ASSET PURCHASE AGREEMENT
By and Among
KEY3MEDIA ART EVENTS, INC.
B.C.R. ENTERPRISES, INC.
XXXXXXXXX VENTURES
XXXX X. XXXXXXXXX
And
XXXXX XXXXXXXXX
Dated as of September 10, 2001
TABLE OF CONTENTS
PAGE
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1 PURCHASE AND SALE OF ASSETS ........................................ 1
2 CONSIDERATION ...................................................... 1
2.1 BASE PURCHASE PRICE ................................................ 1
2.2 PAYMENT DATES ...................................................... 2
2.3 NO ASSUMPTION OF LIABILITIES ....................................... 3
2.4 ESCROW AMOUNT ...................................................... 4
2.5 INCENTIVE COMPENSATION ............................................. 4
2.6 ALLOCATION OF CONSIDERATION ........................................ 4
2.7 DIVISION OF PAYMENTS ............................................... 4
3 PURCHASE PRICE ADJUSTMENT .......................................... 4
4 CLOSING ............................................................ 5
4.1 DOCUMENTS TO BE DELIVERED BY SELLERS AND SHAREHOLDERS TO BUYER ..... 5
4.2 DOCUMENTS TO BE DELIVERED BY BUYER ................................. 6
4.3 DEPOSIT OF ESCROW AMOUNT ........................................... 6
4.4 PASSAGE OF TITLE AT CLOSING ........................................ 6
4.5 ASSIGNMENT OF SELLERS' CONTRACTS ................................... 6
5 REPRESENTATIONS AND WARRANTIES OF GOLDSTONE AND B.C.R. ............. 7
5.1 CORPORATE ORGANIZATION ............................................. 7
5.2 CAPITALIZATION; STOCK OWNERSHIP .................................... 7
5.3 SUBSIDIARIES AND OTHER EQUITY INVESTMENTS .......................... 8
6 REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND MQV ................ 8
6.1 BUSINESS ORGANIZATION .............................................. 8
6.2 SUBSIDIARIES AND OTHER EQUITY INVESTMENTS .......................... 8
7 REPRESENTATIONS AND WARRANTIES BY SELLERS AND SHAREHOLDERS ...... 8
7.1 CORPORATE AUTHORITY ............................................. 8
7.2 NO VIOLATION .................................................... 9
7.3 OFFERING MEMORANDUM ............................................. 9
7.4 NO UNDISCLOSED LIABILITIES, ETC. ................................ 9
7.5 ABSENCE OF CERTAIN CHANGES ...................................... 9
7.6 TITLE TO AND CONDITION OF PROPERTIES AND ASSETS ................. 10
7.7 CERTAIN PROPERTIES .............................................. 11
7.8 TAX RETURNS ..................................................... 11
7.9 CONTRACTS ....................................................... 12
7.10 LITIGATION ...................................................... 12
7.11 TRADEMARKS AND OTHER INTELLECTUAL PROPERTY ...................... 13
7.12 COMPLIANCE WITH LAWS ............................................ 13
7.13 ENVIRONMENTAL MATTERS ........................................... 14
7.14 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS ..................... 14
7.15 SEC AND ANTITRUST FILINGS ....................................... 14
7.16 EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS ................... 14
7.17 CERTAIN TRANSACTIONS ............................................ 15
7.18 FOREIGN CORRUPT PRACTICES ACT ................................... 15
7.19 ACCOUNTING PRACTICES ............................................ 16
7.20 MINUTE BOOKS .................................................... 16
7.21 INSURANCE ....................................................... 16
7.22 CERTAIN DISCLOSURES ............................................. 16
7.23 BROKERS ......................................................... 16
7.24 CONDUCT OF BUSINESS ............................................. 16
7.25 EBITDA CALCULATIONS ............................................. 16
7.26 NO UNTRUE STATEMENTS ............................................ 17
ii
8 REPRESENTATIONS AND WARRANTIES BY BUYER ........................... 17
8.1 CORPORATE ORGANIZATION ............................................ 17
8.2 AUTHORIZATION OF AGREEMENT; NO VIOLATION .......................... 17
8.3 LITIGATION ........................................................ 17
8.4 BROKERS ........................................................... 17
8.5 INTENT TO GROW THE BUSINESS ....................................... 18
8.6 NO UNTRUE STATEMENTS .............................................. 18
9 COVENANTS OF SELLERS AND SHAREHOLDERS ............................. 18
9.1 ACCESS, INFORMATION AND DOCUMENTS ................................. 18
9.2 CONDUCT OF BUSINESS PENDING CLOSING ............................... 18
9.3 FINANCIAL STATEMENTS AND CERTIFICATE .............................. 20
9.4 AUDIT EXPENSES .................................................... 21
9.5 CONSENTS AND APPROVALS ............................................ 21
9.6 NO SOLICITATION OF OFFERS ......................................... 21
9.7 USE OF DATABASES .................................................. 21
9.8 USE OF SELLERS' ASSETS ............................................ 21
9.9 COOPERATION IN PREPARATION OF FINANCIAL STATEMENTS ................ 21
10 COVENANTS OF BUYER ................................................ 22
10.1 CONSENTS AND APPROVALS ............................................ 22
10.2 JOINT MARKETING EFFORTS ........................................... 22
10.3 EMPLOYEE BENEFIT MATTERS .......................................... 22
11 CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO SELL THE ASSETS .... 22
11.1 BUYER'S PERFORMANCE ............................................... 22
11.2 CONSENTS AND APPROVALS ............................................ 23
11.3 EMPLOYMENT AGREEMENT .............................................. 23
11.4 CONSULTING AGREEMENT .............................................. 23
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11.5 NO ADVERSE PROCEEDINGS ................................................... 23
11.6 ESCROW AGREEMENT ......................................................... 23
11.7 OTHER .................................................................... 23
11.8 SIMULTANEOUS CLOSING OF B.C.R. TRANSACTION ............................... 23
12 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE ASSETS ........ 23
12.1 SELLERS' AND SHAREHOLDERS' PERFORMANCE ................................... 23
12.2 OPINION OF XXXXXXXXX COUNSEL ............................................. 24
12.3 OPINION OF B.C.R. COUNSEL ................................................ 24
12.4 CONSENTS AND APPROVALS ................................................... 25
12.5 PHYSICAL PROPERTIES ...................................................... 25
12.6 EMPLOYMENT AGREEMENT ..................................................... 26
12.7 CONSULTING AGREEMENT ..................................................... 26
12.8 NO ADVERSE PROCEEDINGS ................................................... 26
12.9 ESCROW AGREEMENT ......................................................... 26
12.10 OTHER .................................................................... 26
13 TERMINATION .............................................................. 26
14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION .............. 26
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ............................... 26
14.2 SELLER'S INDEMNIFICATION OBLIGATIONS ..................................... 27
14.3 BUYER'S INDEMNIFICATION OBLIGATIONS ...................................... 28
14.4 LIABILITY FOR TAXES. ..................................................... 28
14.5 PROCEDURE FOR INDEMNIFICATION CLAIMS ..................................... 28
14.6 LIMITATION OF LIABILITY .................................................. 29
15 SETOFF ................................................................... 29
16 NONCOMPETITION ........................................................... 30
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17 DISPUTE RESOLUTION ........................................................................ 31
18 MISCELLANEOUS ............................................................................. 32
18.1 ASSURANCE OF FURTHER ACTION ............................................................... 32
18.2 EXPENSES .................................................................................. 32
18.3 WAIVER .................................................................................... 32
18.4 NOTICES ................................................................................... 32
18.5 ENTIRE AGREEMENT .......................................................................... 33
18.6 RIGHTS UNDER THIS AGREEMENT; NONASSIGNABILITY ............................................. 33
18.7 GOVERNING LAW, JURISDICTION AND VENUE ..................................................... 33
18.8 KNOWLEDGE QUALIFIERS ...................................................................... 34
18.9 HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES .................................. 34
18.10 SEVERABILITY CONSTRUCTION ................................................................. 34
18.11 COUNTERPARTS .............................................................................. 34
18.12 PRESS RELEASES AND ANNOUNCEMENTS 34
18.13 NO THIRD PARTY BENEFICIARIES .............................................................. 34
Exhibit A INDENTURE, XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT ....................... A-1
Exhibit B FORM OF ESCROW AGREEMENT ........................................................... B-1
Exhibit C B.C.R. ENTERPRISES, INC. Officer's Certificate .................................... C-1
XXXXXXXXX VENTURES Officer's Certificate ......................................... C-2
Exhibit D B.C.R. ENTERPRISES, INC. Secretary's Certificate .................................. D-1
Exhibit E KEY3MEDIA ART EVENTS, INC. Officer's Certificate .................................. E-1
Exhibit F KEY3MEDIA EVENTS, INC. KEY3MEDIA ART EVENTS, INC. Secretary's Certificate ........ F-1
Exhibit G EMPLOYMENT AGREEMENT ............................................................... G-1
Exhibit H CONSULTING AGREEMENT ............................................................... H-1
SCHEDULES ........................................................................................ S-1
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ASSET PURCHASE AGREEMENT
------------------------
This asset purchase agreement (the "Agreement") dated as of this 7th day of
September, 2001 is entered into by and among KEY3MEDIA ART EVENTS, INC., a
Delaware corporation ("Buyer"), B.C.R. Enterprises, Inc., an Illinois
corporation ("B.C.R."), XxXxxxxxx Ventures, a sole proprietorship ("MQV," and
together with B.C.R., the "Sellers"), Xxxx X. XxXxxxxxx, an individual
("XxXxxxxxx") and Xxxxx X. Xxxxxxxxx, an individual ("Goldstone," and together
with XxXxxxxxx, the "Shareholders")
RECITALS
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WHEREAS, the Sellers through an unincorporated joint venture jointly
produce and organize conferences and tradeshows commonly known as Next
Generation Networks and Next Generation Network Ventures (collectively, the
"Business");
WHEREAS, Goldstone owns all of the outstanding capital stock of B.C.R.;
WHEREAS, XxXxxxxxx is the sole owner and operator of MQV;
WHEREAS, Key3Media Events, Inc. (the "Parent") owns all of the
outstanding stock of Buyer; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, all of the properties, assets and business of Sellers relating to
the Business, all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
---------
1 PURCHASE AND SALE OF ASSETS
Upon the terms and provisions of this Agreement, Buyer shall purchase and accept
delivery from Sellers and Shareholders of, and Sellers and Shareholders shall
sell, convey, assign, transfer and deliver to Buyer, at the Closing (as defined
in Section 4), all of Sellers' and Shareholders' rights, title and interest in
and to all the then existing properties, assets and business as a going concern
of every kind and nature, real, personal or mixed, tangible or intangible,
wherever located that relate to the Business, including, without limitation, all
of Sellers' and the Shareholders' goodwill relating to the Business other than,
in each case, the properties, assets and businesses specifically set forth on
Schedule 1 (collectively, the "Excluded Assets"). The properties, assets, and
business to be sold by Sellers and the Shareholders to Buyer pursuant to this
Agreement are collectively referred to as the "Assets."
2 CONSIDERATION
As consideration for the Assets:
2.1 BASE PURCHASE PRICE
Buyer agrees to pay to the Sellers for the Assets and the Sellers agree to
accept from Buyer as the base purchase price for the Assets (the "Base Purchase
Price"), the amount equal to nine (9) times the average of the EBITDA (as
hereinafter defined) derived from the audited financial statements (the "Audited
EBITDA") of the Business for the fiscal years ending December 31, 2000 and
December 31, 2001. The Base Purchase Price is subject to adjustment after the
Closing (as defined below) as
described in Section 3. For purposes of this Agreement, EBITDA means (a) the net
income of the Business determined in accordance with generally accepted
accounting principles, consistently applied ("GAAP") without giving effect to:
(i) extraordinary gains and losses from sales, exchanges and other dispositions
of assets or securities not in the ordinary course of business, and (ii)
nonrecurring items, plus, to the extent deducted in calculating net income, (b)
the sum of, without duplication, (i) depreciation expense, (ii) amortization
expense, (iii) interest expense and (iv) federal, state and local income tax
expense. For the purpose of calculating EBITDA for the years ending on December
31, 2001 and December 31, 2003, the Buyer shall also exclude any fees paid to
the Parent or an affiliate of the Parent for corporate overhead with the
exception of fees relating to (x) accounting services provided by an affiliate
of the Parent (not to exceed the fair market value of such services); and (y)
Buyer's actual in-house cost for the joint marketing efforts described in
Section 10.2. Further, EBITDA for the years ending on December 31, 2000,
December 31, 2001 and December 31, 2003 shall be calculated using the same
methodology for allocation between the Business and the other business being
sold by B.C.R. to Buyer contemporaneously herewith pursuant to the B.C.R.
Agreement (as defined below) of income and expenses set forth in the Offering
Memorandum for the Business dated May, 2001 provided to the Buyer by XxXxxxx &
Xxxxxxxx LLC (the "Offering Memorandum"). Notwithstanding anything to the
contrary in this Section 2.1, for purposes of determining EBITDA for calendar
years ending December 31, 2001 and December 31, 2003, the audit expenses for the
Selected CPA (as defined below) included in calculating EBITDA shall not be more
than $22,922 for each year regardless of the actual audit costs for such years.
For purposes of calculating EBITDA for the calendar year ending December 31,
2000, there shall be no audit expenses for the Selected CPA, and for purposes of
calculating EBITDA for the calendar years ending December 31, 2000 and 2001
there shall be no expenses for the Selected CPA for the preparation of the
Unaudited Quarterly Statements (as defined in Section 9.3). In connection with
the calculation of the EBITDA, $37,500 shall be allocated to Goldstone's
compensation for each of 2000 and 2001 and $50,000 shall be allocated to
XxXxxxxxx'x compensation for each of 2000 and 2001, regardless of actual
compensation during such periods.
2.2 PAYMENT DATES
The Base Purchase Price shall be payable in installments as set forth below:
(A) The estimated amount of the Base Purchase Price as of the
Closing Date (the "Estimated Payment Amount") shall be due
and payable to the Sellers on the Closing Date (as defined
below) in an amount equal to nine (9) times the average of
the EBITDA for the fiscal year ended December 31, 2000 and
the Sellers' estimate of EBITDA for the fiscal year ending
December 31, 2001; provided, however, that ten percent (10%)
of the Estimated Payment Amount (prior to calculation of the
Purchase Price Adjustment) shall be held in an Escrow Account
(as defined below) as set forth in Section 2.4 below).
Solely for purposes of determining the Estimated Payment
Amount to be paid on the Closing Date, the $4,142,000 EBITDA
amount for the fiscal year ended December 31, 2000 set forth
in the Offering Memorandum and the $5,765,000 estimated
EBITDA amount for the fiscal year ending December 31, 2001
set forth in the Offering Memorandum, shall be used by the
parties to calculate an Estimated Payment Amount of
$44,581,500 (subject to adjustment as described in Section 3
below).
(B) The actual amount (the "Actual Payment Amount") of the Base
Purchase Price shall be due and payable to the Sellers within
five days after delivery of audited financial statements for
the Business for the fiscal year ended December 31, 2001. The
Actual Payment Amount shall be equal to nine (9) times the
average of (i) the Audited EBITDA for the fiscal year ended
December 31, 2000 and (ii) the Audited EBITDA for the fiscal
year ending December 31, 2001, as adjusted
2
for any reconciliation of the Purchase Price Reduction or
Purchase Price Increase, as the case may be, under Section 3
below. Buyer and the Sellers shall use their commercially
reasonable efforts to cause the audited financial statements for
the year ending December 31, 2001 to be delivered no later than
February 28, 2002.
(C) In the event the Actual Payment Amount is less than the Estimated
Payment Amount including the Escrow Amount (such difference, a
"Seller Shortfall Amount"), then the Buyer shall be entitled to
receive such Seller Shortfall Amount from the Escrow Account and
Sellers and Shareholders shall, on the payment date of the Actual
Payment Amount (as described in Section 2.2B), also pay to the
Buyer any additional amounts required to make up the full amount
of the Seller Shortfall Amount. If the Seller Shortfall Amount is
less than the Escrow Amount, after payment of the Seller
Shortfall Amount from the Escrow Account to the Buyer the
remainder of the Escrow Account (less any payments for Sellers'
indemnification obligations) shall be released to the Sellers. In
the event the Actual Payment Amount is greater than the Estimated
Payment Amount, including the Escrow Amount (such difference, a
"Buyer Shortfall Amount"), then the Escrow Amount shall be
released to Sellers and the Buyer shall also pay to the Sellers
any additional amounts required to make up the full amount of the
Buyer Shortfall Amount. Any funds received by the Sellers or the
Buyer from the Escrow Account shall include interest earned on
said funds. Interest on the Escrow Amount shall not reduce the
Seller Shortfall Amount or the Buyer Shortfall Amount.
2.3 NO ASSUMPTION OF LIABILITIES
(A) Except with respect to the contractual obligations of Sellers
disclosed in Schedule 2.3 (A) to this Agreement and directly
relating to the ownership or operation of the Assets and Business
after the Closing Date (the "Assumed Liabilities"), the Buyer is
not and will not assume or be liable for any liabilities or
obligations of the Sellers, Shareholders, any of their affiliates
or any other person or entity of any kind or nature, whether
absolute, accrued, contingent or otherwise, or whether due or to
become due, directly or indirectly arising out of or relating to
the ownership or operation of the Assets, the Excluded Assets or
the Business, including, without limitation, any such liabilities
or obligations not disclosed in Schedule 2.3 (A) to this
Agreement or relating to the ownership or operation of the Assets
or Business prior to the Closing Date or of the Excluded Assets
at any time.
(B) Without limiting the foregoing, as between the Buyer and Sellers
the Sellers shall be responsible for any or all liability (if
any) incurred prior to or as of the Closing Date for health
benefits under Section 4980B of the Code ("COBRA") for employees
and their "qualified beneficiaries" (as defined in Section 4980B
(g) of the Internal Revenue Code of 1986, as amended (the "Code")
) under any employee benefit plans maintained by the Sellers. As
to Sellers' employees, as between the Buyer and Sellers, Sellers
shall be responsible for complying with any obligations and
liabilities (if any) arising under COBRA (including notice and
maintaining insurance for employees who elect continued coverage)
as a result of such employees' loss of coverage under Sellers'
health plans. The Sellers shall be responsible for all retiree
welfare obligations, if any, arising out of or attributable to
any employee benefit plan of the Sellers in effect prior to or as
of the Closing Date, or agreements relating thereto.
3
2.4 ESCROW AMOUNT
On the Closing Date, Buyer shall deposit with the Bank of New York (the "Escrow
Agent") an amount equal to ten percent (10%) of the Estimated Payment Amount
(together with any interest earned thereon, the "Escrow Amount"). The Escrow
Amount shall be held by the Escrow Agent pursuant to the terms of an Escrow
Agreement substantially in the form attached hereto as Exhibit B (the "Escrow
Agreement").
2.5 INCENTIVE COMPENSATION
In addition to the Base Purchase Price, within five (5) business days after the
receipt by Buyer of audited financial statements for the Business for the
calendar year ended December 31, 2003,which the Buyer anticipates will be on or
before March 31, 2004, Buyer will make an incentive payment (the "Incentive
Payment") to the Sellers in an amount equal to (i) the amount (if any) by which
the actual audited revenue of the Business for calendar year 2003 exceeds the
average of the actual audited revenue of the Business for the two calendar years
2000 and 2001 (such difference hereinafter referred to as the "XXX") multiplied
by (ii) the applicable factor as follows:
(A) For that portion of the XXX that is greater than or equal to
$0.00, but less than $3,000,000-the multiple shall be 1.0.
(B) For that portion of the XXX that is equal to or greater than
$3,000,000, but less than $6,000,000 the multiple shall be 1.25.
(C) For that portion of the XXX that is equal to or greater than
$6,000,000- the multiple shall be 1.5.
Notwithstanding anything to the contrary above, in the event that (A) the
quotient obtained by dividing the (i) EBITDA for the Business for calendar year
2003 by (ii) the revenue for the Business for calendar year 2003 is less than
(B) the quotient obtained by dividing (x) the average EBITDA for the Business
for the two calendar years 2000 and 2001 by (y) the average of the revenue for
the Business for the two calendar years 2000 and 2001 then Sellers shall not be
entitled to any Incentive Payment.
2.6 ALLOCATION OF CONSIDERATION
The aggregate amount of the Base Purchase Price and the Assumed Liabilities
shall be allocated among the Assets as set forth on Schedule 2.6 attached
hereto.
