATION. Any Person made, or threatened
to be made, a party to any action or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such Person is or
was (i) a Member, or (ii) an employee, officer, director, shareholder or partner
of a Member, or (iii) such other persons (including employees of the Company) as
the Board may designate from time to time, in its sole and absolute discretion
(collectively, the "INDEMNIFIED PERSONS"), shall be indemnified by the Company
for any losses or damage sustained with respect to such action or proceeding,
and the Company shall advance such Indemnified Person's reasonable related
expenses to the fullest extent permitted by law. The Company shall have the
power to purchase and maintain insurance on behalf of the Indemnified Persons
against any liability asserted against or incurred by them. The duty of the
Company to indemnify the Indemnified Persons under this SECTION 3.3 shall not
extend to actions or omissions of any Indemnified Person
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which are grossly negligent or which involve fraud, misrepresentation, bad
faith, or other willful misconduct by such Indemnified Person or which are in
material breach or violation by such Indemnified Person of this Agreement, in
each case as determined by a court of competent jurisdiction. No Indemnified
Person shall be liable to the Company or any other Member for actions taken in
good faith. The Company may indemnify other Persons of the Company. The duty of
the Company to indemnify the Indemnified Persons under this SECTION 3.3 shall be
limited to the assets of the Company, and no recourse shall be available against
any Member for satisfaction of such indemnification obligations of the Company.
ARTICLE IV.
BOOKS; ELECTIONS; BUDGETS; FISCAL YEAR
Section 4.1. ADMINISTRATIVE SERVICES, BOOKS, RECORDS AND
REPORTS. The Managing Member shall cause to be performed all general and
administrative services on behalf of the Company in order to assure that
complete and accurate books and records of the Company are maintained at the
Company's principal place of business showing the names, addresses and number of
Units of each of the Members, all receipts and expenditures, assets and
liabilities, profits and losses, and all other records necessary for recording
the Company's business and affairs, including a capital account for each Member
(a "CAPITAL ACCOUNT"). Each Member's Capital Account shall be increased by:
(i) the amount of any money contributed by
the Member to the Company;
(ii) the fair market value of any property
contributed by the Member to the Company;
(iii) the amount of Net Profits allocated to
the Member; and
(iv) the amount of any Company liabilities
assumed by such Member (or taken subject to) if property is
distributed to the Member by the Company;
and shall be decreased by:
(v) the amount of any money distributed to
the Member by the Company;
(vi) the fair market value of any property
distributed to the Member by the Company;
(vii) the amount of Net Losses allocated to
the Member; and
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(viii) the amount of any Member liabilities
assumed by the Company (or taken subject to) if property is
contributed to the Company by the Member.
The Capital Accounts shall be adjusted by all other adjustments required by
Treasury Regulations ss. 1.704-1(b)(2)(iv). The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations under Section 704(b)
of the Code and, to the extent not inconsistent with the provisions of this
Agreement, shall be interpreted and applied in a manner consistent with such
Regulations.
Section 4.2. FEDERAL INCOME TAX ELECTIONS; METHOD OF
DEPRECIATION. The Managing Member shall determine the method of depreciation to
be utilized by the Company for tax purposes and all elections to be made by the
Company for tax purposes. The Managing Member shall be the "tax matters partner"
for all purposes of the Code but shall have no authority to bind any other
Member without such Member's consent.
Section 4.3. FISCAL YEAR. The fiscal year of the Company (the
"FISCAL YEAR") shall end on September 30.
ARTICLE V.
EMPLOYMENT OF AFFILIATES
Section 5.1. PARTIES EMPLOYED. Subject to the approval of the
Board by unanimous consent, the Company may contract for services to be
performed for the Company by Members or Affiliates of any Member. In the case of
the employment of a Member or of Affiliates of a Member, the compensation to be
paid by the Company to such Member or Affiliates shall be not greater than the
compensation generally paid to third parties for comparable services in
comparable locations. Each of the Services Agreement and the Trademark Licensing
Agreement between Internet World and the Company is by execution of this
Agreement deemed to be approved by the Board.
ARTICLE VI.
DISTRIBUTIONS
Section 6.1. DISTRIBUTIONS. Distributions shall be made at
such time and in such amounts as determined by the Board and shall be made among
the Members in cash and in proportion to the relative number of Units held by
each Member.
Section 6.2. RESTORATION OF FUNDS. Except as otherwise
provided by law, no Member shall be required to restore
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to the Company any funds properly distributed to it pursuant to SECTION 6.1.
Section 6.3. SPECIAL TAX DISTRIBUTIONS. Notwithstanding the
provisions of SECTION 6.1 above, if the Company has net taxable income for
federal income tax purposes for any taxable year of the Company, then the
Company shall first distribute at least an amount of cash (a "Tax Distribution")
to each Member which, when combined with all other distributions to such Member
in the current and all preceding taxable years of the Company, equals the
product of (A) the highest combined federal, state and local marginal income tax
rate hypothetically applicable to any Member and (B) the excess, if any, of (i)
the aggregate net taxable income allocated to such Member under this Agreement
in the current and all preceding taxable years of the Company over (ii) the
aggregate net taxable loss allocated to such Member under this Agreement in all
preceding taxable years of the Company.
ARTICLE VII.
DISSOLUTION AND LIQUIDATION
Section 7.1. DISSOLUTION.
(a) Except as otherwise required by the Act, the Company shall
have perpetual existence unless the Board shall by unanimous written consent
elect to dissolve the Company or there is an entry of a decree of judicial
dissolution of the LLC under Section 18-802 of the Act.
(b) The death, retirement, resignation, expulsion, bankruptcy
or dissolution of any Member or the occurrence of any other event that
terminates the continued membership of any Member in the Company shall not, in
and of itself, cause dissolution of the Company.
Section 7.2. WINDING UP AFFAIRS AND DISTRIBUTION OF ASSETS.
(a) Upon a winding up of the Company, the Managing Member
shall be the liquidating Member (the "Liquidating Member") and shall proceed to
wind up the affairs of the Company, liquidate the remaining property and assets
of the Company and wind-up and terminate the business of the Company. The
Liquidating Member shall cause a full accounting of the assets and liabilities
of the Company to be taken and shall cause the assets to be liquidated and the
business to be wound up as promptly as possible by either or both of the
following methods: (1) selling the Company assets and distributing the net
proceeds therefrom (after the payment of Company liabilities) to each Member in
satisfaction of its Capital Account; or (2) distributing the Company assets to
the Members in kind and
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debiting the Capital Account of each Member with the fair market value of such
assets, each Member accepting an undivided interest in the partnership assets
(subject to their liabilities) in proportion to and to the extent of each
Member's positive Capital Account balance after allocating and crediting to the
Capital Accounts the unrealized gain or loss to the Members as if such gain or
loss had been recognized and allocated pursuant to SECTION 2.4.
(b) If the Company shall employ method (1) as set forth in
SECTION 7.2(A) in whole or part as a means of liquidation, then the proceeds of
such liquidation shall be applied in the following order of priority: (i) first,
to the expenses of such liquidation; (ii) second, to the debts and liabilities
of the Company to third parties, if any, in the order of priority provided by
law; (iii) third, a reasonable reserve shall be set up to provide for any
contingent or unforeseen liabilities or obligations of the Company to third
parties (to be held and disbursed, at the discretion of the Liquidating Member,
by an escrow agent selected by the Liquidating Member) and at the expiration of
such period as the Liquidating Member may deem advisable, the balance remaining
in such reserve shall be distributed as provided herein; (iv) fourth, to debts
of the Company to the Members or their Affiliates and any fees and
reimbursements payable under this Agreement; and (v) fifth, to the Members in
proportion to their respective positive Capital Account balances determined
after all allocations of Net Profit and Net Loss have been made.
