Exhibit 10.2
EXECUTION COPY
SHAREHOLDERS' AGREEMENT
DATED AS OF
OCTOBER 11, 2000
AMONG
ADVANSTAR HOLDINGS CORP.
AND
THE SHAREHOLDERS PARTIES HERETO
TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS...................................................2
ARTICLE 2
CORPORATE GOVERNANCE
SECTION 2.01. COMPOSITION OF THE BOARD......................................9
SECTION 2.02. REMOVAL......................................................10
SECTION 2.03. VACANCIES....................................................10
SECTION 2.04. DIRECTOR EXPENSES............................................10
SECTION 2.05. CHARTER OR BYLAW PROVISIONS..................................11
ARTICLE 3
RESTRICTIONS ON TRANSFER
SECTION 3.01. GENERAL RESTRICTIONS ON TRANSFER.............................11
SECTION 3.02. LEGENDS......................................................11
SECTION 3.03. PERMITTED TRANSFEREES........................................12
SECTION 3.04. RESTRICTIONS ON TRANSFERS BY EXISTING SHAREHOLDERS AND DLJIP
FUNDS, AND TRANSFERS OF ROLLOVER SHARES GENERALLY............12
SECTION 3.05. RESTRICTIONS ON TRANSFERS BY MANAGEMENT SHAREHOLDERS.........13
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
SECTION 4.01. TAG-ALONG RIGHTS.............................................15
SECTION 4.02. DRAG-ALONG RIGHTS............................................18
SECTION 4.03. ADDITIONAL CONDITIONS TO TAG-ALONG SALES AND DRAG-ALONG SALES
..................................................................20
SECTION 4.04. PREEMPTIVE RIGHTS............................................22
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. DEMAND REGISTRATION..........................................23
SECTION 5.02. PIGGYBACK REGISTRATION.......................................26
SECTION 5.03. LOCK-UP AGREEMENTS...........................................27
SECTION 5.04. REGISTRATION PROCEDURES......................................27
SECTION 5.05. INDEMNIFICATION BY THE COMPANY...............................31
SECTION 5.06. INDEMNIFICATION BY PARTICIPATING SHAREHOLDERS................32
SECTION 5.07. CONDUCT OF INDEMNIFICATION PROCEEDINGS.......................32
SECTION 5.08. CONTRIBUTION.................................................33
SECTION 5.09. PARTICIPATION IN PUBLIC OFFERING.............................34
SECTION 5.10. OTHER INDEMNIFICATION........................................35
SECTION 5.11. COOPERATION BY THE COMPANY...................................35
SECTION 5.12. NO TRANSFER OF REGISTRATION RIGHTS...........................35
SECTION 5.13. S-8 REGISTRATION FOLLOWING IPO...............................35
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.01. CONFIDENTIALITY..............................................35
SECTION 6.02. FINANCIAL STATEMENTS.........................................37
SECTION 6.03. FINANCIAL ADVISOR AND INVESTMENT BANKING ADVISOR.............37
SECTION 6.04. AFFILIATE TRANSACTIONS.......................................37
SECTION 6.05. CONFLICTING AGREEMENTS.......................................37
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. BINDING EFFECT; ASSIGNABILITY; BENEFIT.......................38
SECTION 7.02. NOTICES......................................................38
SECTION 7.03. WAIVER; AMENDMENT; TERMINATION...............................41
SECTION 7.04. FEES AND EXPENSES............................................41
SECTION 7.05. GOVERNING LAW................................................41
SECTION 7.06. JURISDICTION.................................................41
SECTION 7.07. WAIVER OF JURY TRIAL.........................................42
SECTION 7.08. SPECIFIC ENFORCEMENT.........................................42
SECTION 7.09. COUNTERPARTS; EFFECTIVENESS..................................42
SECTION 7.10. ENTIRE AGREEMENT.............................................42
SECTION 7.11. CAPTIONS.....................................................42
SECTION 7.12. SEVERABILITY.................................................42
Exhibit A Joinder Agreement
ii
SHAREHOLDERS' AGREEMENT
AGREEMENT dated as of October 11, 2000 among:
(i) Advanstar Holdings Corp., a Delaware corporation (the "COMPANY");
(ii) DLJ ESC II, L.P. (only in its capacity as a holder of Common Shares
purchased pursuant to the Subscription and Contribution Agreement dated as of
October 11, 2000 among the DLJ Funds and the Company and certain others), DLJ
Merchant Banking Partners III, L.P., DLJ Offshore Partners III, C.V., and DLJ
Funding III, Inc. (together, the "DLJ FUNDS");
(iii) Xxxxxxx & Xxxxxxxx Capital Partners III, L.P., H&F Orchard Partners
III, L.P., and H&F International Partners III, L.P. (collectively, the "H&F
FUNDS") and Xxxxx X. Xxxxxxx Co., Ltd. (collectively with the H&F Funds, the
"EXISTING SHAREHOLDERS");
(iv) DLJ ESC II, L.P. (only in its capacity as a purchaser of Warrants
pursuant to the Securities Purchase Agreement (the "SECURITIES PURCHASE
AGREEMENT") dated as of October 11, 2000 among the Company, Advanstar, Inc., and
the purchasers party thereto), DLJ Investment Partners II, L.P., DLJ Investment
Partners, L.P., and DLJ Investment Funding II, Inc., (collectively, the "DLJIP
FUNDS"); and
(v) the individuals named as Management Shareholders on the signature
pages hereof, and the individuals who are members of management and become a
party to this Agreement after the date hereof pursuant to the terms hereof
(collectively, the "MANAGEMENT SHAREHOLDERS").
If any DLJ Funds shall hereafter transfer any of their Company Securities
to any of their respective Permitted Transferees (as such terms are defined
below), the term "DLJ FUNDS" shall mean the DLJ Funds and such Permitted
Transferees, taken together, and any right, obligation or action that may be
exercised or taken at the election of the DLJ Funds may be exercised or taken at
the election of the DLJ Funds and such Permitted Transferees.
If any Existing Shareholder shall hereafter transfer any of its Company
Securities to any of its Permitted Transferees, the term "EXISTING SHAREHOLDER"
as applied to such Existing Shareholder shall mean such Existing Shareholder and
its Permitted Transferees, taken together, and any right, obligation or other
action that may be exercised or taken at the election of such Existing
Shareholder may be exercised or taken at the election of such Existing
Shareholders and its Permitted Transferees.
If any DLJIP Fund shall hereafter transfer any of its Company Securities
to any of its Permitted Transferees, the term "DLJIP FUND" shall mean such DLJIP
Fund and such Permitted Transferees, taken together, and any right, obligation
or action that may be exercised or taken at the election of such DLJIP Fund may
be exercised or taken at the election of such DLJIP Fund and such Permitted
Transferees.
If any Management Shareholder shall hereafter transfer any of his or her
Company Securities to any of his or her Permitted Transferees, the term
"MANAGEMENT SHAREHOLDER" as applied to such Management Shareholder shall mean
such Management Shareholder and his or her Permitted Transferees, taken
together, and any right, obligation or other action that may be exercised or
taken at the election of such Management Shareholder may be exercised or taken
at the election of such Management Shareholder and his or her Permitted
Transferees.
W I T N E S S E T H :
WHEREAS, the Company is a party to the Agreement and Plan of Merger dated
as of August 14, 2000 (the "MERGER AGREEMENT") among the Company, Junior Jetman
Corp., Advanstar, Inc. and AHI Advanstar LLC;
WHEREAS, upon the occurrence of the merger and other transactions
contemplated by the Merger Agreement, the DLJ Funds, the Existing Shareholders
and the Management Shareholders will own all of the outstanding Common Shares
(as defined herein), and the Existing Shareholders, the DLJIP Funds, Xxxxx X.
Xxxx and Xxxxxx X. Xxxxxxx will own all of the outstanding Warrants (as defined
herein); and
WHEREAS, the parties hereto desire to enter into this Agreement to govern
certain of their rights, duties and obligations after consummation of the
transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:
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"ADVERSE PERSON" means any Person that the Board reasonably determines is
a competitor or a potential competitor of, or otherwise adverse to, the Company
or any of its Subsidiaries.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person; PROVIDED that no securityholder of the Company shall be deemed an
Affiliate of any other securityholder solely by reason of any investment in the
Company. For the purpose of this definition, the term "CONTROL" (including, with
correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; PROVIDED that no securityholder of the
Company shall be deemed to be an Affiliate of any other securityholder solely by
reason of any investment in the Company.
"AGGREGATE OWNERSHIP" means, with respect to any Shareholder or group of
Shareholders, the total number of Common Shares owned (without duplication) by
such Shareholder or group of Shareholders as of the date of such calculation,
calculated on a Fully-Diluted basis.
"XXXX" means Xxxxx X. Xxxx.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"BYLAWS" means the Bylaws of the Company, as the same may be amended from
time to time.
"CHARTER" means the Certificate of Incorporation of the Company, as the
same may be amended from time to time.
"CLOSING DATE" means October 11, 2000.
"COMMON SHARES" means shares of Common Stock.
"COMMON STOCK" means the common stock, par value $1.00 per share, of the
Company and any stock into which such Common Stock may thereafter be converted
or changed.
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"COMPANY SECURITIES" means (i) the Common Stock, (ii) any securities
convertible into or exchangeable for Common Stock, and (iii) any options,
warrants (including the Warrants) or other rights to acquire Common Stock or any
other equity or equity-linked security issued by the Company.
"CONTRIBUTION AGREEMENT" means the Subscription and Contribution Agreement
dated as of the date hereof among the DLJ Funds, Xxxxxx X. Xxxxxxx, Xxxxx X.
Xxxx and the Company.
"DLJMB" means DLJ Merchant Banking Partners III, L.P.
"DRAG-ALONG PORTION" means, with respect to any Other Shareholder in a
Drag- Along Sale, the Aggregate Ownership of Company Securities by such Other
Shareholder MULTIPLIED BY a fraction, the numerator of which is the number of
Company Securities proposed to be sold by the Drag-Along Seller (as defined in
Section 4.02) in the applicable Drag-Along Sale (as defined in Section 4.02) and
the denominator of which is the Aggregate Ownership of Company Securities by the
Drag-Along Seller at such time.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FULLY-DILUTED" means, with respect to any class of Company Securities,
all outstanding shares and all shares issuable in respect of securities
convertible into or exchangeable for such shares, all stock appreciation rights,
options, warrants (including the Warrants) and other rights to purchase or
subscribe for such Company Securities or securities convertible into or
exchangeable for such Company Securities; PROVIDED that if any of the foregoing
stock appreciation rights, options, warrants or other rights to purchase or
subscribe for such Company Securities are subject to vesting, the Company
Securities subject to vesting shall be included in the definition of
"Fully-Diluted" only upon and to the extent of such vesting.
"INITIAL OWNERSHIP" means, with respect to any Shareholder or group of
Shareholders, the Aggregate Ownership by such Shareholder or group of
Shareholders as of the date hereof (or, in the case of any Management
Shareholder who becomes a party to this Agreement after the date hereof, as of
the date of entry of such Management Shareholder into this Agreement), in each
case taking into account any stock split, stock dividend, reverse stock split or
similar event.