2.7 DIVISION OF PAYMENTS
The Base Purchase Price, any Buyer Shortfall Amount and the Incentive Payment,
if any, payable pursuant to this Section 2 shall be paid fifty percent (50%) to
MQV (or at MQV's direction, to XxXxxxxxx) and fifty percent (50%) to B.C.R. (or
at B.C.R.'s direction, to Goldstone). Any Seller Shortfall Amount in excess of
the Escrow Amount (if any) shall be paid fifty percent (50%) by MQV or XxXxxxxxx
and fifty percent (50%) by B.C.R. or Goldstone.
3 PURCHASE PRICE ADJUSTMENT
In the event the sum (the "Working Capital Requirement") as of August 31, 2001
of the Business' (i) cash and cash equivalents, (ii) accounts receivable, (iii)
prepaid expenses, (iv) security deposits and (v) prepaid credit card changes is
less than the (i) deferred revenue liability and (ii) accounts payable of the
Business as of the August 31, 2001, then the Estimated Payment Amount shall be
adjusted downward (a "Purchase Price Reduction") by the amount of the difference
between the Working Capital Requirement and the deferred revenue liability. In
the event that the Working Capital Requirement is greater than the deferred
revenue liability of the Business as of August 31, 2001, then the Estimated
Payment Amount
4
shall be adjusted upward (a "Purchase Price Increase") by the amount of the
difference between the Working Capital Requirement and the deferred revenue
liability. The Purchase Price Reduction or Purchase Price Increase, as
applicable, is sometimes referred to as the "Purchase Price Adjustment". The
parties will calculate a preliminary Purchase Price Reduction or Purchase Price
Increase, as applicable, on or before, and payable at, the Closing. The final
Purchase Price Reduction or Purchase Price Increase, as applicable, will be
calculated based upon the Working Capital Requirement and deferred revenue
liability of the Business, in each case, as of August 31, 2001, and reconciled
by agreement of the parties within 45 days after the Closing. The Base Purchase
Price shall be adjusted by the amount of the final Purchase Price Reduction or
the final Purchase Price Increase, as applicable.
Notwithstanding anything to the contrary in this Agreement, the profit and loss
of the Business shall be transferred to Buyer as of September 1, 2001.
4 CLOSING
The closing of the purchase and sale of the Assets ("Closing") shall take place
at the office of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(or at such other place as the parties may mutually agree) at five o'clock
(5:00) in the evening, local time, on September 10, 2001 (the "Closing Date").
4.1 DOCUMENTS TO BE DELIVERED BY SELLERS AND SHAREHOLDERS TO BUYER
At the Closing, Sellers and Shareholders will deliver to Buyer:
(A) the Indenture, Xxxx of Sale, Assignment and Assumption
Agreement in the form set forth as Exhibit A;
(B) such specific instruments of sale, conveyance, assignment,
transfer and delivery with full covenants of warranty as to
Sellers' good and marketable title in and to such of the
Assets included within such general instrument of sale,
conveyance, assignment, transfer, and delivery as Buyer shall
reasonably request;
(C) all Sellers' contracts, books, records, and other data
relating to the Assets and the Business; provided, however
that B.C.R. shall be permitted to deliver copies of its
corporate minute books;
(D) a certificate of each Seller in the form of Exhibit C
certifying as to the accuracy of each Seller's representations
and warranties when made and on and as of the Closing Date as
if made thereon and that each Seller has performed and
complied with all of the terms, provisions, and conditions to
be performed and complied with by each Seller at or before the
Closing;
(E) a certificate of B.C.R. in the form of Exhibit D, certifying
as to certain corporate matters, together with all of the
attachments referred to therein;
(F) the H&D opinion (as defined below) and the B.C.R. Opinion (as
defined below);
(G) the Goldstone Employment Agreement (as defined below),
executed by Goldstone;
(H) the XxXxxxxxx Consulting Agreement (as defined below),
executed by XxXxxxxxx;
(I) the Escrow Agreement, executed by Sellers and Shareholders;
and
5
(J) such other certificates and documents as Buyer or its counsel
may reasonably request.
4.2 DOCUMENTS TO BE DELIVERED BY BUYER
At the Closing, Buyer will deliver to Sellers:
(A) the Estimated Payment Amount (less the Escrow Amount), as
adjusted pursuant to Section 3, by transfer of immediately
available funds to such account at such two banks as Sellers
shall direct;
(B) a certificate of Buyer in the form of Exhibit E certifying as
to the accuracy of Buyer's representations and warranties when
made and as of the Closing Date as if made thereon and that
Buyer has performed and complied with all of the terms,
provisions, and conditions to be performed and complied with
by Buyer at or before the Closing; and
(C) a certificate of Buyer in the form of Exhibit F certifying as
to certain corporate matters, together with all of the
attachments referred to therein;
(D) the Goldstone Employment Agreement, executed by Buyer;
(E) the XxXxxxxxx Consulting Agreement, executed by Buyer;
(F) the Indenture, Xxxx of Sale, Assignment and Assumption
Agreement in the form set forth as Exhibit A;
(G) the Escrow Agreement, executed by Buyer and the Escrow Agent;
and
(H) such other certificates and documents as Sellers or their
counsel may reasonably request.
4.3 DEPOSIT OF ESCROW AMOUNT
At the Closing, the Buyer shall deposit the Escrow Amount into the Escrow
Account in accordance with Section 2.4 above.
4.4 PASSAGE OF TITLE AT CLOSING
Upon delivery of the instruments of sale, conveyance, assignment, transfer and
delivery, title in and to the Assets shall pass to Buyer at the Closing. At the
Closing, Sellers will put Buyer in full, complete and quiet possession and
enjoyment of all of the Assets and from and after the Closing the ownership and
operation of the Assets and the Business of Sellers to be sold to Buyer pursuant
to this Agreement shall be for the account and risk of Buyer. Buyer shall be
under no liability for any debt, liability or obligation of Sellers incurred
after the Closing or arising out of any transaction by Sellers or any event
occurring with respect to Sellers after the Closing, other than liabilities
arising under this Agreement.
4.5 ASSIGNMENT OF SELLERS' CONTRACTS
Nothing in this Agreement shall be deemed to constitute an assignment or an
attempt to assign any contract or other agreement to which any Seller is a party
if the attempted assignment thereof without the consent of the other party to
such contract or agreement would constitute a breach thereof or affect in any
way the rights of any Seller thereunder. If after any Seller has used its best
efforts to obtain the consent of
6
any such other party to such contract or agreement, such consent shall not be
obtained at or prior to the Closing, or an attempted assignment thereof at the
Closing would be ineffective and would affect the rights of any Seller
thereunder, Sellers will cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such contract or agreement,
including the enforcement, at the cost and for the benefit of Buyer, of any and
all rights of any Seller against such other party thereto arising out of the
breach or cancellation thereof by such other party or otherwise.
5 REPRESENTATIONS AND WARRANTIES OF GOLDSTONE AND B.C.R.
The following representations and warranties are qualified by the statements
contained in the Disclosure Schedule attached hereto. The Disclosure Schedule
shall be arranged in sections and subsections corresponding to the numbered and
lettered sections and subsections contained in this Section 5. The disclosures
in any section or subsection of the Disclosure Schedule shall qualify other
sections and subsections in this Section 5 only to the extent it is clear from a
reading of the disclosure that such disclosure is applicable to such other
sections and subsections. Goldstone and B.C.R. jointly and severally represent
and warrant to Buyer and Parent as follows:
5.1 CORPORATE ORGANIZATION
B.C.R. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois and has the corporate power and
authority to carry on its business as now being conducted and to own and operate
the properties and assets now owned and being operated by it. Goldstone has
delivered to Buyer complete and correct copies of B.C.R.'s Certificate of
Incorporation and Bylaws as in effect on the date hereof. B.C.R. is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in the jurisdictions set forth in Schedule 5.1. B.C.R. is not
required to be qualified or licensed to do business as a foreign corporation in
any other jurisdiction except such jurisdictions, if any, in which the failure
to be so qualified or licensed will not, individually or in the aggregate, have
a material adverse effect upon the condition (financial or otherwise),
operations or business (based upon the present or future conduct of the present
Business), properties, assets, or liabilities of the Assets or Business (a
"MAE").
5.2 CAPITALIZATION; STOCK OWNERSHIP
The authorized capital stock of B.C.R. consists of one thousand (1000) shares of
common stock, par value of One Dollar ($1.00) per share ("B.C.R. Stock"), of
which one hundred (100) shares were issued and outstanding and no shares are
held by B.C.R. as treasury shares. All of such issued shares have been duly
authorized and validly issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other right. Neither B.C.R.
nor Goldstone is a party to or bound by any contract, agreement or arrangement
to issue, sell or otherwise dispose of or redeem, purchase or otherwise acquire
any capital stock or any other security of B.C.R. or any other security
exercisable or exchangeable for or convertible into any capital stock or any
other security of B.C.R., and there is no outstanding option, warrant or other
right to subscribe for or purchase, or contract, agreement or arrangement with
respect to, any capital stock or any other security of B.C.R. or any other
security exercisable or convertible into any capital stock or any other security
of B.C.R
Goldstone, as trustee under the declaration of trust establishing the Xxxxx X.
Xxxxxxxxx Revocable Trust dated June 6, 1995 (the "Trust"), owns all of such one
hundred (100) outstanding shares of B.C.R. Stock as set forth in Schedule 5.2
free and clear of all liens, claims, charges, restrictions, equities or
encumbrances of any kind.
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5.3 SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
Neither B.C.R. nor Goldstone owns, directly or indirectly, any shares of capital
stock of any corporation or any equity investment in any partnership,
association or other business organization related to the Business.
6 REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND MQV
XxXxxxxxx and MQV jointly and severally, represent and warrant to Buyer and
Parent as follows:
6.1 BUSINESS ORGANIZATION
MQV is a proprietorship owned solely by XxXxxxxxx and no other person or entity
has any ownership interest or rights to acquire any ownership interest in MQV
and MQV is solely liable for its operations. MQV is not required to be qualified
or licensed to do business as a foreign sole proprietorship in any jurisdiction
6.2 SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
Neither MQV nor XxXxxxxxx owns, directly or indirectly, any shares of capital
stock of any corporation or any equity investment in any partnership,
association or other business organization related to the Business.
7 REPRESENTATIONS AND WARRANTIES BY SELLERS AND SHAREHOLDERS
Each Seller and Shareholder represents and warrants to Buyer and Parent as of
the date hereof as follows; provided, however, that to the extent any
representation and warranty relates to (i) a Seller or Shareholder, each Seller
and Shareholder shall be deemed to have made such representation and warranty
solely with respect to itself and the Seller it owns or the Shareholder that
owns it, as applicable, and such Seller and Shareholder shall be jointly and
severally liable with respect thereto, and (ii) any other matter, each Seller
and the Shareholder that owns it shall be collectively liable for only 50% of
any damages or other liability arising out of a breach of such representation
and warranty (although they will be jointly and severally liable for such 50%).
The following representations and warranties are qualified by the statements
contained in the Disclosure Schedule attached hereto. The Disclosure Schedule
shall be arranged in sections and subsections corresponding to the numbered and
lettered sections and subsections contained in this Section 7. The disclosures
in any section or subsection of the Disclosure Schedule shall qualify other
sections and subsections in this Section 7 only to the extent it is clear from a
reading of the disclosure that such disclosure is applicable to such other
sections and subsections.
7.1 CORPORATE AUTHORITY
Each Seller has the corporate or proprietorship power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action of the sole director and shareholder (or, if none, all persons whose
authorization is required) of B.C.R. and no other corporate or proprietorship
proceeding on the part of any Seller is necessary to authorize the execution and
delivery of this Agreement or the performance of any of the transactions
contemplated hereby. This Agreement has been duly executed and delivered on
behalf of each Seller and Shareholder and constitutes a legal, valid and binding
obligation of each such party enforceable against them in accordance with its
terms.
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7.2 NO VIOLATION
Neither the execution, delivery or performance of this Agreement nor
consummation of any of the transactions contemplated hereby (i) will violate or
conflict with the Articles of Incorporation or Bylaws (or any other governing
instruments) of any Seller, or (ii) will result in any breach of or default
under any provision of any contract or agreement of any kind to which any Seller
or any Shareholder is a party or by which any Seller or any Shareholder is bound
or to which any property or asset of any of them is subject, (iii) is prohibited
by or requires any Seller or Shareholder to obtain or make any consent,
authorization, approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any court or
governmental agency, board, bureau, body, department or authority, or of any
other person, (iv) will cause any acceleration of maturity of any note,
instrument, or other obligation to which any Seller or any Shareholder is a
party or by which any Seller or any Shareholder is bound or with respect to
which any Seller or any Shareholder is an obligor or guarantor or (v) will
result in the creation or imposition of any lien, claim, charge, restriction,
equity or encumbrance of any kind whatsoever upon or give to any other person
any interest or right (including any right of termination or cancellation) in or
with respect to any of the properties, assets, businesses, agreements or
contracts of any Seller or any Shareholder, including without limitation the
Assets or relating to the Business.
7.3 OFFERING MEMORANDUM
The financial and other information set forth in the Offering Memorandum
presents fairly and accurately, in all material respects, the results of
operation of the Business as at, and for periods ending on, the dates set forth
therein with respect to the Assets or relating to the Business.
7.4 NO UNDISCLOSED LIABILITIES, ETC.
Since December 31, 2000, (except for the transactions contemplated by this
Agreement):
(A) No Shareholder or Seller has incurred any liability or
obligation (absolute, accrued, contingent or otherwise) of any
nature relating to the Business, other than liabilities and
obligations (i) reflected in the Offering Memorandum or the
Unaudited Balance Sheet (as defined in Section 9.3 below),
(ii) set forth in Schedule 7.9 or (iii) incurred in the
ordinary course of business that will not, individually or in
the aggregate, have a MAE; and
(B) To the best of Sellers' and Shareholders' knowledge, the
accounts receivables reflected on the Unaudited Balance Sheet
are collectible in accordance with their terms and without
undue effort, and the reserve for uncollectible accounts set
forth on the Unaudited Balance Sheet is adequate.
7.5 ABSENCE OF CERTAIN CHANGES
Since December 31, 2000 (except for the execution and delivery of this
Agreement), there has not been:
(A) any change that, individually or in the aggregate, would have
a MAE;
(B) any damage, destruction or loss of physical property (whether
or not covered by insurance) that, individually or in the
aggregate, will have a MAE;
(C) any material loss or waiver of any material right with respect
to the Business; including any loss of any material customer
of the Business (which shall be deemed to include any customer
comprising more than three percent (3%) of the Business'
annual revenue) or any ananacancellation or threatened
cancellation of any material order; or
9
(D) any resignation or termination of employment of any of the key
employees of the Business or threatened resignation or
termination of such employment (other than as a result of such
officer's or employee's employment by Buyer) that would,
individually, or in the aggregate, have a MAE.
Since December 31, 2000, no Shareholder or Seller has:
(A) incurred or agreed to incur any indebtedness for borrowed
money with respect to the Business;
(B) paid or obligated itself to pay in excess of $100,000 in the
aggregate for fixed assets with respect to the Business;
(C) sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets relating to the
Business (other than Excluded Assets) having a fair market
value at the time of sale, transfer or disposition of $100,000
or more in the aggregate, or canceled, or agreed to cancel,
any debts or claims, other than in the ordinary course of
business;
(D) mortgaged, pledged or subjected to any charge, lien, claim or
encumbrance, or agreed to mortgage, pledge or subject to any
charge, lien, claim or encumbrance, any of the Assets;
(E) increased, or agreed to increase, the compensation or bonuses
or special compensation of any kind of any employees, over the
rate being paid to them on December 31, 2000, other than
normal merit and/or cost-of-living increases pursuant to
customary arrangements consistently followed, or adopted or
increased any benefit under any insurance, pension or other
employee benefit plan, payment or arrangement made to, for or
with any such employee;
(F) entered into any amendment relating to or terminated any
material contract, agreement or license relating to the
Business and to which it is a party or by which the Assets are
subject or bound other than in the ordinary course of
business;
(G) made any change in the accounting policies, methods or
practices used with respect to the Business;
(H) entered into any transaction with respect to the Business not
in the ordinary course of its business;
(I) received any notice of audit or inquiry relating to the
Business from any taxing or governmental authority; or
(J) made any change in its tax reporting policies, methods or
practices with respect to the Business.
7.6 TITLE TO AND CONDITION OF PROPERTIES AND ASSETS
Sellers have good and marketable title in and to all the Assets, including,
without limitation, (i) all those used in the operation of the Business and (ii)
those reflected in the Offering Memorandum (except as sold or otherwise disposed
of in the ordinary course of business subsequent to the date thereof), and the
Assets constitute all the assets and properties necessary and sufficient for
Buyer to conduct the Business after the Closing Date is substantially the same
manner and fashion as they are currently conducted by
10
Sellers and/or Shareholders. The Assets are subject to no mortgage, pledge,
conditional sales contract, lien, security interest, right of possession in
favor of any third party, claim, or other encumbrance, except the lien of
current taxes not yet due and payable. Subsequent to December 31, 2000, no
Seller or Shareholder has sold or disposed of any of the Assets or obligated
itself to do so except in the ordinary course of business. To the best knowledge
of Sellers and Shareholder, the facilities, machinery, furniture, office and
other equipment included in the Assets are in good operating condition and
repair, subject only to ordinary wear and tear, and the operation of the
Business is not in violation of any material ordinance, regulation, building,
zoning, environmental or other law or regulation applicable to the Business.
7.7 CERTAIN PROPERTIES
Schedule 7.7 sets forth all real estate owned by any Seller and all personal
property and real estate leased to any Seller in each case included in the
Assets and specifies, in the case of real estate, the location of each property,
the use of the facility thereon, the name of the owner or the names of the
lessor and the lessee, the square footage of improvements and the acreage of
land. Sellers have delivered to Buyer (i) a copy of each deed or lease by which
any Seller(s) and/or Shareholder(s) acquired title to or its interest in the
real estate described in Schedule 7.7, (ii) a copy of all title abstracts and
title insurance policies Sellers have obtained and which are currently in effect
for the real estate described in Schedule 7.7, (iii) a copy of the most recent
survey or surveys any Seller(s) and/or Shareholder(s) has for the real estate
described in Schedule 7.7, (iv) a copy of all certificates of occupancy for the
improvements on the real estate described in Schedule 7.7 and a copy of any
variance granted with respect to any of such real estate described in Schedule
7.7 pursuant to applicable zoning laws or ordinances and (v) a copy of each
lease by which any Seller(s) and/or Shareholder (s) acquired their interest in
the personal property described in Schedule 7.7 of which documents are true and
complete copies thereof (translated into English if the original thereof is in a
foreign language) as in effect of the date hereof. No Seller or Shareholder has
received any written notice from any governmental agency, board, bureau, body,
department or authority of any United States or foreign jurisdiction, with
respect to the use of any of the real estate described in Schedule 7.7. There is
no easement, right-of-way agreement, license, sublease, occupancy agreement, or
like instrument with respect to any of the real estate described in Schedule
7.7. Each lease pursuant to which any Seller(s) and/or Shareholder(s) leases any
real or personal property described in Schedule 7.7 is in full force and effect
and is valid and enforceable in accordance with its terms. There is not under
any such lease any default by any Seller(s) and/or Shareholder(s), or any event
that with notice or lapse of time or both would constitute such a default by any
Seller(s) and/or Shareholder(s) and with respect to which such Seller(s) and/or
Shareholder(s) has not taken adequate steps to prevent such default from
occurring; all of such events, if any, and the aforesaid steps taken by each
Seller are set forth in Schedule 7.7. To the best knowledge of the Sellers and
Shareholders, there is not under any such lease any default by any other party
thereto or any event that with notice or lapse of time or both would constitute
such a default thereunder by such party.
7.8 TAX RETURNS
All tax and information returns required to have been filed prior to the date of
this Agreement by Sellers and/or the Shareholders with any governmental agency,
board, bureau, body, department or authority of any United States or foreign
jurisdiction have been duly filed, and each such return correctly reflects the
income, franchise, sales, use or other tax liability and all other information
required to be reported thereon, and Sellers and/or Shareholders have paid or
accrued all income, franchise, sales, use, and other taxes due by them as
reflected on said returns. Sellers have not (i) agreed to any extension of the
statute of limitations, or (ii) incurred any tax liability related to the
Business as a result of any transaction not in the ordinary course of business.
