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Exhibit 2.1
COMBINATION AGREEMENT
by and among
PENTON MEDIA, INC.,
▇-▇ ACQUISITION CORP.,
PITTWAY CORPORATION,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PUBLISHING COMPANY,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
1 DEFINITIONS..............................................................................................1
2 THE COMBINATION.........................................................................................11
2.1 The Merger.....................................................................................11
2.2 The Closing....................................................................................11
2.3 Actions at the Closing; Effective Time.........................................................12
2.4 Effect of Merger...............................................................................12
(a) General.............................................................................12
(b) Articles of Incorporation...........................................................12
(c) Bylaws..............................................................................12
(d) Directors and Officers..............................................................12
(e) Conversion of ▇-▇ Shares............................................................13
(f) Conversion of Capital Stock of Combination Subsidiary...............................14
(g) Contingent Cash Payment(s)..........................................................14
(h) Guarantee of Value..................................................................17
(i) Closing of Transfer Records.........................................................20
(j) Delivery of Merger Consideration to Public Official.................................20
(k) Lost, Stolen or Destroyed Certificates..............................................20
(l) Transferability Restriction.........................................................20
(m) Plan of Merger......................................................................20
3 REPRESENTATIONS AND WARRANTIES OF PENTON ...............................................................20
3.1 Penton and Combination Subsidiary Organization and Qualification...............................20
3.2 Penton and Combination Subsidiary Authority Relative to This Agreement.........................21
3.3 Penton Constituent Instruments/Capitalization..................................................22
3.4 Subsidiaries...................................................................................23
3.5 Financial Statements...........................................................................23
3.6 Absence of Undisclosed Liabilities.............................................................24
3.7 No Material Adverse Change.....................................................................24
3.8 Litigation.....................................................................................24
3.9 Brokerage......................................................................................24
3.10 Employees; Retiree Welfare Benefit Liabilities.................................................24
3.11 Compliance with Laws; Permits; Certain Operations..............................................24
3.12 Affiliate Transactions.........................................................................25
3.13 Tax Status of Spinoff; Tax Matters Related to the Merger.......................................25
4 REPRESENTATIONS AND WARRANTIES OF THE ▇-▇ SHAREHOLDERS..................................................25
4.1 ▇-▇ Organization and Qualification.............................................................26
4.2 Authority Relative to This Agreement...........................................................26
4.3 Investment.....................................................................................27
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4.4 ▇-▇ Constituent Instruments/Capitalization.....................................................27
4.5 Subsidiaries...................................................................................28
4.6 Title to Assets................................................................................28
4.7 Sufficiency of Assets..........................................................................28
4.8 Financial Statements...........................................................................28
4.9 Absence of Undisclosed Liabilities.............................................................29
4.10 No Material Adverse Change.....................................................................29
4.11 Litigation.....................................................................................29
4.12 Brokerage......................................................................................29
4.13 Employees; Retiree Welfare Benefits Liabilities................................................29
4.14 Compliance with Laws; Permits; Certain Operations..............................................29
4.15 Affiliate Transactions.........................................................................30
4.16 Tax Status of Merger...........................................................................30
5 REPRESENTATIONS AND WARRANTIES OF PITTWAY...............................................................30
5.1 Organization and Qualification.................................................................30
5.2 Authority Relative to This Agreement...........................................................30
5.3 Brokerage......................................................................................31
5.4 Affiliate Transactions.........................................................................31
6 CONDUCT OF BUSINESS PENDING THE MERGER..................................................................32
6.1 Conduct of Penton Business Pending the Merger..................................................32
6.2 Conduct of ▇-▇ Business Pending the Merger.....................................................33
7 ADDITIONAL AGREEMENTS...................................................................................35
7.1 Access and Information; Corporate Records; Confidentiality.....................................35
7.2 Registration Rights; Certain Filings...........................................................36
(a) Demand Registration.................................................................36
(b) Piggyback Registrations.............................................................37
(c) Registration Covenants..............................................................38
(d) Holdback Agreements.................................................................39
(e) Indemnification Relating to Registrations...........................................40
(f) Resale Restrictions.................................................................42
(g) Obligation of the ▇-▇ Shareholders to Supply Information............................43
(h) Obligation of Penton to Supply Information..........................................43
(i) Obligation to Deliver Certain Filings...............................................44
7.3 Other Necessary Action; Further Assurance......................................................44
7.4 Certain Tax Matters............................................................................45
7.5 No Negotiations, etc...........................................................................46
7.6 Expenses.......................................................................................47
7.7 Indemnification and Hold Harmless Agreements...................................................47
(a) Penton Indemnification Provisions for Benefit of the ▇-▇
Shareholders........................................................................47
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(b) ▇-▇ Shareholders Indemnification Provisions for Benefit of
Penton and Combination Subsidiary...................................................47
(c) Pittway Indemnification Provisions for Benefit of Penton............................48
(d) Penton Indemnification Provisions for Benefit of Pittway............................49
(e) ▇-▇ Shareholders Indemnification Provisions for Benefit of
Pittway.............................................................................50
(f) Matters Involving Third Parties.....................................................50
(g) Determination of Adverse Consequences...............................................51
(h) Determination of Indemnification Remedies...........................................51
(i) Limitations.........................................................................51
(j) Basket for Certain Indemnification Claims...........................................52
7.8 Employee Matters...............................................................................52
(a) Employee Benefit Liabilities........................................................52
(b) Penton Pension Plans................................................................53
(c) Penton Employee Welfare Benefit Plans...............................................55
(d) Disputed Employee Benefit Claims....................................................56
(e) Workers' Compensation Claims........................................................56
(f) Penton 1998 Stock Awards Plan.......................................................56
(g) ▇▇▇▇▇▇ ▇▇▇▇ Director Stock Option Plan..............................................56
(h) Penton SERP.........................................................................56
(i) Coverage of Surviving Corporation's Employees.......................................57
7.9 Update of Disclosure Letters...................................................................57
7.10 Agreement Regarding Distribution of Penton Common on Certain
Pittway Shares.................................................................................57
7.11 Agreement Regarding Transitional Services......................................................58
7.12 Agreement Regarding Post-Spinoff Tax Returns and Other Post-
Spinoff Tax Matters............................................................................58
7.13 ▇-▇ Shareholders Non-Compete, Non-Solicitation.................................................59
7.14 Penton Directors...............................................................................60
7.15 Post-Effective Time Cash Contributions/Return..................................................60
7.16 Post-Effective Time Receivables Collection.....................................................61
8 CONDITIONS..............................................................................................62
8.1 Conditions to Obligations of Each Party........................................................62
8.2 Additional Conditions to Obligations of ▇-▇ and the ▇-▇
Shareholders...................................................................................64
8.3 Additional Conditions to Obligations of Penton and Combination
Subsidiary.....................................................................................67
8.4 Additional Conditions to Obligation of Pittway.................................................69
9 TERMINATION, AMENDMENT AND WAIVER.......................................................................71
9.1 Termination....................................................................................71
9.2 Effect of Termination..........................................................................71
9.3 Amendment......................................................................................72
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9.4 Waiver.........................................................................................72
10 GENERAL PROVISIONS......................................................................................72
10.1 Survival of Representations and Warranties.....................................................72
10.2 Public Statements..............................................................................73
10.3 Designation of ▇-▇ Shareholders as Representative..............................................73
10.4 Notices........................................................................................73
10.5 Interpretation.................................................................................74
10.6 Severability...................................................................................75
10.7 Disputes.......................................................................................75
10.8 Jurisdiction and Service of Process............................................................76
10.9 Miscellaneous..................................................................................77
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EXHIBITS
Exhibit A - Articles of Incorporation of Combination Subsidiary
Exhibit B - By-Laws of Combination Subsidiary
Exhibit C - Post-Spinoff Amended and Restated Certificate of
Incorporation of Penton
Exhibit D - Post-Spinoff Bylaws of Penton
Exhibit E - Form of Employment Agreement between ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
Exhibit F - Form of Employment Agreement between ▇▇▇▇▇▇ and Penton
DISCLOSURE LETTERS
Penton Disclosure Letter Captions
Authority
Capitalization
Joint Ventures
Liabilities
Litigation
Compliance with Laws
Affiliate Transactions
Taxes
Possible Dispositions
▇-▇ Shareholders Disclosure Letter Captions
Authority
Security Interests
Sufficiency of Assets
Liabilities
Litigation
Compliance with Laws
Affiliate Transactions
Pittway Disclosure Letter Captions
Authority
Affiliate Transactions
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COMBINATION AGREEMENT
COMBINATION AGREEMENT dated as of May 21, 1998 (this
"AGREEMENT"), by and among Penton Media, Inc., a Delaware corporation
("PENTON"), ▇-▇ Acquisition Corp., an Illinois corporation ("COMBINATION
SUBSIDIARY") that is a wholly-owned direct subsidiary of Penton, Pittway
Corporation, a Delaware corporation ("PITTWAY") of which Penton is a
wholly-owned direct subsidiary, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Publishing Company, an Illinois
Corporation ("▇-▇"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇") (collectively, the "▇-▇ SHAREHOLDERS"), the owners of all of the
outstanding capital stock of ▇-▇. Penton, Combination Subsidiary, Pittway, D-M
and the ▇-▇ Shareholders are referred to collectively herein as the "PARTIES."
Penton and the ▇-▇ Shareholders desire to cause a business
combination of ▇-▇ with Penton through the merger of ▇-▇ with and into
Combination Subsidiary in which the ▇-▇ Shareholders receive stock of Penton,
cash and additional contingent consideration, on the terms set forth in this
Agreement. The combination is contingent upon the distribution of all of the
outstanding capital stock of Penton to the stockholders of Pittway (the
"SPINOFF") and also upon the other conditions set forth in this Agreement.
The Parties intend (a) that the Spinoff qualify as a tax-free
(to Pittway and the stockholders of Pittway) distribution under the provisions
of Section 355 of the Code (as defined herein) and (b) that the merger of ▇-▇
with and into Combination Subsidiary constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
"ACCREDITED INVESTOR" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"ADJUSTED ▇-▇ LIABILITIES" means the payables and accrued
liabilities of ▇-▇ that exist immediately prior to the Effective Time that are
then recorded (or required to be recorded in accordance with ▇-▇'s historic
practice as reflected in the ▇-▇ Financial Statements) on the books of ▇-▇,
exclusive of any such payables and accrued liabilities related to Business
Information Products for which revenues would not be recognized until after the
Effective Time under ▇-▇'s historic practice as reflected in the ▇-▇ Financial
Statements.
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"ADVERSE CONSEQUENCES" means all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, dues, interest, penalties,
fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
liens, losses, reasonable expenses and fees (including reasonable attorneys'
fees), and court costs. In calculating any damage or loss claimed to have been
suffered by any ▇-▇ Shareholder for purposes of Section 7.7: (i) no account
shall be taken of the effect of the occurrence, act, omission or state of facts
underlying such claim on the value of the shares of Penton Common to which such
damage or loss relates except to the extent such effect is reflected in the
market price of such shares at the time of such claim, whether or not such
effect is foreseeable or determinable at the time of such claim; (ii) such
damage or loss shall include any decline in the market price of the shares of
Penton Common to which such damage or loss relates that is attributable to any
Penton indemnification with respect to such damage or loss; and (iii) any
payment (in cash or shares of Penton Common) to such ▇-▇ Shareholder pursuant to
Section 2.4(h) for or with respect to the shares of Penton Common to which such
damage or loss relates shall be taken into account.
"ADVERSE ▇-▇ CHANGE" means any change since December 31, 1997,
other than a change contemplated in this Agreement, which has an adverse effect
on the business (taking into account prospects), financial condition, assets or
results of operations of ▇-▇.
"ADVERSE PENTON CHANGE" means any change since December 31,
1997, other than a change contemplated in this Agreement, which has an adverse
effect on the business (taking into account prospects), financial condition,
assets or results of operations of Penton and its Subsidiaries, considered as
whole.
"AFFILIATE" means, with respect to any Person, any Person
controlling, controlled by or under common control with such Person. In any
event, each ▇-▇ Shareholder shall be deemed to be an Affiliate of the other ▇-▇
Shareholder and of ▇-▇, and ▇-▇ shall be deemed to be an Affiliate of each ▇-▇
Shareholder.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Section 1504 (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law).
"ARTICLES OF MERGER" has the meaning set forth in Section 2.3.
"AVERAGE MARKET PRICE" during any period means (i) the
numerical average of the closing prices of Penton Common on the principal
securities exchange or trading system on which such security is then traded on
the days during such period on which Penton Common is traded thereon; or (ii) if
Penton Common is not traded on a securities exchange or trading system during
such period, the numerical average of the last quoted sale prices (or, if not so
quoted, the averages of the high bid and low asked prices) of Penton Common in
the over-the-counter market on the days during
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such period for which such prices are available; or (iii) if Penton Common is
not traded on a securities exchange or trading system or in the over-the-counter
market during such period, the market value of Penton Common at the midpoint of
such period, as determined by an investment banking firm of recognized standing
that is not an investment banking firm of Penton or any of its Affiliates
jointly retained by Penton and the ▇-▇ Shareholders (or, if they are unable to
agree on the choice of such a firm, a firm selected by lot from four such firms
that are willing to serve, two of which shall be designated by Penton and two of
which shall be designated by the ▇-▇ Shareholders).
"BUSINESS INFORMATION PRODUCT" means a magazine, special
issue, catalogue, directory, newsletter, card deck, electronic/internet product,
trade show, exposition, conference or ancillary product.
"CLOSING" has the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended,
and regulations issued thereunder.
"COMBINATION SUBSIDIARY" has the meaning set forth in the
preface to this Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality and
Non-Disclosure Agreement dated August 15, 1997 between Penton, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇.
"CONTINGENT CASH PAYMENT" has the meaning set forth in Section
2.4(g)(i).