(c) In connection with the liquidation of the Company, the
Members severally, jointly, or in any combination upon which they may agree,
shall have the first opportunity to make bids or tenders for all or any portion
of the assets of the Company, and such assets shall not be sold to an outsider
except only for a price higher than the highest and best bid of a single Member,
the Members jointly, or a combination of Members. Any bid made by a Member or
Members for all or any portion of the assets shall be made, if at all, within
thirty (30) days after the Liquidating Member or any other Member shall have
requested such bids. A copy of each bid shall be delivered by the Liquidating
Member to each Member. Unless otherwise agreed by all Members, no Member shall
be entitled to raise its bid after submission thereof, whether in response to a
bid received by the Company from any other Member or third party, or otherwise.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NOTICES.
(a) All Notices, consents, approvals, reports, designations,
requests, waivers, elections and other
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communications (collectively, "NOTICES") authorized or required to be given
pursuant to this Agreement shall be given in writing and either personally
delivered to the Member to whom it is given or delivered by an established
delivery service by which receipts are given or mailed by registered or
certified mail, postage prepaid, or sent by telex or telegram or electronic
telecopier, addressed to the Member at its address listed on EXHIBIT B hereto.
(b) All Notices shall be deemed given when delivered or, if
mailed as provided in SECTION 8.1(a), on the third (3rd) day after the day of
mailing, and if sent by telex or telegram or telecopier or overnight delivery
service, twenty-four (24) hours after the time of dispatch. Any Member may
change its address for the receipt of Notices at any time by giving Notice
thereof to all of the other Members, in which event EXHIBIT B hereto shall be
amended accordingly. Notwithstanding the requirement in SECTION 8.1(A) as to the
use of registered or certified mail, any routine reports required by this
Agreement to be submitted to Members at specified times may be sent by
first-class mail.
Section 8.2. CERTIFICATE REQUIREMENTS. From time to time the
Members shall sign and acknowledge all such writings as are required to amend
the Certificate or for the carrying out of the terms of this Agreement or, upon
dissolution of the Company, to cancel such Certificate.
Section 8.3. ENTIRE AGREEMENT. This Agreement, together with
the agreements listed in SECTION 5.1, supersedes all prior agreements and
understandings among the Members with respect to the subject matter hereof.
Section 8.4. MODIFICATION. No change or modification of this
Agreement shall be of any force unless such change or modification is in writing
and has been signed by at least 85% of the Members; PROVIDED, that if such
change or modification would not have a material adverse effect on the rights or
obligations of another Member, such change or modification may be made by the
Board without the approval of other Members, and PROVIDED FURTHER, that Members
who became Members as the result of the grant or sale of Option Units pursuant
to SECTION 2.7 shall not be deemed Members for purposes of this SECTION 8.4.
Section 8.5. WAIVERS. No waiver of any breach of any of the
terms of this Agreement shall be effective unless such waiver is in writing and
signed by the Member against whom such waiver is claimed. No waiver of any
breach shall be deemed to be a waiver of any other or subsequent breach.
Section 8.6. SEVERABILITY. If any provision of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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Section 8.7. FURTHER ASSURANCES. Each Member shall execute
such deeds, assignments, endorsements, evidences of Transfer and other
instruments and documents and shall give such further assurances as shall be
necessary to perform its obligations hereunder.
Section 8.8. GOVERNING LAW. This Agreement shall be governed
by and be construed in accordance with the laws of the State of Delaware.
Section 8.9. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
Section 8.10. LIMITATION ON RIGHTS OF OTHERS. No Person other
than a Member shall have any legal or equitable right, remedy or claim under or
in respect of this Agreement.
Section 8.11. BROKERS AND FINDERS. Each Member shall indemnify
and hold all of the other Members and the Company harmless from and against any
commission, fee or other payment due any broker, finder or other Person in
connection with such Member's decision to invest in the Company.
Section 8.12. NUMBER AND GENDER. As used in this Agreement,
all pronouns and any variation thereof shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the Person
or Persons may require.
Section 8.13. FIDUCIARIES. Whenever any trust or estate is
acting as a Member under this Agreement, any obligation or liability created
hereunder shall bind only the assets of such trust or estate. No such obligation
or liability shall be personally binding upon, nor shall resort be had to, nor
recourse or satisfaction sought from, any individual or entity, or the property
of any individual or entity, at any time acting as a fiduciary of any such trust
or estate, whether the claim giving rise to such obligation or liability is
based on contract, tort or otherwise.
Section 8.14. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Members and their respective
successors and permitted assigns.
Section 8.15. SECURITIES LAWS. All offerings and Transfers of
Units shall be made in compliance with applicable federal and state securities
laws. Each Member indemnifies the other Members and the Company for any loss,
cost, liability or damage arising from its breach of the foregoing sentence.
Section 8.16. ATTORNEYS' FEES. In the event of any litigation
or arbitration regarding the rights and obligations under this Agreement, the
prevailing party shall be entitled to
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recover reasonable attorneys' fees and
court costs in addition to any other relief which may be granted. The
"prevailing party" shall mean the party who receives substantially the relief
desired, whether by settlement, dismissal, summary judgment, judgment or
otherwise.
Section 8.17. WAIVER OF PARTITION. Each Member hereby waives
its right to bring an action for partition of any of the property owned by the
Company.
Section 8.18. AUTHORIZED PERSONS. Each Member is hereby
designated as an authorized person to sign the Company's Certificate of
Formation and any other documents that are appropriate and necessary to
effectuate the purpose of this Agreement.
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IN WITNESS HEREOF, the Members have duly executed this
Agreement as of the opening of business on the day and year first above written.
XXXX X. XXXXXXX
----------------------------------
INTERNET WORLD MEDIA, INC.
By:
------------------------------
Name:
Title:
[XXXXXXX AFFILIATES]
83
EXHIBIT A
CAPITAL OWNERSHIP NUMBER OF
MEMBERS CONTRIBUTION PERCENTAGE UNITS
------- ------------ ----------- -----
Xxxx X. Xxxxxxx $16,000,000.00 71.2% 712
Internet World $4,471,910.11 19.9% 199
[Xxxxxxx Affiliate 1] $500,000 2.225% 22.25
[Xxxxxxx Affiliate 2] $500,000 2.225% 22.25
[Xxxxxxx Affiliate 3] $500,000 2.225% 22.25
[Xxxxxxx Affiliate 4] $500,000 2.225% 22.25
84
EXHIBIT B
85
EXHIBIT B
FORM OF SERVICES AGREEMENT
86
SERVICES AGREEMENT
This SERVICES AGREEMENT (this "Agreement"), dated _________,
1998 (the "Effective Date"), by and among Penton Media, Inc., a Delaware
corporation ("Penton"), Internet World Media, Inc., a Delaware corporation (the
"Company"), and iWorld LLC, a Delaware limited liability company ("iWorld").