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7.9 CONTRACTS
No Seller or Shareholder is a party to any of the following types of agreements
or instruments relating to the Business, whether written or oral:
(A) any contract with any labor union;
(B) any employment or consulting contract or other contract for
services relating to the Business involving a payment of
more than $25,000 annually;
(C) any lease whether as lessor or lessee with respect to any
property, real or personal involving a payment of more than
$25,000 annually;
(D) any loan agreement or instrument relating to any debt;
(E) any contract of purchase or sale involving more than
$100,000;
(F) any contract with any agent, dealer or distributor;
(G) any standby letter of credit, guarantee or performance bond
and involving more than $ 100,000;
(H) any contract or agreement restricting the ability of any
person (including, but not limited to, any Shareholder) from
freely engaging in the Business or competing anywhere in the
world;
(I) any contract relating to the lease of exhibition, trade show
or exposition space whether as lessor, sublessor or lessee;
(J) any contract not made in the ordinary course of business
involving more than $ 25,000; or
(K) any other contract, except insubstantial contracts for
supplies or services not involving more than $25,000 and
which can be terminated upon one year's notice without cost.
Except as set forth in Schedule 7.9, no Seller or Shareholder is a party to any
contract with any governmental authority that relates to the Business or that,
individually or in the aggregate, would have a MAE. Each contract or other
agreement listed in Schedule 7.9 is in full force and effect and is valid and
enforceable by the applicable Seller(s) and/or Shareholder(s) in accordance with
its terms. No Seller or Shareholder, or, to the best knowledge of Sellers and
the Shareholders, any other party is in default in the observance or the
performance of any term or obligation to be observed or performed by such party
under any contract listed in Schedule 7.9. To the best knowledge, of Sellers and
the Shareholders, no other person is in default in the observance or the
performance of any term or obligation to be observed or performed by such party
under any material contract with any Seller relating to the Business. Neither
Seller nor any Shareholder knows of any bid or contract proposal made by any
Seller that, if accepted or entered into, might result in a loss to Sellers with
respect to the Business. Sellers have delivered to Buyer true and complete
copies of all contracts listed in Schedule 7.9 as in effect on the date hereof.
7.10 LITIGATION
There are no actions, suits, proceedings, mediations, arbitrations or
investigations, either at law or in equity, or before any commission or other
administrative authority in any U.S. or foreign jurisdiction, of
12
any kind now pending or, to the best knowledge of Sellers and the Shareholders,
threatened or proposed in any manner, or, to the best knowledge of Sellers and
the Shareholders, any circumstances which should or could reasonably form the
basis of any such action, suit, proceeding or investigation, involving any
Seller or any Shareholder or any of their properties or assets that (i) if
asserted and decided adversely to Sellers or any Shareholder, could,
individually or in the aggregate, have a MAE, or (ii) questions the validity of
this Agreement or the transaction contemplated hereby, or (iii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated to be taken
by any Seller or any Shareholder under this Agreement. There is no arbitration
proceeding pending or, to the best knowledge of Sellers and the Shareholders,
threatened in any manner under any agreement or otherwise. None of Sellers or
the Shareholders or any of their properties or assets is subject to any judicial
or administrative judgment, order, decree or restraint.
7.11 TRADEMARKS AND OTHER INTELLECTUAL PROPERTY
Except as set forth in Schedule 7.11, and excluding copyright licenses executed
prior to January 1, 2000, no Seller(s) and/or Shareholder(s) owns any copyright,
registered trademark or trade name, nor has any license to use any copyright,
trademark or trade name been issued to it, nor does any Seller and/or
Shareholder use any copyright, registered trademark or registered trade name in
connection with the operation of the Business, including without limitation, the
operation of tradeshows. Each of the registered trademarks and registered trade
names listed on Schedule 7.11 has been validly issued and is owned by the
applicable Seller(s) and/or Shareholder(s) and they have the exclusive rights to
use all such copyrights, registered trademarks and registered trade names in the
Business. Sellers and the Shareholders collectively own or have the right to use
and can transfer to Buyer such ownership or right to use all copyrights,
trademarks, trade names, know-how, trade secrets, and other proprietary rights
necessary to conduct the Business and Sellers and Shareholders do not know of
any claim, or any basis of any claim, that any of them has infringed any patent,
copyright, trademark, trade name, know- how, trade secret or other proprietary
right of any other person. Sellers and Shareholders do not know of any potential
claim of infringement of any patent, copyright, trademark, trade name, know-how,
trade secret or other proprietary right of any other person that has not been
asserted but that, if asserted, would have, individually or in the aggregate, a
MAE.
7.12 COMPLIANCE WITH LAWS
Each of the Sellers and the Shareholders have complied with and is in compliance
with all federal, state, local and foreign statutes, laws, ordinances,
regulations, rules, permits, judgments, orders or decrees (including any
applicable bulk sales laws) applicable to it or any of its properties, assets,
operations and businesses, relating to the Business and there does not exist any
basis for any claim of default under or violation of any such statute, law,
ordinance, regulation, rule, judgment, order or decree except such defaults or
violations, if any, that, individually or in the aggregate, do not and would not
have a MAE. No Seller or Shareholder has received any opinion or memorandum or
legal advice from any legal counsel to the effect that it is exposed to any
liability or disadvantage that, individually or in the aggregate, is or may have
a MAE. Each of the Sellers and the Shareholders is in compliance with (i) all
applicable requirements of all United States and foreign governmental
authorities with respect to environmental protection, including, without
limitation, regulations establishing quality criteria and standards for air,
water, land and hazardous materials, (ii) all applicable requirements of the
Occupational Safety and Health Act of 1970 within the United States and
comparable workplace-safety laws of all other jurisdictions and all rules,
regulations and orders thereunder and (iii) all applicable laws and related
rules and regulations of all United States and foreign jurisdictions affecting
labor union activities, civil rights or employment, including without
limitation, in the United States, the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Employment Opportunity Act
of 1972, the Employee Retirement Income Security Act of 1974, the Equal Pay Act
and the National Labor Relations Act in each case relating to the Business.
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7.13 ENVIRONMENTAL MATTERS
Each of the Sellers and the Shareholders has complied with and is in compliance
with all federal, state, local and foreign statutes, laws, ordinances,
regulations, rules, permits, judgments, orders and decrees applicable to or
relating to environmental protection including, without limitation, standards
relating to air, water, land and the generation, storage, transportation,
treatment or disposal of solid wastes and hazardous wastes, except where such
noncompliance would not individually, or in the aggregate, have a MAE. Each of
the Sellers has obtained and adhered to all necessary permits and other
approvals, including interim status under the Federal Solid Waste Disposal Act,
necessary to store, dispose of and otherwise handle hazardous wastes and has
reported, to the extent required by all federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, permits, judgments, orders and
decrees, all past and present sites owned and operated by Sellers where
hazardous wastes have been treated, stored or disposed of, except where the
failure to so obtain, adhere or report, that would not individually, or in the
aggregate, have a MAE None of the Sellers and the Shareholders knows of any
location on any of the property included in the Assets where hazardous wastes or
other harmful substances have entered or are likely to enter into the soil or
groundwater. Sellers know of no on-site or off-site location to which Sellers
have transported hazardous wastes or arranged for the transportation of
hazardous wastes, which site is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against Sellers, Shareholders or Buyer for any cleanup cost, remedial
work, damage to natural resources or personal injury, including, but not limited
to, claims under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
7.14 GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS
Schedule 7.14 lists all licenses, franchises, permits and other governmental
authorizations held by any Seller or Shareholder (or combination thereof)
material to the conduct of the Business. Such licenses, franchises, permits and
other governmental authorizations are valid, and no Seller or Shareholder has
received any notice that any governmental authority intends to cancel, terminate
or not renew any such license, franchise, permit or other governmental
authorization. Sellers and the Shareholders collectively hold all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have, individually or in the aggregate, a MAE. The Business has not
been, is not being conducted, and none of the Assets are owned or are being
used, in violation of any material statute, law, ordinance, regulation, rule or
permit of any governmental entity or any judgment, order or decree.
7.15 SEC AND ANTITRUST FILINGS
No Seller or Shareholder has ever issued any security covered by a registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Investment Company Act of 1940, as
amended, and no security issued by any of them has ever been registered pursuant
to the Securities Exchange Act of 1934, as amended. No Seller or Shareholder has
purchased or sold any security of which it or any affiliate was the issuer at
any time when the information publicly available relating to it, at the time and
in light of the circumstances under which it was made, was false or misleading
with respect to any material fact or omitted to state any material fact
necessary in order to make the statements made therein not false or misleading.
No party is required to file a notification or a report under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR") or any other
antitrust law in respect of any action pursuant to or contemplated by this
Agreement and the Business does not constitute a partnership for purposes of
HSR.
7.16 EMPLOYEE BENEFIT PLANS AND OTHER ARRANGEMENTS
(A) DISCLOSURE
Schedule 7.16 lists all employee benefit plans (as defined in Section 3(3) of
ERISA and all bonus pay, stock option, restricted stock, deferred and incentive
compensation, supplemental retirement, stock
14
purchase, severance, vacation pay, sick pay, fringe benefit or other plans,
programs or arrangements relating to the Business, to which any Seller
contributes, has an obligation to contribute, maintains or sponsors (the
"Benefit Plans"). Each of the Benefit Plans has been administered in compliance
with its terms and all filing, reporting, disclosure, funding and other
applicable requirements of ERISA and the Code. Sellers have furnished Buyer with
true and correct copies of (i) all Benefit Plans, (ii) each summary plan
description and summary of material modification, (iii) the most recently filed
IRS Form 5500 and (iv) the most recently received IRS determination letter.
(B) QUALIFIED RETIREMENT PLANS
None of the Benefit Plans which is a "pension plan" (as defined in Section 3()
of ERISA (the "Pension Plans") is a multi-employer plan as defined in Section
3(37) of ERISA, or is subject to the requirements of Title IV of ERISA, Section
302 of ERISA or Section 412 of the Code. Each Pension Plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the IRS that it is so qualified, and no fact or event
has occurred since the date of such determination letter that would adversely
affect the qualified status of any such Pension Plan. No Seller or Shareholder
has incurred any liability for any penalty or tax under Section 4971, 4072,
4075, 4979 or 4980 of the Code or Section 502 of ERISA.
(C) WELFARE BENEFIT PLANS
Each of the Benefit Plans which is a "welfare plan" (as defined in Section 3(1)
of ERISA) (the "Welfare Plans") has at all times been in compliance with the
provision of Section 4980B of the Code any applicable state continuation
coverage laws. None of the Welfare Plans, nor any Seller or Shareholder provides
or promises post-retirement health, life or other welfare benefits to current
employees or retirees (or their spouses or dependents), except as required by
Section 4980B of the Code or other applicable law.
(D) OTHER
No Seller or Shareholder has incurred any liability under Title IV of ERISA
relating to the Business including, without limitation, any liability in
connection with the termination, or reorganization of any pension plan subject
to Title IV of ERISA, or withdrawal from any multiemployer plan, and no fact or
event exists which could reasonably be expected to give rise to any such
liability. All contributions, premiums, or payments required to be made with
respect to any Benefit Plan have been made on or before their due date.
7.17 CERTAIN TRANSACTIONS
There is no transaction, and no transaction now proposed, relating to the
Business to which any Seller or Shareholder was or is to be a party and in which
any director or officer of any Seller or any person owning of record or
beneficially more than l0 percent of the outstanding capital stock of any class
of or other equity interest in any Seller or any associate of any such person
had or has a direct or indirect material interest.
7.18 FOREIGN CORRUPT PRACTICES ACT
No Seller or Shareholder nor any director, officer, agent, employee or other
person associated with or acting on behalf of any of them has used any corporate
funds for any unlawful contribution, gift, entertainment or other expense
relating to political activity or made any direct or indirect unlawful payment
to any U.S. or foreign government official or employee from corporate funds or
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977 or paid or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment, in each case relating, directly or
indirectly, to the Business.
15
7.19 ACCOUNTING PRACTICES
The books and records relating to the Business are, in all material respects,
accurate and reflect the assets of the Business and have been maintained in
accordance with internal accounting controls that provide reasonable assurance
that (i) transactions are executed with management's authorization, (ii) for the
Business transactions are recorded as necessary to permit preparation of
financial statements and to maintain accountability for the assets , (iii)
access to the assets of the Business is permitted only in accordance with
management's authorization of the Business , and (iv) the reported
accountability of the assets of the Business is compared with existing assets of
the Business at reasonable intervals.
7.20 MINUTE BOOKS
B.C.R.'s minute books contain complete and accurate records of all meetings and
other corporate actions of its stockholders and Boards of Directors and
committees thereof relating to or affecting the Assets or the Business.
7.21 INSURANCE
The Assets are insured for the benefit of Sellers, in amounts deemed adequate by
Sellers and Shareholders, against all risks usually insured against by persons
operating similar properties or conducting similar operations in the localities
where such properties are located or such operations are conducted under valid
and enforceable policies issued by insurers of recognized responsibility.
Schedule 7.21 lists all such policies. Sellers have delivered to Buyer true and
complete copies of all such policies as in effect on the date hereof.
7.22 CERTAIN DISCLOSURES
Schedule 7.22 contains a list of all exhibitors for the Business for the fiscal
years ending December 31, 2000 and December 31, 2001 through the date hereof.
7.23 BROKERS
Except as set forth in Schedule 7.23, all negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Sellers and the Shareholders directly with Buyer and without the intervention of
any other person and in such manner as not to give rise to any valid claim
against any of the parties or the Assets for any finder's fee, brokerage
commission or like payment.
7.24 CONDUCT OF BUSINESS
The Business has been operated during the fiscal year ending December 31, 2001
in the same manner as it was during the fiscal year ended December 31, 2000, and
will continue to be so operated until Closing.
7.25 EBITDA CALCULATIONS
The Year 2000 EBITDA set forth in the Offering Memorandum is accurate in all
material respects and the estimated Year 2001 EBITDA set forth in the Offering
Memorandum was determined by the Sellers and Shareholders in good faith based on
assumptions and information believed reasonable. Sellers and Shareholders
understand and agree that such EBITDA amounts are subject to adjustment pursuant
to an audit that will determine the actual Base Purchase Price.
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7.26 NO UNTRUE STATEMENTS
No statement by any Seller or Shareholder contained in this Agreement or any
Schedule hereto and no written statement contained in any certificate or other
document required to be furnished by any Seller, Shareholder or any officer,
employee, counsel or other agent of any of them to Buyer pursuant to or in
connection with this Agreement, including without limitation, the Offering
Memorandum, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary in order to make the
statements therein contained not misleading.
8 REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents and warrants to the Sellers and Shareholders as follows:
8.1 CORPORATE ORGANIZATION
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to carry on the business now being conducted by Sellers and to acquire
and own and operate the Assets and the Business.
8.2 AUTHORIZATION OF AGREEMENT; NO VIOLATION
Buyer's Board of Directors has duly authorized the execution and delivery of
this Agreement and the purchase and the consummation of the other transactions
contemplated hereby. Buyer has delivered to Sellers a true and complete copy,
certified by its Secretary, of the resolutions, which have been duly adopted by
its Board of Directors authorizing such execution and delivery and such purchase
and the consummation of such other transactions. This Agreement and all such
other agreements and written obligations entered into and undertaken in
connection with the transactions contemplated hereby constitute the valid and
legally binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms. Neither the execution, delivery or
performance of this Agreement by Buyer nor the consummation of any of the
transactions contemplated hereby (i) will violate or conflict with any provision
of the Certificate of Incorporation or Bylaws of Buyer or (ii) will result in
any breach of or default under any provision of any contract or agreement of any
kind to which Buyer is a party or by which Buyer is bound or to which the
properties or assets of Buyer are subject. Buyer has delivered to Sellers copies
of its Certificate of Incorporation and all amendments thereto and a copy of its
Bylaws, which are true and complete copies of such instruments as in effect on
the date of this Agreement. All consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which must be obtained or
satisfied by the Buyer and which are necessary for the consummation of the
transactions contemplated by this Agreement have been, or will be prior to the
Closing Date, obtained and satisfied.
8.3 LITIGATION
There are no actions, suits, proceedings or investigations, either at law or in
equity, or before any commission or other administrative authority in any United
States or foreign jurisdiction, of any kind now pending or threatened or
proposed in any manner, or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or investigation, involving
Buyer or any of its properties or assets that (i) questions the validity of this
Agreement or (ii) seeks to delay, prohibit or restrict in any manner any action
taken or contemplated to be taken by Buyer under this Agreement.
8.4 BROKERS
Except as set forth in Schedule 8.4, all negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Buyer directly
with Sellers and Shareholders and without
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the intervention of any other person and in such manner as not to give rise to
any valid claim against any of the parties for a finder's fee, brokerage
commission or like payment.
8.5 INTENT TO GROW THE BUSINESS
Buyer intends to grow the Business, including its revenue and EBITDA, to a
revenue margin, consistent with the growth of the other businesses of the
Parent, subject to economic conditions generally and in the information
technology industry in particular, technological changes and developments,
competition and other factors which the Buyer may or may not be able to control.
8.6 NO UNTRUE STATEMENTS
No statement by Buyer contained in this Agreement and no written statement
contained in any certificate or other document required to be furnished by any
officer, employee, counsel or other agent of Buyer to Sellers or Shareholders
pursuant to this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary in order
to make the statements therein contained not misleading.
9 COVENANTS OF SELLERS AND SHAREHOLDERS
Each Seller and Shareholder covenants and agrees with Buyer as follows;
provided, however, that to the extent any covenant relates to (i) a Seller or
Shareholder, each Seller and Shareholder shall be deemed to have agreed to such
covenant solely with respect to itself and the Seller it owns or the Shareholder
that owns it, as applicable, and such Seller and Shareholder shall be jointly
and severally liable with respect thereto, and (ii) any other covenant, each
Seller and the Shareholder that owns it shall be collectively liable for only
50% of any damages or other liability arising out of a breach of such covenant
(although they will be jointly and severally liable for such 50%).
9.1 ACCESS, INFORMATION AND DOCUMENTS
Pending the Closing, Sellers and Shareholders will give to Buyer and to its
agents and representatives (including, but not limited to, accountants, lawyers
and appraisers) full and complete access during normal working hours to any and
all of the properties, assets, books, records and other documents of Sellers to
enable Buyer to make such examination of the business, properties, assets,
books, records and other documents of Sellers and Shareholders as Buyer may
determine, and Sellers and Shareholders will furnish to Buyer such information
and copies of such documents and records as Buyer shall reasonably request. As
part of such examination Buyer may, upon prior notice to Sellers, make such
inquiries of such persons having business relationships with Sellers (including,
but not limited to, exhibitors, licensees and customers) as Buyer shall
determine and Sellers and Shareholders shall cooperate fully with Buyer in
connection therewith; provided, however that Sellers may require that Sellers be
present during any such inquiries.