"INITIAL PUBLIC OFFERING" means the first fully-distributed Public
Offering of Common Stock after the date hereof with aggregate gross proceeds to
the Company and all selling stockholders in an amount equal to or greater than
$50,000,000.
"KRAKOFF" means Xxxxxx X. Xxxxxxx.
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"NASD" means the National Association of Securities Dealers, Inc.
"OTHER SHAREHOLDERS" means all Shareholders other than any DLJ Funds.
"PERMITTED TRANSFEREE" means:
(i) in the case of any DLJ Fund, (A) any other DLJ Fund, (B) any
Other Shareholder, (C) any general or limited partner of any DLJ Fund (a
"DLJ PARTNER"), and any corporation, partnership or other entity that is
an Affiliate of any DLJ Partner (collectively, "DLJ AFFILIATES"), (D) any
managing director, general partner, director, limited partner, officer or
employee of any DLJ Fund or any DLJ Affiliate, or any spouse, lineal
descendant, sibling, parent, heir, executor, administrator, testamentary
trustee, legatee or beneficiary of any of the foregoing persons described
in this clause (D) (collectively, "DLJ ASSOCIATES"), or (E) any trust the
beneficiaries of which, or any corporation, limited liability company or
partnership the stockholders, members or general or limited partners of
which, include only such XXX Xxxxx, XXX Xxxxxxxxxx, XXX Associates, their
spouses, children or other lineal descendants;
(ii) in the case of any H&F Fund, (A) any other H&F Fund, or (B) any
other investment fund, liquidating trust or liquidating entity that is an
Affiliate of an H&F Fund;
(iii) in the case of any other Existing Shareholder, any investment
fund that is an Affiliate of such other Shareholder;
(iv) in the case of any DLJIP Fund, any other investment fund that
is an Affiliate of such DLJIP Fund; and
(v) in the case of any Management Shareholder, (A) any spouse, child
or other lineal descendant of such Management Shareholder, (B) a Person to
whom Common Shares are Transferred from such Management Shareholder by
will or the laws of descent and distribution, or (C) a trust that is for
the exclusive benefit of such Management Shareholder or its Permitted
Transferees under clause (A) or (B) above.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PRO RATA SHARE" means, for any Existing Shareholder and any proposed
issuance of Company Securities with respect to which the Existing Shareholders
shall be entitled to exercise their rights under Section 4.04, the fraction that
results from dividing (i) such Existing Shareholder's Aggregate Ownership
immediately before giving effect to such issuance, by (ii)
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the total number of Common Shares then outstanding (immediately before giving
effect to such issuance), calculated on a Fully-Diluted basis.
"PUBLIC OFFERING" means an underwritten public offering of Company
Securities by the Company pursuant to an effective registration statement under
the Securities Act, other than pursuant to a registration statement on Form S-4
or Form S-8 or any similar or successor form.
"REGISTRABLE SECURITIES" means, at any time, any Common Shares held by any
Shareholder until (i) a registration statement covering such Common Shares has
been declared effective by the SEC and such Common Shares have been disposed of
pursuant to such effective registration statement, (ii) such Common Shares are
sold under circumstances in which all of the applicable conditions of Rule 144
(or any similar provisions then in force) under the Securities Act are met or
(iii) such Common Shares are otherwise Transferred, the Company has delivered a
new certificate or other evidence of ownership for such Common Shares not
bearing the legend required pursuant to this Agreement and such Common Shares
may be resold without subsequent registration under the Securities Act.
"REGISTRATION EXPENSES" means any and all expenses incident to the
performance of or compliance with any registration or marketing of securities,
including all (i) registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange
or automated interdealer quotation system, (ii) fees and expenses of compliance
with any securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualifications of the
securities registered), (iii) expenses in connection with the preparation,
printing, mailing and delivery of any registration statements, prospectuses and
other documents in connection therewith and any amendments or supplements
thereto, (iv) security engraving and printing expenses, (v) internal expenses of
the Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (vi) reasonable
fees and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the Company
(including the expenses relating to any comfort letters or costs associated with
the delivery by independent certified public accountants of any comfort letters
requested pursuant to Section 5.04(h) hereof), (vii) reasonable fees and
expenses of any special experts retained by the Company in connection with such
registration, (viii) reasonable fees and out-of-pocket expenses of the
Shareholders (including reasonable fees and expenses of counsel, but limited to
one counsel for all of the Shareholders participating in the offering selected
(A) by the DLJ Funds, in the case of any offering in which any DLJ Funds
participate, or (B) in any other case, by the Shareholders holding the majority
of the Registrable Securities to be sold for the account of all Shareholders in
the offering), (ix) fees and expenses in connection with any review by the NASD
of the underwriting arrangements or other terms of the offering, and all fees
and expenses of any "qualified independent underwriter," including the fees and
expenses of any counsel thereto, (x) fees and disbursements of underwriters
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customarily paid by issuers or sellers of securities, but excluding any
underwriting fees, discounts and commissions attributable to the sale of
Registrable Securities, (xi) costs of printing and producing any agreements
among underwriters, underwriting agreements, any "blue sky" or legal investment
memoranda and any selling agreements and other documents in connection with the
offering, sale or delivery of the Registrable Securities, (xii) transfer agents'
and registrars' fees and expenses and the fees and expense of any other agent or
trustee appointed in connection with such offering, (xiii) expenses relating to
any analyst or investor presentations or any "road shows" undertaken in
connection with the registration, marketing or selling of the Registrable
Securities, (xiv) fees and expenses payable in connection with any ratings of
the Registrable Securities, including expenses relating to any presentations to
rating agencies and (xv) all other costs and expenses incurred by the Company or
its officers in connection with their compliance with Section 5.04(m) hereof.
"REMAINING INITIAL OWNERSHIP" means, for any Shareholder or group of
Shareholders at any time, the percentage equal to a fraction, the numerator of
which is the Aggregate Ownership for such Shareholder or group of Shareholders
at such time, and the denominator of which is the Initial Ownership for such
Shareholder or group of Shareholders.
"RESTRICTED SALES PERIOD" means the period, if any, beginning on the fifth
anniversary of the Closing Date and ending upon consummation of the Initial
Public Offering.
"RETAINED VESTED OWNERSHIP" means, for any Management Shareholder at any
time, the percentage equal to a fraction, the numerator of which is the
Aggregate Ownership for such Management Shareholder at such time, and the
denominator of which is the sum of (i) the Initial Ownership of such Management
Shareholder and (ii) each and every amount by which the Aggregate Ownership of
such Management Shareholder has increased at any time subsequent to the date of
such Management Shareholder's entry into this Agreement.
"ROLLOVER SHARES" means (i) for Krakoff, 140,000 of the Common Shares
issued to Krakoff pursuant to the Contribution Agreement, and (ii) for Xxxx,
46,667 of the Common Shares issued to Xxxx pursuant to the Contribution
Agreement.
"RULE 144" means Rule 144 (or any successor provisions) under the
Securities Act.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER" means each Person (other than the Company) who shall be a
party to or bound by this Agreement, whether in connection with the execution
and delivery hereof as of the date hereof, pursuant to Sections 3.03 or 7.01 or
otherwise, so long as such Person shall
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"beneficially own" (as such term is defined in Rule 13d-3 of the Exchange Act)
any Company Securities.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"TAG-ALONG PORTION" means, for any Tagging Person (as defined in Section
4.01) in a Tag-Along Sale (as defined in Section 4.01), the Aggregate Ownership
of Common Shares by the Tagging Person immediately prior to such Tag-Along Sale
MULTIPLIED BY a fraction, the numerator of which is the maximum number of Common
Shares proposed to be sold by the applicable Tag-Along Seller (as defined in
Section 4.01) in such Tag- Along Sale and the denominator of which is the
Aggregate Ownership of Common Shares by the Tag-Along Seller at such time.
"THIRD PARTY" means a prospective purchaser of Company Securities in a
bona fide arm's-length transaction from a Shareholder, other than a Permitted
Transferee or other Affiliate of such Shareholder.
"TRANSFER" means, with respect to any Company Securities, (i) when used as
a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or
otherwise transfer such Company Securities or any participation or interest
therein, whether directly or indirectly, or agree or commit to do any of the
foregoing and (ii) when used as a noun, a direct or indirect sale, assignment,
disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of
such Company Securities or any participation or interest therein or any
agreement or commitment to do any of the foregoing.
"WARRANTS" means the Warrants to purchase Common Shares, issued by the
Company to (i) Krakoff, Alic, and Existing Shareholders pursuant to the Merger
Agreement, and (ii) the DLJIP Funds pursuant to the Securities Purchase
Agreement.
(a) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Confidential Information 6.01
Damages 5.05
Registration 5.01(a)
DLJSC 6.03
Drag-Along Rights 4.02(a)
Drag-Along Sale 4.02(a)
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Drag-Along Sale Notice 4.02(a)
Drag-Along Sale Notice Period 4.02(a)
Drag-Along Sale Price 4.02(a)
Drag-Along Seller 4.02(a)
Drag-Along Transferee 4.02(a)
Indemnified Party 5.07
Indemnifying Party 5.07
Inspectors 5.04(g)
Issuance Notice 4.04(a)
Lock-Up Period 5.03
Maximum Offering Size 5.01(e)
Piggyback Registration 5.02(a)
Records 5.04(g)
Registering Shareholders 5.01(a)
Replacement Nominee 2.03(a)
Requesting Shareholder 5.01(a)
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Response Notice 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tag-Along Seller 4.01(a)
Tagging Person 4.01(a)
ARTICLE 1
CORPORATE GOVERNANCE
SECTION 1.01. COMPOSITION OF THE BOARD. (a) The Board shall initially
consist of five directors, of whom three shall be designated by DLJMB, one shall
be designated by the DLJIP Funds, and one will be Xxxxxx X. Xxxxxxx, for so long
as he is employed by the Company and his employment agreement provides for him
to serve on the Board. The DLJ Funds shall be permitted to increase or decrease
the number of directors who serve on the Board from time to time, and DLJMB
shall be permitted to designate any such additional directors. The director
designated by the DLJIP Funds shall initially be Xxxxx Xxxxxx. The DLJIP Funds
shall have the right to designate a director only as long as they hold at least
50% of their Initial Ownership, and no transferee of a DLJIP Fund shall be able
to exercise any right to designate a director pursuant to this Agreement.
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(b) Each Shareholder agrees that, if at any time it is then entitled to
vote for the election of directors to the Board, it shall vote all of its
Company Securities that are entitled to vote or execute proxies or written
consents, as the case may be, and take all other necessary action (including
causing the Company to call a special meeting of shareholders) in order to
ensure that the composition of the Board is as set forth in this Section 2.01.
(c) The Company agrees to cause each individual designated pursuant to
Section 2.01(a) or 2.03 to be nominated to serve as a director on the Board, and
to take all other necessary actions (including calling a special meeting of the
Board and/or shareholders) to ensure that the composition of the Board is as set
forth in this Section 2.01.
SECTION 1.02. REMOVAL. Each Shareholder agrees that, if at any time it is
then entitled to vote for the removal of directors from the Board, it shall not
vote any of its Company Securities in favor of the removal of any director who
shall have been designated by DLJMB pursuant to Section 2.01, unless DLJMB shall
have consented to such removal in writing; PROVIDED that if DLJMB shall request
in writing the removal, with or without Cause, of such director, such
Shareholder shall vote all its Company Securities that are entitled to vote in
favor of such removal. Xxxxxx X. Xxxxxxx shall not be removed from the Board
while he is still employed by the Company as Chief Executive Officer pursuant to
a written and duly executed employment agreement.