WHEREAS, iWorld was formerly a wholly-owned subsidiary of the
Company;
WHEREAS, in connection with the acquisition of the Company by
Xxxxxx, Xxxx X. Xxxxxxx, an individual, purchased an 80.1% interest in iWorld
from the Company and the Company retained a 19.9% interest in iWorld;
WHEREAS, iWorld's business consists of a network of Internet
web sites that contains the latest news and resources for the Internet industry,
directories of Internet products and services, back issues of the Company's
print publications and information about the Company's Internet World and ISPCON
trade shows and conferences (the "Business");
WHEREAS, prior to the Effective Date of this Agreement, the
Company provided to iWorld, and iWorld provided to the Company, certain services
on a barter basis;
WHEREAS, Penton and the Company desire to acquire from iWorld,
and iWorld desires to acquire from Penton and the Company, the services set
forth on the Schedules attached to this Agreement, pursuant to the terms and
conditions provided herein and for no other purposes.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
Section 1. SERVICES. Beginning on the Effective Date, (a)
Penton and the Company will provide to iWorld the services set forth on Schedule
A hereto and (b) iWorld will provide to Penton and the Company the services set
forth on Schedule B hereto (in each case, the "Services"). The provision of
Services to each party will be in a manner consistent with the Company's and
iWorld's past practices, except as otherwise provided in the Schedules hereto.
Section 2. CHARGES FOR SERVICES. Except as set forth in the
Schedules hereto, each party will provide the Services without charge and in
consideration for the Services to be provided to such party by the other parties
hereto.
87
Section 3. TERM OF AGREEMENT. (a) This Agreement will commence
on the Effective Date and will continue in full force and effect for a period of
three (3) years from the Effective Date. This Agreement shall automatically
renew for three-year terms unless terminated by Penton or the Company, on the
one hand, or iWorld, on the other hand, in either case upon at least six months
prior written notice to the other parties.
(b) If majority ownership, or effective control, of iWorld is
transferred to an unrelated third party without Penton's prior written consent,
and iWorld terminates this Agreement pursuant to Section 3(a) hereof, iWorld
will pay Penton a fee of $20 million.
Section 4. LIMITATION OF LIABILITY. Except for willful
misconduct or gross negligence, in no event will any party be liable to any
other party for any damage, cost, claim of any nature whatsoever, including,
without limitation, any lost profits, collateral, consequential, incidental,
special or indirect damages, costs or claims arising out of or relating to the
provision by such party of any Services to the other party.
Section 5. RELATIONSHIP OF PARTIES. Except as specifically
provided herein, none of the parties shall act or represent or hold itself out
as having authority to act as an agent or partner of the other party, or in any
way bind or commit the other party to any obligations. Any such act will create
a separate liability in the party so acting to any and all third parties
affected thereby. The rights, duties, obligations and liabilities of the parties
shall be several and not joint or collective, and nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
Section 6. REMEDIES; EXPENSES OF ENFORCEMENT. Each party will
be entitled to all remedies available at law or in equity for the enforcement of
this Agreement. In any action brought to enforce or contest any provision of
this Agreement, the prevailing party will be entitled to recover all resulting
costs and expenses, including, without limitation, reasonable attorneys' fees.
Section 7. COMPLETE AGREEMENT. This Agreement, the Trademark
License Agreement, dated the date hereof, between the Company and iWorld, and
all Schedules attached hereto and thereto and incorporated herein and therein by
this reference contain the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede any previous understandings
or agreements, whether written or oral, in respect of such subject matter. There
are no understandings, representations or warranties of any kind with respect to
the Services.
Section 8. ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties;
provided, however, that no party may assign, transfer, encumber or grant to any
third party a security interest in this Agreement or in any of its rights,
duties or obligations hereunder, by operation of law or otherwise, without the
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prior written consent of the other parties, such consent not to be unreasonably
withheld. Any assignment which does not comply with this Section 8 shall be
void and of no legal effect.
Section 9. AMENDMENT; WAIVER. No change to this Agreement will
be valid unless in writing signed by an authorized representative of the parties
hereto. The failure of any party to enforce any provision of this Agreement
shall not be construed to be a waiver of such provision or the right of such
party thereafter to enforce such provision or any other provision of this
Agreement.
Section 10. SEVERABILITY. The illegality, invalidity or
unenforceability of any part of this Agreement shall not affect the legality,
validity or enforceability of the remainder of this Agreement. If any part of
this Agreement shall be found to be illegal, invalid or unenforceable, then this
Agreement shall be given such meaning as would make this Agreement legal, valid
and enforceable in order to give effect to the intent of the parties.
Section 11. NOTICES. All notices, requests, demands, claims
and other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if it
is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Penton: Penton Media Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx
If to the Company: Internet World Media Inc.
--------------------------
Attn: Xxxxx Xxxxxxxx
If to iWorld: iWorld LLC
--------------------------
Attn: Xxxx X. Xxxxxxx
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail,
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89
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 intended recipient. Any party may change the address
to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other party notice in the manner herein set
forth.
Section 12. GOVERNING LAW. This Agreement and all disputes
arising under this Agreement shall be governed by, and interpreted in accordance
with, the internal laws (and not the law of conflicts) of the State of New York.
Section 13. HEADINGS. The headings in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
Section 14. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
PENTON MEDIA, INC.
By:
--------------------------------------
Name:
Title:
INTERNET WORLD MEDIA, INC.
By:
--------------------------------------
Name:
Title:
IWORLD LLC
By:
--------------------------------------
Name:
Title:
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SCHEDULE A
- The Company will grant iWorld a royalty-free license to use certain
intellectual property of the Company pursuant to the terms and
provisions of the form of the Trademark License Agreement attached
hereto as Annex A (the "License Agreement").
- iWorld will receive one full-page advertisement at no charge in each
issue of Internet World and Boardwatch.
- The Company will continue to print the sidebar entitled "Online
Resources" in each issue of Internet World and Boardwatch.
- iWorld will be listed on all promotional literature as the only
"Sponsoring Web Site" of the Company's trade shows.
- The Company will provide iWorld at no charge with 400 square feet of
exhibit space at each of the Company's United States and Canadian trade
shows.
- iWorld may purchase up to 400 square feet of exhibit space at each of
the Company's trade shows outside of the United States and Canada at a
50% discount from the then current prices for repeat exhibitors.
- The Company will provide iWorld with 200 square feet of sales office
space at each of the Company's trade shows in addition to any exhibit
space iWorld may have at such trade show.
- The Company will provide iWorld with 10 passes to each of the Company's
conferences and trade shows.
- The Company will provide iWorld at no charge with prominent hanging
banners at each of the Company's United States and Canadian trade shows
with sizes and quantities to be mutually agreed upon. iWorld will pay
the costs of hanging and removing such banners.
- iWorld may purchase one prominent hanging banner at each of the
Company's trade shows outside of the United States and Canada at a 50%
discount from the then current prices for repeat exhibitors.
- iWorld will be listed prominently as a sponsor to appropriate
conference tracks for each of the Company's trade United States and
Canadian shows.
- iWorld may rent the Company's mailing lists at a run cost plus 20%.
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92
- iWorld may purchase (i) additional advertisement space in the Company's
publications on a cost basis and (ii) additional exhibit space at the
Company's other trade shows on a negotiated discount basis.