9.2 CONDUCT OF BUSINESS PENDING CLOSING
From the date hereof until the Closing, except as consented to by Buyer in
writing:
(A) Each Seller will maintain itself at all times as a
corporation or sole proprietorship duly organized,
validly existing and in good standing under the laws of
the jurisdiction under which it is incorporated;
(B) Sellers and Shareholders will conduct the business and
operations of the Business in a good and diligent manner
on an arm's-length basis and substantially in the manner
carried on as of the date hereof and Sellers will not
engage in any activity or transaction or make any
commitment to purchase or
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spend other than in the ordinary course of its business
as heretofore conducted; provided, however, without the
written consent of Buyer, Sellers will not make any
commitment to purchase or spend involving $ 50,000 or
more;
(C) Sellers and Shareholders will not declare, authorize or
pay any distribution or dividend to the Shareholders and
Sellers and Shareholders will not redeem, purchase or
otherwise acquire, or agree to redeem, purchase or
otherwise acquire or agree to redeem purchase or
otherwise acquire, any shares of its stock;
(D) Sellers and Shareholders will not pay or obligate
themselves to pay any compensation, commission or bonus
to any director, officer, employee or independent
contractor as such, except for the regular compensation
and commissions payable to such director, officer,
employee or independent contractor at the rate in effect
on the date of this Agreement;
(E) Sellers will continue to carry insurance insuring the
Assets and Business, in amounts reasonably deemed
adequate by their managements, against all risks usually
insured against by persons operating similar properties
or conducting similar operations in the localities where
such properties are located or such operations are
conducted under valid and enforceable policies issued by
insurers of recognized responsibility;
(F) Sellers and Shareholders will use their best efforts to
preserve the Business intact, to keep available to Buyer
the services of its employees (and to compensate such
employees consistent with past practices) and
independent contractors and to preserve for Buyer its
relationships with exhibitors, advertisers, customers,
attendees, suppliers, licensees, distributors, and
customers and others having business relationships with
it; provided, however that nothing herein shall give any
employee the right to become an employee of Buyer for
any specific time after the Closing Date;
(G) Sellers and Shareholders will not, and will not obligate
themselves to, sell or otherwise dispose of or pledge or
otherwise encumber any of the Assets except in the
ordinary course of business and Sellers and Shareholders
will maintain their facilities, machinery and equipment
related to the Business in good operating condition and
repair, subject only to ordinary wear and tear;
(H) Each Seller or Shareholder, as applicable, will not
amend its Articles of Incorporation or Bylaws;
(I) Sellers and Shareholders will not, with respect to the
business, engage in any activity or transaction other
than in the ordinary course of its business as
heretofore conducted;
(J) Without limiting the foregoing, Sellers and Shareholders
will consult with Buyer regarding all significant
developments, transactions, and proposals relating to
the Business or the Assets;
(K) Sellers and Shareholders will keep in full force and
effect all material rights, franchises, intellectual
property rights and goodwill relating or pertaining to
the Business;
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(L) Sellers and Shareholders will maintain the books,
accounts and records pertaining to the Business
consistent with past practices;
(M) Sellers and Shareholders will promptly inform the
Buyer in writing of any variances from the
representations and warranties contained in Article 7;
(N) Sellers and Shareholders will not enter into any
contract, agreement or commitment without the prior
consent of Buyer which, if entered into prior to the
date of this Agreement, would be required to be
disclosed on one or more Schedules referred to in
Article 7, except for contracts entered into in the
regular course of business (i) for speakers and
instructors and (ii) relating to the leasing of
exhibition, trade show or exposition space, as lessor;
9.3 FINANCIAL STATEMENTS AND CERTIFICATE
The Sellers have prepared and delivered to Buyer (i) unaudited statements of
income, on a combined basis, of the Business and the other businesses operated
by B.C.R. (the "B.C.R. Business") for the quarters ending September 30, 2000,
December 31, 2000, March 31, 2001 and June 30, 2001 and (ii) an unaudited pro
forma balance sheet of the Business as of August 31, 2001, a copy of which is
attached to Schedule 9.3(the "Unaudited Balance Sheet"). As soon as possible but
in no event later than sixty (60) days following the Closing, Sellers will
prepare and deliver to Buyer (i) a balance sheet of the Business and the related
statements of income, retained earnings and cash flows (the "Audited Balance
Sheet") of the Business prepared in accordance with GAAP as at December 31, 2000
(the "Audited Balance Sheet Date") and for the year then ended audited by
Certified Public Accountants selected by Buyer (the "Selected CPA") and
accompanied by a signed copy of the audit report thereon by the Selected CPA and
(ii) unaudited balance sheets and related statements of income, retained
earnings and cash flows of the Business for the quarters ending March 31, 2000,
June 30, 2000, September 30, 2000, December 31, 2000, March 31, 2001 and June
30, 2001, (the "Unaudited Quarterly Statements"), all of which shall be in form
and substance satisfactory to Buyer. Sellers and Shareholders will deliver to
Buyer at the time of the delivery to Buyer of the Audited Balance Sheet a
certificate executed by each Shareholder and each Seller in which each shall
represent and warrant to Buyer that:
(A) the Audited Balance Sheet presents fairly and
accurately, in all material respects, the financial
position of the Business as of the Audited Balance Sheet
Date and the results of its operations and its cash
flows for the year then ended in conformity with GAAP
consistently applied;
(B) to the best of Sellers' and Shareholders' knowledge, the
provision for uncollectible accounts set forth in the
Audited Balance Sheet are adequate;
(C) as at December 31, 2000, there was no material liability
that should properly be reflected or reserved against in
a financial statement prepared in conformity with GAAP
which is not fully reflected or reserved against in the
Audited Balance Sheet;
(D) there are no matters of material importance relating to
the condition (financial or otherwise), operations or
business (based upon the present or future conduct of
the present Business), properties, assets or liabilities
of the Business required by GAAP to be reflected or
reserved against in the Audited Balance Sheet which are
not reflected or reserved against in the Audited Balance
Sheet in accordance with GAAP;
(E) the Sellers have good and marketable title to all of
their properties and assets reflected in the Audited
Balance Sheet (except as sold or otherwise disposed of
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in the ordinary course of business since the date of
such Audited Balance Sheet), subject to no mortgage,
pledge, conditional sales contract, lien or other
encumbrance, except the lien of current taxes not yet
due and payable; and
(F) neither Sellers nor Shareholders know of any question
relating to any of the tax or information returns of
Sellers which if determined adversely to Sellers would
result in the assertion of any tax deficiency against
the Buyer.
9.4 AUDIT EXPENSES
Buyer and Sellers shall each pay fifty percent (50%) of the fees paid to the
Selected CPA for preparing the Unaudited Quarterly Statements. Sellers shall pay
for the audit of the Business as of December 31, 2000 and for the year then
ended, and Buyer shall pay for the audit of the Business as of December 31, 2001
and for all subsequent years and for the years then ended.
9.5 CONSENTS AND APPROVALS
Each Seller and Shareholder shall use its commercially reasonable efforts to
obtain prior to the Closing all consents, authorizations, and approvals under
all statutes, laws, ordinances, regulations, rules, judgments, decrees, and
orders of any court or governmental agency, board, bureau, body, department or
authority or of any other person required to be obtained by it in connection
with the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby.
9.6 NO SOLICITATION OF OFFERS
Until the earlier of Closing or termination of this Agreement, none of the
Sellers or Shareholders shall, directly or indirectly, through any officer,
director, employee, agent or otherwise, (i) solicit, initiate or encourage the
submission of proposals or offers from any person relating to any acquisition or
purchase of the Assets or the Business (an "Acquisition Proposal"), or (ii)
participate in any discussion or negotiation regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any way with
or assist, facilitate or encourage, any Acquisition Proposal by any other
person.
9.7 USE OF DATABASES
Sellers, Goldstone and XxXxxxxxx acknowledge and agree that all databases (the
"Databases") consisting of lists of exhibitors, conference and tradeshow
attendees, customers, suppliers and other information previously utilized by the
Business are Assets transferred to the ownership of Buyer pursuant to the terms
of this Agreement. Sellers, Goldstone and XxXxxxxxx shall not utilize the
Databases for any business directly or indirectly in competition with the
Business or sell, rent, assign, sublicense, or otherwise convey their interest
in the Databases to or permit the use of the Databases by any third parties.
9.8 USE OF SELLERS' ASSETS
So long as Buyer conducts any of its operations at the address of Sellers'
principal executive office, Sellers, Goldstone and XxXxxxxxx shall xxxxx Buyer a
perpetual non-revocable license and permission to continue to use any assets
previously utilized in connection with the Business (but not transferred by the
terms of this Agreement) in a manner consistent with past practice.
9.9 COOPERATION IN PREPARATION OF FINANCIAL STATEMENTS
Sellers, Goldstone and XxXxxxxxx shall cooperate with Buyer's accountant in the
preparation of quarterly audited and unaudited financial statements for the
Business for the periods preceding the Closing Date as such financial statements
may be required by applicable state and federal securities laws.
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10 COVENANTS OF BUYER
10.1 CONSENTS AND APPROVALS
Buyer shall use its best efforts to obtain prior to the Closing all consents,
authorizations and approvals under all statutes, laws, ordinances, regulations,
rules, judgments, decrees, and orders of any court or governmental agency,
board, bureau, body, department or authority or of any other person required to
be obtained by Buyer in connection with the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby.
10.2 JOINT MARKETING EFFORTS
The Buyer shall cooperate with the Sellers in joint marketing efforts to be
mutually agreed upon for the Business, including access and use of the Parent's
marketing resources, mailing lists, general promotion of the Business and
cross-promotion at the Parent's Networld-Interop ("N+I") show in Atlanta,
Georgia (e.g., e-mails, show daily, show guide, possible N+I discount to attend
the events sponsored by the Business, public relations and, web site promotions.
The Buyer shall charge the Business for this joint marketing activity based upon
its actual in-house costs.
10.3 EMPLOYEE BENEFIT MATTERS
For purposes of determining eligibility to participate, vesting and entitlement
to benefits where length or tenure of service is relevant under any benefit plan
or arrangement (other than a defined benefit plan or stock option plan) of Buyer
or any of its affiliates, all employees of the Sellers that are employed by
Buyer or any of its affiliates for a period commencing on the Closing Date and
ending three months thereafter (the "Continuing Employees") shall receive
service or tenure credit with respect to Buyer's and its affiliates' benefit
plans to the same extent such credit would have been granted if such employees
had been employed by Buyer or its affiliates rather than Sellers during such
employees' continuous tenure or service with Sellers prior to the Closing Date.
Buyer shall provide benefits to the Continuing Employees that are comparable to
the benefits provided to similarly situated employees of Parent. Notwithstanding
the foregoing, the parties acknowledge and agree that Buyer shall have no
obligation to increase the number of benefit plans nor (except with respect to
tenure and service credits for Sellers' employees) modify the Buyer's existing
benefit plans. The Buyer's health benefit plans for each Continuing Employee
shall commence on the date of employment of such Continuing Employee.
11 CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO SELL THE ASSETS
The obligation of Sellers to sell the Assets is subject to the fulfillment prior
to or at the Closing of the following conditions:
11.1 BUYER'S PERFORMANCE
There shall not be any material error, misstatement or omission in the
representations and warranties made by Buyer in this Agreement; all
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer to Sellers or any Shareholder pursuant to
this Agreement shall be true when made and at and as of the Closing as though
such representations and warranties were made at and as of said time (except (i)
as contemplated by this Agreement and (ii) to the extent, if any, any Sellers
and any Shareholder shall waive the same); and Buyer shall have performed and
complied with all the terms, provisions, and conditions of this Agreement to be
performed and complied with by Buyer at or before the Closing.
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11.2 CONSENTS AND APPROVALS
Except as provided in Schedule 11.2, Buyer shall have obtained all consents,
authorizations and approvals under all statutes, laws, ordinances, regulations,
rules, judgments, decrees and orders of any court or governmental agency, board,
bureau, body, department or authority or of any other person required to be
obtained by Buyer in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby.
11.3 EMPLOYMENT AGREEMENT
Buyer shall have executed an Employment Agreement with Goldstone on
substantially the terms set forth in Exhibit G (the "Goldstone Employment
Agreement").
11.4 CONSULTING AGREEMENT
Buyer shall have executed a Consulting Agreement with XxXxxxxxx on substantially
the terms set forth in Exhibit H (the "XxXxxxxxx Consulting Agreement").
11.5 NO ADVERSE PROCEEDINGS
No order, decree or injunction of any court or agency of competent jurisdiction
shall be in effect, and no law, statute or regulation shall have been enacted or
adopted, that enjoins, prohibits or makes illegal consummation of any of the
transactions contemplated hereby provided, however, that Buyer, Sellers and
Shareholders shall use their best efforts to prevent any such rule, regulation,
injunction, decree or other order, and to appeal as promptly as possible any
injunction, decree or other order that may be entered.
11.6 ESCROW AGREEMENT
Buyer and Escrow Agent shall have executed the Escrow Agreement.
11.7 OTHER
Each of the Sellers and Shareholders shall have received all of the items
required to be delivered to them pursuant to Section 4.2.
11.8 SIMULTANEOUS CLOSING OF B.C.R. TRANSACTION
The separate Asset Purchase Agreement dated as of the date hereof among the
Buyer, Parent, B.C.R. and Goldstone (the "B.C.R. Agreement") shall have been, or
shall simultaneously be, consummated.
12 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE ASSETS
The obligation of Buyer to purchase the Assets is subject to the fulfillment
prior to or at the Closing of the following conditions:
12.1 SELLERS' AND SHAREHOLDERS' PERFORMANCE
All representations and warranties by any Seller or each Shareholder contained
in this Agreement or in any written statement delivered by each Seller or each
Shareholder to Buyer pursuant to this Agreement shall be true and correct when
made at and as of the Closing as though such representations and warranties were
made at and as of said time (except (i) as contemplated by this Agreement and
(ii) to the extent, if any, Buyer shall waive the same); and each Seller and
Shareholder shall have performed and
23
complied with all the terms, provisions and conditions of this Agreement to be
performed and complied with by such Seller and Shareholder at or before the
Closing.
12.2 OPINION OF XXXXXXXXX COUNSEL
Buyer shall have received an opinion, dated the Closing date, of Xxxx & Xxxx,
LLP, counsel for XxXxxxxxx and MQV, in form and substance reasonably
satisfactory to Buyer, to the effect, that (the "H&D Opinion"):
(A) This Agreement and each instrument of sale, conveyance,
assignment, transfer, and delivery referred to in
Section 4.1 is a valid and binding obligation of
XxXxxxxxx, as an individual and doing business as MQV,
enforceable against him in accordance with its terms,
except (a) as the same may be limited by bankruptcy,
insolvency, reorganization or other laws or equitable
principles relating to or affecting the enforcement of
creditors' rights, (b) that the granting of specific
performance is subject to the discretion of a court of
equity, and (c) with respect to any provision contained
in this Agreement relating to noncompetition or
nonsolicitation;
(B) Neither the execution, delivery or performance of this
Agreement nor consummation of any of the transactions
contemplated hereby (i) will result in any breach of or
default under any provision of any contract or agreement
of any kind to which XxXxxxxxx, as an individual and
doing business as MQV is a party or by which XxXxxxxxx,
as an individual or doing business as MQV, is bound or
to which any property or asset owned by him is subject
and is listed on Schedule 7.9 or (ii) is prohibited by
or requires XxXxxxxxx, as an individual or doing
business as MQV, to obtain or make any consent,
authorization, approval, registration or filing under
any statute, law, ordinance, regulation, rule, judgment,
decree or order of any court or governmental agency,
board, bureau, body, department or authority, or of any
other person known to us;
(C) No authorization, approval or consent of, or any action
by, any United States federal or state court or
regulatory authority or by any court or regulatory
authority of any foreign jurisdiction that has not been
obtained or taken is required for the execution,
delivery or performance of this Agreement by XxXxxxxxx,
as an individual and doing business as MQV,including the
sale of the Assets; and;
(D) Such counsel knows of no litigation, proceeding or
investigation pending, or threatened involving
XxXxxxxxx, as an individual and doing business as MQV,
or the Assets or the Business or which questions the
validity of this Agreement or any action taken or to be
taken by XxXxxxxxx,,as an individual and doing business
as MQV, under this Agreement
12.3 OPINION OF B.C.R. COUNSEL
Buyer shall have received an opinion, dated the Closing date, of Xxxxx &
Xxxxxxx, P.C., counsel for B.C.R. and Goldstone, in form and substance
reasonably satisfactory to Buyer, to the effect, that (the "B.C.R. Opinion"):
(A) B.C.R. is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Illinois and has the corporate power and authority to
carry on its business as now being conducted and to own
and operate the property and assets now owned and being
operated by it;
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(B) Goldstone, as trustee under the Trust, owns all of the issued and
outstanding shares of stock of B.C.R.;
(C) This Agreement and each instrument of sale, conveyance,
assignment, transfer, and delivery referred to in Section 4.1 is
a valid and binding obligation of Goldstone and B.C.R.
enforceable against them in accordance with its terms, except (a)
as the same may be limited by bankruptcy, insolvency,
reorganization or other laws or equitable principles relating to
or affecting the enforcement of creditors' rights and (b) that
the granting of specific performance is subject to the discretion
of a court of equity, and (c) with respect to any provision
contained in this Agreement relating to noncompetition or
nonsolicitation;
(D) All corporate proceedings required to be taken by B.C.R. at or
before the Closing in connection with this Agreement and the
transactions contemplated hereby have been duly taken;
(E) Neither the execution, delivery or performance of this Agreement
nor consummation of any of the transactions contemplated hereby
(i) will result in any breach of or default under any provision
of any contract or agreement of any kind to which Goldstone or
B.C.R. is a party or by which Goldstone or B.C.R. is bound or to
which any property or asset of any of them is subject and is
listed on Schedule 7.9, or (ii) is prohibited by or requires
Goldstone or B.C.R. to obtain or make any consent, authorization,
approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
court or governmental agency, board, bureau, body, department or
authority, or of any other person known to us;
(F) No authorization, approval or consent of, or any action by, any
United States federal or state court or regulatory authority or
by any court or regulatory authority of any foreign jurisdiction
that has not been obtained or taken is required for the
execution, delivery or performance of this Agreement by the
Sellers and the Shareholders, including the sale of the Assets;
and
(G) Such counsel knows of no litigation, proceeding or investigation
pending, or threatened involving Goldstone or B.C.R. or the
Assets or the Business or which questions the validity of this
Agreement or any action taken or to be taken by Goldstone or
B.C.R. under this Agreement.
12.4 CONSENTS AND APPROVALS
Sellers and the Shareholders shall have obtained all consents, authorization and
approvals under all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau, body,
department or authority or of any other person required to be obtained by
Sellers or the Shareholders in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
12.5 PHYSICAL PROPERTIES
There shall have occurred no damage to or destruction or loss of (whether or not
covered by insurance) any tangible personal property included in the Assets
that, individually or in the aggregate, would have a MAE.
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12.6 EMPLOYMENT AGREEMENT
Goldstone shall have executed the Goldstone Employment Agreement.
12.7 CONSULTING AGREEMENT
XxXxxxxxx shall have executed the XxXxxxxxx Consulting Agreement.
12.8 NO ADVERSE PROCEEDINGS
No order, decree or injunction of any court or agency of competent jurisdiction
shall be in effect, and no law, statute or regulation shall have been enacted or
adopted, that enjoins, prohibits or makes illegal consummation of any of the
transactions contemplated hereby provided, however, that Buyer, Sellers and
Shareholders shall use their best efforts to prevent any such rule, regulation,
injunction, decree or other order, and to appeal as promptly as possible any
injunction, decree or other order that may be entered.
12.9 ESCROW AGREEMENT
Sellers and Escrow Agent shall have executed the Escrow Agreement.
12.10 OTHER
The Buyer shall have received all of the items required to be delivered to it
pursuant to Section 4.1.
13 TERMINATION
This Agreement may be terminated at any time prior to Closing as follows:
(A) by mutual consent of the Sellers and the Buyer;
(B) by either the Sellers or the Buyer if the other party shall
breach any of its respective representations, warranties or
agreements contained in this Agreement; or
(C) by either the Sellers or the Buyer if the transactions
contemplated by this Agreement shall not have been consummated
on or before September 30, 2001, (or such later date as may be
agreed upon in writing by the parties hereto), provided that the
terminating party has otherwise complied with all its
obligations under this Agreement.
If this Agreement is terminated pursuant to Section 13, all rights and
obligations of the Sellers and the Buyer hereunder shall terminate and neither
party shall have any liability to the other party hereunder, except that nothing
herein will relieve any party from liability for any breach of this Agreement
prior to such termination.
14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements contained in any certificate or other instrument delivered by or
on behalf of any Seller or Shareholder or Buyer, respectively, pursuant to this
Agreement shall be deemed representations and warranties hereunder by the party
delivering such certificate or instrument. All representations, warranties, and
agreements made by any Seller or Shareholder or Buyer in this Agreement or
pursuant
26
hereto shall survive the Closing for a period of eighteen (18) months beginning
on the day immediately following the Closing Date; provided, however that such
survival period shall not be affected by any knowledge of or investigation by
the other parties; provided further, however, if a claim is properly made prior
to the end of the applicable survival period, such claim shall survive until
finally resolved by the parties in accordance with Section 14.5 hereof.
Notwithstanding the foregoing, any representations, warranties and agreements
with respect to taxes shall survive for the applicable statute of limitations
and with respect to title and ownership of the Assets shall survive
indefinitely. From and after the Closing Date, the remedies contemplated by this
Section 14 shall be the sole recourse of the parties hereto and their respective
affiliates for all monetary damages relating to or arising, directly or
indirectly, out of this Agreement or the transactions contemplated hereby (other
than those specifically contemplated by the Goldstone Employment Agreement and
the XxXxxxxxx Consulting Agreement), and each party hereto hereby waives any and
all rights, claims, causes of action and other remedies for monetary damages
such party or its affiliates may have against the other parties hereto relating
to the subject matter of this Agreement (other than with respect to the
Goldstone Employment Agreement and the XxXxxxxxx Consulting Agreement) other
than the remedies expressly provided in this Section 14; provided, however, that
notwithstanding the foregoing, nothing contained in this Agreement or otherwise
shall in any way limit any claim, suit, cause of action or remedy that may be
available to any party based on fraud or intentional misrepresentation;
provided, however, that nothing contained herein shall limit the availability of
equitable relief for violations of Section 16 and for violations of the
provisions of the XxXxxxxxx Consulting Agreement and the Goldstone Employment
Agreement.