"CONTROL" means direct ownership of stock possessing at least
eighty percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of shares
of each and all other classes of stock (for purposes of which ownership shall
not include voting stock if rights to vote such stock (or to restrict or
otherwise control the voting of such stock) are held by a third party (including
a voting trust) other than an agent).
"CONTROL GROUP LIABILITY" means any joint and several
Liability imposed by law on entities that are Affiliates of each other.
"CORPORATE RECORDS" means books, ledgers, files,
correspondence, lists, Tax Returns, declarations of estimated Tax, contracts,
commitments and records (whether stored in written form, on computer disks, on
microfiche or other medium).
"COVERED PENTON EMPLOYEES/DEPENDENTS" means individuals who
are, immediately prior to the Effective Time, employees or former employees of
Penton and its then or former Subsidiaries (other than former Subsidiaries
Saddlebrook Resorts,
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Inc., Saddlebrook International Tennis, Inc., C&A Investments, Inc. and Pittway
Real Estate, Inc., each a Florida corporation) and their respective
predecessors, and their spouses and eligible dependents.
"▇▇▇▇▇▇ & ▇▇▇▇▇" means ▇▇▇▇▇▇ & ▇▇▇▇▇/Peneco, Inc., a Florida
corporation.
"DEFINED BENEFIT PLAN" has the meaning set forth in Section
3(35) of ERISA.
"DEFINED CONTRIBUTION PLAN" has the meaning set forth in
Section 3(34) of ERISA.
"DELAWARE CORPORATION LAW" means the General Corporation Law
of the State of Delaware, as amended from time to time.
"DEMAND REGISTRATION" has the meaning set forth in Section
7.2(a).
"DISTRIBUTED ▇-▇ ACCOUNTS RECEIVABLE" has the meaning set
forth in Section 6.2
"▇-▇" has the meaning set forth in the preface to this
Agreement.
"▇-▇ COMMON STOCK" means Common Stock - Series A, without par
value, of ▇-▇.
"▇-▇ FINANCIAL STATEMENTS" has the meaning set forth in
Section 4.8.
"▇-▇ INSIDERS" has the meaning set forth in Section 4.15.
"▇-▇ OWNERSHIP FRACTION" means, with respect to each ▇-▇
Shareholder, the fraction of which the numerator is the number of shares of ▇-▇
Common Stock outstanding immediately prior to the Effective Time owned by such
▇-▇ Shareholder and the denominator is the total number of shares of ▇-▇ Common
Stock outstanding immediately prior to the Effective Time.
"▇-▇ SHAREHOLDERS" has the meaning set forth in the preface to
this Agreement.
"▇-▇ SHAREHOLDERS DISCLOSURE LETTER" has the meaning set forth
in Section 4.2.
"▇▇▇▇▇▇▇" has the meaning set forth in the preface to this
Agreement.
"EFFECTIVE TIME" has the meaning set forth in Section 2.3.
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"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
Section 3(2) of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
Section 3(1) of ERISA.
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section
8.1(o).
"EQUITY INFORMATION" means Equity Information Exchange
Limited, a U.K. corporation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING PENTON SUBSIDIARIES" means Combination Subsidiary,
▇▇▇▇▇▇ & ▇▇▇▇▇, Equity Information, Index, Penton Media and Service Exhibitions.
"FIRST REFERENCE PERIOD" means the period of thirty days
following the Penton 1999 Earnings Release Date.
"GOVERNMENTAL ACTIONS" means all authorizations, consents,
approvals, waivers, exceptions, variances, franchises, permissions, permits and
licenses of, and filings and declarations with, by or in respect of, any
Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any United States (federal,
state or local) or non-United States governmental Person, authority or agency,
court or regulatory commission or stock exchange or other self-regulatory body,
whether governmental or private.
"GUARANTEED AVERAGE MARKET PRICE" means $29.0 million divided
by the number of Merger Shares.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"ILLINOIS CORPORATION LAW" means the Business Corporation Act
of 1983 of the State of Illinois, as amended from time to time.
"INDEX" means Independent Exhibitions Limited, a U.K.
corporation.
"INTELLECTUAL PROPERTY" means all (a) patents, patent
applications, patent disclosures, and improvements thereto, (b) trademarks,
service marks, trade dress, logos, trade names, business names and corporate
names and registrations and
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applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) mask works and registrations and
applications for registration thereof, (e) computer software (and any source
code thereto), data and documentation, (f) trade secrets and confidential
business information (including ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, techniques, research and development information, software products in
development, drawings, specifications, designs, plans, manuals, proposals,
technical data, copyrightable works, financial, marketing, and business data,
pricing and cost information, business and marketing plans, and customer and
supplier lists and information), (g) other proprietary rights, (h) rights to
register or apply for registration of any of the foregoing, (i) copies and
tangible embodiments of any of the foregoing (in whatever form or medium) and
(j) other rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means actual knowledge.
"KNOWLEDGE OF PENTON" means Knowledge of any of ▇▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. Vice, without independent investigation.
"KNOWLEDGE OF PITTWAY" means Knowledge of any of King Harris,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, without independent investigation.
"KNOWLEDGE OF THE ▇-▇ SHAREHOLDERS" means Knowledge of either
of the ▇-▇ Shareholders, after due inquiry of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇-▇'s current
Office Manager, and ▇▇▇ ▇▇▇▇▇▇, ▇-▇'s current accountant, but without any other
independent investigation.
"LETTER OF INTENT" means the Letter of Intent dated November
21, 1997 by and among Penton and the ▇-▇ Shareholders.
"LIABILITY" means any liability of any nature (whether known
or unknown, accrued or unaccrued, absolute or contingent, liquidated or
unliquidated, asserted or unasserted, ▇▇▇▇▇▇ or inchoate, due or to become due,
or otherwise), including any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a
material adverse effect on the financial condition, assets, business, or results
of operations of such Person. When used with respect to Penton, Material Adverse
Effect means a Material Adverse Effect on Penton and its Subsidiaries considered
as a whole; and when used with respect to Pittway, Material Adverse Effect means
a Material Adverse Effect on Pittway and the Post-Spinoff Pittway Subsidiaries
considered as a whole.
"▇▇▇▇▇▇" has the meaning set forth in the preface to this
Agreement.
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"MERGER" has the meaning set forth in Section 2.1.
"MERGER SHARES" means the shares of Penton Common issued to
the ▇-▇ Shareholders pursuant to Section 2.4(e)(ii)(A).
"1989 MERGER AGREEMENT" has the meaning set forth in Section
7.10.
"OLD PITTWAY" has the meaning set forth in Section 7.10.
"ORDINARY COURSE OF BUSINESS" with respect to any Person(s)
means the ordinary course of business of such Person(s) consistent with past
custom and practice of such Person(s) (including with respect to quantity and
frequency).
"OUTSTANDING EFFECTIVE TIME SHARES" means the number of shares
of Penton Common to be outstanding immediately after the Effective Time,
including the Merger Shares. It is expressly understood, however, that neither
shares contingently issuable under Section 2.4(h), shares issuable under
employee benefit plans as contemplated in Section 7.8, shares issuable under
options, warrants or other agreements, arrangements or commitments set forth
under the caption "Capitalization" in the Penton Disclosure Letter nor shares
issuable in connection with acquisitions referred to in the final paragraph of
Section 6.1 shall be counted as shares of Penton Common that are outstanding for
purposes of determining the Outstanding Effective Time Shares.
"PARTIES" has the meaning set forth in the preface to this
Agreement.
"PENTON " has the meaning set forth in the preface to this
Agreement.
"PENTON COMMON" means Common Stock, par value $.01 per share,
of Penton.
"PENTON DISCLOSURE LETTER" has the meaning set forth in
Section 3.2.
"PENTON FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.5.
"PENTON 401(K) PLAN" has the meaning set forth in Section
7.8(b).
"PENTON INSIDERS" has the meaning set forth in Section 3.12.
"PENTON MEDIA" means Penton Media Limited, a U.K. corporation.
"PENTON 1998 DIRECTOR STOCK OPTION PLAN" means a stock option
plan under which non-employee directors of Penton may be awarded options to
purchase Penton Common.
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"PENTON 1998 STOCK AWARDS PLAN" means an equity awards plan
(and programs thereunder) similar to the Pittway Corporation 1990 Stock Awards
Plan, as amended (and Pittway's programs thereunder), except that such plan may
include a special performance-related compensation program for Penton's top
executive officers.
"PENTON 1999 EARNINGS RELEASE DATE" means the date on which
Penton publicly releases its financial results for calendar year 1999.
"PENTON PENSION PLAN" has the meaning set forth in Section
7.8(b).
"PENTON RETIREE LIFE INSURANCE" means the Penton Retiree Life
Insurance Benefit portion of the Basic Group Life, Optional Life and AD&D Plan
for Employees of Pittway Corporation.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a Governmental Authority.
"PIGGYBACK REGISTRATION" has the meaning set forth in Section
7.2(b).
"PITTWAY" has the meaning set forth in the preface to this
Agreement.
"PITTWAY BLUE CHIP PLAN" means the Pittway Corporation Blue
Chip Profit Sharing and Savings Plan, as amended.
"PITTWAY DISCLOSURE LETTER" has the meaning set forth in
Section 5.2.
"PITTWAY 501(C)(9) TRUST" means the Pittway Corporation
Welfare Benefits Trust.
"PITTWAY INSIDERS" has the meaning set forth in Section 5.4.
"PITTWAY RETURNS" has the meaning set forth in Section 7.12.
"PITTWAY SALARIED PLAN" means the Pittway Corporation
Retirement Plan for Salaried Employees, as amended.
"POST-SPINOFF PITTWAY SUBSIDIARIES" means the Subsidiaries of
Pittway immediately after the consummation of the Spinoff.
"REGISTRATION EXPENSES" means all expenses incident to
Penton's performance of or compliance with Sections 7.2(a), (b) and (c), as
applicable, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel for
Penton and all independent certified public
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accountants, underwriters (excluding discounts and commissions) and other
Persons retained by Penton. Registration Expenses shall not include fees and
disbursements of counsel for the holders of Registrable Shares or fees and
disbursements of any other Persons retained by the holders of Registrable
Shares.
"REGISTRABLE SHARES" means (i) the Merger Shares and (ii) any
Penton Common issued or issuable with respect to the shares described in (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Shares, such securities will
cease to be Registrable Shares when they have been distributed to the public
pursuant to an offering registered under the Securities Act or transferred in a
transaction exempt from registration under the Securities Act; provided that in
the event either ▇-▇ Shareholder transfers as a block in a transaction exempt
from registration under the Securities Act all of the Merger Shares issued to
him, such Merger Shares shall not thereupon cease to be Registrable Shares, but
shall thereafter continue to be subject to the foregoing cessation provisions.
"RULING" means the private letter ruling dated May 8, 1998
received by Pittway from the IRS to the effect, among others, that the Spinoff
will constitute a tax-free (to Pittway and the stockholders of Pittway)
distribution under Section 355 of the Code.
"SECOND REFERENCE PERIOD" means the period of thirty days
ending on the second anniversary of the Effective Time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, any claim of any third party, or
any voting rights of any third party.
"SERVICE EXHIBITIONS" means Service Exhibitions Limited, a
U.K. corporation.
"SPINOFF" has the meaning set forth in the preface to this
Agreement.
"SUBSIDIARY" means, with respect to any particular parent
business entity, any business entity of which such parent business entity and/or
one or more business entities which are themselves Subsidiaries of such parent
business entity, (i) in the case of a corporation, have the power to vote or
direct the voting of sufficient securities to elect a majority of the directors
of such corporation and (ii) in the case of all other Persons, own an interest
in such Person which permits the owner thereof to control the management of such
Person.
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"SURVIVING CORPORATION" has the meaning set forth in Section
2.1.
"SURVIVING CORPORATION'S PRE-TAX PROFITS" for any calendar
year means the sum of (i) Surviving Corporation's net income for such calendar
year PLUS (ii) Surviving Corporation's income Taxes deducted in determining such
net income (in the case of calendar year 1998, including ▇-▇'s net income
(excluding interest income) for the portion of such calendar year prior to the
Effective Time and taking into account ▇-▇'s income Taxes deducted in
determining such net income), determined in accordance with generally accepted
accounting principles applied on the same basis as in the preparation of the ▇-▇
Financial Statements, subject to the following adjustments and understandings:
(a) depreciation expense will be determined as if there were no writeup of the
value of the Surviving Corporation's assets as a result of the Merger, and the
goodwill and other intangibles resulting from the Merger will not be amortized;
(b) any funds provided to the Surviving Corporation by Penton, whether as
capital or as a loan or advance, will be deemed provided without charge except
in the event that the amount of such funds outstanding at any time (net of
repayments thereof) exceeds the amount of funds withdrawn from the Surviving
Corporation by Penton, other than as payment for products or services provided
or as repayment of funds provided, then outstanding (net of repayments thereof)
-- in which event such excess will be deemed lent to the Surviving Corporation
at an interest rate per annum equal to Penton's blended borrowing rate (or such
lower borrowing rate, if any, as is available to the Surviving Corporation on a
stand-alone basis from Persons other than the ▇-▇ Shareholders or their
Affiliates for a borrowing in the same amount) from time to time; (c) to the
extent that services of a type ▇-▇ currently obtains from an outside supplier
(e.g., services of a professional, an insurance broker or a printer) are
obtained from Penton, or from another outside supplier, at the direction of
Penton or of the Surviving Corporation's Board of Directors, such services will
be deemed provided at a cost equal to the lesser of the amount actually charged
to ▇-▇ for such services or the amount that would have been charged to ▇-▇ for
such services by ▇-▇'s current supplier; (d) to the extent that general and
administrative services of Penton's internal staff (e.g., accounting and
employee benefits) are provided at the direction of Penton or of the Surviving
Corporation's Board of Directors, such services will be deemed provided at a
cost equal to the lesser of Penton's allocated cost to provide them or ▇-▇'s
cost of providing such services under its current operation; provided that so
long as ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇-▇'s current Office Manager, continues to be employed
by the Surviving Corporation, accounting services of Penton's internal staff
will be deemed provided at no cost; (e) any other business transactions between
the Surviving Corporation and Penton or any of its other Subsidiaries or
Affiliates will be accounted for on an arm's-length basis; (f) the salary of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ paid or accrued as Penton executives will be charged to the
Surviving Corporation; (g) any amounts paid or accrued under Penton employee
benefit plans and programs with respect to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and employees of the
Surviving Corporation (including, except in the cases of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, any
such amounts related to equity-based compensation) will be charged to the
Surviving Corporation, provided that such charges will not exceed, on a per
employee per annum basis, the charges per
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employee per annum paid or accrued under ▇-▇ benefit plans and programs during
1997 and reflected in the ▇-▇ Financial Statements; and (h) no part of Penton's
general corporate overhead (e.g., the compensation of Penton executives other
than ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, including without limitation the compensation of such
executives for serving on Surviving Corporation's board of directors or as its
officers), as opposed to Penton's costs specifically related to services
performed directly for the Surviving Corporation, will be charged to the
Surviving Corporation.