- The Company will provide to iWorld the services of at least two
individuals to perform editorial/design work on iWorld's network of
Internet web sites with respect to the Company's content contained on
such site. These individuals may either be employees of the Company or,
at the Company's expense, iWorld.
- Penton will obtain, or will cause iWorld to obtain, a line of credit
in an amount not to exceed $6 million, which line of credit shall be
guaranteed severally 30% by Penton and 70% by Xxxx X. Xxxxxxx.
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SCHEDULE B
- iWorld will continue to include on its Internet web site, in accordance
with the License Agreement, back issues of the Company's print
publications and information (including, without limitation,
promotional and registration information) about the Company's Internet
World and ISPCON trade shows and conferences including other potential
new launches directly related to the Internet industry. The form in
which this content is used will be minimally no different than as
currently used in the Business, as pictured on the Annexes hereto.
- iWorld will provide to the Company advertisement banners on iWorld's
Internet web site that are similar in nature to those currently in use,
as pictured on Annexes hereto. iWorld will provide a minimum of 2.3
million advertisement banners per month.
- Penton or the Company may purchase additional advertisement impressions
on iWorld's web site for Penton's or the Company's other publications
and trade shows on a negotiated discount basis.
- iWorld will reimburse the Company for its use of the Company's
facilities, including reasonable rent payments not to exceed the
occupancy cost per square foot actually paid by the Company to any
third party.
- iWorld will reimburse the Company out of the credit line made available
to iWorld for any amounts paid for the acquisitions of xxxxxxxx.xxx and
xxx.xxx.
- Earn out payments paid in connection with the acquisitions of
xxx-xxxxxxxxx.xxx and xxxxx.xxx will be obligations of iWorld and not
the Company or any successor to the Company and will not be paid until
after the effective time of the acquisition of the Company by Penton,
and iWorld will indemnify the Company for any earn out payments that
the Company makes in connection with such acquisitions.
- The payment of $1.05 million 12 months after the acquisition of
xxxxx.xxx will be the obligation of iWorld and not the Company or any
successor to the Company and will not be paid until after the effective
time of the acquisition of the Company by Penton, and iWorld will
indemnify the Company for any amounts paid by the Company with respect
to such $1.05 million payment.
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EXHIBIT C
FORM OF TRADEMARK LICENSING AGREEMENT
95
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of
________ __, 1998 ("Effective Date") by and between Internet World Media, Inc.,
a Delaware corporation ("Licensor"), and iWorld LLC, a Delaware limited
liability company ("Licensee").
RECITALS
A. Licensor is a wholly-owned subsidiary of Penton Media,
Inc., a Delaware corporation ("Penton").
B. Licensor currently owns a 19.9% interest in Licensee.
Licensee's business consists of a network of Internet web sites that contains
the latest news and resources for the Internet industry, directories of Internet
products and services, back issues of the Licensor's print publications and
information about the Licensor's Internet World and ISPCON trade shows and
conferences (the "Business");
C. Licensee acknowledges that Licensor is the sole and
exclusive owner of the entire right, title and interest in, to and under the
Trademarks (as defined below) and any and all registrations thereof; and
D. Licensee desires to acquire from Licensor, and Licensor
desires to grant to Licensee, a license to use the Trademarks in connection with
the Business, pursuant to the terms and conditions provided herein and for no
other purposes.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
1. DEFINITIONS.
1.1 TRADEMARKS. The term "Trademarks" shall mean the trademarks, trade
names and logos as set forth on Schedule A, attached hereto as amended in
writing from time to time, and all registrations, applications and renewals
therefor.
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2. LICENSE.
2.1 GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee a non-exclusive, non-transferable,
royalty-free license to use the Trademarks solely in connection with the
Business.
2.2 NO SUBLICENSE. Licensee shall not sublicense any of its rights
under this Agreement to any other person or entity without the prior written
approval of Licensor, which shall not be unreasonably withheld. Any attempted
sublicense shall be null and void and shall immediately terminate this Agreement
and the licenses granted herein.
2.3 RESERVATION OF RIGHTS. No rights or licenses, express or implied,
other than those granted in Section 2.1, are granted by this Agreement to
Licensee under any intellectual property owned or controlled by Licensor. The
rights granted to Licensee pursuant to this Agreement are subject to all
pre-existing contracts and to all rights of third parties related to the
Trademarks. Licensor expressly reserves the right to use the Trademarks anywhere
in the world in connection with any materials or products developed or sold by
or for Licensor or any services rendered by or for Licensor.
3. TERM AND TERMINATION.
3.1 TERM. Unless terminated in accordance with Section 3.2, this
Agreement shall continue in full force and effect for a period of three (3)
years from the Effective Date. This Agreement shall automatically renew for
three-year terms unless terminated by Licensor upon six months prior written
notice to Licensee.
3.2 TERMINATION FOR BREACH. Licensor shall have the right to terminate
this Agreement immediately: (i) if Licensee breaches any material term or
condition of this Agreement and fails to remedy such breach within thirty (30)
days after receipt from Licensor of notice of such breach; (ii) if proceedings
are instituted by or against Licensee under federal or state bankruptcy laws or
an assignment or receivership is established for the benefit of the creditors of
Licensee; or (iii) if majority ownership, or effective control, of Licensee is
transferred to an unrelated third party.
3.3 EFFECT OF TERMINATION. Upon expiration or termination of this
Agreement for any reason, Licensee shall immediately discontinue all use of the
Trademarks, including use of the Trademarks as part of its corporate, assumed or
trade name, and shall destroy all materials bearing the Trademarks other than a
single copy of any materials bearing the Trademarks, which may be retained for
archival purposes. An officer of Licensee shall certify in writing to Licensor
that Licensee has discontinued such use and has destroyed such materials.
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4. LIMITATIONS ON LICENSE.
4.1 USAGE. Except as provided in Section 2.1, Licensee shall not make
any use of the Trademarks or any term, phrase or design with is confusingly
similar to, or a colorable imitation of, the Trademarks, or any portion of the
Trademarks in any manner whatsoever, including but not limited to: (i) any use
as part of a corporate, assumed or trade name; (ii) as a product name; (iii) as
a service xxxx; (iv) on stationery, business cards or similar materials; or (v)
directly or indirectly in connection with, or in relation to, any activity or
agreements with third parties.
4.2 OWNERSHIP OF TRADEMARKS. Any and all rights, title or interest in,
to or under the Trademarks which may accrue to the benefit of, or be acquired
by, Licensee as a result of its exercise of the rights and licenses granted
pursuant hereto shall be assigned to and inure to the sole benefit of Licensor;
and Licensee hereby agrees to assign and assigns to Licensor any and all such
right, title and interest as and to the extent reasonably requested by Licensor.
4.3 ADDITIONAL COVENANTS. Licensee shall not assert any claim of
ownership of, or any claim to, any goodwill or reputation associated with the
Trademarks, by reason of Licensee's licensed use thereof or otherwise. Licensee
shall not take and, to the extent reasonably within Licensee's power to control,
shall not permit any action or omission in derogation of any of the rights of
Licensor in the Trademarks, either during the term of this Agreement or
thereafter.
5. QUALITY CONTROL.
5.1 QUALITY STANDARDS. Licensee shall maintain quality standards, for
all of its uses of the Trademarks, which are substantially equivalent to or
stricter than those standards previously used by Licensee in connection with the
Business.