14.2 SELLER'S INDEMNIFICATION OBLIGATIONS
Subject to the terms and conditions of this Section 14.2, each Seller and
Shareholder agrees to indemnify and hold Buyer, Parent, Parent's affiliates, and
their respective officers, directors, employees, agents, successors and assigns
harmless against and in respect of any and all damages, claims, debts,
obligations, liabilities, interest, penalties, and expenses (including
reasonable legal fees, expert witness fees and other expenses) (collectively,
"Damages") arising out of, connected with or related to the following:
(A) any and all debts, liabilities, and obligations arising out of or
relating to the Business or the Assets of any nature, whether
absolute, accrued or contingent other than the Assumed
Liabilities obligations existing or incurred on or prior to the
Closing Date, or arising out of any transaction or event
occurring on or prior to the Closing Date;
(B) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of any Seller or
Shareholder contained in the Offering Memorandum, this Agreement
or certificate or other statement to be delivered or caused to be
delivered by any Seller or Shareholder pursuant to this
Agreement; or (ii) failure to perform any covenant or agreement
of any Seller or Shareholder contained in this Agreement or
certificate or other statement to be delivered or caused to be
delivered by any Seller or Shareholder pursuant to this
Agreement; and
(C) any and all actions, suits, demands, assessments or judgments
with respect to any claim arising out of or relating to the
subject matter of the indemnification.
Notwithstanding the foregoing, (i) any claim for indemnification with respect to
a breach of any representation and warranty or covenant relating solely to a
Seller or Shareholder may only be made against such Seller and/or Shareholder,
as applicable, and they shall be jointly and severally liable for any such
claim, (ii) each Seller and the Shareholder that owns it shall be collectively
liable for only 50% of all other indemnification claims (although they will be
jointly and severally liable for such 50%), (iii) no claim for indemnity shall
be made for any breach to the extent that the Base Purchase Price has been
adjusted as a result of such breach. Without limiting the foregoing, each
Shareholder personally guarantees the
27
repayment of one hundred percent (100%) of any or all of the Estimated Payment
Amount to which the Seller which such Shareholder owns is not entitled pursuant
to the terms of this Agreement (without any right of set off or defenses)
14.3 BUYER'S INDEMNIFICATION OBLIGATIONS
Subject to the terms and conditions of this Section 14, Buyer agrees to
indemnify and hold each of the Sellers and Shareholders and their respective
affiliates, officers, directors, employees, agents, successors and assigns
harmless against and in respect of any and all Damages arising out of, connected
with or related to the following:
(A) any and all debts, liabilities, and obligations arising out of or
relating to the Business or the Assets of any nature, whether
absolute, accrued or contingent, existing or incurred after the
Closing Date or arising out of any transaction or event occurring
after the Closing Date;
(B) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of Buyer contained in
this Agreement or certificate or other statement to be delivered
or caused to be delivered by Buyer pursuant to this Agreement or
(ii) any failure to perform any covenant or agreement of Buyer
contained in this Agreement; or certificate or other statement to
be delivered or caused to be delivered by Buyer pursuant to this
Agreement; and
(C) any and all actions, suits, demands, assessments or judgments
with respect to any claim arising out of or relating to the
subject matter of the indemnification.
14.4 LIABILITY FOR TAXES.
Sellers and the Shareholders, shall be liable for, shall indemnify and hold the
Buyer, Buyer's affiliates, and their respective officers, directors, employees,
agents, successors and assigns harmless from and against, and shall make payment
of (i) any federal, state, local or foreign income, sales, use, franchise,
property, value added, license, excise, transfer, employment, occupation,
pension plan, Social Security, payroll withholding, withholding or any other tax
together with any penalties and interest imposed on the Buyer attributable to
any tax period ending prior to or on the Closing Date (the "Pre-Closing
Period"), (ii) any income taxes for a Pre-Closing Period resulting from or
attributable to the transactions described in this Agreement, (iii) any income
taxes for which Buyer is or may be liable under a transferee liability or
similar theory, (iv) with respect to any income tax periods that began before
but end after the Closing Date, income taxes imposed for the portion of such
periods that are deemed to close on the Closing Date, and (v) any foreign tax
attributable to any Pre-Closing Period. Notwithstanding the foregoing, each
Seller and the Shareholder that owns it shall be collectively liable for only
50% of all other indemnification claims under this Section (although they will
be jointly and severally liable for such 50%).
14.5 PROCEDURE FOR INDEMNIFICATION CLAIMS
In the case of any claim or demand notice of a claim or demand of a third party
that may give rise to a claim for indemnification by the Buyer or Parent or any
Shareholder or Seller, or any of their related indemnified parties, as the case
may be hereunder (in such capacity, the "Indemnified Party"), such Indemnified
Party shall give prompt written notice of such claim, demand or circumstance
(described in reasonable detail) to the party against whom indemnification may
be sought hereunder (in such capacity, the "Indemnifying Party"); provided that
the failure to provide such notice shall not affect the obligation of the
Indemnifying Party hereunder except to the extent, if any, that the lack of
prompt notice adversely affects the ability of the Indemnifying Party to defend
against or diminish the losses arising out of such claim, demand or
circumstance. The Indemnifying Party shall have the right to defend and to
direct the defense against any such claim or demand, in its name or in the name
of the Indemnified Party, as the
28
case may be, at the expense of the Indemnifying Party, and with counsel selected
by the Indemnifying Party and reasonably acceptable to the Indemnified Party
unless (i) such claim or demand seeks an order, injunction or other equitable
relief against the Indemnified Party or (ii) the Indemnified Party shall have
reasonably concluded that there is a conflict of interest between the
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such claim or demand. Notwithstanding anything in this Agreement to the
contrary, the Indemnified Party shall, at the expense of the Indemnifying Party,
cooperate with the Indemnifying Party, and keep the Indemnifying Party fully
informed, in the defense of such claim or demand. The Indemnified Party shall
have the right to participate in the defense of any claim or demand with counsel
employed at its own expense; provided, however, that, in the case of any claim
or demand described in clause (i) or (ii) above or as to which the Indemnifying
Party shall not in fact have employed counsel to assume the defense against such
claim or demand, the reasonable fees and disbursements of such counsel shall be
at the expense of the Indemnifying Party. The Indemnifying Party shall have no
indemnification obligations with respect to any such claim or demand which shall
be settled by the Indemnified Party without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any action in any manner that would materially and
adversely affect the Indemnified Party.
14.6 LIMITATION OF LIABILITY
In no event shall the aggregate monetary liability of Buyer under this Agreement
exceed one hundred percent (100%) of the total amounts to be paid to Sellers by
the Buyer for the purchase of the Assets and the Business (including the
Incentive Payment, but excluding any payments made pursuant to the Goldstone
Employment Agreement or the XxXxxxxxx Consulting Agreement). In no event shall
the aggregate monetary liability of any Seller under this Agreement exceed one
hundred percent (100%) of the total amounts paid to such Seller by the Buyer for
the purchase of the Assets and the Business (including the Incentive Payment,
but excluding any payments made pursuant to the Goldstone Employment Agreement
or the XxXxxxxxx Consulting Agreement). No Indemnifying Party shall be liable
for monetary damages arising from a misrepresentation or breach of warranty by
such Indemnified Party to an Indemnified Party until and unless the aggregate
monetary damages incurred by such Indemnified Party from all misrepresentations
or breaches of warranty by such Indemnified Party exceeds $750,000, at which
time such liability shall revert back to the full amount of any such damages
provided, however that such limitation of liability shall not be applicable to
any Damages arising from Sellers' defaults as set forth on Schedule 7.9 (IV) or
with respect to Sellers' potential pension plan liability as referenced in
Schedule 7.16. Nothing in this Section 14.6 shall limit the availability of
equitable relief for violations of Section 16 and for violations of the
provisions of the XxXxxxxxx Consulting Agreement and the Goldstone Employment
Agreement. Upon making any payment to an Indemnified Party for any
indemnification claim pursuant to this Section 14, the Indemnifying Party shall
be subrogated, to the extent of such payment, to any rights that the Indemnified
Party may have against any other persons with respect to the subject matter
underlying such indemnification claim and the Indemnified Party shall take such
actions as the Indemnifying Party may reasonably require to perfect such
subrogation or to pursue such rights against such other persons as the
Indemnified Party may have; provided that no such right of subrogation shall
exist unless and until the Indemnified Party's Damages with respect to the
subject matter underlying such indemnified claim are paid in full. If an
Indemnified Party receives payment from a third party in respect of Damages for
which an Indemnifying Party has provided indemnification, then the Indemnified
Party shall reimburse the Indemnifying Party to the extent of such payment (up
to the amount of the indemnification provided by the Indemnifying Party).
15 SETOFF
If from time to time and at any time Buyer shall be entitled to be paid any
amount under the provisions of this Agreement, Buyer shall be entitled, if it so
elects, to set off such amount against the then unpaid amount of the Purchase
Price. Such right of set off shall be in addition to and not in substitution of
any other rights Buyer shall be entitled to under the provisions of either
Section 14 or otherwise.
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16 NONCOMPETITION
Neither the B.C.R., Goldstone nor any of their Affiliates (as defined below)
will, except as permitted by the last sentence of this paragraph, without the
prior written consent of the Buyer, (a) for a period beginning on the Closing
Date and ending on the later of two years after the Closing Date or termination
of the employment relationship between Goldstone and Buyer, directly or
indirectly, anywhere in the world engage in any promotional enterprise or
activity which competes with the Business as now conducted by Sellers or the
Business as conducted by Buyer as it evolves (the "Prohibited Operations"), or
directly or indirectly employ, engage, contract for or solicit the services in
any capacity of any person who is employed by Sellers in the operation of the
Business on the date hereof; or (b) after the Closing Date, use for its own
benefit or divulge or convey to any third party, any confidential information
relating to the Business, including, without limitation, exhibitor, advertiser,
customer, attendee and supplier lists, formulae, trade know-how, secrets,
consultant contracts, pricing information, marketing plans, product development
plans, business acquisition plans and all other information relating to the
operation of the Business not in the public domain or otherwise publicly
available. An "Affiliate" of a person or entity is any other person or entity
controlled by, controlling or under common control with such person or entity.
Neither XxXxxxxxx, MQV, nor any of their Affiliates will, except as permitted by
the last sentence of this paragraph, without the prior written consent of the
Buyer, (a) for a period beginning on the Closing Date and ending on the later of
two years after the Closing Date or termination of the consulting relationship
between XxXxxxxxx and Buyer, directly or indirectly, anywhere in the world
engage in any Prohibited Operations, or directly or indirectly employ, engage,
contract for or solicit the services in any capacity of any person who is
employed by Sellers in the operation of the Business on the date hereof; or (b)
after the Closing Date, use for its own benefit or divulge or convey to any
third party, any confidential information relating to the Business, including,
without limitation, exhibitor, advertiser, customer, attendee and supplier
lists, formulae, trade know-how, secrets, consultant contracts, pricing
information, marketing plans, product development plans, business acquisition
plans and all other information relating to the operation of the Business not in
the public domain or otherwise publicly available. Notwithstanding the
foregoing, XxXxxxxxx may continue to make speeches at networking conferences and
trade shows consistent with past practices. Information that enters the public
domain or is publicly available loses its confidential status hereunder so long
as neither the Sellers, Shareholders nor their Affiliates directly or indirectly
cause such information to enter the public domain. Notwithstanding the
foregoing, the Sellers, Shareholders and their Affiliates may, in the aggregate,
invest in securities of any issuer engaged in Prohibited Operations if (i) such
securities are listed on any national or regional securities exchange or have
been registered under the Securities Exchange Act of 1934 and (ii) such
investment does not exceed, in the case of any class of the capital stock of any
one issuer, 5% of the issued and outstanding shares, or, in the case of other
securities, 5% of the aggregate principal amount thereof issued and outstanding.
Further, the Sellers, Shareholders and their Affiliates may, in the aggregate,
invest any amount in securities of any issuer engaged in Prohibited Operations
if revenues from the Prohibited Operations constitute less than 5% of the
revenues of such issuer provided that the Prohibited Operations are transferred
or terminated by such issuer as soon as practicable after the Sellers or their
Affiliates acquire control of such issuer. Buyer acknowledges and agrees that
Sellers and Shareholders may engage in any activity unrelated to the ownership,
management or active involvement with (including, but not limited to, employment
or consulting services) networking conferences and tradeshows, none of which
shall constitute Prohibited Operations.
The Sellers and Shareholders acknowledge that the restrictions contained in this
Section 16 are reasonable and necessary to protect the legitimate interests of
the Buyer and that any breach by the Sellers or Shareholders of any provision
hereof will result in irreparable injury to the Buyer. The Sellers or
Shareholders acknowledge that, in addition to all remedies available at law, the
Buyer shall be entitled to equitable relief (without the necessity of posting
any bond), including injunctive relief, and an equitable accounting of all
earnings, profits or other benefits arising from such breach and shall be
entitled to receive such other damages, direct or consequential, arising from
such breach as may be appropriate.
30
In the event that any court or other body of competent jurisdiction determines
that the duration, geographic scope, or both, of this Section 16 are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that this Section 16 shall remain in full force and effect
for the greatest time period and in the greatest areas that would not render it
unenforceable.
17 DISPUTE RESOLUTION
If any Seller disputes the Buyer's calculation of the Actual Payment Amount, the
Incentive Payment or the Purchase Price Adjustment, such Seller shall notify the
Buyer in writing (the "Dispute Notice") of each disputed item (each, a "Disputed
Item"), specifying the amount thereof in dispute and setting forth, in detail,
the basis for such dispute, within thirty business days of the Seller's receipt
of the payment reflecting Buyer's calculation of such Disputed Item. In the
event of such a dispute, each of the Buyer and the Seller shall negotiate in
good faith to resolve all of the Disputed Items. If the Buyer and the Seller are
unable to resolve all of the Disputed Items within twenty business days of the
Buyer's receipt of the Dispute Notice, either the Buyer or the Seller may,
within five business days after the end of such twenty business days, request
that any unresolved Disputed Items be resolved by means of a mediation conducted
pursuant to this Section 17 ("Mediation").
Any request for a Mediation shall be made in writing to an independent
accounting firm of recognized national standing that is mutually agreeable to
Buyer and Seller. The firm to which such request is made shall, upon agreeing in
writing to resolve the Disputed Items submitted to it in accordance with the
terms of this Agreement, be the "Mediator," as that term is used in this
Agreement.
If the Buyer and Sellers are unable to agree upon the selection of a Mediator,
then each of Buyer and Sellers may select an independent accounting firm of
national prominence and such firms shall mutually agree upon the selection of a
third independent accounting firm of national prominence which shall serve as
the Mediator.
Upon being selected, the Mediator shall conduct a Mediation to determine, acting
as an expert and not as an arbitrator with regard to each of the Disputed Items
that were submitted to the Mediator whether the Actual Payment Amount, the
Incentive Payment or the Purchase Price Adjustment, as the case may be, was
prepared in accordance with the requirements of this Agreement and, if not, the
dollar amount of any adjustment that may be required in order for the Disputed
Item in question to conform to the requirements of this Agreement. The Mediator
shall make such determination subsequent to conducting the Mediation and shall
set forth such determination in a written ruling, which ruling shall be rendered
within 90 days of the date on which the Mediator was selected and shall be
delivered to the Buyer and the Sellers. The locale of all hearings conducted by
the Mediator in connection with the Mediation shall be the Los Angeles,
California office of the Mediator.
The determination of the Mediator shall be final, binding, and conclusive on the
Buyer and the Sellers; The fees and disbursements of the Mediator shall be
allocated between the Sellers on the one hand and the Buyer on the other hand in
the same proportion that the aggregate amount of such Disputed Items so
submitted to the Mediator that is unsuccessfully disputed by each such party (as
finally determined by the Mediator) bears to the total amount of such Disputed
Items so submitted.
This Section 17 shall only apply to the resolution of disputes relating to the
calculation of the Actual Payment Amount, the Incentive Payment or the Purchase
Price Adjustment and shall not limit the parties right to judicial remedies for
the resolution of any other disputes or the enforcement of any other rights
under this Agreement, including indemnification rights.
31
18 MISCELLANEOUS
18.1 ASSURANCE OF FURTHER ACTION
From time to time after the Closing and without further consideration from
Buyer, but at Buyer's expense, Sellers and Shareholders shall execute and
deliver, or cause to be executed and delivered, to Buyer such further
instruments of sale, conveyance, assignment, transfer and delivery and take such
other action as Buyer may reasonably request in order to more effectively sell,
convey, assign, transfer and deliver and reduce to the possession of Buyer any
and all of the Assets and consummate the transactions contemplated hereby.
18.2 EXPENSES
Each of the parties will pay all of its own legal and accounting fees and other
expenses incurred in the preparation of this Agreement and the performance of
the terms and provisions of this Agreement. Sellers shall bear all expenses and
commission resulting from its sales and marketing efforts for the sale of the
Business. In addition, Sellers shall pay all transfer, income and other taxes
incurred by Sellers in connection with the sale of the Assets and the Business
pursuant to the terms of this Agreement.
18.3 WAIVER
The parties hereto may by written agreement (i) extend the time for or waive or
modify the performance of any of the obligations or other acts of the parties
hereto or (ii) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement.
18.4 NOTICES
All notices, requests, demands, claims and other communications hereunder shall
be in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly delivered four business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or one
business day after it is sent for next business day delivery via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Buyer or Parent: Copy to:
Xxxxxxx Xxxxx Xxx X. Xxxxxxxxx, Esq.
Key3Media Group, Inc. Key3Media Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx, 0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000 Xxxxx 000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to XxXxxxxxx or MQV: Copy to:
Xxxx X. XxXxxxxxx Xxxxx X. Xxxxxxxxxx, Esq.
XxXxxxxxx Ventures Xxxx and Xxxx LLP
0000 Xxxxxxx Xxxx 60 State Street
Concord, MA 01742 Xxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
32
If to Goldstone or B.C.R.: Copy to:
Xxxxx X. Xxxxxxxxx Brien X. Xxxxx, Esq.
B.C.R. Enterprises, Inc. Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxx Xxxxx 000 Xxxxx Xxxx Xxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
18.5 ENTIRE AGREEMENT
This Agreement, the Schedules and Exhibits attached hereto and the
Confidentiality Information Agreement dated May 14, 2001 executed by Key3Media
Events, Inc. embody the entire agreement among the parties and there have been
and are no agreements, representations or warranties, oral or written among the
parties other than those set forth or provided for in this Agreement. This
Agreement may not be modified or changed, in whole or in part, except by a
supplemental agreement signed by each of the parties.
18.6 RIGHTS UNDER THIS AGREEMENT; NONASSIGNABILITY
This Agreement shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, but shall not be assignable by any
party without the prior written consent of the other parties; provided, however,
that Buyer may, in connection with a merger, consolidation or transfer of all or
substantially all of the assets that constitute the Business at that time,
assign its rights and obligations under this Agreement to any corporation all or
substantially all of the capital stock or equity interests of which are owned
directly or indirectly by Parent, in which event all of the rights and powers of
Buyer, and remedies available to it hereunder shall extend to and be enforceable
by such subsidiary.
Nothing contained in this Agreement is intended to confer upon any person, other
than the parties to this Agreement and their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
18.7 GOVERNING LAW, JURISDICTION AND VENUE
This Agreement shall be governed by and construed in accordance with the laws of
the State of California without regard to its conflict of laws rules. The
parties hereto agree that all actions or proceedings initiated by either party
hereto and arising directly or indirectly out of this Agreement which are
brought pursuant to judicial proceedings shall be litigated in a Federal or
state court located in the State of California. The parties hereto expressly
submit and consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which notices
are to be sent pursuant to this Agreement. The parties hereto waive any claim
that a Federal or state court located in the State of California is an
inconvenient forum or an improper forum based on lack of venue.
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18.8 KNOWLEDGE QUALIFIERS
Whenever a provision in this Agreement refers to the best of a party's
knowledge, such provision shall refer to a party's conscious awareness after due
and reasonable inquiry has been made with respect to the matters referenced
thereby.
18.9 HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES
The headings of the Sections, paragraphs and subparagraphs of this Agreement are
solely for convenience and reference and shall not limit or otherwise affect the
meaning of any of the terms or provisions of this Agreement. The references
herein to Sections, Exhibits and Schedules, unless otherwise indicated, are
references to sections of and exhibits and schedules to this Agreement.
18.10 SEVERABILITY CONSTRUCTION
Any provision of this Agreement which is invalid, illegal or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction. The language used in this Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
18.11 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but which together constitute one and the same instrument.
This Agreement may be executed and delivered by facsimile.