SECTION 1.03. VACANCIES. If, as a result of death, disability, retirement,
resignation, removal or otherwise, there shall exist or occur any vacancy on the
Board:
(a) DLJMB may designate another individual (the "REPLACEMENT NOMINEE") to
fill such vacancy and serve as a director on the Board; and
(b) each Shareholder then entitled to vote for the election of directors
to the Board agrees that it shall vote all of its Company Securities that are
entitled to vote or execute proxies or written consents, as the case may be, in
order to ensure that the Replacement Nominee be elected to the Board.
SECTION 1.04. DIRECTOR EXPENSES. The Company shall pay all reasonable out-
of-pocket expenses incurred by each director in connection with attending
regular and special meetings of the Board and any committee thereof, and any
such meetings of the board of directors of any Subsidiary of the Company and any
committee thereof.
SECTION 1.05. CHARTER OR BYLAW PROVISIONS. Each Shareholder agrees to vote
all of its Company Securities that are entitled to vote or execute proxies or
written consents, as the case may be, and to take all other actions necessary,
to ensure that the Company's Charter and Bylaws (a) facilitate, and do not at
any time conflict with, any provision of this Agreement and
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(b) permit each Shareholder to receive the benefits to which each such
Shareholder is entitled under this Agreement. The Charter and Bylaws shall
provide for (a) the elimination of the liability of each director on the Board
to the maximum extent permitted by applicable law and (b) indemnification of
each director on the Board for acts on behalf of the Company to the maximum
extent permitted by applicable law.
ARTICLE 2
RESTRICTIONS ON TRANSFER
SECTION 2.01. GENERAL RESTRICTIONS ON TRANSFER. (a) Each Shareholder
understands and agrees that the Company Securities held by it on the date hereof
have not been registered under the Securities Act and are restricted securities
under the Securities Act and the rules and regulations promulgated thereunder.
Each Shareholder agrees that it shall not Transfer any Company Securities (or
solicit any offers in respect of any Transfer of any Company Securities), except
in compliance with the Securities Act, any other applicable securities or "blue
sky" laws, any restrictions on Transfer contained in the terms and conditions
for such Company Securities, any agreement or instrument pursuant to which such
Company Securities have been issued, and the terms and conditions of this
Agreement.
(b) Any attempt to Transfer any Company Securities not in compliance with
this Agreement shall be null and void, and the Company shall not, and shall
cause any transfer agent not to, give any effect in the Company's stock records
to such attempted Transfer.
SECTION 2.02. LEGENDS. (a) In addition to any other legend that may be
required, each certificate for Company Securities issued to any Shareholder
shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY FOREIGN OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SHAREHOLDERS'
AGREEMENT DATED AS OF OCTOBER 11, 2000, COPIES OF WHICH MAY BE OBTAINED
UPON REQUEST FROM ADVANSTAR HOLDINGS CORP. OR ANY SUCCESSOR THERETO."
(b) If any Company Securities shall cease to be Registrable Securities
under clause (i) or clause (ii) of the definition thereof, the Company, upon the
written request of the holder thereof, shall issue to such holder a new
certificate evidencing such Company Securities without
11
the first sentence of the legend required by Section 3.02(a) endorsed thereon.
If any Company Securities cease to be subject to any and all restrictions on
Transfer set forth in this Agreement, the Company, upon the request of the
written holder thereof, shall issue to such holder a new certificate evidencing
such Company Securities without the second sentence of the legend required by
Section 3.02(a) endorsed thereon.
SECTION 2.03. PERMITTED TRANSFEREES. Notwithstanding anything in this
Agreement to the contrary, any Shareholder may at any time Transfer any or all
of its Company Securities to one or more of its Permitted Transferees without
the consent of any Person and without compliance with Sections 3.04, 3.05, 4.01
and 4.02 so long as (a) such Permitted Transferee shall have agreed in writing
to be bound by the terms of this Agreement in the form of Exhibit A attached
hereto and (b) the Transfer to such Permitted Transferee is in compliance with
the Securities Act, any other applicable securities or "blue sky" laws, any
restrictions on Transfer contained in the terms and conditions for such Company
Securities, and any agreement or instrument pursuant to which such Company
Securities have been issued.
SECTION 2.04. RESTRICTIONS ON TRANSFERS BY EXISTING SHAREHOLDERS AND DLJIP
FUNDS, AND TRANSFERS OF ROLLOVER SHARES GENERALLY. (a) Subject to Section
3.04(b), no Existing Shareholder or DLJIP Fund shall Transfer any of its Company
Securities and neither Krakoff nor Xxxx shall sell any of their respective
Rollover Shares, except to one or more of its Permitted Transferees in
accordance with Section 3.03 or as follows (in each case in compliance with the
Securities Act, any other applicable securities or "blue sky" laws, any
restrictions contained in the terms and conditions for such Company Securities
and any agreement or instrument pursuant to which such Company Securities have
been issued):
(i) (only in the case of a DLJIP Fund, or a transferee of a DLJIP
Fund pursuant to this paragraph (i)) to any Person who is not an Adverse
Person, PROVIDED that (A) it transfers to such Person in the same
transaction Senior Discount Debentures due 2011 of Advanstar, Inc.
("NOTES") in the same ratio of Notes to Warrants at which the DLJIP Funds
originally purchased Notes and Warrants (or in a greater ratio of Notes to
Warrants) and (B) such transferee shall have agreed in writing to be bound
by the terms of this Agreement in the form of Exhibit A attached hereto,
as if such Person were a DLJIP Fund;
(ii) in a Transfer in a Tag-Along Sale or Drag-Along Sale pursuant
to Section 4.01 or 4.02;
(iii) on or after the date of the Initial Public Offering, in the
Initial Public Offering to the extent permitted by Section 5.02(c) or in a
Public Offering thereafter in connection with the exercise of its rights
under Article 5 hereof or pursuant to Rule 144, in each case in compliance
with Section 5.03, or in a Transfer to any Person that is not
12
an Adverse Person, or (only in the case of an H&F Fund) in a Transfer to a
general or limited partner of such H&F Fund as part of a general
distribution to all general and limited partners of such H&F Fund; or
(iv) in a Transfer during the Restricted Sales Period to any Person
that is not an Adverse Person; PROVIDED that the transferee must agree to
be bound by the terms of this Agreement in the form of Exhibit A attached
hereto.
(b) The restrictions on Transfer set forth in Section 3.04(a) above shall
terminate at the earlier to occur of (i) the tenth anniversary of the Closing
Date and (ii) the date when the Remaining Initial Ownership of the DLJ Funds
falls below 16-2/3%.
(c) Transfers by Krakoff and Xxxx of Rollover Shares pursuant to Sections
3.04(a)(ii), 3.04(a)(iii), and 3.04(a)(iv) shall be permitted notwithstanding
anything to the contrary in Section 3.05 hereof.
SECTION 2.05. RESTRICTIONS ON TRANSFERS BY MANAGEMENT SHAREHOLDERS. (a)
Subject to Section 3.05(b), no Management Shareholder shall Transfer any of his
Company Securities, except to one or more of its Permitted Transferees in
accordance with Section 3.03 or as follows (in each case in compliance with the
Securities Act, any other applicable securities or "blue sky" laws, any
restrictions contained in the terms and conditions for such Company Securities,
and any agreement or instrument pursuant to which such Company Securities have
been issued):
(i) in a Transfer in a Tag-Along Sale or Drag-Along Sale pursuant to
Section 4.01 or 4.02;
(ii) after the date of the Initial Public Offering, in a Public
Offering in connection with the exercise of their respective registration
rights under Article 5 hereof or pursuant to Rule 144, in each case in
compliance with Section 5.03, or in a Transfer to any Person that is not
an Adverse Person; PROVIDED that:
(A) prior to the date that is 4-1/2 years following the
consummation of the Initial Public Offering, until the Remaining
Initial Ownership for the DLJ Funds falls below 66.67%, no
Management Shareholder may Transfer any Company Securities;
(B) prior to the date that is 4-1/2 years following the
consummation of the Initial Public Offering, for so long as the
Remaining Initial Ownership for the DLJ Funds is at least 50% but
less than 66.67%, each Management Shareholder shall be permitted to
Transfer up to the greater of: (1) 15,000
13
Common Shares (less the aggregate number of Common Shares previously
transferred by such Management Shareholder pursuant to this Section
3.05(a)(ii)) and (2) the number of Common Shares that would reduce
such Management Shareholder's Retained Vested Ownership to 75%;
(C) prior to the date that is 4-1/2 years following the
consummation of the Initial Public Offering, for so long as the
Remaining Initial Ownership for the DLJ Funds is at least 33.33% but
less than 50%, each Management Shareholder shall be permitted to
Transfer up to the greater of: (1) 30,000 Common Shares (less the
aggregate number of Common Shares previously transferred by such
Management Shareholder pursuant to this Section 3.05(a)(ii)) and (2)
the number of Common Shares that would reduce such Management
Shareholder's Retained Vested Ownership to 50%;
(D) prior to the date that is 4-1/2 years following the
consummation of the Initial Public Offering, for so long as the
Remaining Initial Ownership for the DLJ Funds by their Initial
Ownership is at least 16.67% but less than 33.33%, each Management
Shareholder shall be permitted to Transfer up to the greater of: (1)
45,000 Common Shares (less the aggregate number of Common Shares
previously transferred by such Management Shareholder pursuant to
this Section 3.05(a)(ii)) and (2) the number of Common Shares that
would reduce such Management Shareholder's Retained Vested Ownership
to 25%; and
(E) at any time on or after the earlier of (1) the date when
the Remaining Initial Ownership for the DLJ Funds falls below 16.67%
and (2) the date that is 4-1/2 years following the consummation of
the Initial Public Offering, each Management Shareholder shall be
permitted to Transfer any or all of his Company Securities;
PROVIDED FURTHER that notwithstanding the restriction in (A) above, at any
time on or after the date that is 3 years following the consummation of
the Initial Public Offering, each Management Shareholder shall be
permitted to Transfer up to the greater of: (1) 15,000 Common Shares (less
the aggregate number of Common Shares previously transferred by such
Management Shareholder pursuant to this Section 3.05(a)(ii)) and (2) the
number of Common Shares that would not reduce such Management
Shareholder's Retained Vested Ownership below 75%.
(iii) in a Transfer during the Restricted Sales Period to any Person
that is not an Adverse Person; PROVIDED that the transferee must agree to
be bound by and a party to this Agreement; and PROVIDED FURTHER that no
Management Shareholder shall
14
be permitted to Transfer any Company Securities pursuant to this clause
(iii) if such Transfer would cause (x) such Management Shareholder's
Retained Vested Ownership to be less than (1) 100% minus (2) the product
of 20% and the number of full years that have occurred since the fourth
anniversary of the Closing Date, or (y) such Management Shareholder's
Retained Vested Ownership to be less than the Remaining Initial Ownership
for the DLJ Funds; and
(iv) at any time while a Transfer of Company Securities would
otherwise be prohibited by this Section 3.05(a), any Management
Shareholder other than Krakoff and Xxxx shall be permitted to Transfer, to
any Person who is not an Adverse Person, an aggregate number of Common
Shares that would not cause such Management Shareholder's Retained Vested
Ownership to be less than 97%; PROVIDED that the transferee must agree to
be bound by and a party to this Agreement.