5.2 PROPOSED USES. Licensee shall submit, at Licensee's expense, to
Licensor for Licensor's consent, such consent not to be unreasonably withheld,
examples of any new form of use of the Trademarks proposed by Licensee. Any such
form of use neither approved nor disapproved within ten (10) days of submission
to Licensor shall be deemed approved.
5.3 SAMPLES. At the reasonable request of Licensor and at the expense
of Licensee, Licensee shall provide Licensor with copies, photographs or
representative samples of advertising copy, promotional materials or other
materials of Licensee bearing the Trademarks that are created by Licensee, and
shall permit representatives of Licensor to inspect Licensee's facilities upon
reasonable notice and during normal business hours to determine whether Licensee
is maintaining the quality standards set forth in Section 5.1.
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6. REGISTRATION AND ENFORCEMENT.
6.1 REGISTRATION. Registration and any other form of protection for the
Trademarks shall only be obtained by Licensor in its name and at its expense. In
those jurisdictions where registration of a user of trademarks or registration
of trademark licenses is required by law, Licensor and Licensee shall make a
joint application, at Licensor's request and expense, to the Registrar of
Trademarks, or such other person as is required by the laws of the relevant
jurisdiction, for the registration of Licensee as a registered user of the
Trademarks or for the registration of this Agreement, as required. Licensee
shall furnish Licensor with all reasonably requested information (including
specimens and samples illustrative of the manner of use of the Trademarks) and
documentation (including the execution and delivery of any and all true and
correct affidavits, declarations, oaths and other documentation prepared by
Licensor) to assist Licensor in obtaining and maintaining such trademark
protection and registrations.
6.2 ENFORCEMENT. Licensee shall take all reasonable steps and shall
provide such materials, cooperation and assistance at Licensor's expense as may
be reasonably required to assist Licensor in maintaining and enforcing the
Trademarks with respect to uses made by Licensee of the Trademarks. Licensee
shall promptly notify Licensor of any actual or suspected infringement or misuse
of the Trademarks by third parties. Licensor shall have the sole discretion to
take action against such infringers or misusers or suspected infringers or
misusers, and any and all recoveries resulting from such actions initiated by
Licensor shall be retained by Licensor, except to the extent Licensee suffers
actual damages, in which event Licensee will be entitled to a portion of such
recovery equal to its percentage damage after deducting from the total amount of
such recovery any expenses incurred by Licensor in taking such action. Licensee
shall not take any action with respect to any third party in an attempt to
enforce any rights regarding the Trademarks without the prior written approval
of Licensor.
7. REMEDY.
Licensee acknowledges that its breach of its obligations hereunder
would cause immediate and irreparable harm to Licensor for which money damages
would be inadequate, Therefore, Licensor shall be entitled to injunctive relief
for Licensee's breach of such obligations without proof of actual damages and
without the posting of bond or other security except as required by law. Such
remedy shall not be deemed to be the exclusive remedy for any such breach but
shall be in addition to all other remedies available at law or in equity.
8. REPRESENTATIONS; INDEMNIFICATIONS.
8.1 LICENSOR'S DISCLAIMER. Licensor expressly disclaims all
representations and warranties, express or implied, in connection with this
Agreement and the Trademarks, including but not limited to, the implied
warranties of title, merchantability and fitness for a particular purpose.
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8.2 LIMITATION OF LIABILITY. Licensor shall not be liable to Licensee,
its affiliates or any third party for any direct damages or for any special,
consequential, exemplary or incidental damages (including lost or anticipated
revenues or profits relating to the same), arising from any claim relating to
this Agreement or the Trademarks, whether such claim is based on warranty,
contract, tort (including negligence or strict liability) or otherwise, even if
an authorized representative of Licensor is advised of the possibility or
likelihood of same, unless Licensor is in breach of this Agreement.
8.3 INDEMNIFICATION. Licensee agrees to indemnify and hold harmless
Licensor, its affiliates, and its and their stockholders, directors, officer,
employees, agents and assignees harmless and shall pay all losses, damages,
fees, expenses or costs (including reasonable attorneys' fees) incurred by them
based upon any claim, demand, suit or proceeding alleging that Licensee's
actions except as specifically permitted under this Agreement violate any rights
of any third party or alleging any breach by Licensee of any of its obligations
herein.
Licensor shall promptly notify Licensee of any such claim,
demand, suit or proceeding, and Licensee, upon written request by Licensor,
shall promptly defend and continue the defense of such claim, demand, suit or
proceeding at Licensee's expense. If Licensee fails to undertake and continue
such defense, Licensor shall have the right (but not the obligation) to make and
continue such defense as it considers appropriate, and the expenses and costs
thereof, including but not limited to reasonable attorneys' fees, out-of-pocket
costs and the costs of an appeal and bond thereof, together with the amounts of
any judgment rendered against Licensor shall be paid by Licensee upon demand.
Nothing herein shall prevent Licensor from defending, if it so
desires in its own discretion, any such claim, demand, suit or proceeding at its
own expense through its own counsel, notwithstanding that the defense thereof
may have been undertaken by Licensee.
9. GENERAL.
9.1 SURVIVAL. The obligations of Licensee and the rights of Licensor
under Sections 3.3, 8.2 and 8.3 shall survive the expiration or termination of
this Agreement for any reason.
9.2 ENTIRE AGREEMENT. This Agreement, the Services Agreement, dated the
date hereof, by and among the parties hereto and Penton, and all Schedules
attached hereto and thereto and incorporated herein and therein by this
reference contain the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede any previous understandings or
agreements, whether written or oral, in respect of such subject matter.
9.3 REQUIRED APPROVALS. Licensee shall obtain all necessary licenses,
permits and approvals of this Agreement required by any government or
governmental agency, at Licensee's sole cost and expense. Performance of this
Agreement shall be subject to obtaining all such
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necessary licenses, permits and approvals pursuant to this Section 9.3 and to
the terms of any such licenses, permits and approvals.
9.4 COMPLIANCE WITH LAWS. Each of the parties shall comply with all
applicable laws, rules, regulations and orders of the United States, all other
jurisdictions and any agency or court thereof.
9.5 BINDING AGREEMENT. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the parties; provided, however,
that Licensee may not assign, transfer, encumber or grant to any third party a
security interest in this Agreement or in any of its rights, duties or
obligations hereunder, by operation of law or otherwise, without the prior
written consent of Licensor, such consent not to be unreasonably withheld. Any
assignment which does not comply with this Section 9.5 shall be void and of no
legal effect.
9.6 NO WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be construed to be a waiver of such provision or the
right of such party thereafter to enforce such provision or any other provision
of this Agreement.
9.7 RELATIONSHIP OF PARTIES. Except as specifically provided herein,
none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other party, or in any way bind
or commit the other party to any obligations. Any such act will create a
separate liability in the party so acting to any and all third parties affected
thereby. The rights, duties, obligations and liabilities of the parties shall be
several and not joint or collective, and nothing contained in this Agreement
shall be construed as creating a partnership, joint venture, agency, trust or
other association of any kind, each party being individually responsible only
for its obligations as set forth in this Agreement.
9.8 SEVERABILITY. The illegality, invalidity or unenforceability of any
part of this Agreement shall not affect the legality, validity or enforceability
of the remainder of this Agreement. If any part of this Agreement shall be found
to be illegal, invalid or unenforceable, then this Agreement shall be given such
meaning as would make this Agreement legal, valid and enforceable in order to
give effect to the intent of the parties.