18.12 PRESS RELEASES AND ANNOUNCEMENTS
None of the parties shall issue any press release or public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other parties; provided, however, that any party may make any
public disclosure it believes in good faith is required by applicable law,
regulation or stock market rule (in which case the disclosing party shall use
reasonable efforts to advise the other parties and provide them with a copy of
the proposed disclosure prior to making the disclosure).
18.13 NO THIRD PARTY BENEFICIARIES
This Agreement shall not confer any rights or remedies upon any person other
than the parties hereto and their respective successors and permitted assigns.
34
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
KEY3MEDIA ART EVENTS, INC.
By _________________________________________
President
B.C.R. ENTERPRISES, INC.
By _________________________________________
Xxxxx X. Xxxxxxxxx
XXXXXXXXX VENTURES
By__________________________________________
Xxxx X. XxXxxxxxx
______________________________________________
Xxxxx X. Xxxxxxxxx, in his individual capacity
______________________________________________
Xxxx X. XxXxxxxxx, in his individual capacity
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc. set forth in
this Agreement.
KEY3MEDIA EVENTS, INC.
By:_________________________________________
Name:
Title:
35
Exhibit A
---------
INDENTURE, XXXX OF SALE, ASSIGNMENT AND ASSUMPTION
AGREEMENT
INDENTURE, XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT THIS
INDENTURE, XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT, is made, executed
and delivered as of September 10, 2001 by B.C.R. Enterprises, Inc., an Illinois
corporation and XxXxxxxxx Ventures (collectively called "Grantor") to Key3Media
Art Events, Inc., a Delaware corporation (herein called "Grantee"). All
capitalized terms used and not defined herein shall have the respective meanings
ascribed to them in the Asset Purchase Agreement dated September 10, 2001 by and
among Grantor, Grantee, Xxxx X. XxXxxxxxx and Xxxxx X. Xxxxxxxxx (the
"Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Grantor and Grantee are parties to the Agreement providing
for, among other things, the transfer and sale to the Grantee of all of the
properties, assets, rights, goodwill and business of Grantor, all as more fully
described in the Agreement, for consideration in the amount and on the terms and
conditions provided in the Agreement; and
WHEREAS, all of the terms and conditions precedent provided in the
Agreement have been met and performed (or a waiver thereof has been obtained) by
the respective parties thereto, and the parties now desire to carry out, in
part, the intent and purpose of the Agreement by the Grantor's execution and
delivery to the Grantee of this instrument evidencing the vesting in the Grantee
of all of the properties, assets, rights, goodwill and business of Grantor
relating to the Business hereinafter described.
NOW, THEREFORE, in consideration of the premises and of other valuable
consideration to Grantor in hand paid by Grantee, at or before the execution and
delivery hereof, the receipt and sufficiency of which by Grantor is hereby
acknowledged, Grantor has conveyed, granted, bargained, sold, transferred, set
over, assigned, aliened, remised, released, delivered and confirmed; and by this
instrument does convey, grant, bargain, sell, transfer, set over, assign, alien,
remise, release, deliver and confirm unto Grantee, its successors and assigns
forever, all the businesses, franchises, rights, privileges, properties and
assets of the Grantor relating to the Business of every nature and description,
tangible and intangible, real or personal, wherever located, including Grantor's
goodwill and all trademarks and trade names which are owned by Grantor for the
purpose of conducting the Business (as defined in the Agreement) of the Grantor,
except with respect to the assets set forth on Schedule 1 to the Agreement (the
"Excluded Assets"). The assets so conveyed, granted, bargained, sold,
transferred, set over, assigned, aliened, remised, released, delivered and
confirmed hereby are referred to collectively herein as the "Assets" and are,
without limiting the generality of the foregoing, more particularly described as
follows:
(a) all rights and interests of Grantor in, to and under all contracts,
commitments, agreements, options and other arrangements of every kind and
description relating to the Business including all supply contracts, purchase
contracts, exhibition contracts, sponsorship contracts and service contracts
relating to the Business;
(b) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all rights and interests of
Grantor in, to and under all domestic or foreign patents, patent applications,
trademarks, trademark registrations and applications therefore, all domestic or
foreign trade names, labels and other trade rights, in each case relating to the
Business;
(c) all debts, accounts, bills and notes receivable, commercial paper
and acceptances, and other evidences of indebtedness owned by Grantor relating
to the Business; all bills of lading, trust receipts, warehouse receipts and
other documents of title relating to the Business of whatever kind and
A-1
description; all rights and claims under policies of insurance and fidelity or
other bonds; all shares of stock and other securities of all kinds owned by
Grantor (including the contents of all safe deposit boxes and the securities and
other items held in custody accounts); all other claims, demands, judgments,
rights, equities, chattel mortgages, security agreements and choses in action
relating to the Business, and the proceeds thereof; and all permits and
memberships in clubs and cooperatives;
(d) all books, records and other data, but excluding the minute books
and stock books and corporate records;
(e) all Grantor's goodwill and trade connections relating to the
Business and Grantor's rights to use the trademarks and service marks listed in
Schedule 7.11 to the Agreement;
(f) any prepaid expenses relating to the Business;
(g) all intangible assets of Grantor relating to the Business,
including customer lists, trade secrets and similar information generally
described as "know-how" with respect to the patents and patent applications
aforesaid;
(h) all research, engineering, marketing and other data relating to the
Business;
(i) all the goodwill existing between Grantor and each of its
customers, suppliers, agents and others relating to the Business;
(j) all rights, claims, and causes of action of Grantor relating to the
Business arising after the date hereof against any officer, former officer,
employee or former employee or other person arising out of the disclosure or
use, or threatened disclosure or threatened use, of any proprietary information
relating to the Business including, without limitation, any invention, process,
method, formula treatment, discovery or improvement or application thereof, or
other know-how, or compilation of information, list of customers or suppliers,
document or record with respect thereto or contained therein; and
(k) if and to the extent that the same have not been transferred
effectively by separate instruments of assignment, all other property in which
Grantor has any interest whatsoever, real, personal or mixed, whether tangible
or intangible, of every kind and description relating to the Business and
wherever situated, including contingent and unknown interests, claims, rights
and properties, whether or not specifically mentioned or described herein and
whatever may be the nature or location of said assets, properties or business
but not including the Excluded Assets.
TO HAVE AND TO HOLD all of the Assets.
Section 1. The Grantee hereby assumes and agrees to pay, perform and
discharge, as and when due, all of the Assumed Liabilities (as defined in the
Agreement).
Section 2. Grantor hereby constitutes and appoints Grantee, its
successors and assigns, Grantor's true and lawful attorney, with full power of
substitution, in Grantor's name and stead, but on behalf and for the benefit of
Grantee, its successors and assigns, to demand and receive any and all of the
Assets, and to give receipts and releases for and in respect of the same, and
any part thereof, and from time to time to institute and prosecute in Grantor's
name, or otherwise, for the benefit of Grantee, its successors and assigns, any
and all proceedings at law, in equity or otherwise, which Grantee, its
successors or assigns, may deem proper for the collection or reduction to
possession of any of the Assets or for the collection and enforcement of any
claim or right of any kind hereby sold, conveyed, transferred or assigned, or
intended so to be, and to do all acts and things in relating to the Assets which
Grantee, its successors or assigns shall deem desirable, Grantor hereby
declaring that the foregoing powers are coupled with an interest and are and
shall be irrevocable by Grantor or by its dissolution or in any other manner or
for any reason whatsoever.
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Section 3. Grantor hereby covenants that, from time to time after the
delivery of this instrument, at Grantee's request and without further
consideration, Grantor will do, execute, acknowledge, and deliver, or will cause
to be done, executed, acknowledged and delivered, all and every such further
acts, deeds, conveyances, transfers, assignments, powers of attorney and
assurances as reasonably may be required more effectively to convey, transfer to
and vest in Grantee, and to put Grantee in possession of, any of the Assets and,
in the case of contracts and rights, if any, which cannot be effectively
transferred to Grantee without the consent of third parties, to endeavor to
obtain such consents promptly and if any be unobtainable, to use its best
efforts to assure to Grantee the benefits thereof.
Section 4. Nothing in this instrument, express or implied, is intended
or shall be construed to confer upon, or give to, any person, firm or
corporation other than Grantee and its successors and assigns, any remedy or
claim under or by reason of this instrument or any terms, covenants or condition
hereof, and all the terms, covenants and conditions, promises and agreements in
this instrument contained shall be for the sole and exclusive benefit of Grantee
and its successors and assigns.
Section 5. This instrument is executed by, and shall be binding upon,
Grantor and Grantee, their successors and assigns, for the uses and purposes
above set forth and referred to, effective immediately upon its delivery to
Grantee.
Section 6. This instrument shall be governed by and construed in
accordance with the laws of the State of California without giving effect to the
principles of conflicts of law thereof.
Section 7. The sale, transfer, conveyance and assignment has been
executed and delivered by the Grantor in accordance with the Agreement and is
expressly made subject to those liabilities, obligations and commitments which
the Grantee has expressly assumed and agreed to pay, perform and discharge
pursuant toSection 1 above.
The Grantor, by its execution of this instrument, and the Grantee, by
its acceptance of this instrument, each hereby acknowledgees and agrees that
neither the representations and warranties nor the rights and remedies of any
party under the Agreement shall be deemed to be enlarged, modified or altered in
any way by this instrument.
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IN WITNESS WHEREOF, Grantor has caused this Xxxx of Sale to be signed
by its President and its Secretary and its corporate seal to be affixed hereto
on date.
B.C.R. ENTERPRISES, INC.
By_______________________
Name: Xxxxx X. Xxxxxxxxx
Title: President
XXXXXXXXX VENTURES
By_________________________
Xxxx X. XxXxxxxxx
KEY3MEDIA ART EVENTS, INC.
By_________________________
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc., set forth
in this Agreement.
KEY3MEDIA EVENTS, INC.
By_________________________
Name:
Title:
A-4
Exhibit B
---------
FORM OF
ESCROW AGREEMENT
FORM OF ESCROW AGREEMENT This ESCROW AGREEMENT, dated as of September 10, 2001
(this "Agreement"), by and among Key3Media Art Events, Inc., a Delaware
corporation ("Buyer"), B.C.R. Enterprises, Inc., an Illinois corporation
("B.C.R."), XxXxxxxxx Ventures, a sole proprietorship ("MQV" and together with
B.C.R., the "Sellers"), and The Bank Of New York, a New York banking
corporation, as escrow agent (the "Escrow Agent').
W I T N E S S E T H
WHEREAS, pursuant to the Asset Purchase Agreement, dated as of
September 10, 2001 (the "Purchase Agreement") by and among Buyer, Sellers, Xxxxx
X. Xxxxxxxxx, an individual, and Xxxx X. XxXxxxxxx, an individual, Buyer has
agreed to acquire the Assets from Sellers, upon the terms and subject to the
conditions set forth in the Purchase Agreement;
WHEREAS, the Purchase Agreement provides that the Buyer is to deposit
with the Escrow Agent the sum of $4,458,150 in cash (such sum, together with
amounts earned thereon as herein provided, the "Escrow Funds") upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the Escrow Agent is willing to act as escrow agent, upon the
express terms and subject to express conditions oft this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable: consideration, the Parties hereby agree as follows:
1. Definitions.
-----------
1.1 Defined Terms. Capitalized terms used in this Agreement and
-------------
not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement, The following
terms shall have the respective meanings given thereto in the
Sections indicated below.
Term Reference in this Agreement
---- ---------------------------
Agreement Preamble
Buyer Preamble
Escrow Agent Preamble
Escrow Funds Recitals
Purchase Agreement Recitals
Sellers Preamble
Successor Agent Section 5.11
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2. Appointment of Escrow Agent. Buyer and Sellers hereby appoint the
---------------------------
Escrow Agent to act as agent on their behalf pursuant to this
Agreement and the Escrow Agent hereby consents to its appointment in
such capacity on the terms and conditions of this Agreement.
3. Deposit and Investment of Escrow Funds.
--------------------------------------
(i) Buyer shall deposit with the Escrow Agent the sum of
$4,458,150] by wire transfer as follows: Xxx Xxxx xx Xxx Xxxx,
XXX #000 000 108, A/C#:[ ], for further credit ________________
Attn: Xxxxxx Xxxxx. The Escrow Funds shall be held by the Escrow
Agent for the benefit of Sellers and Buyer in accordance with the
terms of and conditions of the Purchase Agreement and this
Agreement.
(ii) The Escrow Agent shall invest and reinvest without
distinction between principal and interest, the Escrow Funds in
such savings accounts, certificates of deposit, money market and
stable value funds, treasury securities, mutual funds, holding
treasury securities and such other similar investments as Buyer
and Sellers shall instruct in writing from time to time.
Simultaneously with the execution and delivery of this Agreement,
Buyer and Sellers shall deliver an initial investment instruction
to the Escrow Agent, substantially in the form annexed as Annex I
hereto. The Escrow Agent shall have no liability for any loss
arising from or related to any such investments. The Escrow Agent
shall present for redemption any obligation so purchased or sell
any such obligation, as may be necessary in order to fulfill the
provisions of this Agreement. Obligations so purchased as an
investment of the Escrow Funds shall be deemed at all times to be
a part of the Escrow Funds, and the interest accruing thereon
shall be credited to the person to which the Escrow Funds are
delivered pursuant hereto. The Escrow Agent may, but shall not be
obligated to, make any and all investments permitted by this
paragraph 3(ii) through its own bond or investment department.
4. Release of Escrow Funds.
-----------------------
4.1 Authorized Disbursements. Subject to the provisions of Section
------------------------
5.1(b) the Escrow Agent is hereby authorized to disburse the
Escrow Funds as follows:
(i) upon receipt of and in accordance with joint written
instructions signed by Buyer and Sellers, or
(ii) in accordance with the binding order of a court of
competent jurisdiction delivered to the Escrow Agent upon which
order the Escrow Agent shall conclusively rely and act.
5. Escrow Agent.
------------
5.1 Duties of Escrow Agent. (a) The Escrow Agent shall treat the
----------------------
Escrow Funds with such degree of care as it treats it own similar
property. It is agreed that the duties of the Escrow Agent are
only such as are herein specifically provided, and the Escrow
Agent shall have no other duties, implied or otherwise. The
Escrow Agent's duties are as a depository only, and the Escrow
Agent shall incur no responsibility or liability
B-2
whatsoever, except for its willful misconduct or gross
negligence. The Escrow Agent may consult with counsel of its
choice and shall not be responsible or liable for any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the advice of such counsel (subject to the
exception set forth above in the prior sentence). Except where
the terms of this Agreement expressly refer thereto, the Escrow
Agent shall not be bound in any way by any of the terms of the
Purchase Agreement or any other agreement to which one or more
of, Buyer or Sellers are parties, whether or not the Escrow Agent
has knowledge thereof, and the Escrow Agent shall not in any way
be required to determine whether or not the Purchase Agreement or
any other agreement has been complied with by Buyer or Sellers or
any other party thereto. In the event that the Escrow Agent shall
be uncertain as to any of its duties or rights hereunder, it
shall be entitled to refrain from taking action other than to
keep safely all property held in escrow until it shall be
directed otherwise pursuant to a joint written notice from and
executed by Buyer and Sellers or a court order, and the Escrow
Agent shall not be responsible or liable for any damages while
waiting for such joint written notice or court order. This
Agreement shall not create any fiduciary duty of the Escrow Agent
to Buyer or Sellers or any other person or entity whatsoever. The
Escrow Agent shall provide monthly statements identifying
transactions, transfers or holdings of the Escrow Funds and each
such statement shall be deemed to be correct and final upon
receipt thereof by the parties hereto unless the Escrow Agent is
notified in writing to the contrary within thirty (30) business
days of the date of such statement.
(b) As security for the due and punctual performance of any
and all obligations to the Escrow Agent hereunder, now or
hereafter arising, Sellers and Buyer, individually and
collectively, hereby pledge, assign and grant to the Escrow Agent
a continuing security interest in, and a lien on, the Escrow
Funds and all distributions thereon or additions thereto (whether
such additions are the result of deposits or the investment of
the Escrow Funds). The security interest of the Escrow Agent
shall at all times be valid, perfected and enforceable by the
Escrow Agent against Sellers, Buyer and all third parties in
accordance with the terms of this Agreement. If any fees,
expenses or costs incurred by, or any obligations owed to, the
Escrow Agent hereunder are not promptly paid when due, the Escrow
Agent may reimburse itself therefore from the Escrow Funds and
may sell, convey or otherwise dispose of any investment of the
Escrow Funds for such purpose.
5.2 Reliance by Escrow Agent on Written Notices. The Escrow Agent may
-------------------------------------------
conclusively rely and shall be fully authorized and protected in
relying upon any written notice, demand, certificate, advice,
opinion or document which it, in good faith believes to be
genuine. Set forth in Schedule 5.2 hereto is a list of the names
of the persons authorized to act for each of the parties under
this Agreement. Any officer of either party shall, from time to
time, certify to the Escrow Agent the names of any other person
or persons authorized to act for such party under the Agreement.
The Escrow Agent may conclusively rely on and shall be authorized
and fully protected in acting or failing to act upon this
written, facsimile or electronically delivered instructions of
any person named on Schedule 5.2 or by certification of an
officer of a party with respect to any matter relating to the
Escrow Agent acting as the Escrow Agent.
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5.3 Risk to Escrow Agent. None of the provisions of this Agreement
--------------------
shall require the Escrow Agent to expend or risk its own funds or
otherwise to incur any liability, financial or otherwise, in the
performance of any of its duties hereunder, or in the exercise of
any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or indemnification
satisfactory to it against such risk or liability is not assured
to it. In no event shall the Escrow Agent be liable (i) for any
consequential, punitive or special damages, (ii) for the acts or
omissions of its nominees, correspondents, designees, subagents
or sub custodians, or (iii) for an amount in excess of the value
of the Escrow Funds, valued as of the date of deposit. The Escrow
Agent shall not incur any liability for not performing any act or
fulfilling any duty, obligation or responsibility hereunder by
reason of any occurrence beyond the control of the Escrow Agent
(including but not limited to any act or provision of any present
or future law or regulation or governmental or telex or other
wire or communication facility.
5.4 No Investigation by Escrow Agent. The Escrow Agent shall not be
--------------------------------
required or bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent,
entitlement order, approval or other paper or document.
5.5 Escrow Agent's Execution of Power. The Escrow Agent may execute
---------------------------------
any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys,
custodians, or nominees appointed with due care, and shall not be
responsible or liable for any willful misconduct or gross
negligence on the part of any agent, attorney, custodian or
nominee so appointed as finally determined by a non-appealable
order of a court of competent jurisdiction.
5.6 Legal Proceedings. The Escrow Agent shall not be required to
-----------------
institute legal proceedings of any kind.
5.7 Escrow Agent Reporting. Notwithstanding anything to the contrary
----------------------
herein, except as required by law, in no event shall the Escrow
Agent be under a duty to file any reports or withhold or deduct
any amounts in respect of taxes due for payments made pursuant to
this Agreement.
5.8 Fees of Escrow Agent. Sellers and Buyer severally covenant and
--------------------
agree to pay to the Escrow Agent from time to time, and the
Escrow Agent shall be entitled to, the fees and expenses set
forth on Schedule 5.8 and will further pay or reimburse the
Escrow Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Escrow Agent
in accordance with any of the provisions hereof or any other
documents executed in connection herewith (including the
reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all persons not regularly in
its employ), other than periodic reports and audits and other
actions requested by any party pursuant to the last sentence of
Section 5.1 (a) hereof, which related expenses, disbursements and
advances shall be paid by the requesting party, as set forth
therein. All fees and amounts payable to the Escrow Agent under
this Section 5.8 shall be payable fifty percent (50%) by Sellers
and fifty percent (50%) by Buyer. The obligations of Sellers and
Buyer under this Section 5.8 to compensate the Escrow Agent and
to pay or reimburse the Escrow Agent for
B-4
reasonable expenses, disbursements and advances shall survive the
satisfaction and discharge of this Agreement or the earlier resignation
or removal of the Escrow Agent.
5.9 Indemnification of the Escrow Agent. Sellers and Buyer jointly and
-----------------------------------
severally agree to be responsible to indemnify and hold the Escrow
Agent and its directors, employees, officers, agents, successors and
assigns harmless from and against any and all losses, claims, damages,
liabilities and expenses, including without limitation, reasonable
costs of investigation and reasonable counsel fees and expenses which
may be imposed on the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as the escrow agent hereunder or the
performance of its duties hereunder, except as a result of the Escrow
Agent's negligence or willful misconduct. Such indemnity includes,
without limitation, all losses, damages, liabilities and expenses
(including reasonable counsel fees and expense) incurred in connection
with any litigation (whether at the trial or appellate levels) arising
from this Agreement or involving the subject matter hereof. The
indemnification provisions contained in this Section 5.9 are in
addition to any other rights any of the indemnified parties may have by
law or otherwise and shall survive the termination of this Agreement or
the resignation or removal of the Escrow Agent.