"TAX" or "TAXES" means (i) any income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, assessment or governmental charge of any kind
whatsoever imposed by any Governmental Authority, including any interest,
penalty, or addition thereto, whether disputed or not, (ii) liability for the
payment of any amounts of the type described in (i) above arising as a result of
being (or having been) a member of any Affiliated Group or being (or having
been) included or required to be included in any Tax Return related thereto; and
(iii) liability for the payment of any amounts of the type described in (i)
above as a result of any express or implied obligation to indemnify or otherwise
assume or succeed to the liability of any other Person.
"TAX RETURN" means any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting schedule, statement or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"UNCLAIMED PITTWAY SHARES" has the meaning set forth in
Section 7.10.
"UNDISCLOSED ▇-▇ MATTER" means any fact or circumstance
existing as of the date of this Agreement regarding the business, assets,
properties, condition (financial or otherwise), results of operations or
prospects of ▇-▇ which has not been disclosed in this Agreement, the attachments
and exhibits hereto, the ▇-▇ Shareholders Disclosure Letter (without giving
effect to any updating disclosures made by the ▇-▇ Shareholders pursuant to
Section 7.9) or the other written information heretofore furnished to Penton and
Pittway in connection with the transactions contemplated hereby.
"UNDISCLOSED PENTON MATTER" means any fact or circumstance
existing as of the date of this Agreement regarding the business, assets,
properties, condition (financial or otherwise), results of operations or
prospects of Penton and its Subsidiaries which has not been disclosed in this
Agreement, the attachments and exhibits hereto, the Penton Disclosure Letter or
the Pittway Disclosure Letter (in the
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case of each such disclosure letter, without giving effect to any updating
disclosures made by Penton or Pittway pursuant to Section 7.9) or the other
written information heretofore furnished to the ▇-▇ Shareholders in connection
with the transactions contemplated hereby.
"UNPAID ADJUSTED ▇-▇ LIABILITIES" means, at any time, the then
unpaid balance of the Adjusted ▇-▇ Liabilities.
ARTICLE 2
THE COMBINATION
2.1 THE MERGER. On and subject to the terms and conditions of
this Agreement and in accordance with the Illinois Corporation Law, ▇-▇ shall
merge with and into the Combination Subsidiary (the "MERGER") at the Effective
Time. Following the Merger, the separate corporate existence of ▇-▇ shall cease
and the Combination Subsidiary shall be the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all of the rights and
obligations of ▇-▇ in accordance with the Illinois Corporation Law.
2.2 THE CLOSING. The closing of the Merger (the "CLOSING")
shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties are to take at the
Closing itself), or such other date as the Parties may mutually determine (the
"CLOSING DATE").
2.3 ACTIONS AT THE CLOSING; EFFECTIVE TIME. Subject to the
satisfaction or waiver of the conditions set forth in Article 8, at the Closing
▇-▇ and the Combination Subsidiary shall cause the filing with the Secretary of
State of Illinois pursuant to Section 1.10 of the Illinois Corporation Law of
executed articles of merger with regard to the Merger meeting the requirements
of Section 11.25 of the Illinois Corporation Law (the "ARTICLES OF MERGER"). The
Merger shall become effective upon the issuance by the Illinois Secretary of
State of a certificate of merger with respect to the Merger (the "EFFECTIVE
TIME"). The Surviving Corporation may, at any time after the Effective Time,
take any action (including executing and delivering any document) in the name
and on behalf of either ▇-▇ or the Combination Subsidiary in order to carry out
and effectuate the transactions contemplated by this Agreement.
2.4 EFFECT OF MERGER.
(a) GENERAL. The Merger shall have the effect set
forth in Section 11.50 of the Illinois Corporation Law.
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(b) ARTICLES OF INCORPORATION. At the Effective
Time, the Articles of Incorporation of Combination Subsidiary in effect
immediately prior to the Effective Time (attached as EXHIBIT A hereto)
shall become the Articles of Incorporation of the Surviving
Corporation, without any modification or amendment, except that the
name of the Surviving Corporation set forth therein shall be changed to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Publishing Company.
(c) BYLAWS. At the Effective Time, the Bylaws of
Combination Subsidiary in effect immediately prior to the Effective
Time (attached as EXHIBIT B hereto) shall become the Bylaws of the
Surviving Corporation, without any modification or amendment, except
that the name of the Surviving Corporation set forth therein shall be
changed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Publishing Company.
(d) DIRECTORS AND OFFICERS. At the Effective Time,
the directors of the Surviving Corporation shall consist of the
following five members: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and three other members who
shall have been designated by Penton (one of which members designated
by Penton shall serve as chairman of the board of directors); and the
officers of the Surviving Corporation shall be ▇▇▇▇▇▇▇ as President,
▇▇▇▇▇▇ as Executive Vice President and Preston Vice as Secretary;
provided that in the event that prior to the Effective Time ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ becomes unable or unwilling to so serve, he shall be replaced by
another individual designated by the ▇-▇ Shareholders and reasonably
agreeable to Penton and in the event that prior to the Effective Time
Preston Vice becomes unable or unwilling to serve, he shall be replaced
by another individual designated by Penton and reasonably agreeable to
the ▇-▇ Shareholders.
(e) CONVERSION OF ▇-▇ SHARES. At and as of the
Effective Time:
(i) TREASURY SHARES. Shares of ▇-▇ Common
Stock held in the treasury of ▇-▇ immediately prior to the
Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect
thereto.
(ii) OUTSTANDING SHARES. The shares of ▇-▇
Common Stock outstanding immediately prior to the Effective
Time held by each ▇-▇ Shareholder shall be converted
automatically and without any action on the part of such ▇-▇
Shareholder into the following rights, subject to the
subsequent provisions of this Section 2.4, and shall have no
other rights:
(A) the right to receive from
Penton shares of Penton Common equal in number to
six and seven hundred sixty-seven thousandths
percent (6.767%) of the Outstanding Effective Time
Shares multiplied by such ▇-▇ Shareholder's ▇-▇
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Ownership Fraction, rounded to the next lower
whole number of shares;
(B) the right to receive from
Penton cash equal in amount to $7.0 million
multiplied by such ▇-▇ Shareholder's ▇-▇ Ownership
Fraction;
(C) the contingent right to
receive from Penton additional cash equal in amount
to any Contingent Cash Payment that becomes payable
pursuant to Section 2.4(g) multiplied by such ▇-▇
Shareholder's ▇-▇ Ownership Fraction; and
(D) the contingent right to
receive from Penton additional cash and/or Penton
Common set forth in Section 2.4(h).
After the Effective Time, upon each ▇-▇ Shareholder's surrender to Penton of the
certificates representing his shares of ▇-▇ Common Stock outstanding immediately
prior to the Effective Time, duly endorsed for surrender, such ▇-▇ Shareholder
shall be issued the shares, and paid the cash (without interest), provided for
in (ii)(A) and (B) above and shall become entitled to the contingent rights
provided for in (ii)(C) and (D) above.
No ▇-▇ Common Stock shall be deemed to be outstanding, or to have any rights
other than those set forth above in this Section 2.4(e), after the Effective
Time. Without limiting the generality of the foregoing, each of the ▇-▇
Shareholders waives his right pursuant to Section 11.65 of the Illinois
Corporation Law to dissent from the Merger and obtain payment for the shares of
▇-▇ Common Stock outstanding immediately prior to the Effective Time held by
him.
(f) CONVERSION OF CAPITAL STOCK OF COMBINATION
SUBSIDIARY. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of the Combination Subsidiary shall be converted
automatically and without any action on the part of the holder thereof
into one share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
(g) CONTINGENT CASH PAYMENT(S).
(i) AMOUNT. In the event the Surviving
Corporation's Pre-Tax Profits for 1998 exceed $4.0 million,
the ▇-▇ Shareholders, in the aggregate, shall be entitled to
receive from Penton in cash an amount equal to four (4) times
the excess of such Pre-Tax Profits over $4.0 million (a
"CONTINGENT CASH PAYMENT"). In the event the Surviving
Corporation's Pre-Tax Profits for 1999 exceed $4.0 million,
the ▇-▇ Shareholders, in the aggregate, shall be entitled to
receive from Penton in cash an amount
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equal to (A) five (5) times the excess of such Pre-Tax Profits
over $4.0 million, LESS (B) the amount of any payment to which
the ▇-▇ Shareholders, in the aggregate, became entitled
pursuant to the preceding sentence (also a "CONTINGENT CASH
PAYMENT"). Notwithstanding the foregoing, (A) neither the
amount of any Contingent Cash Payment nor the total amount of
Contingent Cash Payments shall exceed $4.0 million; and (B) in
the event of the termination, effective as of a date prior to
December 31, 1999, of either ▇-▇ Shareholder's employment as
described in Paragraph 4(a)(iv) or (v) of his Employment
Agreement, or in the event of Penton's liquidation (i.e., the
sale of all or substantially all of Penton's assets and the
distribution of Penton's net assets to its stockholders)
effective as of a date prior to December 31, 1999, (I) if such
effective date precedes December 31, 1998, the Contingent Cash
Payment on account of the Surviving Corporation's Pre-Tax
Profits for each of 1998 and 1999 shall be $2.0 million and
(II) if such effective date is on or subsequent to December
31, 1998, the Contingent Cash Payment on account of the
Surviving Corporation's Pre-Tax Profits for 1999 shall be the
excess of $4.0 million over the amount of the Contingent Cash
Payment, if any, on account of the Surviving Corporation's
Pre-Tax Profits for 1998.
(ii) PAYMENT. The Contingent Cash Payment,
if any, on account of the Surviving Corporation's Pre-Tax
Profits for a particular calendar year shall be paid promptly
after (and in any event within 15 days after) the final
determination of such Pre-Tax Profits for such calendar year;
provided that any Contingent Cash Payment the amount of which
is determined pursuant to clause (B) of the final sentence of
(i) above on account of the liquidation of Penton shall be
paid at the time of such liquidation.
(iii) DETERMINATION OF SURVIVING
CORPORATION'S PRE-TAX PROFITS. Within ninety (90) days after
the end of each of calendar year 1998 and calendar year 1999,
Penton will deliver to the ▇-▇ Shareholders Penton's
calculation of Surviving Corporation's Pre-Tax Profits for
such calendar year (the "DRAFT CALCULATION"). Penton will (i)
make available to the ▇-▇ Shareholders and their agents,
attorneys and accountants upon reasonable advance notice all
records reasonably relating to the Draft Calculation and (ii)
allow the ▇-▇ Shareholders and their agents, attorneys and
accountants upon reasonable advance notice to interview any
Penton personnel significantly involved in the preparation of
the Draft Calculation regarding the Draft Calculation. If the
▇-▇ Shareholders disagree with the computation of Surviving
Corporation's Pre-Tax Earnings for the calendar year reflected
on the Draft Calculation, the ▇-▇ Shareholders may, within 30
days after receipt of the Draft Calculation, deliver a notice
(an "OBJECTION NOTICE") to Penton setting forth
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the ▇-▇ Shareholders' objections and, to the extent reasonably
possible, Surviving Corporation's Pre-Tax Profits for such
calendar year as determined by the ▇-▇ Shareholders. Penton
and the ▇-▇ Shareholders will use reasonable efforts to
resolve any disagreements as to the computation of Surviving
Corporation's Pre-Tax Profits for such calendar year, but if
they do not obtain a final resolution within 30 days after
Penton has received the Objection Notice, Penton and the ▇-▇
Shareholders will jointly retain an independent accounting
firm of recognized national standing that is not a public
accountant of Penton or any of its Affiliates (an "INDEPENDENT
FIRM") to resolve any remaining disagreements. If Penton and
the ▇-▇ Shareholders are unable to agree on the choice of an
Independent Firm, the choice will be selected by lot from
those "big-six" accounting firms that are Independent Firms
or, if no "big-six" accounting firm is an Independent Firm or
is willing to serve, selected by lot from four Independent
Firms that are willing to serve, two of which shall be
designated by Penton and two of which shall be designated by
the ▇-▇ Shareholders. Penton and the ▇-▇ Shareholders will
direct the chosen Independent Firm to render a determination
within 20 days of its retention and Penton and the ▇-▇
Shareholders and their respective agents will cooperate with
the chosen Independent Firm during its engagement. The chosen
Independent Firm will consider only those issues related to
the Draft Calculation set forth in the Objection Notice which
Penton and the ▇-▇ Shareholders have been unable to resolve.
The determination of the chosen Independent Firm will be based
on and consistent with the definition of Surviving
Corporation's Pre-Tax Profits included herein. The
determination of the chosen Independent Firm will be
conclusive and binding upon Penton and the ▇-▇ Shareholders.