9.9 FURTHER ASSURANCES. Licensee agrees to execute such other documents
and take all such actions as Licensor may reasonably request to effect the terms
of this Agreement.
9.10 GOVERNING LAW. This Agreement and all disputes arising under this
Agreement shall be governed by, and interpreted in accordance with, the internal
laws (and not the law of conflicts) of the State of New York.
9.11 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
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hereunder shall be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to Licensee: iWorld LLC
--------------------------
--------------------------
Attn:
If to Licensor: Internet World Media, Inc.
--------------------------
--------------------------
Attn:
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set forth
above 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 intended
recipient. Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.
9.12 HEADINGS. The headings in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
9.13 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
INTERNET WORLD MEDIA, INC.
By:____________________________
Name:
Title:
IWORLD LLC
By:____________________________
Name:
Title:
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SCHEDULE A
Internet World
Boardwatch
ISPCON
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EXHIBIT D
TERMS OF WARRANT AGREEMENT
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TERMS OF WARRANT AGREEMENT
BACKGROUND
- Xxxx X. Xxxxxxx purchases an 80.1% interest in iWorld LLC for $18
million, implying a $22.5 million value for all of iWorld.
- Assuming that 1000 units in iWorld are outstanding at the Effective
Time, Xx. Xxxxxxx purchases 801 from Internet World Media, Inc., which
retains 199 units.
- The Warrants are to have a strike price such that they are at the money
when iWorld is worth $30 million.
TERMS
- Units purchasable upon exercise: 10%.
- Standard anti-dilution provisions for both the number of units
purchasable and the strike price.
- Exercisable at any time immediately after the Effective Date until the
earlier of (i) three years from the Effective Date and (ii) the time
iWorld completes an initial public offering; provided, however, that
IWM will not be required to exercise at the time of an IPO if iWorld's
IPO valuation is less than $30 million.
- Unlimited piggyback regisration rights, except with respect to the
initial public offering, subject to customary cutbacks.
- Other customary provisions for warrants.
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EXHIBIT E
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made as of
_________ ___, 1998 (the "Effective Date") by and between Penton Media, Inc., a
Delaware corporation (the "Company"), and Xxxx X. Xxxxxxx, an individual
("Consultant").
WHEREAS, Consultant was the Chief Executive Officer of
Mecklermedia Corporation, a Delaware corporation ("Xxxxxxx").
WHEREAS, the Company has completed the acquisition of all of
the issued and outstanding stock of Xxxxxxx, has transferred an 80.1% interest
in iWorld, a Delaware limited liability company ("iWorld"), to Consultant, and
intends to operate on a going-forward basis Xxxxxxx'x remaining business of
publishing magazines and conducting trade shows (the "Xxxxxxx Business"); and
WHEREAS, in connection with such acquisition, Consultant has
resigned as the Chief Executive Officer of Xxxxxxx; and
WHEREAS, the Company believes that Consultant's vision and
strategic planning abilities are likely to be important to the Company's ability
to continue the growth and development of the Xxxxxxx Business in the future;
and
WHEREAS, the Company therefore wishes to retain Consultant as
its consultant to perform consulting services and to advise the Company with
respect to the Xxxxxxx Business under the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS.
(a) AFFILIATES. "Affiliate" means any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the Person specified or, directly or indirectly,
is related to or otherwise associated with any such Person.
(b) COMPANY. "Company" includes the Company's subsidiaries
(excluding iWorld), divisions and Affiliates as they may exist from time to
time.
(c) COMPANY'S BUSINESS. "Company's Business" means the
Company's current business of publishing magazines, publishing electronic media
and conducting trade shows, and such further businesses as the Company may enter
into during the Term.
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(d) CONFIDENTIAL INFORMATION. "Confidential Information" means
information, excluding information relating to iWorld, that would constitute a
trade secret under the Uniform Trade Secrets Act or that otherwise is not
generally known to the public and that is developed, owned or obtained and kept
confidential by the Company, including, without limitation, information
developed by Consultant in the course of performing the Consulting Services and
the Company's non-public technical, marketing, financial, customer and sales
information.
(e) INTERNET WORLD. "Internet World" means the newspaper
published by Xxxxxxx entitled "Internet World."
(f) PERSON. "Person" means an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including, without limitation, a government or political
subdivision or an agency or instrumentality of a government or political
subdivision.
(g) RESTRICTED TERRITORY. "Restricted Territory" means: (a)
the geographic area within a 100 mile radius of any and all of the Company
locations where the Company maintains an office or other facility at the time of
the termination of this Agreement and at any time during the two year period
prior to such termination; and (b) all of the specific customers, whether within
or outside of the geographic area described in (a) above, with which Consultant
had any responsibility with respect to the Company (whether indirect, direct or
advisory) at the time of the termination of this Agreement and at any time
during the one year period prior to such termination.
(h) iWORLD BUSINESS. "iWorld Business" means the business of
maintaining Internet web sites that contain the latest news and resources for
the Internet industry, directories of Internet products and services, back
issues of print publications of Internet World Media Inc. ("IWM") and
information about IWM's Internet World and ISPCON trade shows and conferences.
(i) WORK PRODUCT. "Work Product" means, other than work
performed for iWorld, (a) any and all discoveries, inventions and know how,
including, without limitation, any and all test data, findings, designs,
machines, devices, apparatus, compositions, methods or processes, or any
improvements of the foregoing, made, conceived, discovered or developed by
Consultant, whether alone or in conjunction with others, which arise solely out
of the performance of the Consulting Services or that are derived from, are
based upon or utilize in any way any proprietary information, data, materials or
products belonging to the Company, whether during or after the termination of
this Agreement; and (b) all documents, reports or materials of any kind prepared
by Consultant in performing the Consulting Services.
2. SERVICES AND COMPENSATION.
(a) CONSULTING SERVICES. The Company retains Consultant to
furnish the Company with Consultant's unique expertise, advice, consulting and
personal services in connection with the Xxxxxxx Business pursuant to this
Agreement ("Consulting Services"). The Consultant shall render the Consulting
Services at such times and locations as Consultant and the
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Company shall mutually agree upon in good faith and Consultant shall devote such
time and attention as is necessary for him to perform the Consulting Services
successfully; provided, however that (i) the Consulting Services shall not
infringe upon Consultant's duties, obligations and responsibilities with respect
to iWorld, and (ii) Consultant shall not be obligated to perform the Consulting
Services for more than 15 hours per week during the first year of the Term, 10
hours per week during the second year of the Term and five hours per week during
the third year of the Term. The determination as to whether the Consulting
Services infringe upon Consultant's duties, obligations and responsibilities
with respect to iWorld shall be made in good faith by mutual agreement between
Consultant and the Company. If Consultant and the Company disagree as to whether
the Consulting Services infringe upon Consultant's duties, obligations and
responsibilities with respect to iWorld, the determination shall be made by an
independent third party chosen by mutual agreement of Consultant and the Company
made in good faith. To the degree that the Consulting Services are found to
infringe upon Consultant's duties, obligations and responsibilities with respect
to iWorld, Consultant may diminish the Consulting Services and the Company may
make a pro rata diminution in Consultant's compensation for the requisite
period. To facilitate the Consulting Services, Consultant will have access to
the Company's intranet and e-mail system. However, Consultant shall perform
Consulting Services only at the request of the Company, and the actual
Consulting Services to be provided by Consultant in connection with the Xxxxxxx
Business will be as designated by the Company from time to time. Consultant
shall not be required to travel outside of the continental United States and any
domestic travel (which requires a flight of over 2 hours) required shall be in
first class accommodations. The Consulting Services shall be limited to the
following:
(i) consulting with the Company regarding the
overall strategic direction of the Xxxxxxx
Business;
(ii) consulting with the Company to identify
acquisitions which would be synergistic to
Internet World;
(iii) consulting with the Company regarding
programming, speaker assignments and
conference structure;
(iv) consulting with the Company regarding new
Internet arena launches;
(v) consulting with the Company's electronics
group management on trade show and
conference launch issues and web site
initiatives;
(vi) consulting with the Company on cross media
promotion;
(vii) meeting with Internet World's editorial
board (no more than once per month);
(viii) meeting with certain clients and
participating in round tables and focus
groups; and
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(ix) speaking at Internet World events.