5.10 Successor to Escrow Agent. Any corporation or other entity whatsoever
-------------------------
into which the Escrow Agent may be merged or converted or with which it
may be consolidated, any corporation or other entity whatsoever
resulting from any merger, conversion or consolidation to which the
Escrow Agent shall be a party or any corporation or other entity
whatsoever succeeding to the business of the Escrow Agent shall be the
success of the Escrow Agent hereunder with the execution or filing of
any paper with any party hereto except where an instrument of transfer
or assignment is required by law to effect such succession.
5.11 Resignation of Escrow Agent. If the Escrow Agent at any time, in its
---------------------------
sole discretion, deems it necessary or advisable to resign as the
Escrow Agent hereunder, it may do so by giving prior written notice of
such even to Buyer and Sellers and thereafter delivering the Escrow
Funds to any other escrow agent mutually agreed upon by Buyer and
Sellers as notified to the Escrow Agent in writing, and if no such
escrow agent shall be designated by Buyer and Sellers within sixty (60)
calendar days of such written notice, then the Escrow Agent shall seek
the appointment of its successor as prescribed by the clerk or other
proper officer of a court of competent jurisdiction located within the
State of New York to the extent permitted by law (any such successor to
the Escrow Agent, whether designated by Buyer and Sellers or pursuant
to the clause above or otherwise, is hereinafter referred to as the
"Successor Agent"). The costs and expenses (including reasonable
attorney's fees and expenses) incurred by the Escrow Agent in
connection with such proceeding for the appointment of a Successor
Agent shall be paid by, and be deemed a joint and several obligation of
Buyer and Sellers, Buyer and Sellers may, at any time after the date
hereof, upon thirty (30) days prior written notice to the Escrow Agent
agree in writing to appoint a Successor Agent for the resigning or
removed Escrow Agent, whereupon the Escrow Agent shall deliver the
Escrow Funds to such Successor Agent as provided below. The fees of any
Successor Agent shall be borne severally by Buyer and Sellers. Upon
receipt of the identity of the
B-5
Successor Agent, the Escrow Agent shall either deliver the Escrow Agent's fees,
costs and expenses or other obligations owed to the Escrow Agent, or hold such
Escrow Funds (or any portion thereof), pending distribution, until all such
fees, costs and expense or other obligations are paid. Upon delivery of the
Escrow Funds to the Successor Agent, (i) the Escrow Agent shall be discharged
from any and all responsibility or liability with respect to the Escrow Funds
(except as otherwise provided herein) and (ii) all references herein to the
"Escrow Agent" shall, where applicable, be deemed to include such Successor
Agent and such Successor Agent shall thereafter become the Escrow Agent for all
purposes of this Agreement.
6. Miscellaneous.
-------------
6.1 Construction: Interpretation. The heading contained in this
-----------------------------
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement, Article, Section,
schedule, exhibit, recital and party references are to this Agreement
unless otherwise stated. No party, nor its counsel, shall be deemed the
drafter of this Agreement for purposes of construing the provisions of
this Agreement, and all provisions of this Agreement shall be construed
in accordance with their fair meaning and not strictly for or against
any party.
6.2 Amendments and Modifications. No party hereto shall
----------------------------
be bound by any modification, amendment, termination, cancellation,
rescission or replacement of this Agreement unless the same shall be in
writing and signed by it.
6.3 Notices. All notices and other c4ommunication hereunder shall be in
-------
writing and shall be effective when actually received by the party to
which such notice is sent (which in the case of the Escrow Agent is its
Corporate Trust Department), as follows:
If to Buyer, to: Copy to:
(Which shall not constitute notice)
\
Xxxxxxx Xxxxx Xxx X. Xxxxxxxxx
Key3Media Events, Inc. Key3Media Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx 0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000 Xxxxx 000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to Xxxx XxXxxxxxx Copy to:
(Which shall not constitute notice)
Xxxx X. XxXxxxxxx Xxxxx X. Xxxxxxxxxx, Esq.
XxXxxxxxx Ventures Xxxx and Xxxx LLP
0000 Xxxxxxxx Xxxx 60 State Street
Concord, MA 01742 Xxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
B-6
If to Xxxxx Xxxxxxxxx or B.C.R. Copy to:
Enterprises, Inc. (Which shall not constitute notice)
Xxxxx X. Xxxxxxxxx Brien X. Xxxxx, Esq.
B.C.R. Enterprises, Inc. Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxx Xxxxx 000 Xxxxx Xxxx Xx.
Xxxxx 000 Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to Escrow Agent, to:. Copy to:
(Which shall not constitute notice)
The Bank of New York
Insurance Trust and Escrow Xxxx
000 Xxxxxxx Xxxxxx, 0X
Xxx Xxxx Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
or to such other address as the person to whom notice is being given may have
previously furnished to the other parties in writing in the manner set forth
above.
6.4 Assignment. Subject to Section 5.10, neither this Agreement nor any
----------
of the rights, interests or obligation hereunder shall be assigned by
any party (whether by operation of law or otherwise) without the prior
written consent of Buyer, Sellers and the Escrow Agent; provided that
either Sellers or Buyer may assign its rights to any affiliate, but no
such assignment shall relieve the assignor of its obligations
hereunder. This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successor and
permitted assigns.
6.5 Termination of Agreement. This Agreement shall terminate upon the
------------------------
mutual written express agreement of Buyer and Sellers. In any event,
this Agreement shall terminate when all the Escrow Funds have been
delivered according to the terms of this Agreement.
6.6 Representation. Each of the parties hereby represents and warrants (a)
--------------
that this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes its legal, valid and binding obligation and
(b) that the execution, delivery, and performance of this Agreement by
it does not violate any application law or regulation.
6.7 Other Miscellaneous Provisions. (a) This Agreement may be executed
------------------------------
simultaneously in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(i) Whenever under the terms hereof the time for giving a
notice or performing an act falls upon a Saturday, Sunday, or banking
holiday, such time shall be extended to the next day on which Escrow
Agent is open for business.
B-7
(ii) This Agreement shall be interpreted, construed, enforced and
administered in accordance with the internal substantive laws (and not
the choice of law rules) of the State of New York. Unless provided
otherwise by an order of the Court, each of the parties hereto hereby
submits to the personal jurisdiction of and each agrees that all
proceedings relating hereto to which the Escrow Agent is a plaintiff or
named party shall be brought in courts located within the City and
State of New York, Los Angeles, California or elsewhere as the Escrow
Agent may select. Each of the parties hereto hereby waives the right to
trial by jury in any such proceedings. To the extent that in any
jurisdiction any party may be entitled to claim, for itself or its
assets, immunity from suit, execution, attachment (whether before or
after judgment) or other legal process, such party hereby irrevocably
agrees not to claim, and hereby waives, such immunity.
(iii) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions
"The Bank of New York by name or the rights, powers, or duties of the
Escrow Agent under this Agreement shall be issued by any other parties
hereto, or on such party's behalf, without the prior written consent of
the Escrow Agent.
(iv) The Escrow Agent does not have any interest in the Escrow
Funds but is servings as escrow holder only and having only possession
thereof. Sellers and Buyer shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the Escrow
Funds incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent for any amounts that it is obligated to pay
in the way of such taxes. Any payments of income in respect of the
Escrow Funds shall be subject to withholding regulations then in force
with respect to United States taxes. The parties hereto will provide
the Escrow Agent with appropriate form for tax I.D. number
certifications. It is understood that the Escrow Agent shall be
responsible for income reporting only with respect to income received
on investment of funds, which are a part of the Escrow Funds and is not
responsible for any other reporting as provided in Section 5.7 hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK-
THE NEXT PAGE IS THE SIGNATURE PAGE]
B-8
IN WITNESS WHEREOF, each of the parties has caused this Escrow
Agreement to be executed by a duly authorized officer as of the day and year
first written above.
KEY3MEDIA ART EVENTS, INC.
By ___________________________________
President
B.C.R. ENTERPRISES, INC.
By ___________________________________
Xxxxx X. Xxxxxxxxx, President
XXXXXXXXX VENTURES
By____________________________________
Xxxx X. XxXxxxxxx
THE BANK OF NEW YORK,
as Escrow Agent
By:___________________________________
Name:
Title:
Key3Media Events, Inc., hereby unconditionally guaranties all of the
obligations, covenants and agreements of Key3Media Art Events, Inc. set forth in
this Agreement.
KEY3MEDIA EVENTS, INC.
By:___________________________________
Name:
Title:
B-9
SCHEDULE 5.2
AUTHORIZED SIGNATORIES
For XxXxxxxxx Ventures
----------------------
The authorized signatory for XxXxxxxxx Ventures is Xxxx X. XxXxxxxxx.
For B.C.R. Enterprises, Inc.:
-----------------------------
The authorized signatory for B.C.R. Enterprises, Inc. is Xxxxx X. Xxxxxxxxx.
For Key3Media Art Events, Inc.
------------------------------
The authorized signatories for Key3Media Art Events, Inc. are Xxxxxxx
X. Xxxxx, Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxx.
B-10
SCHEDULE 5.8
ESCROW AGENT FEE
Escrow Agent shall be paid Five Thousand Dollars ($5,000) for its services
hereunder.
B-11
Exhibit C
---------
B.C.R. ENTERPRISES, INC.
Officer's Certificate
---------------------
I, Xxxxx X. Xxxxxxxxx, President and Secretary of B.C.R.
Enterprises, Inc., an Illinois corporation ("Company"), pursuant
to 4.1(D) of the Asset Purchase Agreement, dated as of September
10, 2001 (the "Agreement"), between the Company, MQV, B.C.R.
Enterprises, Inc., XxXxxxxxx Ventures, Xxxx X. XxXxxxxxx, Xxxxx
Xxxxxxxxx and Key3Media Art Events, Inc., a Delaware corporation,
hereby certify, for and on behalf of the Company that:
1. All representations and warranties made by the Company in the
Agreement, as they relate to the Company, are true and correct on the
date hereof as though such representations and warranties were made as
of this date, and the Company has duly performed or complied with all
of the covenants, obligations and conditions to be performed or
complied with by it under the terms of the Agreement on or prior to the
Closing Date.
2. All authorizations, consents or approvals or other action required to
be obtained or taken by the Company in connection with the execution,
delivery and performance of the Agreement by the Company and the
consummation by the Company of the transactions contemplated thereby
have been obtained or taken
IN WITNESS WHEREOF, the undersigned, in his capacity as President of the
Company, has executed this Certificate for and on behalf of the Company as of
this 10th day of September, 2001.
________________________
Name: Xxxxx X. Xxxxxxxxx
President
C-1
XXXXXXXXX VENTURES
Officer's Certificate
---------------------
The undersigned, Xxxx X. XxXxxxxxx ("XxXxxxxxx"), as an
individual and doing business as XxXxxxxxx Ventures ("MQV"),
pursuant to .14.1(D) of the Asset Purchase Agreement, dated as of
September 10, 2001, (the "Agreement"), between MQV, B.C.R.
Enterprises, Inc., XxXxxxxxx Ventures, Xxxx X. XxXxxxxxx, Xxxxx
X. Xxxxxxxxx and Key3Media Art Events, Inc. a Delaware
corporation, hereby certifies that:
1. All representations and warranties made by MQV and XxXxxxxxx in the
Agreement, as they relate to MQV and XxXxxxxxx, are true and correct on
the date hereof as though such representations and warranties were made
as of this date, and XxXxxxxxx and MQV have duly performed or complied
with all of the covenants, obligations and conditions required to be
performed or complied with by them under the terms of the Agreement on
or prior to the Closing Date.
2. All authorizations, approvals, consents or other action required to be
obtained or taken by XxXxxxxxx or MQV in connection with the execution,
delivery and performance of the Agreement by XxXxxxxxx and MQV and the
consummation by XxXxxxxxx and MQV of the transactions contemplated
thereby have been obtained or taken
IN WITNESS WHEREOF, the undersigned, as an individual and doing business as
XxXxxxxxx Ventures, has executed this Certificate as of this 10th day of
September, 2001.
____________________________
Name: Xxxx X. XxXxxxxxx
As an individual and doing
business as XxXxxxxxx Ventures
C-2
Exhibit D
---------
B.C.R. ENTERPRISES, INC.
Secretary's Certificate
-----------------------
Pursuant to Section 4.1 of the Asset Purchase Agreement dated as
of September 10, 2001, (the "Agreement") by and between Key3Media Art
Events, Inc., a Delaware corporation (the "Company"), B.C.R.
Enterprises, Inc., XxXxxxxxx Ventures, Xxxx X. XxXxxxxxx and Xxxxx X.
Xxxxxxxxx, I Xxxxx X. Xxxxxxxxx, Secretary of the Company, hereby
certify that:
(a) Attached hereto as Annex A is a true and correct copy of the
Certificate of Incorporation of the Company and all amendments thereto,
certified by the Secretary of State of Illinois on August 28, 2001, and
a Certificate of Good Standing issued by the Secretary of State of
Illinois on August 28, 2001. No amendment or other document relating to
or affecting the Certificate of Incorporation of the Company has been
filed in the office of the Secretary of State of Illinois since a
change of registered agent was filed on May 17, 2000, and no action has
been taken by the Company or its stockholders, directors or officers in
contemplation of the filing of any such amendment or other document or
in contemplation of the liquidation or dissolution of the Company;
(b) Attached hereto as Annex B is a true and complete copy of the By-laws
of the Company, as in full force and effect since, April 1, 1981, to
and including the date hereof;
(c) Attached hereto as Annex C are true copies of resolutions duly adopted
by the Sole Directors and Sole Shareholder of the Company by unanimous
written consent as of September 10, 2001; such resolutions have not
been amended, modified or rescinded and remain in full force and effect
as of the date hereof; and such resolutions are the only resolutions
adopted by the Company's Sole Director or Shareholder or any committee
thereof relating to the Agreement or the transactions contemplated
thereby.
IN WITNESS WHEREOF, I have hereunto signed my name on this 10th day of
September, 2001.
________________________________
Xxxxxxxxx Xxxxxxxxx, Secretary
D-1
Exhibit E
---------
KEY3MEDIA ART EVENTS, INC.
Officer's Certificate
---------------------
I, Xxx Xxxxxxxxx, Executive Vice President of Key3Media Art
Events, Inc., a Delaware corporation ("KAE"), pursuant to Section
4.2 (B) of the Asset Purchase Agreement, dated as of September 10,
2001, (the "Agreement"), by and among KAE, B.C.R. Enterprises,
Inc., XxXxxxxxx Ventures, Xxxx X. XxXxxxxxx and Xxxxx X. Xxxxxxxxx
does hereby certify, for and on behalf of KAE that:
1. All representations and warranties made by KAE in the Agreement, as
they relate to KAE, are true and correct on the date hereof as though
such representations and warranties were made as of this date, and KAE
has duly performed or complied with all of the covenants, obligations
and conditions to be performed or complied with by it under the terms
of the Agreement on or prior to the Closing Date.
2. All authorizations, consents or approvals or other action required to
be obtained or taken prior to the Closing Date in connection with the
execution, delivery and performance of the Agreement by KAE and the
consummation by KAE of the transactions contemplated thereby have been
obtained or taken.
IN WITNESS WHEREOF, the undersigned, in his capacity as Executive Vice
President, of KAE has executed this Certificate for and on behalf of KAE as of
this 10th day of September, 2001.
_____________________________________
Xxx Xxxxxxxxx
Executive Vice President
E-1
Exhibit F
---------
KEY3MEDIA EVENTS, INC.
KEY3MEDIA ART EVENTS, INC
Secretary's Certificate
-----------------------
I, Xxx Xxxxxxxxx, Secretary of Key3Media Art Events, Inc., a
Delaware corporation, and Key3Media Events, Inc., a Delaware
corporation (collectively the "Companies"), hereby certify that:
(a) Attached hereto as Annex A is are true and correct copies of the
Certificates of Incorporation of the Companies and all amendments
thereto, certified by the Delaware Secretary of State on the respective
dates set forth therein, and a Certificate of Good Standing for the
Companies issued by the Delaware Secretary of State on the respective
dates set forth therein. No amendment or other document relating to or
affecting the Certificates of Incorporation of the Companies has been
filed in the office of the Delaware Secretary of State since September
7, 2001, and no action has been taken by the Companies or their
stockholders, directors or officers in contemplation of the filing of
any such amendment or other document or in contemplation of the
liquidation or dissolution of the Companies;
(b) Attached hereto as Annex B is a true and complete copy of the By-laws
of the Companies, as in full force and effect since, September 7, 2001,
to and including the date hereof;
(c) Attached hereto as Annex C are true copies of resolutions duly adopted
by the Boards of Directors and Stockholders of the Companies by
unanimous written consent as of August 29, 2001; such resolutions have
not been amended, modified or rescinded and remain in full force and
effect; and such resolutions are the only resolutions adopted by the
Companies' Board of Directors or any committee thereof or the
Stockholders relating to the Asset Purchase Agreement, dated as of
September 10, 2001, between Key3Media Art Events, Inc., XxXxxxxxx
Ventures, Xxxx X. XxXxxxxxx, Xxxxx X. Xxxxxxxxx and B.C.R. Enterprises,
Inc. or the transactions contemplated thereby.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company this 10th day of September.
_____________________________
Xxx Xxxxxxxxx, Secretary
F-1
Exhibit G
---------
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 10, 2001, by and between Key3Media Art
Events, Inc. (the "Company") and Xxxxx X. Xxxxxxxxx ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is desirous of employing Executive, and Executive
is desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. Definitions. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "Base Salary Amount" shall mean a salary based upon $250,000
per year.
(b) "Benefit Plan" shall mean each vacation pay, sick pay,
retirement, pension, profit sharing, welfare, medical, dental,
disability, life insurance, deferred compensation, incentive
compensation, stock issuance and option or other employee benefit plan,
program or arrangement of any kind or nature whatsoever, if any.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Cause" shall have the meaning ascribed to that term in
Section 7.
(e) "Common Stock" shall mean the Common Stock, no par value, of
the parent of the Company, Key3Media Group, Inc. ("Group").
(f) "Covenant Period" shall have the meaning ascribed to that term
in Section 9(a).
(g) "Customer" shall have the meaning ascribed to that term in
Section 9(c).
(h) "Disability" shall have the meaning ascribed to that term in
Section 6(a).
(i) "Disability Period" shall have the meaning ascribed to that
term in Section 6(a).
(j) "Proprietary Information of the Company" shall have the
meaning ascribed to that term in Section 10.
2. Employment. The Company hereby employs Executive, and Executive
----------
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. Term of Employment. The term of employment hereunder shall
------------------
commence on the date of Closing of the Asset Purchase Agreement by and among
KAE, B.C.R. Enterprises, Inc., XxXxxxxxx Ventures, Xxxx X. XxXxxxxxx and Xxxxx
X. Xxxxxxxxx (the "Asset Purchase Agreement"), and end on December 31, 2003,
subject to early termination as herein provided.
G-1
4. Position and Duties. Executive shall serve as the President and Chief
-------------------
Executive Officer of the Company. Subject to the authority of the Board of
Directors of the Company, the Executive shall have all of the powers and duties
incident to the office of President and Chief Executive Officer prescribed by
the Board of Directors and such other powers and duties as may be prescribed by
the Board of Directors of the Company that are consistent with his position.
5. Exclusive Duties. During Executive's employment by the Company,
----------------
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(a), 9(b) and 9(c). Such duties shall not require Executive to
re-locate from his present residence in Hinsdale, Illinois, and shall not
require him to travel away from such present residence substantially more than
he has traveled as president of B.C.R. Enterprises, Inc.
6. Compensation and Other Benefits.
-------------------------------
(a) Base Salary. During the term of this Agreement, the Company
-----------
shall pay to Executive the Base Salary Amount. The Base Salary Amount
shall be subject to increase, at the sole discretion of the Chief
Executive Officer or the Compensation Committee of the Board of Directors
of the Company, as applicable, on or around each anniversary date of the
execution of this Agreement, subject to approval of Executive for any
increase during 2003. The Base Salary Amount shall be paid to Executive
in accordance with the Company's regular payroll practices with respect
to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the reasonable opinion of the Board of Directors,
based upon competent medical advice, he can no longer perform the duties
of President and Chief Executive Officer of the Company (a "Disability"),
the Company shall only be obligated to continue to pay the Base Salary
Amount to Executive for the one hundred twenty 120-day period immediately
following the date of Disability (the "Disability Period"). The right to
receive salary payments during the Disability Period, if applicable,
shall survive any termination of employment by virtue of Disability
pursuant to Section 7.