(b) The restrictions on Transfers set forth in Section 3.05(a) above shall
terminate at the earlier to occur of (i) the tenth anniversary of the Closing
Date and (ii) the date when the Remaining Initial Ownership for the DLJ Funds
falls below 16-2/3%. Notwithstanding the immediately preceding sentence, the
restrictions on Transfers set forth in Section 3.05(a) shall not terminate with
respect to any Management Shareholder's Company Securities that shall have been
pledged to the Company as security in connection with any indebtedness for
borrowed money owed by such Management Shareholder to the Company, unless the
proceeds from the sale of such Securities are applied to repay such indebtedness
in full.
ARTICLE 3
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
SECTION 3.01. TAG-ALONG RIGHTS. (a) Subject to Sections 4.01(g) and 4.03,
if any DLJ Funds (collectively, the "TAG-ALONG SELLER") propose to Transfer any
Company Securities to any Third Party in a single transaction or in a series of
related transactions (a "TAG-ALONG SALE"),
(i) the Tag-Along Seller shall provide each Other Shareholder notice
of the terms and conditions of such proposed Transfer ("TAG-ALONG NOTICE")
and offer each Other Shareholder the opportunity to participate in such
Transfer in accordance with this Section 4.01, and
(ii) each Other Shareholder may elect, at its option, to participate
in the proposed Transfer in accordance with this Section 4.01 (each such
electing Other Shareholder, a "TAGGING PERSON").
15
The Tag-Along Notice shall identify the number and class of Company
Securities proposed to be sold by the Tag-Along Seller and all other Company
Securities subject to the offer ("TAG-ALONG OFFER"), the consideration for which
the Transfer is proposed to be made, and all other material terms and conditions
of the Tag-Along Offer, including the form of the proposed agreement, if any,
and a firm offer by the proposed transferee to purchase Company Securities from
the Shareholders in accordance with this Section 4.01.
From the date of its receipt of the Tag-Along Notice, each Tagging Person
shall have the right (a "TAG-ALONG RIGHT"), exercisable by notice ("TAG-ALONG
RESPONSE NOTICE") given to the Tag-Along Seller within 15 days after its receipt
of the Tag-Along Notice (the "TAG-ALONG NOTICE PERIOD"), to request that the
Tag-Along Seller include in the proposed Transfer the number of Company
Securities held by such Tagging Person as is specified in the Tag-Along Response
Notice; PROVIDED that, if the aggregate number of Company Securities proposed to
be sold by the Tag-Along Seller and all Tagging Persons in such transaction
exceeds the number of Company Securities that can be sold on the terms and
conditions set forth in the Tag-Along Notice, then each Tagging Person shall be
entitled to include in the Tag-Along Sale only its Tag-Along Portion of Company
Securities and the Tag-Along Seller shall be entitled to include the number of
Company Securities proposed to be Transferred by the Tag-Along Seller as set
forth in the Tag- Along Notice (reduced, to the extent necessary, so that each
Tagging Person shall be able to include its Tag-Along Portion) and such
additional Company Securities as permitted by Section 4.01(d), and PROVIDED
FURTHER that, if such Tagging Person owns any Warrants, such Tagging Person, in
lieu of exercising Warrants, may Transfer Warrants for some or all of that
number of Common Shares as would otherwise have constituted its Tag-Along
Portion, in which event the consideration to be received with respect to each
such Warrant shall be the consideration per Common Share applicable to the
Tag-Along Offer, less the then applicable exercise price of the Warrants
included in the Tag-Along Sale. Each Tag-Along Response Notice shall include
wire transfer instructions for payment of the purchase price for the Company
Securities to be sold in such Tag-Along Sale. Each Tagging Person that exercises
its Tag-Along Rights hereunder shall deliver to the Tag- Along Seller, with its
Tag-Along Response Notice, the certificate or certificates representing the
Company Securities of such Tagging Person to be included in the Tag- Along Sale,
together with a limited power-of-attorney authorizing the Tag-Along Seller to
Transfer such Company Securities on the terms set forth in the Tag-Along Notice.
Delivery of the Tag-Along Response Notice with such certificate or certificates
and limited power-of-attorney shall constitute an irrevocable acceptance of the
Tag-Along Offer by such Tagging Persons.
If, at the end of a 120-day period after such delivery of such
Tag-Along Response Notice (which 120-day period shall be extended if any of the
transactions contemplated by the Tag-Along Offer are subject to regulatory
approval until the expiration of five Business Days after all such approvals
have been received, but in no event later than 180 days following
16
receipt of the Tag-Along Response Notice by the Tag-Along Seller), the Tag-Along
Seller has not completed the Transfer of all such Company Securities on
substantially the same terms and conditions set forth in the Tag-Along Notice,
the Tag- Along Seller shall (i) return to each Tagging Person the limited
power-of-attorney (and all copies thereof) together with all certificates
representing the Company Securities that such Tagging Person delivered for
Transfer pursuant to this Section 4.01(a) and any other documents in the
possession of the Tag-Along Seller executed by the Tagging Persons n connection
with the proposed Tag-Along Sale, and (ii) not conduct any Transfer of Company
Securities without again complying with this Section.
(b) Concurrently with the consummation of the Tag-Along Sale, the
Tag-Along Seller shall (i) notify the Tagging Persons thereof, (ii) remit to the
Tagging Persons the total consideration for the Company Securities of the
Tagging Persons Transferred pursuant thereto, with the cash portion of the
purchase price paid by wire transfer of immediately available funds in
accordance with the wire transfer instructions in the applicable Tag-Along
Response Notices and (iii) promptly after the consummation of such Tag-Along
Sale, furnish such other evidence of the completion and the date of completion
of such transfer and the terms thereof as may be reasonably requested by the
Tagging Persons.
(c) If at the termination of the Tag-Along Notice Period any Other
Shareholder shall not have elected to participate in the Tag-Along Sale, such
Other Shareholder shall be deemed to have waived its rights under Section
4.01(a) with respect to, and only with respect to, the Transfer of its Company
Securities pursuant to such Tag-Along Sale.
(d) If (i) any Other Shareholder declines to exercise its Tag-Along Rights
or (ii) any Tagging Person elects to exercise its Tag-Along Rights with respect
to less than such Tagging Person's Tag-Along Portion, the Tag-Along Seller shall
be entitled to Transfer, pursuant to the Tag-Along Offer, a number of Company
Securities held by it equal to the number of Company Securities constituting, as
the case may be, the Tag-Along Portion of such Other Shareholder and the portion
of such Tagging Person's Tag-Along Portion with respect to which Tag-Along
Rights were not exercised.
(e) The Tag-Along Seller shall Transfer, on behalf of itself and any
Tagging Person, the Company Securities subject to the Tag-Along Offer and
elected to be Transferred on the terms and conditions set forth in the Tag-Along
Notice within 120 days (or such longer period as extended under Section 4.01(a))
of the date on which all Tag-Along Rights shall have been waived, exercised or
expired; PROVIDED that the consideration payable in any such Transfer may exceed
the consideration specified in the Tag-Along Notice by up to 10%.
(f) Notwithstanding anything contained in this Section 4.01, there shall
be no liability on the part of the Tag-Along Seller to the Tagging Persons
(other than the obligation to return
17
any certificates evidencing Company Securities and limited powers- of-attorney
received by the Tag-Along Seller) if the Transfer of Company Securities pursuant
to Section 4.01 is not consummated for whatever reason. Whether to effect a
Transfer of Company Securities pursuant to this Section 4.01 by the Tag-Along
Seller is in the sole and absolute discretion of the Tag-Along Seller.
(g) No Management Shareholder shall have any rights under this Section
4.01 until such time as the Remaining Initial Ownership for the DLJ Funds,
immediately prior to or as a result of the proposed Transfer, is or would be
less than 66-2/3%. The provisions of this Section 4.01 shall not apply to any
Transfer of Company Securities: (i) to any Permitted Transferees of the
Tag-Along Seller, (ii) in a Drag-Along Sale for which the Drag-Along Seller
shall have elected to exercise its rights under Section 4.02 or (iii) in the
Initial Public Offering or at any time thereafter. The provisions of this
Section 4.01 shall terminate upon the consummation of the Initial Public
Offering.
SECTION 3.02. DRAG-ALONG RIGHTS. (a) Subject to Sections 4.02(e) and 4.03,
if the DLJ Funds (collectively, the "DRAG-ALONG SELLER") propose to Transfer
Company Securities to any Third Party (the "DRAG-ALONG TRANSFEREE") in a single
transaction or in a series of related transactions, and
(i) the Company Securities to be Transferred by the Drag-Along
Seller represent not less than 50% of their Initial Ownership, or
(ii) the Company Securities to be Transferred by the Drag-Along
Seller, together with the Company Securities to be Transferred by the
Other Shareholders pursuant to this Section 4.02(a), constitute more than
50% of the Common Shares then outstanding,
(any such Transfer, a "DRAG-ALONG SALE"), the Drag-Along Seller may at its
option require each Other Shareholder to Transfer the Drag-Along Portion of
Company Securities ("DRAG-ALONG RIGHTS") then held by such Other Shareholder,
and (subject to and at the closing of the Drag-Along Sale) to exercise such
number of options or Warrants for Common Shares held by such Other Shareholder
as is required in order that a sufficient number of Common Shares are available
to Transfer the relevant Drag-Along Portion of Company Securities held by each
such Other Shareholder, for the same consideration per unit of the relevant
class of Company Securities and otherwise on the same terms and conditions as
the Drag-Along Seller; PROVIDED that any Other Shareholder that holds options or
Warrants the exercise price per share of which is greater than the per share
price at which the Common Shares are to be Transferred to the Drag-Along
Transferee, if required by the Drag-Along Seller to exercise such options or
Warrants, may, in place of such exercise, submit to irrevocable cancellation
thereof without any liability for payment of any exercise price with respect
thereto. If the Drag-Along Sale is not
18
consummated with respect to any Common Shares acquired upon exercise of such
options or Warrants, or the Drag-Along Sale is not consummated, such options or
Warrants shall be deemed not to have been exercised or canceled, as applicable.