(x) such other services as Consultant and the
Company may mutually agree upon.
Consultant shall perform all Consulting Services on behalf of the Company in a
timely, diligent and professional manner in accordance with the highest
commercial industry standards. Consultant will not be required to travel more
than 15 nights a year during the first year of the Term, more than 12 nights a
year during the second year of the Term or more than 8 nights a year during the
third year of the Term.
(b) COMPENSATION. During the Term (as defined below), the
Company shall (i) pay Consultant $100,000 a year payable monthly on the last day
of each month in cash; and (ii) within ten business days after written request
by Consultant, reimburse Consultant for his reasonable direct expenses incurred
in performing the Consulting Services.
(c) INDEPENDENT CONTRACTOR.
(i) Consultant is and will at all times be and
remain an independent contractor. Consultant
is free to exercise Consultant's own
judgment as to the manner and method of
providing the Consulting Services to the
Company, subject to applicable laws and
requirements reasonably imposed by the
Company.
(ii) Consultant acknowledges and agrees that
Consultant will not be treated as an
employee for purposes of federal, state or
local income tax withholding, and unless
otherwise specifically provided by law, for
purposes of the Federal Insurance
Contributions Act, the Social Security Act,
the Federal Unemployment Tax Act or any
Worker's Compensation law of any State and
for purposes of benefits provided to
employees of the Company under any employee
benefit plan.
(iii) Consultant acknowledges and agrees that as
an independent contractor, Consultant is
required to pay any applicable taxes on the
fees paid to Consultant.
3. NO USE OF OTHERS' RIGHTS. Consultant represents and warrants that
Consultant can perform the Consulting Services, independent of any confidential
and proprietary information owned by a third party, other than iWorld,
including, without limitation, patents, copyrights, trademarks, service marks,
trade names, slogans, logos, copyrights, designs, sketches, ideas, persona,
images (e.g., photographs, computerized graphics, etc.) or publicity rights.
4. DOCUMENTATION. In connection with the provision of Consulting
Services, Consultant shall provide to the Company, upon the Company's request:
(i) all information,
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documents and other materials relating to the Consulting Services; and (ii) oral
reports regarding the progress of the Consulting Services rendered.
5. CONFIDENTIALITY. Consultant shall keep in strict confidence, and
will not, directly or indirectly, at any time, while a Consultant or after his
association with the Company, disclose, furnish, disseminate, make available or,
except in the course of performing his duties as a Consultant under this
Agreement, use any Confidential Information, acquired by Consultant during the
Term. Consultant specifically acknowledges that: (i) the Confidential
Information, whether reduced to writing, maintained on any form of electronic
media, or maintained in the mind or memory of Consultant and whether compiled by
the Company or Consultant derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from their disclosure or use; (ii) reasonable efforts have been
put forth by the Company to maintain the secrecy of such information; (iii) such
information is and will remain the sole property of the Company; and (iv) any
retention and use of such information during or after the termination of this
Agreement (except in the course of performing his obligations under this
Agreement) will constitute a misappropriation of the Company's trade secrets.
6. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Consultant acknowledges
and agrees that, in the performance of his duties under this Agreement, he will
be brought into frequent contact, either in person, by telephone or through the
mails, with existing and potential customers of the Company. Consultant also
agrees that any Confidential Information gained by Consultant during his
association with the Company has been developed by the Company through
substantial expenditures of time and money and constitutes valuable and unique
property of the Company. Consultant further understands and agrees that the
foregoing makes it necessary for the protection of the Xxxxxxx Business and the
Company's Business that Consultant not compete with the Company during the term
of the Agreement, as further provided in the following sections.
7. NONCOMPETITION DURING TERM. For three years from the Effective Date,
Consultant shall not, individually or through any Affiliate of Consultant, in
any of the United States of America, Puerto Rico, the Virgin Islands, Canada or
any other country in the world:
(a) enter into or engage in any business that competes
with the Xxxxxxx Business or the Company's Business; or
(b) solicit customers, active prospects, business or patronage
for any business that competes with the Xxxxxxx Business or the Company's
Business or sell any products or services for any business that competes with
the Xxxxxxx Business or the Company's Business; or
(c) solicit, divert, entice or otherwise take away any
customers, former customers, active prospects, business, patronage or orders of
the Company or attempt to do so; or
(d) promote or assist, financially or otherwise, any Person
engaged in any business that competes with the Xxxxxxx Business or the Company's
Business.
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(e) Notwithstanding anything herein to the contrary, the
parties hereto agree that the iWorld Business is not competitive with the
Xxxxxxx Business or the Company's Business and that Consultant is free to carry
out, implement and continue the iWorld Business.
8. NONSOLICITATION. Consultant shall not, and shall not cause any of
his Affiliates to, directly or indirectly, at any time solicit or induce or
attempt to solicit or induce any employee, representative, agent or consultant
of the Company (other than employees, representatives, agents or consultants of
iWorld) to terminate his, her or its employment, representation or other
association with the Company.
9. NONCOMPETITION - DIRECT OR INDIRECT. Consultant will be in violation
of SECTIONS 7, 8 and 10 if he engages in any or all of the activities set forth
in those sections directly as an individual on his own account, or indirectly
for any other Person and whether as partner, joint venturer, employee, agent,
salesperson, consultant, officer or director of any Person or as an equity
holder of any Person in which Consultant or Consultant's spouse, child or parent
owns, directly or indirectly, any of the equity interests; provided, however,
that nothing herein shall prohibit Consultant or Consultant's spouse, child or
parent from acquiring or holding any issue of stock or securities of any
business, individual, partnership, firm or corporation (each an "Entity") which
has any securities listed on a national securities exchange or quoted daily in
the listing of over-the-counter market securities, provided that at any one time
Consultant and his spouse, child or parent do not own more than 5% of the voting
securities of any such Entity.
10. DISCLOSURE OBLIGATION. Consultant shall, upon the Company's
request, disclose fully and promptly to the Company any and all written Work
Product.
11. ASSIGNMENT. All Work Product is deemed a "work for hire" in
accordance with the U.S. Copyright Act and is owned exclusively by the Company.