In any proceeding described above in this paragraph (iii), all
of the reasonable costs and expenses of Penton (including
reasonable attorneys' fees), all of the reasonable costs and
expenses of the ▇-▇ Shareholders (including reasonable
attorneys' fees) and all costs and expenses of the chosen
Independent Firm shall be borne by Penton in the event the
Draft Calculation is lower than the amount of Surviving
Corporation's Pre-Tax Profits for such calendar year as
determined by the chosen Independent Firm; otherwise the ▇-▇
Shareholders shall bear all such costs and expenses. It is
expressly understood and agreed that monthly operating
statements of the Surviving Corporation will not under any
circumstances be binding on either Penton or the ▇-▇
Shareholders for purposes of calculating Surviving
Corporation's Pre-Tax Profits.
(iv) CONTROL OF SURVIVING CORPORATION.
(A) Until the close of its business on
December 31, 1999, the Surviving Corporation will be kept in
existence as a wholly-
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owned subsidiary of Penton, and none of its assets (other than
cash) will be transferred to Penton or any of Penton's
Affiliates.
(B) Unless an event described in clause (B)
of the final sentence of Section 2.4(g) (i) above has
occurred, the taking of any of the following actions during
1998 or 1999 shall require the prior written consent of each
▇-▇ Shareholder who at the time continues to be employed by
the Surviving Corporation:
(I) Surviving Corporation's
incurrence of debt for purposes other than for
working capital requirements in excess of working
capital of ▇-▇ at the Effective Time and thereafter
generated by the Surviving Corporation;
(II) Surviving Corporation's
hiring of any employee (other than to fill a
vacancy at the prevailing compensation level) or
consultant, or termination (other than for cause)
of the employment of any of the persons who are
employees of ▇-▇ immediately prior to the Effective
Time;
(III) Surviving Corporation's
change in the salary or bonus of any of its
employees;
(IV) Surviving Corporation's
institution or termination of, or increase or
decrease in benefits under, any employee benefit
plan or program (it being understood and agreed
that Penton's institution or termination of, or
increase or decrease in benefits under, any
employee benefit plan or program provided generally
to employees of Penton and Surviving Corporation
shall not constitute Surviving Corporation's
institution or termination of, or increase or
decrease in benefits under, any employee benefit
plan or program);
(V) Surviving Corporation's
development or acquisition of a new Business
Information Product or discontinuation or
disposition of an existing Business Information
Product;
(VI) Surviving Corporation's
making of any change to a Business Information
Product that is material to such Business
Information Product;
(VII) Surviving Corporation's
incurrence of expenses outside the ordinary course
of ▇-▇'s business or inconsistent with ▇-▇'s past
practice;
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(VIII) Surviving Corporation's
discontinuation or reduction of its East Coast or
Midwest promotion accounts, each $35,000 per year,
or, provided such practices do not violate the
Foreign Corrupt Practices Act of 1977 or any other
applicable law and do not generate unreported
income to either ▇-▇ Shareholder, Surviving
Corporation's alteration of ▇-▇'s past practices
with respect to such promotion accounts; or
(IX) Surviving Corporation's
engaging in any other material transaction;
provided that no such written consent (other than with respect
to a termination of employment (other than for cause) or a
termination of, or decreases in benefits under, any employee
benefit plan or program) shall be required if such action
would have no adverse effect on Surviving Corporation's
Pre-Tax Profits for any remaining calendar year (or portion
thereof) during 1998 and 1999 or if the adverse effect of such
action on Surviving Corporation's Pre-Tax Profits for each
then remaining calendar year (or portion thereof) during 1998
and 1999 can be reliably measured and Penton agrees to exclude
such effect from the calculation thereof.
(C) Subject to (A) above, to any contrary
provision of either Employment Agreement and to obtaining any
consent required by (B) above, Penton, as the sole stockholder
of the Surviving Corporation, shall have the power and right
to control all aspects of the business and operations of the
Surviving Corporation.
(h) GUARANTEE OF VALUE.
(i) In the event that either the Average
Market Price during the First Reference Period or the Average Market
Price during the Second Reference Period is less than the Guaranteed
Average Market Price, Penton will, on the 15th day after the conclusion
of the Second Reference Period (or, if such day is not a business day,
on the first business day thereafter), pay to each ▇-▇ Shareholder cash
in an amount equal to (x) the excess of the Guaranteed Average Market
Price over the lower of such Average Market Prices (such excess being
referred to as the "SPREAD"), multiplied by (y) the number of Merger
Shares issued to such ▇-▇ Shareholder (whether or not held by him at
the time of payment); provided that the payment made with respect to
any Merger Share no longer held by such ▇-▇ Shareholder at the end of
the preceding day that has been sold by such ▇-▇ Shareholder (or by any
transferee that acquired such Merger Share from such ▇-▇ Shareholder in
a transaction not involving a sale) for a gross price, before expenses
of sale (including without limitation underwriters discounts or
commissions, broker commissions and fees and disbursements of counsel),
equal to or exceeding the
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Guaranteed Average Market Price less the Spread shall be limited to the
excess of the Guaranteed Average Market Price over such gross price
(and thus, for example, no payment shall be made with respect to any
such Merger Share so sold for a gross price equal to or exceeding the
Guaranteed Average Market Price); and further provided that if and to
the extent the total amount payable to any ▇-▇ Shareholder, or to the
▇-▇ Shareholders in the aggregate, would, in the reasonable judgment of
the ▇-▇ Shareholders or Penton, cause the Merger not to constitute a
"reorganization" within the meaning of Section 368(a) of the Code,
then, at the election of the ▇-▇ Shareholders (provided such election
is received by Penton at least five (5) business days prior to the due
date for payment of such cash) or at the election of Penton (provided
such election is given to the ▇-▇ Shareholders by Penton at least two
(2) business days prior to the due date for payment of such cash),
Penton will substitute for a portion of such cash shares of Penton
Common (valued at the Average Market Price during the Second Reference
Period) to the extent necessary to avoid such result (provided that no
fractional share of Penton Common shall be issued to either ▇-▇
Shareholder, but in lieu thereof Penton shall pay to such ▇-▇
Shareholder an amount in cash equal to the product of such fractional
share multiplied by the Average Market Price during the Second
Reference Period).
(ii) Each ▇-▇ Shareholder agrees to provide
to Penton, by 10:00 a.m., Cleveland, Ohio time on the due date for any
payment to him pursuant to (i) above, a written certification
identifying each sale of a Merger Share by him (or by any transferee
that acquired any Merger Share from him in a transaction not involving
a sale) prior to such date and the gross price for which such Merger
Share was sold, together with evidence supporting such certification
reasonably satisfactory to Penton. To expedite Penton's review of such
certification and evidence, each ▇-▇ Shareholder agrees to provide to
Penton, within 5 days after the conclusion of the Second Reference
Period, a written certification identifying each sale of a Merger Share
by him (or by any transferee that acquired any Merger Share from him in
a transaction not involving a sale) prior to the conclusion of the
Second Reference Period and the gross price for which such Merger Share
was sold, together with evidence supporting such certification
reasonably satisfactory to Penton.
(iii) Penton agrees that during the period
beginning sixty days prior to the ▇▇▇▇▇▇ ▇▇▇▇ Earnings Release Date and
ending at the conclusion of the Second Reference Period, it will not
make any public disclosures except as required by law or consistent
with its public disclosure practices subsequent to the Spinoff. Penton
further agrees that during the period beginning twenty business days
prior to the First Reference Period and ending at the conclusion of
such Reference Period, and during the period beginning twenty business
days prior to the Second Reference Period and ending at the conclusion
of such Reference Period, neither it nor any of its Affiliates will
purchase any security of the same type as any Merger Share.
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Each ▇-▇ Shareholder agrees that during the period beginning twenty
business days prior to the First Reference Period and ending at the
conclusion of such Reference Period, and during the period beginning
twenty business days prior to the Second Reference Period and ending at
the conclusion of such Reference Period, neither he nor any of his
Affiliates (excluding Penton notwithstanding the occurrence of the
Effective Time) will sell any Merger Share (or other security of the
same type as any Merger Share).
(iv) Notwithstanding the foregoing
provisions of this Section 2.4(h), in the event any significant portion
of the Average Market Price during the First Reference Period or during
the Second Reference Period is to be determined pursuant to clause
(iii) of the definition of "Average Market Price," then, in lieu of any
payment of cash and/or shares of Penton Common pursuant to clause (i)
above, Penton shall, on the 15th day after the conclusion of the Second
Reference Period (or, if such day is not a business day, on the first
business day thereafter), purchase from each ▇-▇ Shareholder the Merger
Shares held by him at the conclusion of the Second Reference Period by
paying to such ▇-▇ Shareholder, against surrender by him, free and
clear of any Security Interest, of the certificate(s) evidencing such
shares of Penton Common duly endorsed for surrender, an amount equal to
the Guaranteed Average Market Price multiplied by the number of such
shares.
(v) In the event that subsequent to the
Effective Time and prior to the conclusion of the Second Reference
Period any other security (including without limitation any other share
of Penton Common) is issued as a dividend or distribution on, or in a
split of, or in exchange for or in lieu of, any Merger Share: (x) such
Merger Share shall be treated for all purposes of this Section as
including such other security; and (y) the Average Market Price shall
include not only the Average Market Price of Penton Common as defined
in Article 1 but also an amount equal to the Average Market Price of
such other security determined in a manner corresponding to that used
in determining the Average Market Price of Penton Common.
(vi) Penton, Combination Subsidiary, ▇-▇
and the ▇-▇ Shareholders acknowledge that any contingent rights to
payments of cash, and any payments other than payments of cash,
pursuant to the preceding provisions of this Section 2.4(h) do not
constitute "boot" for federal income tax purposes. Except insofar as a
portion of any such payment constitutes interest for such purposes, and
except as otherwise required on account of any change in law or the
interpretation thereof subsequent to the execution and delivery of this
Agreement, Penton and the Surviving Corporation agree not to provide
the ▇-▇ Shareholders with a Form 1099 relating to such contingent
rights or payments.
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(i) CLOSING OF TRANSFER RECORDS. After the
Effective Time, transfers of shares of ▇-▇ Common Stock shall not be
made on the stock transfer books of the Surviving Corporation.
(j) DELIVERY OF MERGER CONSIDERATION TO PUBLIC
OFFICIAL. None of Penton, the Combination Subsidiary, ▇-▇, the
Surviving Corporation or any other Person shall be liable to any former
holder of shares of ▇-▇ Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat
or similar laws.
(k) LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any certificate representing shares of ▇-▇ Common Stock shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by
such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made
against it with respect to such certificate, the Surviving Corporation
will issue in exchange for such lost, stolen or destroyed certificate a
new certificate that may be surrendered pursuant to this Section 2.4.
(l) TRANSFERABILITY RESTRICTION. The right of a ▇-▇
Shareholder to receive any Contingent Cash Payment or to receive cash
and/or shares of Penton Common pursuant to Section 2.4(h) may not be
sold, assigned, pledged, gifted, conveyed, transferred or otherwise
disposed of (a "TRANSFER") by such ▇-▇ Shareholder, except by will or
the laws of descent and distribution (and in the case of any such
permitted Transfer, such right shall be subject to the continued
application of this Section to any Transfer by the transferee). Any
Transfer in violation of this Section 2.4(l) shall be null and void.
(m) PLAN OF MERGER. This Article 2 (and the
provisions of this Agreement defining terms used herein) shall
constitute the plan of merger with respect to the Merger for purposes
of Section 11.05 of the Illinois Corporation Law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PENTON
Penton hereby represents and warrants to the ▇-▇ Shareholders
as follows:
3.1 PENTON AND COMBINATION SUBSIDIARY ORGANIZATION AND
QUALIFICATION. Penton is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the requisite
corporate and
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other power and authority (including all licenses, permits and authorizations)
to own and operate its properties and to carry on its business as now conducted.
Penton is qualified to do business in the State of Ohio and in every other
jurisdiction in which the nature of its business or its ownership of property
requires it to be so qualified, except where the failure to be so qualified
would not have a Material Adverse Effect on Penton. Combination Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois, and has the requisite corporate and other power and
authority (including all licenses, permits and authorizations) to own and
operate its properties and to carry on its business as now conducted.
Combination Subsidiary is qualified to do business in every jurisdiction in
which the nature of its business or its ownership of property requires it to be
so qualified, except where the failure to be so qualified would not have a
Material Adverse Effect on Combination Subsidiary.
3.2 PENTON AND COMBINATION SUBSIDIARY AUTHORITY RELATIVE TO
THIS AGREEMENT.
(a) Each of Penton and Combination Subsidiary has
the requisite corporate power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this
Agreement by Penton and the consummation by Penton of the transactions
on its part contemplated by this Agreement have been duly authorized by
the board of directors of Penton and by Pittway as the sole stockholder
of Penton and no other corporate proceedings on the part of Penton are
necessary to authorize this Agreement or such transactions, other than
incidental implementing actions such as action to implement Section
7.14 and action with respect to Penton employee benefit plans described
in Section 7.8.
(b) The execution and delivery of this Agreement by
Combination Subsidiary and the consummation by Combination Subsidiary
of the transactions on its part contemplated by this Agreement have
been duly authorized by the board of directors of Combination
Subsidiary and by Penton as the sole stockholder of Combination
Subsidiary and no other corporate proceedings on the part of
Combination Subsidiary are necessary to authorize this Agreement or
such transactions, other than incidental implementing actions such as
action to implement Section 2.4(d).
(c) This Agreement has been duly executed and
delivered by Penton and Combination Subsidiary and constitutes a valid
and binding obligation of Penton and Combination Subsidiary,
enforceable against them in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity.