The Drag-Along Seller shall provide notice of such Drag-Along Sale to the
Other Shareholders (a "DRAG-ALONG SALE NOTICE") not later than 15 days prior to
the proposed Drag-Along Sale. The Drag-Along Sale Notice shall identify the
transferee, the number of Company Securities subject to the Drag-Along Sale, the
consideration for which a Transfer is proposed to be made (the "DRAG-ALONG SALE
PRICE") and all other material terms and conditions of the Drag-Along Sale. The
number of Company Securities to be sold by each Other Shareholder shall be the
Drag-Along Portion of the class of Company Securities that such Other
Shareholder owns. Each Other Shareholder shall be required to participate in the
Drag-Along Sale on the terms and conditions set forth in the Drag- Along Sale
Notice and to tender all its Company Securities as set forth below. The price
payable in such Transfer shall be the Drag-Along Sale Price. Not later than 10
days after the date of the Drag-Along Sale Notice (the "DRAG-ALONG SALE NOTICE
PERIOD"), each of the Other Shareholders shall deliver to a representative of
the Drag-Along Seller designated in the Drag-Along Sale Notice the certificate
and other applicable instruments representing the Company Securities of such
Other Shareholder to be included in the Drag-Along Sale, together with a limited
power-of-attorney authorizing the Drag-Along Seller or such representative to
Transfer such Company Securities on the terms set forth in the Drag-Along Notice
and wire transfer instructions for payment of the cash portion of the
consideration to be received in such Drag-Along Sale, or, if such delivery is
not permitted by applicable law, an unconditional agreement to deliver such
Company Securities pursuant to this Section 4.02(a) at the closing for such
Drag-Along Sale against delivery to such Other Shareholder of the consideration
therefor. If an Other Shareholder should fail to deliver such certificates to
the Drag-Along Seller, the Company (subject to reversal under Section 4.02(b))
shall cause the books and records of the Company to show that such Company
Securities are bound by the provisions of this Section 4.02(a) and that such
Company Securities shall be Transferred to the Drag-Along Transferee immediately
upon surrender for Transfer by the holder thereof.
(b) The Drag-Along Seller shall have a period of 120 days from the date of
receipt of the Drag-Along Sale Notice to consummate the Drag-Along Sale on the
terms and conditions set forth in such Drag-Along Sale Notice, PROVIDED that, if
such Drag- Along Sale is subject to regulatory approval, such 120-day period
shall be extended until the expiration of five Business Days after all such
approvals have been received, but in no event later than 180 days following the
effective date of the Drag-Along Sale Notice. If the Drag-Along Sale shall not
have been consummated during such period, the Drag-Along Seller shall return to
each of the Other Shareholders the limited power-of-attorney and all
certificates and other applicable instruments representing Company Securities
that such Other Shareholders delivered for Transfer pursuant hereto, together
with any other documents in the possession of the Drag-Along Seller executed
19
by the Other Shareholders in connection with such proposed Transfer, and all the
restrictions on Transfer contained in this Agreement or otherwise applicable at
such time with respect to such Company Securities owned by the Other
Shareholders shall again be in effect.
(c) Concurrently with the consummation of the Drag-Along Sale, the Drag-
Along Seller shall give notice thereof to the Other Shareholders, shall remit to
each of the Other Shareholders that have surrendered their certificates and
other applicable instruments the total consideration (the cash portion of which
is to be paid by wire transfer in accordance with such Other Shareholder's wire
transfer instructions) for the Company Securities Transferred pursuant hereto
and shall furnish such other evidence of the completion and time of completion
of such Transfer and the terms thereof as may be reasonably requested by such
Other Shareholders.
(d) Notwithstanding anything contained in this Section 4.02, there shall
be no liability on the part of the Drag-Along Seller to the Other Shareholders
(other than the obligation to return the limited power-of-attorney and the
certificates and other applicable instruments representing Company Securities
received by the Drag-Along Seller) if the Transfer of Company Securities
pursuant to this Section 4.02 is not consummated for whatever reason, regardless
of whether the Drag-Along Seller has delivered a Drag-Along Sale Notice. Whether
to effect a Transfer of Company Securities pursuant to this Section 4.02 by the
Drag-Along Seller is in the sole and absolute discretion of the Drag-Along
Seller.
(e) The provisions of this Section 4.02 shall not apply to any Transfer in
a Public Offering or pursuant to Rule 144. With respect to the Existing
Shareholders, the DLJIP Funds and Krakoff and Xxxx (to the extent of their
respective Rollover Shares), this Section 4.02 shall terminate upon the
consummation of the Initial Public Offering.
SECTION 3.03. ADDITIONAL CONDITIONS TO TAG-ALONG SALES AND DRAG-ALONG
SALES. Notwithstanding anything contained in Sections 4.01 or 4.02, the rights
and obligations of the Other Shareholders to participate in a Tag-Along Sale
under Section 4.01 or a Drag-Along Sale under Section 4.02 are subject to the
following conditions:
(a) upon the consummation of such Tag-Along Sale or Drag-Along Sale, all
of the Shareholders participating therein will receive the same form and amount
of consideration per share, or, if any Shareholders are given an option as to
the form and amount of consideration to be received, all Shareholders
participating therein will be given the same option; and
(b) each Other Shareholder shall (i) make such representations, warranties
and covenants and enter into such definitive agreements as are customary for
transactions of the nature of the proposed Transfer, (ii) benefit from and be
subject to all of the same provisions of the definitive agreements as the
Tag-Along Seller or Drag-Along Seller, as the case may be,
20
and (iii) be required to bear their proportionate share of any escrows,
holdbacks or adjustments in purchase price; PROVIDED that no Other Shareholder
shall be obligated (A) to indemnify, other than severally indemnify, any Person
in connection with such Tag-Along Sale or Drag-Along Sale, as the case may be,
(B) to incur liability to any Person in connection with such Tag-Along Sale or
Drag-Along Sale, as the case may be, in excess of the lesser of (1) its pro rata
share of such liability and (2) the proceeds realized by such Other Shareholder
in such sale, or (C) to agree not to compete with or solicit the employees of
any Person, PROVIDED that any Management Shareholder who is offered continued
employment with the Company or any of its Subsidiaries after such Tag-Along Sale
or Drag-Along Sale on reasonably similar or better terms may be required to
agree with all of the following provisions in this Section 4.03(b) (but no other
noncompete or nonsolicitation agreement): that upon termination of the
Management Shareholder's employment or service with the Company or any of its
Subsidiaries for any reason other than the Company's or any of its Subsidiaries,
termination of such business relationship without Cause (as defined in the
Company's 2000 Management Incentive Plan), for the period of one (1) year
following the date of such termination, the Management Shareholder shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, be employed in a capacity that relates to the specific
duties and responsibilities over which the Management Shareholder exercised
direct control or which the Management Shareholder supervised directly during
the Management Shareholder's employment or service with the Company or any of
its Subsidiaries, or in any manner engage in, any business that competes with
the businesses of the Company or any of its Subsidiaries. For the purposes of
this Section, a business is deemed to compete with the businesses of the Company
or any of its Subsidiaries if such business engages in any of the following: (i)
the organization of trade exhibitions or conferences (regardless of the subject
matter of any such trade exhibition or conference), (ii) the publication
(including electronic publication) of trade journals and other magazines aimed
at any particular industry or profession, or (iii) the development or operation
of business-to-business portal websites. Notwithstanding the two immediately
preceding sentences, (1) nothing in such noncompete agreement shall prohibit the
Management Shareholder, if he or she was employed by, or providing services for,
the Company or any of its Subsidiaries (within 12 months preceding the date of
termination) primarily within one Geographic Region (as defined below), from
becoming employed by, or providing services for, any third party primarily
within another Geographic Region and (2) nothing in such noncompete agreement
shall prohibit the Management Shareholder, if he or she was primarily employed
by, or providing services for, the Company or any of its Subsidiaries (within 12
months preceding the date of termination) with respect to trade publications,
trade exhibitions, conferences or websites serving particular industries or
markets (as defined by the publication subscribers and advertisers, trade
exhibition attendees and exhibitors, conference registrants and content, website
users, advertisers and other participants), from becoming employed by, or
providing services for, any third party primarily with respect to trade
publications, trade exhibitions, conferences or websites serving other
industries or markets. As used herein, "GEOGRAPHIC REGION" means any of the (i)
United States, Canada and Mexico,
21
(ii) South America, (iii) Europe, (iv) China and South East Asia, including
Indonesia, Malaysia, Taiwan, Japan and the Pacific Islands, (v) Australia and
(vi) the rest of the world. In the event of termination of the Management
Shareholder's employment or service with the Company for any reason whatsoever,
the Management Shareholder will agree to refrain from soliciting, interfering
with or endeavoring to entice away any employee of the Company or any of its
Subsidiaries for a period of one (1) year following the date of such
termination. Nothing in such noncompete agreement shall prohibit the Management
Shareholder from being a passive owner of not more than 2% of the outstanding
stock of any class or a corporation which is publicly traded, so long as the
Management Shareholder has no active participation in the management or business
of such corporation.
SECTION 3.04. PREEMPTIVE RIGHTS. (a) The Company shall give each Existing
Shareholder notice (an "ISSUANCE NOTICE") of any proposed issuance by the
Company of any Company Securities to any DLJ Funds prior to the Initial Public
Offering at least 15 Business Days prior to the proposed issuance date. The
Issuance Notice shall specify the price at which such Company Securities are to
be issued and the other material terms of the issuance. Subject to Section
4.04(e) below, if any DLJ Funds will purchase any such Company Securities from
the Company, each Existing Shareholder shall be entitled to purchase such
Shareholder's Pro Rata Share of the Company Securities proposed to be issued, at
the price and on the other terms specified in the Issuance Notice.
(b) An Existing Shareholder may exercise its rights under this Section
4.04 by delivering notice of its election to purchase such Company Securities to
the Company, the DLJ Funds and to each other Existing Shareholder within ten
Business Days of receipt of the Issuance Notice. A delivery of such notice
(which notice shall specify the number (or amount) of Company Securities to be
purchased by the Shareholder submitting such notice) by such Existing
Shareholder shall constitute a binding agreement of such Shareholder to
purchase, at the price and on the terms specified in the Issuance Notice, the
number of shares (or amount) of Company Securities specified in such
Shareholder's notice. If, at the termination of such ten-Business Day-period,
any Existing Shareholder shall not have exercised its rights to purchase any of
such Shareholder's Pro Rata Share of such Company Securities, such Existing
Shareholder shall be deemed to have waived all of its rights under this Section
4.04 with respect to, and only with respect to, the purchase of such Company
Securities.
(c) If any Existing Shareholder declines to exercise its preemptive rights
under this Section 4.04 or elects to exercise such rights with respect to less
than such Existing Shareholder's Pro Rata Share, the DLJ Funds shall be entitled
to purchase from the Company the number of Company Securities constituting the
Pro Rata Share with respect to which such Existing Shareholder shall not have
exercised its preemptive rights.
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(d) The Company shall have 90 days from the date of the Issuance Notice to
consummate the proposed issuance of any or all of such Company Securities that
the DLJ Funds and the Existing Shareholders have elected not to purchase at the
price and upon terms that are not materially less favorable to the Company than
those specified in the Issuance Notice, PROVIDED that, if such issuance is
subject to regulatory approval, such 90- day period shall be extended until the
expiration of five Business Days after all such approvals have been received,
but in no event later than 120 days from the date of the Issuance Notice. At the
consummation of such issuance, the Company shall issue certificates representing
the Company Securities to be purchased by each Shareholder exercising preemptive
rights pursuant to this Section 4.04 registered in the name of such Shareholder,
against payment by such Shareholder of the purchase price for such Company
Securities. If the Company proposes to issue any class of Company Securities
after such 90-day period, it shall again comply with the procedures set forth in
this Section 4.04.