If, and to the extent, any of the Work Product is not considered a "work for
hire," Consultant shall, without further compensation, assign to the Company and
does hereby assign to the Company, Consultant's entire right, title and interest
in and to all Work Product. At the Company's expense and at the Company's
request, Consultant shall provide reasonable assistance and cooperation,
including, without limitation, the execution of documents in order to obtain,
enforce or maintain the Company's proprietary rights in the Work Product
throughout the world. Consultant appoints the Company as its agent and grants
the Company a power of attorney for the limited purpose of executing all such
documents.
12. PUBLICATION. Consultant shall not publish or submit for
publication, or otherwise disclose to any Person other than the Company, any
data or results from Consultant's work on behalf of the Company without the
prior written consent of the Company.
13. TERM AND TERMINATION.
(a) TERM. Unless earlier terminated pursuant to SECTION 15(b),
the term of this Agreement commences on the Effective Date and continues for
three years (the "Term").
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(b) BREACH. In the event that Consultant breaches, or fails to
comply with, any of the provisions of this Agreement, the Company, upon 10 days
prior written notice to Consultant specifying the nature of the breach or
failure to comply, has the right to terminate this Agreement (i) if Consultant
fails to cure such breach or fails to comply, if curable, within 10 days after
the giving of such written notice or (ii) within 10 days after the giving of
such written notice to Consultant, if such breach or failure to comply cannot be
cured.
(c) RETURN OR DESTRUCTION. Upon termination of this Agreement,
Consultant shall return, in good condition, all property of the Company,
including, without limitation, all tangible embodiments of the Confidential
Information.
(d) SURVIVAL. The obligations of the Company and Consultant
set forth in this Agreement that by their terms extend beyond or survive the
termination of this Agreement will not be affected or diminished in any way by
the termination of this Agreement.
14. GENERAL.
(a) NO LICENSE. This Agreement may not be construed to grant
and does not grant to Consultant any right or license with respect to any
know-how, Confidential Information, trademarks or other proprietary right of the
Company (apart from the right to make necessary use of the same in rendering
Consulting Services under this Agreement).
(b) REMEDIES. Consultant acknowledges that his failure to
comply with SECTIONS 5 THROUGH 14 of this Agreement will irreparably harm the
Xxxxxxx Business and the Company's Business and that the Company will not have
an adequate remedy at law in the event of such non-compliance. Therefore,
Consultant acknowledges that the Company will be entitled to injunctive relief
or specific performance without the posting of bond or other security, except as
required by law, in addition to whatever other remedies it may have, at law or
in equity, in any court of competent jurisdiction against any acts of
non-compliance by Consultant under this Agreement.
(c) LACK OF AGENCY. Neither party will be responsible, either
directly or indirectly, for any liability of the other party. Neither party is
deemed an agent of the other party and no actions of either party will be
inferred to create an agency relationship by third parties. Consultant shall not
have the authority to bind or obligate the Company in any way and Consultant
does not represent that he has such authority.
(d) SEVERABILITY. Should any provisions of this Agreement be
held illegal, invalid or unenforceable by any court or regulatory agency of
competent jurisdiction, such provision is to be modified by such court or
regulatory agency in compliance with the law and, as modified, enforced. All
other terms and conditions of this Agreement will remain in full force and
effect and are to be construed in accordance with the modified provision as if
such illegal, invalid or unenforceable provision had not been contained in this
Agreement.
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(e) APPLICABLE LAW. This Agreement and all disputes arising
under it are governed by the laws of the State of New York. Each party submits
to the jurisdiction of the federal and state courts located within the State of
New York.
(f) NO WAIVER. None of the terms of this Agreement is deemed
waived or amended by either party unless such a waiver or amendment specifically
references this Agreement and is in writing signed by an authorized
representative of the party to be bound. Any such signed waiver is effective
only in the specific instance and for the specific purpose for which it was made
or given.
(g) ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the heirs, successors, representatives and assigns of each party,
but Consultant may not assign or delegate this Agreement without the prior
written consent of the Company.
(h) HEADINGS. The headings in this Agreement are inserted for
convenience only and do not effect the meaning of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which is an original, and all of which are one and the
same instrument.
(j) THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or may be construed, to confer upon or give any Person
other than the Company and Consultant any rights or remedies under, or by reason
of, this Agreement.
(k) NOTICES. All notices and other communications required or
permitted under this Agreement are to be in writing and are duly given if
delivered by a nationally recognized overnight courier service with delivery
charges prepaid, or mailed by certified or registered mail, postage prepaid,
receipt requested, or sent by telecopy to the appropriate party at the address
specified below:
If to the Company:
Penton Media, Inc.
15th Floor
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy No: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
8
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Telecopy No: (000) 000-0000
If to Consultant:
Xxxx X. Xxxxxxx
c/o iWorld LLC
00 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Willkie, Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Xx.
All notices, requests, demands, waivers and communications are deemed received
on the date of delivery.
(l) AMENDMENT. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Consultant, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
(m) ENTIRE AGREEMENT. This Agreement is the entire
understanding and agreement between the parties relating to this subject matter
and supersedes all prior contracts, agreements, arrangements, communications,
discussions, representations and warranties, whether oral or written, between
the parties relating to this subject matter.
IN WITNESS WHEREOF, the Company and Consultant have executed this
Agreement as of the date and year first above written.
PENTON MEDIA, INC.
By: _______________________________ ______________________________
Name: Xxxx X. Xxxxxxx
Title:
9
115
EXHIBIT F
LIST OF CONSENTS REQUIRED
1. Denver West Office Park Lease by and between Denver West Office
Building no. 1 Venture LLP and Board Watch Magazine, Inc. dated as of
June 6, 1998.
Section 15.1 of the lease requires written consent from the
landlord prior to any transfer of the lease by Board Watch
Magazine, Inc. The section provides that a merger of a tenant
with another corporation is considered a transfer. Therefore,
consent must be acquired from the landlord prior to the merger
in order to avoid defaulting under the lease.
2. Lease Agreement by and between Fifty East Forty Second Company and
Mecklermedia Corporation dated as of November 5, 1997.
Section 11 of the lease requires written consent from the
landlord prior to any assignment of the lease by Mecklermedia
Corporation. The section provides that the transfer of the
majority of stock of a corporate tenant is considered an
assignment. Therefore, consent must be acquired from the
landlord prior to the merger in order to avoid defaulting
under the lease.
3. Lease Agreement by and between Flying Dutchman Management, Inc. and
Mecklermedia, Corp. dated as of November 25, 1997.
Section 7 of the lease requires written consent from the
landlord prior to any assignment of the lease by Mecklermedia,
Corp. The section provides that the sale, issuance or transfer
of any voting capital stock of the tenant (if tenant is a
non-public corporation), which results in a change in the
voting control of tenant, is considered an assignment.
4. Agreement by and between New York Convention Center Operating
Corporation ("Licensor") and Mecklermedia Corporation ("Licensee")
dated as of July 23, 1998 (not yet executed)
Section 26 of the agreement requires Licensee to obtain
approval from Licensor in order to assign the agreement. The
section provides that a transfer by operation of law or the
transfer of a fifty percent interest in Licensee is considered
an assignment. Therefore, consent must be acquired from
Licensor prior to the merger in order to avoid defaulting
under the agreement.
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5. Agreement between Los Angeles Convention Center ("LACC") and
Mecklermedia Corporation (currently out for execution) for Internet
World Spring 1999.
Prior agreements with LACC have included Change of Control Provisions.