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(d) Except as set forth under the caption
"Authority" in a letter delivered to the ▇-▇ Shareholders by Penton
simultaneously with the execution of this Agreement (the "PENTON
DISCLOSURE LETTER"), neither Penton nor Combination Subsidiary nor any
of Penton's other Subsidiaries is subject to, or obligated under, any
provision of
(i) its charter or bylaws,
(ii) any agreement, arrangement or
understanding (whether written or oral),
(iii) any license, franchise or permit or
(iv) subject to compliance with the
statutes referred to in (e) below, any law, regulation, order,
judgment or decree,
which would be breached or violated, or in respect of which a right of
termination or acceleration or any Security Interest on any of Penton's
stock or assets or on any of Combination Subsidiary's or any of
Penton's other Subsidiaries' stock or assets would be created, by
Penton's and Combination Subsidiary's execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby other than any such breach, violation, right of
termination or acceleration or Security Interest that would not have a
Material Adverse Effect on Penton.
(e) Other than under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, the
Securities Act, the Exchange Act, securities or "blue sky" laws and the
regulations under the foregoing and as set forth under the caption
"Authority" in the Penton Disclosure Letter, with the exception of
obtaining the approval required to fulfill the condition set forth in
Section 8.1(j) and the filing with the Secretary of State of the State
of Delaware of one or more amendments to Penton's certificate of
incorporation as required to fulfill the condition set forth in Section
8.2(e) and the filing with the Secretary of State of the State of
Illinois of the Articles of Merger, no Governmental Action is necessary
on the part of Penton or Combination Subsidiary for the consummation of
the transactions on its part contemplated by this Agreement except for
any Government Action the failure to obtain or take which would not
have a Material Adverse Effect on Penton.
3.3 PENTON CONSTITUENT INSTRUMENTS/CAPITALIZATION.
(a) The copies of the certificate of incorporation
and bylaws of Penton furnished to the ▇-▇ Shareholders by Penton prior
to the execution and delivery of this Agreement are correct and
complete copies thereof as amended as of the time of such execution and
delivery. As of the Effective Time, the
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certificate of incorporation and bylaws of Penton will be as set forth
on EXHIBIT C and EXHIBIT D hereto, respectively.
(b) As of the date of this Agreement, the
authorized capital stock of Penton consists of 1,000 shares of common
stock having a par value of $1.00 per share, 100 of which shares are
issued and outstanding and owned by Pittway. As of the Effective Time,
the authorized capital stock of Penton will be as set forth in EXHIBIT
C hereto (and each share of capital stock of Penton currently
outstanding will have become Penton Common). All of the issued and
outstanding shares of capital stock of Penton are validly issued, fully
paid and nonassessable. The holders of outstanding shares of capital
stock of Penton are not entitled to any preemptive or other similar
rights. Excluding this Agreement, the Penton 1998 Stock Awards Plan
(under which no awards are outstanding) and the ▇▇▇▇▇▇ ▇▇▇▇ Director
Stock Option Plan (under which no awards are outstanding), and except
as set forth under the caption "Capitalization" in the Penton
Disclosure Letter, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments
obligating Penton to issue or sell any shares of capital stock of
Penton or securities or obligations of any kind convertible into or
exchangeable for any shares of capital stock of Penton or of any other
Person, nor are there any stock appreciation, phantom or similar rights
outstanding based upon the book value or any other attribute of Penton.
When issued pursuant to this Agreement, the shares of Penton Common
issued to the ▇-▇ Shareholders will be duly authorized, validly issued,
fully paid and nonassessable.
3.4 SUBSIDIARIES. Penton owns, directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries (which, at the date of
this Agreement, consist solely of the Existing Penton Subsidiaries), free and
clear of all Security Interests; and there are no subscription rights, warrants,
options, conversion rights or agreements of any kind outstanding to purchase or
otherwise acquire any equity interests in any of such Subsidiaries or any
securities or obligations of any kind convertible into or exchangeable for any
such equity interests. Except as set forth under the caption "Joint Ventures" in
the Penton Disclosure Schedule, neither Penton nor any of its Subsidiaries owns,
directly or indirectly, any stock, partnership interest, joint venture interest,
or other security issued by any corporation, organization or entity other than
interests in Subsidiaries of Penton. Each of Penton's Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation, is qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be so qualified, except where the failure to so qualify would not
have a Material Adverse Effect on Penton, and has the requisite power and
authority (including all authorizations, licenses and permits) to own and
operate its properties and to carry on its business as now conducted.
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3.5 FINANCIAL STATEMENTS. The following unaudited consolidated
financial statements of Penton and its Subsidiaries (collectively the "PENTON
FINANCIAL STATEMENTS") have been delivered to the ▇-▇ Shareholders: balance
sheets and statements of operations, stockholders' equity and cash flows as of
and for the years ended December 31, 1996 and December 31, 1997. The Penton
Financial Statements have been prepared on the basis set forth in the notes
thereto and, subject to the disclosures made in the notes thereto, fairly
present in accordance with generally accepted accounting principles applied on a
consistent basis the financial condition and results of operations of Penton and
its Subsidiaries as of the dates and for the periods referred to therein.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Penton nor any
of its Subsidiaries has any Liabilities which are material to the financial
condition, assets, business or results of operations of Penton and its
Subsidiaries considered as a whole except for (a) Liabilities disclosed in the
Penton Financial Statements or in this Agreement, (b) Liabilities that have
arisen since December 31, 1997 in the Ordinary Course of Business of Penton and
its Subsidiaries (none of which is a Liability resulting from breach of
contract, fraud or other tort, infringement or lawsuit), and (c) Liabilities set
forth under the caption "Liabilities" in the Penton Disclosure Letter.
3.7 NO MATERIAL ADVERSE CHANGE. Since December 31, 1997, there
has not been, occurred or arisen any event which has had or is reasonably likely
to have a Material Adverse Effect on Penton.
3.8 LITIGATION. Except as set forth under the caption
"Litigation" in the Penton Disclosure Letter, there are no actions, suits,
proceedings, orders or investigations pending or, to the Knowledge of Penton,
threatened against or relating to Penton or any of its Subsidiaries at law or in
equity, or before or by any Governmental Authority. Except as set forth under
such caption, neither Penton nor any of its Subsidiaries nor, to the Knowledge
of Penton, Pittway has ever received any written opinion or legal advice to the
effect that Penton is exposed from a legal standpoint to any Liability which is
reasonably likely to have a Material Adverse Effect on Penton.
3.9 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Penton or any of its Subsidiaries.
3.10 EMPLOYEES; RETIREE WELFARE BENEFIT LIABILITIES. No key
executive employee of Penton or any of its Subsidiaries has given notice of
termination of his employment other than at normal retirement. Penton and its
Subsidiaries have complied in all material respects with, or have cured all
material non-compliances with, all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other Taxes. Except
for Penton Retiree Life Insurance, neither Penton nor
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any of its Subsidiaries nor Pittway maintains any Employee Welfare Benefit Plan
which provides benefits to current or future retirees from Penton or any of its
Subsidiaries (or their spouses or dependents) of the type subject to Financial
Accounting Standards Board Statement No. 106 reporting requirements.
3.11 COMPLIANCE WITH LAWS; PERMITS; CERTAIN OPERATIONS. Penton
and its Subsidiaries and their respective officers, agents and employees have
complied in all material respects with, or have cured all material
non-compliances with, all applicable laws and regulations of United States
(federal, state and local) and non-United States governments and all agencies
thereof which affect the businesses or any owned or leased properties of Penton
or any of its Subsidiaries and to which Penton or any of its Subsidiaries may be
subject, and except as set forth under the caption "Compliance with Laws" in the
Penton Disclosure Letter, no claims have been filed against Penton or any of its
Subsidiaries alleging a violation of any such law or regulation, except for any
failures to so comply that would not, individually or in the aggregate, have a
Material Adverse Effect on Penton and except for any such claims that would not,
individually or in the aggregate, have a Material Adverse Effect on Penton.
3.12 AFFILIATE TRANSACTIONS. Except as set forth under the
caption "Affiliate Transactions" in the Penton Disclosure Letter, to the
Knowledge of Penton, no officer or director of Penton or any of its
Subsidiaries, no member of the immediate family of any such officer or director,
and no entity in which any of such persons owns any beneficial interest (other
than a publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 5% of the stock of
which is beneficially owned by any of such persons) (collectively "PENTON
INSIDERS"), has any agreement of any kind with Penton or any of its Subsidiaries
or any interest in any property, real, personal or mixed, tangible or
intangible, used in or pertaining to the business of Penton or any of its
Subsidiaries. For purposes of the preceding sentence, the members of the
immediate family of an officer or director shall consist of the spouse, parents,
children (natural and adopted), siblings, mothers-and fathers-in-law, sons-and
daughters-in-law, and brothers-and sisters-in-law of such officer or director.
3.13 TAX STATUS OF SPINOFF; TAX MATTERS RELATED TO THE MERGER.
Other than as set forth under the caption "Taxes" in the Penton Disclosure
Letter, no Tax is or will be payable by Penton or any of its Subsidiaries as a
result of the Spinoff. Prior to the Merger, Penton and its Subsidiaries have not
acquired any ▇-▇ Common Stock. Penton does not have any plan or intention: (a)
to cause Combination Subsidiary or Surviving Corporation to issue additional
shares of its stock, or take any other action, that would result in Penton
losing Control of it, (b) except as may be required by Section 2.4(h)(iv), to
reacquire any of the Penton Common issued pursuant to this Agreement, or (c) to
cause the Surviving Corporation to sell, distribute or otherwise dispose of any
of ▇-▇'s assets acquired in the Merger, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation controlled
by the
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Surviving Corporation as described in Section 368(a)(2)(C) of the Code.
Combination Subsidiary has no plan or intention: (a) to issue additional shares
of its stock, or take any other action, that would result in Penton losing
Control of it or of the Surviving Corporation, or (b) to sell, distribute or
otherwise dispose of any of ▇-▇'s assets acquired in the Merger, except for
dispositions made in the ordinary course of business or transfers of assets to a
corporation controlled by the Surviving Corporation as described in Section
368(a)(2)(C) of the Code.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE ▇-▇ SHAREHOLDERS
The ▇-▇ Shareholders jointly and severally hereby represent
and warrant to Penton that:
4.1 ▇-▇ ORGANIZATION AND QUALIFICATION. ▇-▇ is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois, and has the requisite corporate and other power and authority
(including all licenses, permits and authorizations) to own and operate its
properties and to carry on its business as now conducted. ▇-▇ is qualified to do
business in every jurisdiction in which the nature of its business or its
ownership of property requires it to be so qualified, except where the failure
to be so qualified would not have a Material Adverse Effect on ▇-▇.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Each of the ▇-▇ Shareholders has the requisite
power to enter into this Agreement and to carry out his obligations
hereunder.
(b) ▇-▇ has the requisite corporate power to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by ▇-▇ and the consummation by
▇-▇ of the transactions on its part contemplated by this Agreement have
been duly authorized by the board of directors of ▇-▇ and by the ▇-▇
Shareholders as the sole stockholders of ▇-▇ and no other corporate
proceedings on the part of ▇-▇ are necessary to authorize this
Agreement or such transactions, other than incidental implementing
actions such as action pursuant to Section 7.8(i).
(c) This Agreement has been duly executed and
delivered by each of the ▇-▇ Shareholders and by ▇-▇ and constitutes a
valid and binding obligation of each of them, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and general
principles of equity.
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(d) Except as set forth under the caption
"Authority" in a letter delivered to Penton by the ▇-▇ Shareholders
simultaneously with the execution of this Agreement (the "▇-▇
SHAREHOLDERS DISCLOSURE LETTER"), neither of the ▇-▇ Shareholders nor
▇-▇ is subject to, or obligated under, any provision of
(i) its charter or bylaws (in the case of
▇-▇),
(ii) any agreement, arrangement or
understanding (whether written or oral),
(iii) any license, franchise or permit (in
the case of ▇-▇), or
(iv) subject to compliance with the
statutes referred to in (e) below, any law, regulation, order,
judgment or decree,
which would be breached or violated, or in respect of which a right of
termination or acceleration or any Security Interest on any of ▇-▇'s
stock or assets would be created, by the ▇-▇ Shareholders' and ▇-▇'s
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby other than any
such breach, violation, right of termination or acceleration or
Security Interest that would not have a Material Adverse Effect on ▇-▇.
(e) Other than under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or
as set forth under the caption "Authority" in the ▇-▇ Shareholders
Disclosure Letter, with the exception of the filing with the Secretary
of State of the State of Illinois of the Articles of Merger, no
Governmental Action is necessary on the part of either ▇-▇ Shareholder
or ▇-▇ for the consummation of the transactions on his or its part
contemplated by this Agreement except for any Governmental Action the
failure to obtain or take which would not have a Material Adverse
Effect on ▇-▇.
4.3 INVESTMENT. Each ▇-▇ Shareholder (i) will be acquiring the
shares of Penton Common issued to him pursuant to this Agreement solely for his
own account for investment purposes and not with a view to any distribution
thereof which would violate the Securities Act; (ii) is a sophisticated investor
with knowledge and experience in business and financial matters; (iii) has not
been offered such Penton Common by any form of general advertising or general
solicitation; (iv) has been given access to such information regarding Penton
and its Subsidiaries as he has requested and has been given an opportunity to
ask questions and has received answers regarding such information; (v) is able
to bear the economic risk inherent in holding such Penton Common and (vi) is an
Accredited Investor by virtue of having (A) a net worth individually or jointly
with his spouse of at least $1,000,000 (without giving effect to any increase in
such net worth as a result of the transactions contemplated hereby), (B) income
individually in excess of $200,000 for each of 1996 and 1997 and an
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expectation of income in excess of such amount in 1998, or (C) income with his
spouse in excess of $300,000 for each of 1996 and 1997 and an expectation of
income with his spouse in excess of such amount in 1998.
4.4 ▇-▇ CONSTITUENT INSTRUMENTS/CAPITALIZATION.