(e) Notwithstanding the foregoing, no Shareholder shall be entitled to
purchase Company Securities as contemplated by this Section 4.04 in connection
with issuances of Company Securities (i) in connection with any bona fide,
arm's-length restructuring of outstanding debt of the Company or any Subsidiary,
or (ii) in connection with any bona fide, arm's-length direct or indirect
merger, acquisition or similar transaction. The Company shall not be under any
obligation to consummate any proposed issuance of Company Securities, nor shall
there be any liability on the part of the Company to any Shareholder if the
Company has not consummated any proposed issuance of Company Securities pursuant
to this Section 4.04 for whatever reason, regardless of whether it shall have
delivered an Issuance Notice in respect of such proposed issuance.
(f) The provisions of this Section 4.04 shall terminate upon the
consummation of the Initial Public Offering.
ARTICLE 4
REGISTRATION RIGHTS
SECTION 4.01. DEMAND REGISTRATION. (a) If the Company shall receive a
written request from any DLJ Funds (or, on one occasion under the circumstances
set forth herein, the DLJIP Funds) (such requesting person, the "REQUESTING
SHAREHOLDER") that the Company effect the registration under the Securities Act
of all or any portion of such Requesting Shareholder's Registrable Securities,
and specifying the intended method of disposition thereof, then the Company
shall promptly give notice of such requested registration (each such request
shall be referred to herein as a "DEMAND REGISTRATION") at least 15 Business
Days prior to the anticipated filing date of the registration statement relating
to such Demand Registration to the
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other Shareholders and thereupon shall use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:
(i) all Registrable Securities for which the Requesting Shareholders
have requested registration under this Section 5.01, and
(ii) subject to the restrictions set forth in Sections 5.01(e) and
5.02, all other Registrable Securities of the same class as those
requested to be registered by the Requesting Shareholders that any
Shareholders with rights to request registration under Section 5.02 (all
such Shareholders, together with the Requesting Shareholders, the
"REGISTERING SHAREHOLDERS") have requested the Company to register by
request received by the Company within ten Business Days after such
Shareholders receive the Company's notice of the Demand Registration,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; PROVIDED that, subject to Section 5.01(d) hereof, the Company shall
not be obligated to effect (x) more than six Demand Registrations, (y) more than
one Demand Registration during any four-month period, or (z) any Demand
Registration unless the aggregate gross proceeds expected to be received from
the sale of the Registrable Securities requested to be included by all
Registering Shareholders in such Demand Registration are at least (A)
$50,000,000 if such Demand Registration would constitute the Initial Public
Offering, or (B) $25,000,000 in any Demand Registration other than the Initial
Public Offering.
(b) Promptly after the expiration of the ten Business Day period referred
to in Section 5.01(a)(ii) hereof, the Company will notify all Registering
Shareholders of the identities of the other Registering Shareholders and the
number of shares of Registrable Securities requested to be included therein. At
any time prior to the effective date of the registration statement relating to
such registration, the Requesting Shareholders may revoke such request, without
liability to any of the other Registering Shareholders, by providing a notice to
the Company revoking such request.
(c) The Company shall be liable for and pay all Registration Expenses in
connection with each Demand Registration, regardless of whether such
Registration is effected.
(d) A Demand Registration shall not be deemed to have occurred:
(i) unless the registration statement relating thereto (A) has
become effective under the Securities Act and (B) has remained effective
for a period of at least 120 days (or such shorter period in which all
Registrable Securities of the Registering Shareholders included in such
registration have actually been sold thereunder),
24
PROVIDED that such registration statement shall not be considered a Demand
Registration if, after such registration statement becomes effective, (1)
such registration statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court and (2) less than 75% of the Registrable Securities
included in such registration statement have been sold thereunder; or
(ii) if the Maximum Offering Size (as defined below) is reduced in
accordance with Section 5.01(e) such that less than 66-2/3% of the
Registrable Securities of the Requesting Shareholders sought to be
included in such registration are included.
(e) If a Demand Registration involves a Public Offering and the managing
underwriter advises the Company and the Requesting Shareholders that, in its
view, the number of Company Securities that the Registering Shareholders and the
Company propose to include in such registration exceeds the largest number of
shares that can be sold without having an adverse effect on such offering,
including the price at which such shares can be sold (the "MAXIMUM OFFERING
SIZE"), the Company shall include in such registration, in the priority listed
below, up to the Maximum Offering Size:
(i) first, all Registrable Securities requested to be registered by
the Requesting Shareholders (allocated, if necessary for the offering not
to exceed the Maximum Offering Size, pro rata among such entities on the
basis of the relative number of Registrable Securities so requested to be
included in such registration by each), and
(ii) second, all Registrable Securities proposed to be registered by
the Company or requested to be included in such registration by any other
Registering Shareholders (allocated, if necessary for the offering not to
exceed the Maximum Offering Size, pro rata among the Company and such
other Registering Shareholders on the basis of the relative number of
Registrable Securities so requested to be included in such registration by
each).
(f) The DLJIP Funds shall only be entitled to one Demand Registration,
which cannot be the Initial Public Offering. The DLJIP Funds shall not be
required to exercise their Warrants as a prerequisite to making a Demand
Registration REQUEST to the Company, but the DLJIP Funds shall only be entitled
to have the Company register Common Shares and not Warrants. Notwithstanding
anything to the contrary in this Agreement, the DLJIP Funds shall not be
entitled, in connection with such Demand Registration, to have officers of the
Company prepare and make presentations at any "road shows" or before any
analysts or rating agencies.
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SECTION 4.02. PIGGYBACK REGISTRATION. (a) If the Company proposes to
register any Company Securities under the Securities Act (other than a
registration on Form S-8 or S-4, or any successor or similar forms, relating to
Common Shares issuable upon exercise of employee stock options or in connection
with any employee benefit or similar plan of the Company or in connection with a
direct or indirect acquisition by the Company of another Person), the Company
shall each such time give prompt notice at least 15 Business Days prior to the
anticipated filing date of the registration statement relating to such
registration to each Shareholder with rights to require registration of Company
Securities hereunder, which notice shall set forth such Shareholder's rights
under this Section 5.02 and shall offer such Shareholder the opportunity to
include in such registration statement the number of Registrable Securities of
the same class or series as those proposed to be registered as each such
Shareholder may request (a "PIGGYBACK REGISTRATION"), subject to the
restrictions set forth in provisions of Sections 5.02(b) and 5.02(c). Upon the
request of any such Shareholder made within 15 Business Days after the receipt
of notice from the Company (which request shall specify the number of
Registrable Securities intended to be registered by such Shareholder), the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Securities that the Company has been so
requested to register by all such Shareholders with rights to require
registration or Company Securities hereunder, to the extent requisite to permit
the disposition of the Registrable Securities so to be registered, PROVIDED that
(i) if such registration involves a Public Offering, all such Shareholders
requesting to be included in the Company's registration must sell their
Registrable Securities to the underwriters selected as provided in Section
5.04(f)(i) on the same terms and conditions as apply to the Company or the
Requesting Shareholders, as applicable, and (ii) if, at any time after giving
notice of its intention to register any Company Securities pursuant to this
Section 5.02(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company shall give notice to all
such Shareholders and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration. No
registration effected under this Section 5.02 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required by Section
5.01. The Company shall be liable for and pay all Registration Expenses in
connection with each Piggyback Registration.
(b) If a Piggyback Registration involves a Public Offering (other than any
Demand Registration, in which case the provisions with respect to priority of
inclusion in such offering set forth in Section 5.01(e) shall apply) and the
managing underwriter advises the Company that, in its view, the number of
Company Securities that the Company and such Shareholders propose to include in
such registration exceeds the Maximum Offering Size, the Company shall include
in such registration, in the following priority, up to the Maximum Offering
Size:
26
(i) first, so much of the Company Securities proposed to be
registered for the account of the Company as would not cause the offering
to exceed the Maximum Offering Size, and
(ii) second, all Registrable Securities requested to be included in
such registration by any Shareholders pursuant to Section 5.02 (allocated,
if necessary for the offering not to exceed the Maximum Offering Size, pro
rata among such Shareholders on the basis of the relative number of shares
of Registrable Securities so requested to be included in such registration
by each).
(c) No Existing Shareholder shall be permitted to exercise its rights to
require registration of any Company Securities in the Initial Public Offering
unless Registrable Securities of the DLJ Funds are included in such
registration. No Management Shareholder shall have any rights to require
registration of any Company Securities in the Initial Public Offering under any
circumstances. No Existing Shareholder or Management Shareholder shall have any
rights to require registration of any Company Securities except to the extent
such Shareholder shall be permitted to Transfer such Company Securities pursuant
Section 3.04 or 3.05.
SECTION 4.03. LOCK-UP AGREEMENTS. If any registration of Company
Securities shall be effected in connection with a Public Offering, neither the
Company nor any Shareholder shall effect any public sale or distribution,
including any sale pursuant to Rule 144, of any Company Securities or other
security of the Company (except as part of such Public Offering) during the
period (each such period, a "LOCK-UP PERIOD") beginning 14 days prior to the
effective date of the applicable registration statement until the earlier of (i)
such time as the Company and the lead managing underwriter shall agree and (ii)
180 days after such effective date. No Other Shareholder shall be required to
commit to a Lock-Up Period that is greater than that to which the DLJ Funds are
required to commit, and each Other Shareholder shall be entitled to require, in
any agreement committing to any Lock-Up Period, that it shall be released from
such agreement automatically when the DLJ Funds are released from their
agreement committing to such Lock-Up Period. For the avoidance of doubt, this
Section 5.03 shall not be construed to affirmatively require any Other
Shareholder to commit to a Lock-Up Period that is greater than the period
beginning 14 days prior to the effective time of the applicable registration
statement and ending 180 days after the effective date of the applicable
registration statement.
SECTION 4.04. REGISTRATION PROCEDURES. Whenever any Shareholders request
that any Registrable Securities be registered pursuant to Section 5.01 or 5.02
hereof, subject to the provisions of such Sections, the Company shall use its
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and, in connection with any such request:
27
(a) The Company shall as expeditiously as possible prepare and file with
the SEC a registration statement on any form for which the Company then
qualifies or that counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 180 days, or in the case of a
shelf registration statement, one year (or such shorter period in which all of
the Registrable Securities of the Registering Shareholders included in such
registration statement shall have actually been sold thereunder).
(b) Prior to filing a registration statement or prospectus or any
amendment or supplement thereto, the Company shall, if requested, furnish to
each participating Shareholder and each underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter the Company shall furnish to
such Shareholder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 or Rule 430A under the Securities Act and such other
documents as such Shareholder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Shareholder.
(c) After the filing of the registration statement, the Company shall (i)
cause the related prospectus to be supplemented by any required prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act, (ii) comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition by the Registering Shareholders thereof set
forth in such registration statement or supplement to such prospectus and (iii)
promptly notify each Registering Shareholder holding Registrable Securities
covered by such registration statement of any stop order issued or threatened by
the SEC or any state securities commission and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
(d) The Company shall use its best efforts to (i) register or qualify the
Registrable Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as any
Registering Shareholder holding such Registrable Securities reasonably (in light
of such Shareholder's intended plan of distribution) requests and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Shareholder to
consummate the disposition of the
28
Registrable Securities owned by such Shareholder; PROVIDED that the Company
shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 5.04(d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
(e) The Company shall immediately notify each Registering Shareholder
holding such Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and promptly prepare and make available to each such Shareholder and
file with the SEC any such supplement or amendment.