(b) Annual Performance Bonuses. During each calendar year, or part
--------------------------
thereof, the Company shall pay Executive an annual performance bonus as
determined by the Board of Directors or its Compensation Committee in its
sole discretion, the determination of which shall be based upon such
standards, guidelines and factual circumstances as the Board of Directors
or its Compensation Committee deems relevant, including, without
limitation, the operating results for the Company during such calendar
year, the importance of the efforts of Executive in achieving such
operating results and the achievement by the Company and/or Executive of
performance goals previously established by the Board of Directors for
such Contract Year. Notwithstanding the foregoing, such annual
performance bonus shall not be paid to Executive for 2003 without the
approval of Executive.
(c) Expenses. Executive shall receive prompt reimbursement from the
--------
Company for all documented business expenses incurred by him in the
performance of his duties hereunder, provided that Executive properly
accounts therefore in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence as
reasonably requested by the Company.
(d) Fringe Benefits. During the term hereof, Executive shall be
---------------
entitled to participate in and receive benefits under all of the
Company's Benefit Plans generally available to senior management of the
Company.
(e) Vacations. During the term hereof, Executive shall be entitled
---------
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and not less than four (4) weeks
paid vacation during each year. .
G-2
(f) Stock Options. Executive shall be entitled to a grant of
-------------
such number of options, (as determined by the Board of Directors), to
purchase the common stock of Group, at the fair market value of said
stock on the date of grant, vesting over a four (4) year period,
subject to the terms and conditions set forth in Group's stock option
plan and the accompanying stock option agreement.
7. Termination. The Company or Executive may terminate the employment
-----------
of Executive if the Executive is determined to have a Disability (as defined in
Section 6(a)) for a period of no less than one hundred twenty 120 days during
any consecutive twelve (12)-month period. The Company may also terminate the
employment of Executive hereunder upon Executive's death or for Cause. For
purposes hereof, "Cause" shall mean (i) Executive admitting or being convicted
of (or entering a plea of no contendere for) fraud, theft, misappropriation of
funds or conviction of a felony, (ii) Executive's admitting or being convicted
of (or entering a plea of no contendere for) illegal conduct tending to place
Executive or the Company in disrepute, (iii) dereliction or gross misconduct in
Executive's performance of his duties as an employee of the Company and failure
to remedy such dereliction or gross misconduct within ten (10) days after having
received written notice thereof, (iv) the failure of Executive to follow the
reasonable and ethical written instructions of the Board of Directors in a
timely manner, and failure thereafter to follow such instructions within ten
(10) days after having received written notice thereof, or (v) violation by
Executive of any of his material covenants contained in this Agreement,
including, without limitation, Section 10 in a timely manner, and failure
thereafter to follow such instructions within ten (10) days after having
received written notice thereof. Upon the termination of Executive's employment
for any reason, Executive shall be entitled to receive all compensation through
the date of such termination plus all accrued but unreimbursed expenses. In
addition, upon the termination of Executive's employment for any reason other
than for or by virtue of Cause, death, Disability or Executive's voluntary
termination of employment, the Company shall continue to be responsible for the
payment of all Base Salary Amount for the remainder of the term hereof;
provided, however, that Executive shall have a duty to mitigate (as to a new
position comparable to Executive's position hereunder) commencing on the first
anniversary of the date of termination; and, further provided that Executive
shall perform his covenants, duties and obligations under Sections 9(a), 9(b)
and 9(c) during the remainder of the term hereof. Termination of Executive's
employment for any reason whatsoever shall not affect Executive's ability to
exercise stock options that have vested prior to the date of termination.
8. Developmental Rights. Executive agrees that any developments by way
--------------------
of invention, design, copyright, trademark or other matters which may be
developed or perfected by him during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and he will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefore; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on his own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. COVENANTS.
---------
(a) Covenant Not to Compete. Executive shall not, without the prior
-----------------------
written consent of the Company, (a) for a period (the "Covenant
Period") ending on the later of two (2) years after the closing date of
the Asset Purchase Agreement or termination of this Agreement, directly
or indirectly, anywhere in the world engage in any Prohibited
Operations (as defined in the Asset Purchase Agreement and as defined
in the Asset Purchase Agreement by and among
G-3
the Company, B.C.R. Enterprises, Inc. and Xxxxx X. Xxxxxxxxx dated as
of September 10, 2001). Notwithstanding the foregoing, the Executive
may, in the aggregate, invest in securities of any issuer engaged in
Prohibited Operations if (i) such securities are listed on any
national or regional securities exchange or have been registered
under the Securities Exchange Act of 1934 and (ii) such investment
does not exceed, in the case of any class of the capital stock of any
one issuer, five percent (5%) of the issued and outstanding shares,
or, in the case of other securities, five percent (5%) of the
aggregate principal amount thereof issued and outstanding. Further,
the Executive may, in the aggregate, invest in securities of any
issuer engaged in Prohibited Operations if revenues from the
Prohibited Operations constitute less than five percent (5%) of the
revenues of such issuer provided that the Prohibited Operations are
transferred or terminated by such issuer as soon as practicable after
the Executive acquires control of such issuer. Buyer acknowledges and
agrees that Executive may engage in any activity unrelated to the
ownership, management or active involvement with (including, but not
limited to, employment or consulting services) networking conferences
and tradeshows.
The Executive acknowledges that the restrictions contained in
this Section 9 are reasonable and necessary to protect the legitimate
interests of the Buyer and that any breach by the Executive of any
provision hereof will result in irreparable injury to the Company.
The Executive acknowledges that, in addition to all remedies
available at law, the Company shall be entitled to equitable relief
(without the necessity of posting any bond), including injunctive
relief, and an equitable accounting of all earnings, profits or other
benefits arising from such breach and shall be entitled to receive
such other damages, direct or consequential, arising from such breach
as may be appropriate.
(b) Solicitation of Employees. During the Covenant Period,
-------------------------
Executive shall not (i) directly or indirectly induce or attempt to
induce (regardless of who initiates the contact) any person then
employed (whether part-time or full-time) by the Company or any of
its subsidiaries or affiliates, whether as an officer, employee,
consultant, adviser or independent contractor, to leave the employ of
the Company or to cease providing or otherwise alter the services
then provided to the Company or to any of its subsidiaries or
affiliates or (ii) in any other manner seek to engage or employ any
such person (whether or not for compensation) as an officer,
employee, consultant, adviser or independent contractor in connection
with the operation of any business which is the same as or similar to
any of the Business (as defined in the Asset Purchase Agreement).
(c) Non-Solicitation of Customers. During the Covenant Period,
-----------------------------
Executive shall not solicit any Customers of the Company or any of
its subsidiaries or affiliates or encourage (regardless of who
initiates the contact) any such Customers to use the facilities or
services of any competitor of the Company or any of its subsidiaries
or affiliates. "Customer" shall mean any person who contracts with
the Company or any of its subsidiaries or affiliates in connection
with the Business.
10. Confidentiality. Executive shall not at any time (during or for
---------------
a period of sixty (60) months after termination of employment) disclose (except
as may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees not
to remove any documents, records or other information from the premises of the
Company or any of its subsidiaries or affiliates containing any such proprietary
information, except in the pursuit of the business of the Company or any of its
subsidiaries or affiliates, and acknowledges that such documents, records and
other information are the exclusive property of the Company or its subsidiaries
or affiliates. Upon termination of Executive's employment, Executive shall
immediately return all Proprietary Information of the Company and all copies
thereof to the Company.
G-4
11. General Provisions.
------------------
(a) Expenses. All costs and expenses incurred by either of the
--------
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) Notices. All notices, demands and other communications hereunder
-------
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
(i) If to the Company:
Key3Media Art Events, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: General Counsel
(ii) If to Executive:
Xxxxx X. Xxxxxxxxx
000 Xxxxx Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
(c) Headings. The descriptive headings contained in this Agreement
--------
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) Successors; Binding Agreement. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a community
property state or a state that has adopted the Uniform Marital Property Act
or equivalent or if Executive is domiciled in a state that grants to his
spouse any other marital rights in Executive's assets (including, without
limitation, dower rights or a right to elect against Executive's will or to
claim a forced share of Executive's estate), this Agreement shall also
inure to the benefit of, and shall also be binding upon, his spouse. If
Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's designee or, if there be no such designee, to
Executive's heirs, devisees, legatees or executors or administrators of
Executive's estate, as appropriate.
(e) Severability. If any provision of this Agreement is held to be
------------
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) Entire Agreement. This Agreement, the Asset Purchase Agreement
----------------
and any applicable option agreements pursuant to Section 6(f)) constitute
the entire agreement of the
G-5
parties hereto with respect to the subject matter hereof and thereof and
supersedes all prior agreements and understandings, both written and
oral, between the Company and Executive with respect to the subject
matter hereof and thereof.
(g) Assignment. This Agreement and the rights and duties
----------
hereunder are not assignable by Executive. This Agreement and the rights
and duties hereunder may not be assigned by the Company without the
express written consent of Executive (which consent may be granted or
withheld in the sole discretion of Executive), except that such consent
shall not be required in order for the Company to assign this Agreement
or the rights or duties hereunder to an affiliate (as such term is
defined in Section 9(b)) of the Company or to a third party in
connection with the merger or consolidation of the Company with, or the
sale of all or substantially all of the assets or business of the
Company to, that third party.
(h) Amendment; Waiver. This Agreement may not be amended or
-----------------
modified except by an instrument in writing signed by, or on behalf of,
the Company and Executive. Either party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of
the other party or (b) waive compliance with any of the agreements or
conditions of the other party contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or
a subsequent waiver of the same term or condition, or a waiver of any
other term or condition, of this Agreement. The failure of any party to
assert any of its rights hereunder shall not constitute a waiver of any
such rights.
(i) Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois,
applicable to contracts executed in and to be performed entirely within
that state.
(j) Jurisdiction and Venue. The parties hereto agree that all
----------------------
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant
to judicial proceedings shall be litigated in a Federal or state court
located in the State of Illinois. The parties hereto expressly submit
and consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or papers may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 11(b) of
this Agreement. The parties hereto waive any claim that a Federal or
state court located in the State of Illinois is an inconvenient forum or
an improper forum based on lack of venue.
(k) Equitable Relief. Executive acknowledges that the covenants
----------------
contained in Sections 9 and 10 are reasonable and necessary to protect
the legitimate interests of the Company, that in the absence of such
covenants the Company would not have entered into this Agreement, that
any breach or threatened breach of such covenants will result in
irreparable injury to the Company and that the remedy at law for such
breach or threatened breach would be inadequate. Accordingly, the
Executive agrees that the Company, in addition to any other rights or
remedies which it may have, shall be entitled to seek such equitable and
injunctive relief as may be available from any court of competent
jurisdiction to restrain the Executive from any breach or threatened
breach of such covenants.
(l) Attorneys' Fees. If any legal action or other proceeding is
---------------
brought for the enforcement of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief
to which it may be entitled.
(m) Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto in separate counterparts, each
of which when executed shall be
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deemed to be an original while all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date and year first written above.
Key3Media Art Events, Inc.
By: ______________________________
Title: ___________________________
__________________________________
Xxxxx X. Xxxxxxxxx
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EXHIBIT H
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CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into
this 10th day of September, 2001 (the "Effective Date"), by and
between Key3Media Art Events, Inc. ("Buyer") and Xxxx X. XxXxxxxxx
("Consultant").
WHEREAS, Consultant has previously been employed in the
business of producing tradeshows under the tradename Next
Generation Networks and Next Generation Networks Ventures (the
"Business") and has developed and is now possessed of certain
skills, knowledge and abilities in connection therewith that may
be of use to Buyer; and
WHEREAS, Consultant is willing to provide consulting services
to Buyer as an independent contractor under the terms and
conditions hereinafter set forth,
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. Buyer hereby retains Consultant as an independent
contractor and Consultant hereby accepts retention as an
independent contractor upon the terms and subject to the
conditions hereinafter set forth for a period commencing on the
Effective Date and ending on December 31, 2003 (the "Contract
Term").
2. Consultant shall render the following services for
Buyer during the time periods set forth below:
. Effective Date through December 31, 2001.
. Consultant shall provide all services that Consultant
previously provided for the Business prior to the
Effective Date, including without limitation, for the
production and operation of NGN 2001 and the design of
NGN Ventures 2002. Without limiting the foregoing,
Consultant shall with respect to NGN 2001 (i) co-chair
the event with Xxxxx Xxxxxxxx; (ii) make introductory
presentations; and (iii) participate in the
conference's closing session. In addition, Consultant
shall manage the transition of the Business's key
employees, including, without limitation, Xxxx Xxxxx
and Xxxxx XxXxxxxx, to such employees' employment with
Buyer. Consultant shall also, from time to time, join
the chairman and chief executive officer (the
"Chairman") of Key3Media Group, Inc. in meetings with
members of the investment community in New York or
Boston, as reasonably requested by the Chairman.
. January 1, 2002 through December 31, 2002
. Consultant shall (i) serve as co-chairman of NGN
Ventures 2002 and NGN 2002; (ii) moderate sessions,
make introductory presentations, and participate in the
conferences' closing sessions; (iii) together with Xxxx
Xxxxxxxx, direct the editorial content, and the review
and editing of presentations for the conference; and
(iv) join the Chairman in meetings with members of the
investment community in New York or Boston, as
reasonably requested by the Chairman.
. January 1, 2003 through December 31, 2003
. Consultant shall (i) serve as co-chairman of NGN
Ventures 2003 and NGN 2003; (ii) moderate sessions,
make introductory presentations, and participate in the
conferences' closing sessions; and (iii) advise on
editorial content.
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For the balance of 2001 and for 2002, Consultant shall devote
approximately 20% of his business time to his services hereunder,
and for 2003 Consultant shall devote approximately 10% of his
business time to his services hereunder. Except as described
above, Consultant shall have no obligation to provide consulting
or other services to Buyer or any affiliate of the Buyer.
3. For his consulting services hereunder, Consultant
shall be paid a fee at the rate of $50,000 per annum ($4,166.67
per month), prorated for any partial periods, for the term hereof
(the "Consulting Fee"). The Consulting Fee shall be paid monthly
in advance and without deduction or withholding for taxes or
other amounts.
4. (a) Consultant shall not, without the prior written
consent of the Buyer, for a period (the "Covenant Period") ending
on the later of two years after (x) the Closing Date, as defined
in the Asset Purchase Agreement dated as of September 10, 2001 by
and among Buyer, XxXxxxxxx Ventures, Consultant, B.C.R.
Enterprises, Inc. and Xxxxx Xxxxxxxxx (the "Asset Purchase
Agreement"), or (y) termination or expiration of this Agreement,
directly or indirectly, anywhere in the world engage in any
Prohibited Operations (as defined in the Asset Purchase Agreement)
relating to networking conferences or tradeshows. Notwithstanding
the foregoing, Consultant may continue to make speeches at
networking conferences and trade shows consistent with past
practices. Notwithstanding the foregoing, the Consultant may also
invest in securities of any issuer engaged in Prohibited
Operations if (i) such securities are listed on any national or
regional securities exchange or have been registered under the
Securities Exchange Act of 1934 and (ii) such investment does not
exceed, in the case of any class of the capital stock of any one
issuer, 5% of the issued and outstanding shares, or, in the case
of other securities, 5% of the aggregate principal amount thereof
issued and outstanding. Further, the Consultant may invest any
amount in ecurities of any issuer engaged in Prohibited Operations
if revenues from the Prohibited Operations constitute less than 5%
of the revenues of such issuer provided that the Prohibited
Operations are transferred or terminated by such issuer as soon
as practicable after the Consultant acquires control of such
issuer. Except as set forth in the preceding two sentences, to
the extent Consultant acquires or holds directly, or indirectly,
an interest in a business that is engaged in Prohibited
Operations during the Covenant Period , then the Consultant shall
immediately divest his interest in such business or cause such
business to cease engaging in the Prohibited Operations . Buyer
acknowledges and agrees that Consultant may engage in any
activity unrelated to the ownership, management or active
involvement with (including, but not limited to, employment or
consulting services) networking conferences and tradeshows.
(b) The Consultant acknowledges that the restrictions
contained in this Section 4 are reasonable and necessary to
protect the legitimate interests of the Buyer and that any breach
by the Consultant of any provision hereof will result in
irreparable injury to the Buyer. The Consultant acknowledges that,
in addition to all remedies available at law, the Buyer shall be
entitled to equitable relief (without the necessity of posting any
bond), including injunctive relief, and an equitable accounting of
all earnings, profits or other benefits arising from such breach
and shall be entitled to receive such other damages, direct or
consequential, arising from such breach as may be appropriate.
5. During the Covenant Period, Consultant shall not (i)
directly r indirectly induce or attempt to induce (regardless of
who initiates the contact) any person then employed (whether
part-time or full-time) by the Buyer or any of its subsidiaries
or affiliates, whether as an officer, employee, consultant,
adviser or independent contractor, to leave the employ of or
contractual engagement with
H-2
the Buyer or to cease providing or otherwise alter the services
then provided to the Buyer or to any of its subsidiaries or
affiliates or (ii) in any other manner seek to engage or employ
any such person (whether or not for compensation) as an officer,
employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same
as or similar to the Business (as defined in the Asset Purchase
Agreement) and as conducted by Buyer during the term hereof.
6. During the Covenant Period, Consultant shall not
solicit any Customers (as defined below) of the Buyer or any of
its subsidiaries or affiliates or encourage (regardless of who
initiates the contact) any such Customers to use the facilities
or services of any Competitor of the Buyer or any of its
subsidiaries or affiliates. "Customer" shall mean any person who
contracts with the Buyer or any of its subsidiaries or affiliates
in connection with the Business.
7. Consultant shall not at any time (during or for a
period of two years after termination of employment) disclose
(except as may be required by law) or use, except in the pursuit
of the business of the Buyer or any of its subsidiaries or
affiliates, any Proprietary Information of the Buyer or the
Business. "Proprietary Information of the Buyer" means all
information known or intended to be known only to employees of
the Buyer or any of its subsidiaries or affiliates in a
confidential relationship with the Buyer or any of its
subsidiaries or affiliates relating to technical matters
pertaining to the business of the Buyer or any of its
subsidiaries or affiliates, but shall not include any information
within the public domain or otherwise publicly known. Consultant
agrees not to remove any documents, records or other information
from the premises of the Buyer or any of its subsidiaries or
affiliates containing any such proprietary information, except in
the pursuit of the business of the Buyer or any of its
subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the
Buyer or its subsidiaries or affiliates. Upon termination of
Buyer's employment, Consultant shall immediately return all
Proprietary Information of the Buyer and all copies thereof to
the Buyer.
8. Consultant shall not have the right to assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of
any of his/her rights, privileges, or interests hereunder, all of
which shall be considered personal, nonassignable and
nontransferable.
9. This Agreement shall be binding on and shall inure to
the benefit of any successor of Buyer and any of its affiliates,
successors, and assigns. Consultant and the Buyer intend that an
independent contractor relationship be established between the
parties by this Agreement, and nothing herein shall be construed
as creating an employer/employee relationship, joint venture,
partnership or other business group or concerted action. Notices
or other communications in writing relating to this Agreement
shall be addressed as follows or at such other address as either
party may specify in writing from time to time:
If to Buyer: Key3Media Events, Inc.
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx X. Xxxxxxxxx, Esq.
H-3
If to Consultant: XxXxxxxxx Ventures
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. XxXxxxxxx
With a copy to:
Xxxxx X. Xxxxxxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Notice shall be deemed to have been given if delivered
personally, faxed or mailed, postage prepaid to the addresses
herein designated. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts
applicable to agreements made and to be performed within such
state. Any legal action, suit or proceeding arising out of or
related to this Agreement or to the transactions contemplated
hereby shall be instituted in any state or federal court in the
Commonwealth of Massachusetts and the county of Suffolk and each
party agrees not to assert in any such proceeding any claim that
it is not subject to the jurisdiction of said court, that the
proceeding is brought in an inconvenient forum, that the venue of
the proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each party
irrevocably submits to the jurisdiction of such court in any such
proceeding.
IN WITNESS WHEREOF the parties hereto have executed and
delivered this Agreement on the date first above written.
KEY3MEDIA ART EVENTS, INC.
By: ________________________________________
Name:
Title:
CONSULTANT
________________________________________
Xxxx X. XxXxxxxxx, an individual
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XXXXXXXXX
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