(a) The copies of the articles of incorporation and
bylaws of ▇-▇ furnished to Penton by the ▇-▇ Shareholders prior to the
execution and delivery of this Agreement are correct and complete
copies thereof as amended as of the time of such execution and
delivery. There have been no subsequent amendments thereto.
(b) The authorized capital stock of ▇-▇ consists of
700 shares of ▇-▇ Common Stock, 300 shares of Common Stock-Series B,
without par value, and 200 shares of Preferred Stock, without par
value, of which 700 shares of ▇-▇ Common Stock are issued and
outstanding. Such shares of ▇-▇ Common Stock are owned by the ▇-▇
Shareholders as follows: ▇▇▇▇▇▇▇--350 shares; and ▇▇▇▇▇▇--350 shares.
All of the issued and outstanding shares of ▇-▇ Common Stock are
validly issued, fully paid and nonassessable. The holders of
outstanding shares of ▇-▇ Common Stock are not entitled to any
preemptive or other similar rights. Excluding this Agreement, there are
no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating ▇-▇ to issue or sell
any shares of capital stock of ▇-▇ or securities or obligations of any
kind convertible into or exchangeable for any shares of capital stock
of ▇-▇ or of any other Person, nor are there any stock appreciation,
phantom or similar rights outstanding based upon the book value or any
other attribute of ▇-▇.
4.5 SUBSIDIARIES. ▇-▇ has no Subsidiary and owns no stock,
partnership interest, joint venture interest, or any other security issued by
any corporation, organization or entity.
4.6 TITLE TO ASSETS. ▇-▇ has good title to the Business
Information Products and other assets (including without limitation all tangible
and intangible assets, Intellectual Property, licenses and goodwill related to
such Business Information Products, mailing lists, lists of advertisers,
circulation lists and other lists, printed material, work in process, prepaid
expenses, receivables, furniture and equipment) used in its business that it
purports to own (and such title is free and clear of all Security Interests
except as set forth in the final paragraph of Section 6.2 and under the caption
"Security Interests" in the ▇-▇ Shareholders Disclosure Letter); and a valid
leasehold or license interest in the Business Information Products and other
assets used in its business that it purports to lease as lessee or license as
licensee. All such leases and licenses are legal, valid and binding and in full
force and effect, without default. Prior to the execution and delivery of this
Agreement, the ▇-▇ Shareholders have furnished to Penton a correct and complete
copy of each such
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lease and license to which a ▇-▇ Insider (as defined in Section 4.15) is a
party, as amended as of the time of such execution and delivery, identified as
being such a lease or license.
4.7 SUFFICIENCY OF ASSETS. Except as set forth under the
caption "Sufficency of Assets" in the ▇-▇ Shareholders Disclosure Letter, the
assets of ▇-▇ include all of the assets, other than the accounts receivable and
any cash to be distributed to the ▇-▇ Shareholders pursuant to the final
paragraph of Section 6.2, necessary to conduct the business of ▇-▇ as now
conducted and in the manner reflected in the ▇-▇ Financial Statements. The
accounts receivable so distributed to the ▇-▇ Shareholders (which the Surviving
Corporation will have certain obligations to attempt to collect on behalf of the
▇-▇ Shareholders pursuant to Section 7.16) will be valid and enforceable,
subject to no counterclaim or right of setoff, and the Surviving Corporation's
efforts to collect such accounts receivable, provided they are consistent with
▇-▇'s past practices with respect to efforts to collect its trade accounts
receivable, will not subject the Surviving Corporation to any Liability.
4.8 FINANCIAL STATEMENTS. The following unaudited financial
statements of ▇-▇ (collectively the "▇-▇ FINANCIAL STATEMENTS") have been
delivered to Penton: balance sheets and statements of operations, stockholders'
equity and cash flows as of and for the years ended December 31, 1996 and
December 31, 1997. The ▇-▇ Financial Statements have been prepared on the basis
set forth in the notes thereto and, subject to the disclosures made in the notes
thereto, fairly present in accordance with generally accepted accounting
principles applied on a consistent basis the financial condition and results of
operations of ▇-▇ as of the dates and for the periods referred to therein.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. ▇-▇ does not have any
Liabilities which are material to the financial condition, assets, business or
results of operations of ▇-▇, except for (a) Liabilities disclosed in the ▇-▇
Financial Statements or in this Agreement, (b) Liabilities that have arisen
subsequent to December 31, 1997 in the Ordinary Course of Business of ▇-▇ (none
of which is a Liability resulting from breach of contract, fraud or other tort,
infringement or lawsuit), and (c) Liabilities set forth under the caption
"Liabilities" in the ▇-▇ Shareholders Disclosure Letter.
4.10 NO MATERIAL ADVERSE CHANGE. Since December 31, 1997,
there has not been, occurred or arisen any event which has had or is reasonably
likely to have a Material Adverse Effect on ▇-▇.
4.11 LITIGATION. Except as set forth under the caption
"Litigation" in the ▇-▇ Shareholders Disclosure Letter, there are no actions,
suits, proceedings, orders or investigations pending or, to the Knowledge of the
▇-▇ Shareholders, threatened against or relating to ▇-▇, at law or in equity, or
before or by any Governmental Authority. Except as set forth under such caption,
to the Knowledge of the ▇-▇ Shareholders, ▇-▇ has never received any written
opinion or legal advice to the effect
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that ▇-▇ is exposed from a legal standpoint to any Liability which is reasonably
likely to have a Material Adverse Effect on ▇-▇.
4.12 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of ▇-▇ or the ▇-▇ Shareholders.
4.13 EMPLOYEES; RETIREE WELFARE BENEFITS LIABILITIES. No key
executive employee of ▇-▇ has given notice of termination of his employment. ▇-▇
has complied in all material respects with, or has cured all material
non-compliances with, all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other Taxes. ▇-▇ does not
maintain any Employee Welfare Benefit Plan which provides benefits to current or
future retirees from ▇-▇ (or their spouses or dependents) of the type subject to
Financial Accounting Standards Board Statement No. 106 reporting requirements.
4.14 COMPLIANCE WITH LAWS; PERMITS; CERTAIN OPERATIONS. ▇-▇
and its officers, agents and employees have complied in all material respects
with, or have cured all material non-compliances with, all applicable laws and
regulations of U.S. and non-U.S. governments and all agencies thereof which
affect the business or any owned or leased properties of ▇-▇ and to which ▇-▇
may be subject, and, except as set forth under the caption "Compliance with
Laws" in the ▇-▇ Shareholders Disclosure Letter, no claims have been filed
against ▇-▇ alleging a violation of any such law or regulation, except for any
failures to so comply that would not, individually or in the aggregate, have a
Material Adverse Effect on ▇-▇ and except for any such claims that would not,
individually or in the aggregate, have a Material Adverse Effect on ▇-▇.
4.15 AFFILIATE TRANSACTIONS. Except as set forth under the
caption "Affiliate Transactions" in the ▇-▇ Shareholders Disclosure Letter, to
the Knowledge of the ▇-▇ Shareholders, no ▇-▇ Shareholder and no officer or
director of ▇-▇ and no member of the immediate family of any such ▇-▇
Shareholder, officer or director, and no entity in which any of such persons
owns any beneficial interest (other than a publicly held corporation whose stock
is traded on a national securities exchange or in the over-the-counter market
and less than 5% of the stock of which is beneficially owned by any of such
persons) (collectively "▇-▇ INSIDERS"), has any agreement of any kind with ▇-▇
or any interest in any property, real, personal or mixed, tangible or
intangible, used in or pertaining to the business of ▇-▇. For purposes of the
preceding sentence, the members of the immediate family of an officer or
director shall consist of the spouse, parents, children (natural and adopted),
siblings, mothers-and fathers-in-law, sons-and daughters-in-law, and brothers-
and sisters-in-law of such officer or director.
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4.16 TAX STATUS OF MERGER. Neither of the ▇-▇ Shareholders
has, nor has ▇-▇, taken or agreed to take, or failed to take, any action that
would prevent the Merger from constituting a "reorganization" under Section
368(a) of the Code.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PITTWAY
Pittway hereby represents and warrants to Penton as follows:
5.1 ORGANIZATION AND QUALIFICATION. Pittway is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business in the State of Illinois.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Pittway has the requisite corporate power to
enter into this Agreement and to carry out its obligations hereunder.
(b) The execution and delivery of this Agreement by
Pittway and the consummation by Pittway of the transactions on its part
contemplated hereby (including the Spinoff) have been duly authorized
by the Board of Directors of Pittway, and no other corporate
proceedings on the part of Pittway, other than incidental implementing
actions such as the setting of the record date and payment date for the
Spinoff, are necessary to authorize this Agreement and such
transactions.
(c) This Agreement has been duly executed and
delivered by Pittway and constitutes a valid and binding obligation of
Pittway, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity.
(d) Except as set forth under the caption
"Authority" in a letter delivered to Penton by Pittway simultaneously
with the execution of this Agreement (the "PITTWAY DISCLOSURE LETTER"),
neither Pittway nor any of the Post-Spinoff Pittway Subsidiaries is
subject to, or obligated under, any provision of
(i) its charter or bylaws,
(ii) any agreement, arrangement or
understanding (whether written or oral),
(iii) any license, franchise or permit or
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(iv) subject to compliance with the
statutes referred to in (e) below, any law, regulation, order,
judgment or decree,
which would be breached or violated, or in respect of which a right of
termination or acceleration or any Security Interest on any of Penton's
or any of its Subsidiaries' stock or assets would be created, by
Pittway's execution, delivery and performance of this Agreement and the
consummation of the transactions on its part contemplated hereby
(including the Spinoff), other than any such breach, violation, right
of termination or acceleration or Security Interest which will not,
individually or in the aggregate, have a Material Adverse Effect on
Penton.
(e) Other than under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, the
Exchange Act and the regulations under the foregoing, no Governmental
Action is necessary on the part of Pittway for the consummation by
Pittway of the transactions on its part contemplated by this Agreement,
except for such Governmental Actions the failure to obtain or make
which would not, individually or in the aggregate, have a Material
Adverse Effect on Pittway or Penton.
5.3 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Pittway or any Post-Spinoff Pittway Subsidiary.
5.4 AFFILIATE TRANSACTIONS. Except as set forth under the
caption "Affiliate Transactions" in the Pittway Disclosure Letter, to the
Knowledge of Pittway, no officer or director of Pittway or of any Post-Spinoff
Pittway Subsidiary, no member of the immediate family of any such officer or
director, and no entity in which any of such persons owns any beneficial
interest (other than a publicly held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than 5%
of the stock of which is beneficially owned by any of such persons)
(collectively "PITTWAY INSIDERS"), has any agreement of any kind with Penton or
any of its Subsidiaries or any interest in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the business of Penton
or any of its Subsidiaries. For purposes of the preceding sentence, the members
of the immediate family of an officer or director shall consist of the spouse,
parents, children (natural and adopted), siblings, mothers-and fathers-in-law,
sons-and daughters-in-law, and brothers-and sisters-in-law of such officer or
director.
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ARTICLE 6
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 CONDUCT OF PENTON BUSINESS PENDING THE MERGER. Penton
covenants and agrees that from and after the execution and delivery of this
Agreement and prior to the Effective Time, except as required to effect the
Spinoff or as otherwise expressly contemplated or permitted by this Agreement,
and with such additional exceptions as the ▇-▇ Shareholders shall have approved
in writing:
(a) The businesses of Penton and its Subsidiaries
shall be conducted only in the Ordinary Course of Business of Penton,
on an arms'-length basis and in accordance in all material respects
with all applicable laws, rules and regulations; and
(b) Penton and each of its Subsidiaries (i) shall
use all reasonable efforts to preserve intact its business organization
and goodwill, keep available the services of its officers and employees
as a group and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with
it; (ii) shall confer on a regular basis with the ▇-▇ Shareholders to
report operational matters of Penton and its Subsidiaries and the
general status of ongoing operations of Penton and its Subsidiaries;
(iii) shall not take any action which would render, or which reasonably
may be expected to render, any representation or warranty made by
Penton in this Agreement untrue at, or at any time prior to, the
Effective Time in any material respect; (iv) shall notify the ▇-▇
Shareholders of any emergency or other change in the normal course of
business of Penton or any of its Subsidiaries or in the operation of
the properties of Penton or any of its Subsidiaries and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) relating
to Penton or any of its Subsidiaries if such emergency, change,
complaint, investigation or hearing would have a Material Adverse
Effect on Penton or a material adverse effect on Penton's or
Combination Subsidiary's ability to consummate the transactions
contemplated by this Agreement; and (v) shall notify the ▇-▇
Shareholders if it shall discover that any representation or warranty
made by it in this Agreement was when made, or has subsequently become,
untrue in any material respect.