(f) (i) The DLJ Funds shall have the right, in their sole discretion, to
select the underwriter or underwriters in connection with any Public Offering
resulting from a Demand Registration, which underwriter or underwriters may
include any Affiliate of any DLJ Fund, and (ii) the Company shall select an
underwriter or underwriters in connection with any other Public Offering. In
connection with any Public Offering, the Company shall enter into customary
agreements (including an underwriting agreement in customary form) and take such
all other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities in any such Public Offering,
including the engagement of a "qualified independent underwriter" in connection
with the qualification of the underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and substance
reasonably satisfactory to the Company, the Company shall make available for
inspection by any Registering Shareholder and any underwriter participating in
any disposition pursuant to a registration statement being filed by the Company
pursuant to this Section 5.04 and any attorney, accountant or other professional
retained by any such Shareholder or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably necessary or desirable to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records that the Company determines, in good faith,
to be confidential and that it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each Registering
Shareholder agrees that information obtained by it as a result of
29
such inspections shall be deemed confidential and shall not be used by it or its
Affiliates as the basis for any market transactions in the Company Securities
unless and until such information is made generally available to the public.
Each Registering Shareholder further agrees that, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, it shall give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(h) The Company shall furnish to each Registering Shareholder and to each
such underwriter, if any, a signed counterpart, addressed to such Shareholder or
underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the kind
customarily covered by opinions or comfort letters, as the case may be, as a
majority of such Shareholders or the managing underwriter therefor reasonably
requests.
(i) The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earning statement or such other
document that shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder.
(j) The Company may require each such Registering Shareholder promptly to
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time request and such
other information as may be legally required in connection with such
registration.
(k) Each such Registering Shareholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5.04(e) hereof, such Shareholder shall forthwith discontinue disposition
of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.04(e) hereof, and,
if so directed by the Company, such Shareholder shall deliver to the Company all
copies, other than any permanent file copies then in such Shareholder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. If the Company shall give such notice,
the Company shall extend the period during which such registration statement
shall be maintained effective (including the period referred to in Section
5.04(a) hereof) by the number of days during the period from and including the
date of the giving of notice pursuant to Section 5.04(e) hereof to the date when
the Company shall make available to such Shareholder a prospectus supplemented
or amended to conform with the requirements of Section 5.04(e) hereof.
30
(l) The Company shall use its reasonable efforts to list all Registrable
Securities covered by such registration statement on any securities exchange or
quotation system on which any of the Registrable Securities are then listed or
traded.
(m) The Company shall have appropriate officers of the Company (i) prepare
and make presentations at any "road shows" and before analysts and rating
agencies, as the case may be, (ii) take other actions to obtain ratings for any
Registrable Securities and (iii) otherwise use their reasonable efforts to
cooperate as requested by the underwriters in the offering, marketing or selling
of the Registrable Securities.
SECTION 4.05. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Registering Shareholder holding Registrable
Securities covered by a registration statement, its officers, directors,
employees, partners and agents, and each Person, if any, who controls such
Shareholder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable expenses of investigation and
reasonable attorneys' fees and expenses) ("DAMAGES") caused by or relating to
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable Securities
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by or relating
to any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such Damages are caused by or related to any such untrue
statement or omission or alleged untrue statement or omission so made based upon
information furnished in writing to the Company by such Shareholder or on such
Shareholder's behalf expressly for use therein, PROVIDED that, with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any preliminary prospectus, or in any prospectus, as the case may be, the
indemnity agreement contained in this paragraph shall not apply to the extent
that any Damages result from the fact that a current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) was not sent or
given to the Person asserting any such Damages at or prior to the written
confirmation of the sale of the Registrable Securities concerned to such Person
if it is determined that the Company has provided such prospectus to such
Shareholder and it was the responsibility of such Shareholder to provide such
Person with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) would have cured the
defect giving rise to such Damages. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act on substantially the same
basis as that of the indemnification of the Shareholders provided in this
Section 5.05.
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SECTION 4.06. INDEMNIFICATION BY PARTICIPATING SHAREHOLDERS. Each
Registering Shareholder holding Registrable Securities included in any
registration statement agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Shareholder, but only (i) with
respect to information furnished in writing by such Shareholder or on such
Shareholder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus or (ii) to the extent that any
Damages result from the fact that a current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) was not sent or given to
the Person asserting any such Damages at or prior to the written confirmation of
the sale of the Registrable Securities concerned to such Person if it is
determined that it was the responsibility of such Shareholder to provide such
Person with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) was available to such
Shareholder and would have cured the defect giving rise to such loss, claim,
damage, liability or expense. Each such Shareholder also agrees to indemnify and
hold harmless underwriters of the Registrable Securities, their officers and
directors and each Person who controls such underwriters within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act on
substantially the same basis as that of the indemnification of the Company
provided in this Section 5.06. As a condition to including Registrable
Securities in any registration statement filed in accordance with Article 5
hereof, the Company may require that it shall have received an undertaking
reasonably satisfactory to it from any underwriter to indemnify and hold it
harmless to the extent customarily provided by underwriters with respect to
similar securities. No Registering Shareholder shall be liable under this
Section 5.06 for any Damages in excess of the net proceeds realized by such
Shareholder in the sale of Registrable Securities of such Shareholder to which
such Damages relate.
SECTION 4.07. CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Article 5,
such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses, PROVIDED that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have
32
mutually agreed to the retention of such counsel or (ii) in the reasonable
judgment of such Indemnified Party representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, in connection with any proceeding or
related proceedings in the same jurisdiction, the Indemnifying Party shall not
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Without the prior written consent of the Indemnified Party, no
Indemnifying Party shall effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.
SECTION 4.08. CONTRIBUTION. If the indemnification provided for in this
Article 5 is unavailable to the Indemnified Parties in respect of any Damages,
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Damages (i) as between the Company and the Registering
Shareholders holding Registrable Securities covered by a registration statement
on the one hand and the underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company and such
Shareholders on the one hand and the underwriters on the other, from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and such
Shareholders on the one hand and of such underwriters on the other in connection
with the statements or omissions that resulted in such Damages, as well as any
other relevant equitable considerations and (ii) as between the Company on the
one hand and each such Shareholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Shareholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and such Shareholders on the one hand and such underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and such Shareholders bear to the total
underwriting discounts and commissions received by such underwriters, in each
case as set forth in the table on the cover page of the prospectus. The relative
fault of the Company and such Shareholders on the one hand and of such
underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue
33
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and such
Shareholders or by such underwriters. The relative fault of the Company on the
one hand and of each such Shareholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Registering Shareholders agree that it would not be
just and equitable if contribution pursuant to this Section 5.08 were determined
by pro rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5.08, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any Damages that such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Registering Shareholder shall be required
to contribute any amount in excess of the amount in excess of the amount by
which the net proceeds realized by such Shareholder in the sale of Registrable
Securities of such Shareholder to which such Damages relate exceeds the amount
of any Damages that such Shareholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Each
Registering Shareholder's obligation to contribute pursuant to this Section 5.08
is several in the proportion that the proceeds of the offering received by such
Shareholder bears to the total proceeds of the offering received by all such
Registering Shareholders and not joint.
SECTION 4.09. PARTICIPATION IN PUBLIC OFFERING. No Shareholder will be
permitted to require registration of any Registrable Securities in any Public
Offering hereunder unless such Shareholder (a) agrees to sell such Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and the provisions of this Agreement in respect of
registration rights.
34
SECTION 4.10. OTHER INDEMNIFICATION. Indemnification similar to that
specified herein (with appropriate modifications) shall be given by the Company
and each Shareholder participating therein with respect to any required
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
SECTION 4.11. COOPERATION BY THE COMPANY. If any Shareholder shall
transfer any Registrable Securities pursuant to Rule 144, the Company shall
cooperate, to the extent commercially reasonable, with such Shareholder and
shall provide to such Shareholder such information as such Shareholder shall
reasonably request.
SECTION 4.12. NO TRANSFER OF REGISTRATION RIGHTS. None of the rights of
Shareholders under this Article 5 shall be assignable by any Shareholder to any
Person acquiring Securities in any Public Offering or pursuant to Rule 144.
SECTION 4.13. S-8 REGISTRATION FOLLOWING IPO. The Company shall file a
registration statement on Form S-8 in accordance with applicable securities laws
within 180 days after the Initial Public Offering, which registration statement
will cover the Common Shares issuable upon exercise of employee options then
outstanding.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
SECTION 5.01. CONFIDENTIALITY. (a) Each Shareholder agrees that
Confidential Information (as defined below) furnished and to be furnished to it
was and shall be made available in connection with such Shareholder's investment
in the Company. Such Shareholder acknowledges that the Confidential Information
which such Shareholder has obtained or will obtain is the property of the
Company. Such Shareholder agrees that it shall use any Confidential Information
only in connection with its investment in the Company, and not for any other
purpose. Such Shareholder agrees that he or she will not disclose any
Confidential Information to any other Person, except that Confidential
Information may be disclosed: (i) to such Shareholder's Representatives (as
defined below) in the normal course of the performance of their duties or to any
financial institution providing credit to such Shareholder, (ii) to the extent
required by applicable law, rule or regulation (including complying with any
oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which a
Shareholder is subject; provided that such Shareholder give the Company prompt
notice of such requests, to the extent practicable, so
35
that the Company may seek an appropriate protective order or similar relief (and
the Shareholder shall cooperate with such efforts by the Company, and shall in
any event make only the minimum disclosure required by such law, rule or
regulation) or (iii) if the prior written consent of the Board shall have been
obtained.
(b) "CONFIDENTIAL INFORMATION" shall mean trade secrets, confidential or
proprietary information and all other knowledge, know-how, information,
documents or materials owned, developed or possessed by the Company or any
Persons that are or become its Subsidiaries, whether in tangible or intangible
form, pertaining to the business of the Company or its Subsidiaries or any
customer, known or intended to be known only to employees of the Company or its
Subsidiaries or other persons in a confidential relationship with the Company or
its Subsidiaries or the confidentiality of which the Company or its Subsidiaries
takes reasonable measures to protect, including, but not limited to, operating
procedures, knowledge of the organization, publications and events (including
advertising and exhibitor prices, costs, sales or content), processes,
contracts, financial information or measures, business methods, future business
plans, customers (including identities of customers and prospective customers,
identities of individual contacts at business entities which are customers or
prospective customers, preferences, businesses or habits), business
relationships, and other information owned, developed or possessed by the
Company or its Subsidiaries; PROVIDED that Confidential Information shall not
include information that (i) is or becomes generally known to the public other
than as a result of a disclosure by a Shareholder or its partners, directors,
officers, employees, agents, counsel, investment advisers or representatives
(all such persons being collectively referred to as "REPRESENTATIVES") in
violation of this Agreement, (ii) is or was available to such Shareholder on a
non-confidential basis prior to its disclosure to such Shareholder or its
Representatives, or (iii) was or becomes available to such Shareholder on a
non-confidential basis from a source other than the Company, which source is or
was (at the time of receipt of the relevant information) not, to the best of
such Shareholder's knowledge, bound by a confidentiality agreement with the
Company or another Person.