Notwithstanding the foregoing, it is expressly understood and agreed
that (i) no distribution of cash may be made by Penton to Pittway, whether or
not in the Ordinary Course of Business of Penton, if such action would result in
Penton's cash immediately prior to the Spinoff being less than the sum of (x)
the aggregate amount of Penton's then outstanding checks and (y) the aggregate
amount of Penton's then trade show deposits (net of Penton's then deferred costs
incurred with respect to trade shows), (ii) subject to (i), Penton may
distribute cash to Pittway immediately prior to the Spinoff, (iii)
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Penton and its Subsidiaries may acquire (through the acquisition of stock, the
acquisition of assets, merger or otherwise) the businesses and/or Business
Information Products of other Persons, and in connection with such acquisitions
may incur indebtedness and may commit to issue Penton Common contingent upon the
Spinoff, provided that the aggregate amount of indebtedness incurred by Penton
and its Subsidiaries in connection with such acquisitions (including
indebtedness assumed in connection with direct acquisitions of assets or
Business Information Products, but not indebtedness of Persons whose stock is
acquired) does not exceed $50.0 million and further provided that any issuance
of Penton Common committed to would not result in Pittway failing to control
Penton immediately prior to the Spinoff as described in Section 368(c) of the
Code, (iv) Penton may enter into joint venture arrangements with unaffiliated
Persons, (v) Penton and its Subsidiaries may dispose of (through the sale of
stock, the sale of assets, merger or otherwise) (A) the businesses set forth
under the caption "Possible Dispositions" in the Penton Disclosure Letter and
(B) Business Information Products not included in such businesses, provided that
the aggregate annual revenue attributable to such Business Information Products
at their respective dates of disposition does not exceed $10.0 million and
further provided that after giving effect to such dispositions Penton continues
to conduct an active trade or business as defined in Section 355(a)(1)(C) of the
Code, (vi) Penton may enter into credit arrangements to enable it to repay at
the time of the Spinoff its then outstanding indebtedness to Pittway and to
provide it with sufficient working capital for its foreseeable post-Spinoff
needs taking into account the provisions of this Agreement, and (vii) Penton may
enter into employment agreements with key Penton personnel and may amend
existing employment agreements with ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
6.2 CONDUCT OF ▇-▇ BUSINESS PENDING THE MERGER. ▇-▇ and each
of the ▇-▇ Shareholders covenants and agrees that from and after the execution
and delivery of this Agreement and prior to the Effective Time, except as
expressly contemplated or permitted by this Agreement, and with such additional
exceptions as Penton and Pittway shall have approved in writing:
(a) The business of ▇-▇ shall be conducted only in,
and ▇-▇ shall not take any action except in, the Ordinary Course of
Business of ▇-▇, on an arms'-length basis and in accordance in all
material respects with all applicable laws and rules and regulations;
(b) ▇-▇ shall not, directly or indirectly, do or
permit to occur any of the following: (i) issue or incur any obligation
to issue any shares of ▇-▇; (ii) sell, pledge, dispose of or encumber
any of its assets, except in the Ordinary Course of Business of ▇-▇;
(iii) acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof;
(iv) develop or acquire a new Business Information Product, discontinue
or dispose of an existing Business Information Product or make any
change to a Business
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Information Product that is material to such Business Information
Product; or (v) incur any indebtedness for borrowed money or issue any
debt securities except the borrowing of working capital in the Ordinary
Course of Business of ▇-▇ and refinancings or replacements of
borrowings existing on the date hereof;
(c) ▇-▇ shall not, directly or indirectly, (i)
enter into, adopt or modify (A) any employment, severance, or similar
agreement or arrangement, (B) any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation or other plan,
agreement, trust, fund or arrangement (group or otherwise) for the
benefit or welfare of any employee(s) or director(s) or (ii) grant any
bonus, salary increase, severance or termination pay to any officer or
director; or in the case of employees who are not officers or directors
and who earn in excess of $40,000 per year, take any action with
respect to the grant of any bonus, salary increase, severance or
termination pay or with respect to any increase of benefits payable in
effect on the date of this Agreement (provided that nothing in this
Section 6.2(c) shall preclude bonus grants, salary increases, benefit
increases and benefit plan amendments and modifications made in the
Ordinary Course of Business of ▇-▇);
(d) ▇-▇ shall not, directly or indirectly, enter
into or modify any contract, agreement or arrangement with any ▇-▇
Insider;
(e) ▇-▇ shall use all reasonable efforts to cause
its current insurance (or reinsurance) policies not to be canceled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
(f) ▇-▇ (i) shall use all reasonable efforts to
preserve intact its business organization and goodwill, keep available
the services of its officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it and (ii) shall not take
any action which would render, or which reasonably may be expected to
render, any representation or warranty made by the ▇-▇ Shareholders in
this Agreement untrue at, or at any time prior to, the Effective Time
in any material respect; and
(g) Each of the ▇-▇ Shareholders (i) shall confer
on a regular basis with Penton and Pittway to report operational
matters of ▇-▇ and the general status of ongoing operations of ▇-▇;
(ii) shall notify Penton and Pittway if he shall discover that any
representation or warranty made by the ▇-▇ Shareholders in this
Agreement was when made, or has subsequently become, untrue in any
material respect and (iii) shall notify Penton and Pittway of any
emergency or other change in the normal course of business of ▇-▇ or in
the
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operation of its properties and of any governmental or third party
complaints, investigations or hearings (or communications indicating
that the same may be contemplated) if such emergency, change,
complaint, investigation or hearing would have a Material Adverse
Effect on ▇-▇ or a material adverse effect on ▇-▇'s or the ▇-▇
Shareholders' ability to consummate the transactions contemplated by
this Agreement.
Notwithstanding the foregoing, it is expressly understood and agreed
that (i) subject to the condition in Section 8.3(i) and provided such action is
not financed directly or indirectly with indebtedness, ▇-▇ may, at any time and
from time to time prior to the Effective Time, distribute cash to the ▇-▇
Shareholders, and (ii) ▇-▇ may, immediately prior to the Effective Time,
distribute to the ▇-▇ Shareholders the then outstanding trade accounts
receivable of ▇-▇ (the "DISTRIBUTED ▇-▇ ACCOUNTS RECEIVABLE").
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 ACCESS AND INFORMATION; CORPORATE RECORDS;
CONFIDENTIALITY. Penton, on the one hand, and ▇-▇, on the other hand, shall
afford each other and the accountants, counsel and other representatives of each
other full access upon reasonable notice and during normal business hours
throughout the period prior to the Effective Time to all of the properties and
Corporate Records of Penton and its Subsidiaries and of ▇-▇, respectively, and,
during such period, Penton, on the one hand, and ▇-▇, on the other hand, shall
furnish each other all information concerning the business, properties and
personnel of Penton and its Subsidiaries and of ▇-▇, respectively, as may
reasonably be requested.
▇-▇ shall afford Penton full access upon reasonable notice and
during normal business hours throughout the period prior to the Effective Time
to all of the personnel of ▇-▇.
From and after the consummation of the Spinoff, Pittway shall
retain all Corporate Records owned by Pittway or under Pittway's control at the
time of the Spinoff (other than indirectly through Penton and its Subsidiaries)
relating to Penton and its Subsidiaries, shall provide Penton and the
accountants, counsel and other representatives of Penton full access upon
reasonable notice and during normal business hours to such Corporate Records for
the preparation of Tax Returns and other reasonable purposes and shall permit
Penton and such accountants, counsel and representatives to make copies thereof
at the expense of Penton. In the event that within seven years following the
Spinoff Pittway wishes to dispose of any such Corporate Records, Pittway shall
first give written notice thereof to Penton and Penton
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shall thereupon have 20 business days in which to take possession of such
Corporate Records (or any portion thereof) at the expense of Penton.
From and after the consummation of the Spinoff, Penton shall
(and shall cause its Subsidiaries to) retain all Corporate Records owned by it
and such Subsidiaries or under their control at the time of the Spinoff relating
to Penton and its Subsidiaries, shall provide Pittway and the accountants,
counsel and other representatives of Pittway full access upon reasonable notice
and during normal business hours to such Corporate Records for the preparation
of Tax Returns and other reasonable purposes and shall permit Pittway and such
accountants, counsel and representatives to make copies thereof at the expense
of Pittway. In the event that within seven years following the Spinoff Penton or
any of its Subsidiaries wishes to dispose of any such Corporate Records, Penton
shall first give written notice thereof to Pittway and Pittway shall thereupon
have 20 business days in which to take possession of such Corporate Records (or
any portion thereof) at the expense of Pittway.
Penton and Pittway will, and will cause their respective
Subsidiaries (in the case of Pittway, other than Penton and its Subsidiaries),
accountants, counsel and other representatives to, hold in strict confidence,
except to the extent disclosure is required by law, all non-public information
and Corporate Records obtained by them pursuant to this Section 7.1.
Penton and its Subsidiaries shall be entitled to continue to
use any stocks existing as of the consummation of the Spinoff of printed
materials currently used by Penton or its Subsidiaries which contain the name
"Pittway"; provided that (i) such materials may only be used in the same fashion
as used by Penton and its Subsidiaries prior to the Spinoff and only in
accordance with past practice; it being acknowledged and agreed by Penton that
such use of the name "Pittway" is being permitted solely as an accommodation by
Pittway to Penton and its Subsidiaries and (ii) in no event shall Penton or any
of its Subsidiaries use any such materials after the expiration of 90 days
following the consummation of the Spinoff. Nothing herein shall be deemed or
construed as giving Penton or any of its Subsidiaries any rights in or to the
name "Pittway".
7.2 REGISTRATION RIGHTS; CERTAIN FILINGS.
(a) DEMAND REGISTRATION. At any time during the 60
days immediately following the second anniversary of the Effective
Time, and provided no earlier request has been made by either or both
of the ▇-▇ Shareholders pursuant to this Section 7.2(a), either or both
of the ▇-▇ Shareholders may request the registration (the "DEMAND
REGISTRATION") under the Securities Act of then Registrable Shares
constituting at least 25% of the Merger Shares. The request for the
Demand Registration shall specify the number of Registrable Shares
requested to be registered. Within ten days after receipt of such
request, if such request is by fewer than both the ▇-▇
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Shareholders, Penton will give written notice of such requested
registration to the other ▇-▇ Shareholder and will include in such
registration all Registrable Shares held by ▇-▇ Shareholders with
respect to which Penton has received written requests for inclusion
therein within 15 days after the sending of Penton's notice. If the
Demand Registration is an underwritten registration, and if the
managing underwriter(s) advise Penton that in their opinion the number
of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a
price range acceptable to the holders of Registrable Shares
participating in the Demand Registration, then, notwithstanding the
preceding provisions of this Section 7.2(a), Penton will include in the
Demand Registration only each ▇-▇ Shareholder's pro rata portion of the
Registrable Shares to be included therein, on the basis of the numbers
of Registrable Shares requested to be included in the Demand
Registration. Penton will pay all Registration Expenses incurred in
connection with the Demand Registration. The obligation of Penton to
effect the Demand Registration hereunder shall be satisfied when a
registration statement filed in accordance herewith becomes effective
under the Securities Act. Penton may use the shortest form of
registration statement (e.g., Form ▇-▇, ▇-▇ or S-3) which Penton is
then eligible to use. Penton will not include in the Demand
Registration any shares of Penton Common which are held by Persons
other than ▇-▇ Shareholders without the prior written consent of the
holders of at least a majority of the Registrable Shares held by ▇-▇
Shareholders. Penton shall have the right to select the managing
underwriter(s) for the Demand Registration if it is an underwritten
registration, subject to the approval of the ▇-▇ Shareholders (which
approval will not be unreasonably withheld or delayed).
(b) PIGGYBACK REGISTRATIONS. Whenever Penton
proposes to register any Penton Common under the Securities Act (other
than on Form S-8 or S-4 or any similar or successor forms) within the
thirty (30) months following the Effective Time (a "PIGGYBACK
REGISTRATION"), Penton will give prompt written notice to each of the
▇-▇ Shareholders known by it to hold Registrable Shares of its
intention to effect such a registration and will include in such
registration all Registrable Shares with respect to which Penton has
received written requests for inclusion therein within 15 days after
the sending of Penton's notice. Penton will pay all Registration
Expenses incurred in connection with any Piggyback Registration. If a
Piggyback Registration is an underwritten registration, and if the
managing underwriter(s) advise Penton that in their opinion the number
of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a
price range acceptable to Penton, then, notwithstanding the preceding
provisions of this Section 7.2(b), Penton will include in such
registration: first, the securities Penton proposes to sell; and
second, only each ▇-▇ Shareholder's pro rata portion of the Registrable
Shares to be included therein, on the basis of the numbers of
Registrable Shares requested to be included in such Piggyback
Registration. No holder of Registrable Shares may participate in any
Piggyback
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Registration which is underwritten unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by Penton and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such
underwriting arrangements; provided that no holder of Registrable
Shares included in any underwritten registration shall be required to
make any representations or warranties to Penton or the underwriters,
or to agree to indemnify Penton or the underwriters, therein in the
capacity as a selling stockholder other than with respect to such
holder and such holder's intended method of distribution (but this
proviso shall not limit the obligations of such holder under Section
7.7(b)(i)).
(c) REGISTRATION COVENANTS. Whenever pursuant to
this Agreement the holders of Registrable Shares have requested that
any Registrable Shares be registered, and subject to the limitation on
the number of shares to be registered set forth in Section 7.2(a),
Penton will use all reasonable efforts to effect the registration of
the sale of such Registrable Shares in accordance with the intended
method of disposition thereof, and pursuant thereto Penton will as
expeditiously as possible:
(i) prepare and file with the Commission a
registration statement with respect to such Registrable Shares
and use all reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission
such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period of 90 days and comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such registration statement during such
period in accordance with the intended methods of disposition
by the sellers thereof set forth in such registration
statement;
(iii) furnish to each seller of Registrable
Shares covered by such registration statement such number of
copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request
in order to facilitate the disposition of such seller's
Registrable Shares covered by such registration statement;
(iv) use all reasonable efforts to register
or qualify such Registrable Shares under such other securities
or blue sky laws of such United States jurisdictions as any
seller reasonably requests and do any and all other acts and
things which may be reasonably necessary or
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advisable to enable such seller to consummate the disposition
in such jurisdictions of such Registrable Shares owned by such
seller (provided that Penton will not be required to (i)
qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in
any such jurisdiction);
(v) notify each seller of such Registrable
Shares, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the
happening to its Knowledge of any event as a result of which
the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading,
and, at the request of any such seller, prepare a supplement
or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Shares, such
prospectus will not to its Knowledge contain an untrue
statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(vi) cause all such Registrable Shares to
be listed on each securities exchange, or accepted for trading
on each trading system, on which Penton Common shares are then
listed or traded;
(vii) cause all restrictive transfer
legends to be removed from the stock certificates evidencing
such Registrable Shares (subject to re-legending in the event
not sold pursuant to such registration statement) and cause
certificates evidencing the remaining Registrable Shares to be
issued to the holders of such Registrable Shares in such
denominations as such holders may reasonably request; and
(viii) otherwise use all reasonable efforts
to comply with all applicable rules and regulations of the
Commission; and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first
day of Penton's first full calendar quarter after the
effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
(d) HOLDBACK AGREEMENTS. Each of the ▇-▇
Shareholders agrees not to effect any public sale or distribution
(including sales pursuant to Securities Act Rule 144) of equity
securities of Penton, or of any securities convertible into or
exchangeable or exercisable for such securities, during the seven days
prior to and the 90-day period beginning on the effective date of any
registration of Penton Common Stock under the Securities Act (other
than a
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registration on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor forms) except as
part of such registration, unless, in the case of such a registration
which is an underwritten registration, the underwriter(s) managing the
registered public offering otherwise agree. Penton agrees not to
effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and during the 90-day
period beginning on the effective date of the Demand Registration
except pursuant to registrations on Form ▇-▇, ▇▇▇▇ ▇-▇ or any
successor forms, unless, in the case of such a registration which is
an underwritten registration, the underwriter(s) managing the
registered public offering otherwise agree.