(c) This Section 6.01 shall not apply to any transferee of a DLJIP Fund
who is not a Permitted Transferee.
(d) This Section 6.01 shall terminate as to Xxxxx X. Xxxxxxx Co., Ltd. and
the H&F Funds two years from the date of this Agreement. With respect to Xxxxx
X. Xxxxxxx Co., Ltd. and the H&F Funds, "Confidential Information" shall not
include any information that such Shareholders receive for the first time after
the date of this Agreement.
SECTION 5.02. FINANCIAL STATEMENTS. The Company agrees to furnish to the
DLJ Funds, the DLJIP Funds, the H&F Funds and Xxxxx X. Xxxxxxx Co., Ltd., in
each case until the earliest of (i) the Remaining Initial Ownership for such
Shareholder or group of
36
Shareholders is less than 50%, (ii) the Initial Public Offering, and (iii) the
Aggregate Ownership of such Shareholder is less than 0.75%:
(a) as soon as practicable and, in any event, within 60 days after the end
of each of the Company's first three fiscal quarters, an unaudited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such quarter
and the related unaudited consolidated statement of operations and cash flow for
such quarter and for the portion of the fiscal year then ended; and
(b) as soon as practicable and, in any event, within 120 days after the
end of each of fiscal year, an audited consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year and the related audited
statement of operations and cash flow for such fiscal year.
SECTION 5.03. FINANCIAL ADVISOR AND INVESTMENT BANKING ADVISOR. During the
period from and including the date hereof until the earliest of (a) the
consummation of the Initial Public Offering, (b) the date on which the Remaining
Initial Ownership for the DLJ Funds falls below 16-2/3%, and (c) the fifth
anniversary of the Closing Date, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation ("DLJSC") or any Affiliate of DLJSC that DLJMB may choose in its
sole discretion shall be engaged as the financial advisor and investment banker
for the Company on financial and other terms customary in the industry to be
agreed between the Company and DLJSC. DLJSC or such Affiliate shall be entitled
to reimbursement from the Company for all expenses incurred by DLJSC or such
Affiliate (including reasonable fees and expenses of counsel) as financial and
investment banking advisor of the Company.
SECTION 5.04. AFFILIATE TRANSACTIONS. The Company shall not, and shall not
permit any of its Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase, lease
or otherwise acquire any property or assets from, or enter into or make or amend
any transaction, contract, agreement, understanding, loan, advance or guarantee
with or for the benefit of, any Affiliate of the Company, any Shareholder or any
"Associate" of any Shareholder (within the meaning of Section 12b-2 under the
Exchange Act), unless such transaction is on terms that are no less favorable to
the Company or such Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person.
SECTION 5.05. CONFLICTING AGREEMENTS. Each Shareholder represents and
agrees that it shall not (a) grant any proxy or enter into or agree to be bound
by any voting trust or agreement with respect to the Company Securities, except
as expressly contemplated by this Agreement, (b) enter into any agreement or
arrangement of any kind with any Person with respect to its Company Securities
inconsistent with the provisions of this Agreement or for the purpose or with
the effect of denying or reducing the rights of any other Shareholder under this
37
Agreement, including agreements or arrangements with respect to the Transfer or
voting of its Company Securities or (c) act, for any reason, as a member of a
group or in concert with any other Person in connection with the Transfer or
voting of its Company Securities in any manner that is inconsistent with the
provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. BINDING EFFECT; ASSIGNABILITY; BENEFIT. (a) This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns. Any
Shareholder that ceases to own beneficially any Company Securities shall cease
to be bound by the terms hereof (other than (i) the provisions of Sections 5.05,
5.06, 5.07, 5.08 and 5.10 applicable to such Shareholder with respect to any
offering of Registrable Securities completed before the date such Shareholder
ceased to own any Company Securities, (ii) Section 6.01 and (iii) Article 7).
(b) Neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any party hereto
pursuant to any Transfer of Company Securities or otherwise, except that any
Person acquiring Company Securities that is required or permitted by the terms
of this Agreement or any employment agreement or stock purchase, option, stock
option or other compensation plan of the Company or any Subsidiary to become a
party hereto shall (unless already bound hereby) execute and deliver to the
Company an agreement to be bound by this Agreement in the form of Exhibit A
hereto and shall thenceforth be a "SHAREHOLDER".
(c) Nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties hereto, and their respective heirs,
successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.02. NOTICES. All notices, requests and other communications to
any party shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by facsimile
transmission,
if to the Company, to:
Advanstar Holdings Corp.
c/o Advanstar, Inc.
000 Xxxxxxxx Xxxxxx
00
0xx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to the DLJ Funds at the address listed below
and a copy to Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP at the
address listed below.
if to the DLJ Funds, to:
DLJ Merchant Banking Partners
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
if to the Existing Shareholders, to:
Xxxxxxx & Xxxxxxxx, LLC
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Fax: 000-000-0000
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
39
and to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: F. Xxxxxx Xxxxxx, Esq.
Fax: 000-000-0000
if to the DLJIP Funds, to:
DLJ Investment Partners
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxx
Fax: 000-000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Esq.
Fax: 000-000-0000
if to any Management Shareholder, to such Management Shareholder at the
Company's address listed above,
or, in each case, at such other address or fax number as such party may
hereafter specify for the purpose of notices hereunder by written notice to the
Company and the DLJ Funds. All notices, requests and other communications shall
be deemed received on the date of receipt by the recipient thereof if received
prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the
place of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the
place of receipt. Any notice, request or other written communication sent by
facsimile transmission shall be confirmed by certified or registered mail,
return receipt requested, posted within one Business Day, or by personal
delivery, whether courier or otherwise, made within two Business Days after the
date of such facsimile transmissions.
Any Person that hereafter becomes a Shareholder shall provide its address
and fax number to the Company, which shall promptly provide such information to
each other
40
Shareholder.
SECTION 6.03. WAIVER; AMENDMENT; TERMINATION. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the party
against whom the waiver is to be effective. No provision of this Agreement may
be amended or otherwise modified except by an instrument in writing executed by
(1) the Company with approval of the Board, (2) DLJMB, and (3) the Other
Shareholders holding at least 50% of the outstanding Common Shares at the time
of such proposed amendment or modification held by all Other Shareholders.
(b) Any amendment to this Agreement that adversely affects the rights of
the DLJIP Funds under Section 2.01 or 3.04 shall require the written consent of
the DLJIP Funds, so long as they hold at least 50% of their Initial Ownership.
(c) This Agreement shall terminate on the tenth anniversary of the Closing
Date unless earlier terminated.
SECTION 6.04. FEES AND EXPENSES. The Company shall pay all out-of-pocket
costs and expenses of the DLJ Funds, including the reasonable fees and expenses
of counsel, incurred in connection with the preparation of this Agreement, or
any amendment or waiver hereof, and the transactions contemplated hereby and all
matters related hereto; PROVIDED that the Company's obligations to pay such
costs and expenses of the DLJ Funds shall not be considered "Debt" or "Company
Transaction Expenses" pursuant to the Merger Agreement. Each Other Shareholder
hereto shall pay its own costs and expenses, including the fees and expenses of
counsel, incurred in connection with this Agreement, or any amendment or waiver
hereof, and the transactions contemplated hereby and all matters related hereto,
except that the Company shall pay the reasonable fees and expenses of counsel
for the Management Shareholders incurred in connection with the preparation of
this Agreement.
SECTION 6.05. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of laws rules of such state.
SECTION 6.06. JURISDICTION. The parties hereby agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for the
Southern District of New York or any New York State court sitting in New York
City, so long as one of such courts shall have subject matter jurisdiction over
such suit, action or proceeding, and that any case of action arising out of this
Agreement shall be deemed to have arisen from a transaction of business in the
State of New York, and each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and
41
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 7.02 shall be deemed
effective service of process on such party.
SECTION 6.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 6.08. SPECIFIC ENFORCEMENT. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies that may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy that may then be available.
SECTION 6.09. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective on the Closing Date, upon the
occurrence of the Effective Time under the Merger Agreement.
SECTION 6.10. ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents (as defined in the Merger Agreement) constitute the entire agreement
among the parties hereto and supersede all prior and contemporaneous agreements
and understandings, both oral and written, among the parties hereto with respect
to the subject matter hereof and thereof.
SECTION 6.11. CAPTIONS. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
SECTION 6.12. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Upon such a determination, the parties shall negotiate in good faith to modify
this
42
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ADVANSTAR HOLDINGS CORP.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name:
Title:
DLJ MERCHANT BANKING PARTNERS III, L.P.
By: DLJ Merchant Banking III, Inc.,
its Managing General Partner
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name:
Title:
DLJMB FUNDING III, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS III, C.V.
By: DLJ Merchant Banking III, Inc.,
its Managing General Partner
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name:
Title:
44
XXXXXXX & XXXXXXXX CAPITAL
PARTNERS III, L.P.
By: H&F Investors III, as general partner
By: Xxxxxxx & Xxxxxxxx Associates III, L.P.,
as managing general partner
By: H&F Investors III, Inc., as managing
general partner
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------------
Name:
Title:
H&F ORCHARD PARTNERS III, L.P.
By: H&F Investors III, as general partner
By: Xxxxxxx & Xxxxxxxx Associates III, L.P.,
as managing general partner
By: H&F Investors III, Inc., as managing
general partner
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title:
45
H&F INTERNATIONAL PARTNERS III, L.P.
By: H&F Investors III, as general partner
By: Xxxxxxx & Xxxxxxxx Associates III, L.P.,
as managing general partner
By: H&F Investors III, Inc., as managing
general partner
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------------
Name:
Title:
XXXXX X. XXXXXXX CO., LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:
46
DLJ INVESTMENT PARTNERS II, L.P.
By: DLJ INVESTMENT PARTNERS II, INC., as
Managing General Partner
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC., as
Managing General Partner
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING II, INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name:
Title:
DLJ ESC II, L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION, as General Partner its Manager
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name:
Title:
47
MANAGEMENT SHAREHOLDERS:
XXXXXX X. XXXXXXX
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
XXXXX X. XXXX
/s/ Xxxxx Xxxx
-----------------------------------------
48
EXHIBIT A
JOINDER TO SHAREHOLDERS' AGREEMENT
This Joinder Agreement (this "JOINDER AGREEMENT") is made as of the date
written below by the undersigned (the "JOINING PARTY") in accordance with the
Shareholders' Agreement dated as of October 11, 2000 (the "SHAREHOLDERS'
AGREEMENT") among Advanstar Holdings Corp. and certain other persons named
therein, as the same may be amended from time to time. Capitalized terms used,
but not defined, herein shall have the meaning ascribed to such terms in the
Shareholders' Agreement.
The Joining Party hereby acknowledges, agrees and confirms that, by its
execution of this Joinder Agreement, the Joining Party shall be deemed to be a
party to and "Shareholder" under the Shareholders' Agreement as of the date
hereof and shall have all of the rights and obligations of the Shareholder from
whom it has acquired Company Securities (to the extent permitted by the
Shareholders' Agreement) as if it had executed the Shareholders' Agreement. The
Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Shareholders'
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement as
of the date written below.
Date: ___________ ___, ______
[NAME OF JOINING PARTY]
By:
---------------------------------
Name:
Title:
Address for Notices:
49