(e) INDEMNIFICATION RELATING TO REGISTRATIONS.
(i) Penton agrees to indemnify, to the
extent permitted by law, each holder of Registrable Shares
included in the Demand Registration or any Piggyback
Registration against all losses, claims, damages, liabilities
and expenses arising out of, based upon or caused by any
untrue or alleged untrue statement of material fact contained
in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto
filed in connection with such Registration or any omission or
alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or
contained in any information furnished in writing to Penton by
such holder for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or
any amendment or supplement thereto after Penton has furnished
such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, Penton will
indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning
of the Securities Act) to the comparable extent as provided
above with respect to the indemnification of the holders of
Registrable Shares.
(ii) In connection with any registration
statement in which a holder of Registrable Shares is
participating, each such holder will furnish to Penton in
writing such information and affidavits as Penton reasonably
requests for use in connection with such registration
statement and, to the extent permitted by law, will indemnify
Penton, its directors and officers and each Person who
controls Penton (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses
arising out of, based upon or caused by any untrue or alleged
untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto filed in
connection with the
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Demand Registration or such Piggyback Registration or any
omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement
or omission is contained in any information furnished in
writing to Penton by such holder for use therein.
(iii) Any Person entitled to
indemnification under this Section 7.2(e) will (i) give prompt
written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless
in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party will not be subject
to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
(iv) The indemnification provided for under
this Section 7.2(e) will remain in full force and effect
regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer
of securities.
(v) If the indemnification provided for in
this Section 7.2(e) is unavailable to or insufficient to hold
harmless an indemnified party under subsection (i) or (ii)
above in respect of any losses, claims, damages, liabilities
or expenses (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to
reflect the relative fault of Penton, on the one hand, and the
▇-▇ Shareholders who participated in the Demand Registration
or Piggyback Registration, on the other, in connection with
the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the
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omission or alleged omission to state a material fact relates
to information supplied by Penton, on the one hand, or such
▇-▇ Shareholders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Penton and the
▇-▇ Shareholders agree that it would not be just and equitable
if contribution pursuant to this subsection (v) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this subsection (v). The
amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above in this
subsection (v) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim.
(f) RESALE RESTRICTIONS. Each of the ▇-▇
Shareholders hereby acknowledges that:
(i) the shares of Penton Common to be
issued to him pursuant to Section 2.4(e)(ii) and any shares of
Penton Common that may be issued to him pursuant to Section
2.4(h) cannot be resold except pursuant to a registration
statement which has become effective under the Securities Act
or unless an exemption from the registration requirements of
the Securities Act is legally available;
(ii) except as and to the extent expressly
provided in (a) and (b) above, Penton is not obligated to so
register any of such shares;
(iii) each certificate representing Penton
Common shares issued pursuant to this Agreement shall be
imprinted with a legend in substantially the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended, or under the securities laws
of any state or other jurisdiction (together, the
"Securities Laws") and may not be offered for sale,
sold, transferred or otherwise disposed of except
after delivery to the issuer of a written opinion
reasonably satisfactory to the issuer from Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) or other
counsel satisfactory to the issuer that the
proposed disposition will not require registration
under applicable Securities Laws"; and
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(iv) such ▇-▇ Shareholder has consulted
with his counsel, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
(Illinois), regarding the effect on such ▇-▇ Shareholder of
the foregoing clauses of this Section.
Penton agrees that promptly following its receipt of a written
request from a ▇-▇ Shareholder for removal of the legend described in clause
(f)(iii) above from some or all of his certificates referred to in such clause,
and provided such request is accompanied by such certificate(s) duly endorsed
for surrender and by a written opinion reasonably satisfactory to Penton from
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) or other counsel reasonably
satisfactory to Penton that the shares represented by such certificate(s) may
thereafter be freely transferred under applicable Securities Laws, Penton will
cause a new certificate representing such shares, not imprinted with such
legend, to be issued to such ▇-▇ Shareholder.
Penton further agrees that for so long after the Effective
Time as such action remains a condition to the ▇-▇ Shareholders' ability to sell
under Securities Act Rule 144 shares of Penton Common issued pursuant to this
Agreement, Penton will remain current in its periodic filings under the Exchange
Act.
(g) OBLIGATION OF THE ▇-▇ SHAREHOLDERS TO SUPPLY
INFORMATION. Each of the ▇-▇ Shareholders shall as expeditiously as
practicable: (i) supply all information concerning him and his
Affiliates, and ▇-▇ and its Affiliates, and any other information
required by or under the rules and regulations or policies of the
Commission or any other Governmental Authority, as reasonably requested
by Pittway or Penton (A) in connection with filings to be made by
Pittway or Penton with the Commission under the Securities Act or the
Exchange Act in connection with the transactions contemplated by this
Agreement (including without limitation any registration statement
filed by Penton under the Securities Act in connection with the
registration of the Penton Common to be issued in the Spinoff, any
registration statement filed by Penton under the Securities Act
pursuant to the Demand Registration or any Piggyback Registration, the
registration statement to be filed by Penton under the Exchange Act to
register the Penton Common and any registration statement filed under
the Securities Act in connection with any post-Merger issuance to raise
capital), and (B) in connection with any blue sky or state securities
filings made by Penton in connection with the transactions contemplated
by this Agreement; (ii) take such actions as reasonably may be required
to respond to any comments received from the Commission or any other
Governmental Authority with respect to any of the foregoing; and (iii)
take all such other actions which may reasonably be necessary to
satisfy any requirements imposed by any Governmental Authority in
connection with the Spinoff or the Merger or by any stock exchange or
quotation system in connection with the listing or inclusion in a
quotation system of the Penton Common. The ▇-▇ Shareholders warrant
that the information supplied by the ▇-▇ Shareholders pursuant to this
Section 7.2(g) will not contain an untrue statement of material fact,
or omit to state a material
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fact required to be stated or necessary in order to make the statements
contained therein not misleading. The ▇-▇ Shareholders agree to notify
Pittway and Penton promptly in the event any information provided by
them for use in the filings described in this Section 7.2(g) become
false or misleading and agree to promptly furnish corrected
information.
(h) OBLIGATION OF PENTON TO SUPPLY INFORMATION.
Penton shall as expeditiously as practicable: (i) supply all
information concerning it and its Affiliates (other than Pittway or any
Post-Spinoff Pittway Subsidiaries) and any other information required
by or under the rules and regulations of the Commission or any other
Governmental Authority, as reasonably requested by Pittway in
connection with filings to be made by Pittway with the Commission under
the Exchange Act in connection with the transactions contemplated by
this Agreement; (ii) take such actions as reasonably may be required to
respond to any comments received from the Commission or any other
Governmental Authority with respect to any of the foregoing; and (iii)
take all such other actions which may reasonably be necessary to
satisfy any requirements imposed by any Governmental Authority in
connection with the Spinoff or the Merger. Penton warrants that the
information supplied by Penton pursuant to this Section 7.2(h) will not
contain an untrue statement of material fact, or omit to state a
material fact required to be stated or necessary in order to make the
statements contained therein not misleading. Penton agrees to notify
Pittway promptly in the event any information provided by it for use in
the filings described in this Section 7.2(h) shall become false or
misleading and agrees to promptly furnish corrected information.
(i) OBLIGATION TO DELIVER CERTAIN FILINGS. Prior to
filing any registration statement or filing made by Penton or Pittway
of the kind described in this Section 7.2, and prior to filing any
amendment or supplement to any of the foregoing, Penton or Pittway, as
the case may be, shall deliver or cause to be delivered to the ▇-▇
Shareholders and their counsel drafts of the documents to be filed. The
information in such documents as it relates to, or as it includes
information that relates to, ▇-▇ or its Affiliates, or the ▇-▇
Shareholders or their Affiliates, shall be deemed approved by the ▇-▇
Shareholders if both ▇-▇ Shareholders shall approve it or if neither
▇-▇ Shareholder shall have objected in writing to such information
within ten (10) days after receiving such documents. All such documents
shall be deemed to have been delivered: when delivered by hand, if
personally delivered; three business day after being deposited with a
reputable express courier service (charges prepaid); five business days
after being deposited in the mail, postage prepaid, if delivered by
mail; when answered back, if telexed; and when receipt acknowledged (by
a telecopy machine or otherwise), if telecopied.
7.3 OTHER NECESSARY ACTION; FURTHER ASSURANCE. Subject to the
terms and conditions herein provided, Penton, Combination Subsidiary, ▇-▇ and
the ▇-▇ Shareholders agree to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to cause the satisfaction of the conditions to the obligations of
the other Parties to effect the Merger (or, in the case of Pittway, the
conditions to its obligation to effect the Spinoff) and to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, including using reasonable efforts to obtain all necessary waivers,
consents and approvals (including without limitation, in the case of Penton, any
third party consents or assignments necessary to consummate the Spinoff and, in
the case of ▇-▇ and the ▇-▇
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Shareholders, any third party consents or assignments necessary to consummate
the Merger) and to effect all necessary registrations and filings, including,
but not limited to, filings under the Securities Act and the Exchange Act and
submissions of information requested by Governmental Authorities. Such actions
by Penton and ▇-▇ shall include, without limitation, the preparation and
delivery of their respective financial statements, and the delivery of the
reports thereon and related consents, required for the registration statement
referred to in Section 8.1(i). Subject to the terms and conditions herein
provided, Pittway agrees to use all reasonable efforts to take, or cause to be
taken, all action and to use all reasonable efforts to do, or cause to be done,
all things necessary, proper or advisable to cause the Spinoff to be consummated
and to cause the satisfaction of the conditions set forth in Sections 8.2 and
8.3 that are to be satisfied by Pittway.
Without limiting the generality of the preceding paragraph,
each of the Parties shall promptly file any Notification and Report Forms and
related material that it may be required to file in connection with the
transactions contemplated hereby with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and shall promptly make any further filings pursuant
thereto that may be necessary, proper or advisable.
Each of the Parties agrees that at any time and from time to
time after the Effective Time such Party will execute and deliver to any other
Party such further instruments or documents, and will take all such other
action, as may be reasonably required to give effect to the transactions
contemplated hereunder.
Penton agrees to use all reasonable efforts to seek the
release at or prior to the consummation of the Spinoff of Pittway from any
guarantee or other arrangement under which Pittway is obligated with respect to
any Liability of Penton or any of its Subsidiaries and agrees to use its best
efforts to seek such release after such consummation to the extent not obtained
prior thereto. "Reasonable efforts" shall include Penton's delivery of
substitute guarantees or other arrangements.
7.4 CERTAIN TAX MATTERS. Penton agrees not to take (directly
or indirectly), and not to permit any of its Subsidiaries to take (directly or
indirectly), any action (whether prior to, at the time of or after the Spinoff)
which would cause the Spinoff not to be tax free to Pittway, the Post-Spinoff
Pittway Subsidiaries and the stockholders of Pittway under the provisions of
Section 355 of the Code.
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Each of the ▇-▇ Shareholders agrees not to take (directly or
indirectly) or fail to take (directly or indirectly) any action (whether prior
to, at the time of or after the Effective Time) and not to permit ▇-▇ to take
(directly or indirectly) or fail to take (directly or indirectly) any action
prior to the Effective Time which would cause the Merger (i) to give rise to any
Tax to ▇-▇ or the Surviving Corporation or (ii) not to constitute a
"reorganization" under Section 368(a) of the Code. The failure of the ▇-▇
Shareholders to give their optional notice described in Section 2.4(h) shall not
constitute a breach of this agreement.
Penton agrees not to take (directly or indirectly) any action
after the Effective Time which would cause the Merger (i) to give rise to any
Tax to the Surviving Corporation, ▇-▇ or the ▇-▇ Shareholders or (ii) not to
constitute a "reorganization" under Section 368(a) of the Code. Neither the
failure of Penton to give its optional notice described in Section 2.4(h) nor
any payment by Penton pursuant to Section 2.4(e)(ii)(B), 2.4(g), 2.4(h) or 7.16
shall constitute a breach of this agreement.
After the consummation of the Spinoff, Penton will not take
(directly or indirectly), or permit any of its Subsidiaries to take (directly or
indirectly), any action that would increase the Tax Liability of any of the
companies included in Pittway's Affiliated Group for any period ending at or
prior to or including the consummation of the Spinoff.
After the Effective Time, the ▇-▇ Shareholders will not take
(directly or indirectly) any action that would increase the Tax Liability of ▇-▇
for any period ending at or prior to or including the Effective Time.
7.5 NO NEGOTIATIONS, ETC.
(a) During the period prior to the consummation of
the Spinoff, except as permitted by the final paragraph of Section 6.1,
Pittway shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage submission
of any proposal or offer from any Person (including any of its officers
or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of
all or a material portion of the assets of, or any equity interest in,
Penton or any of its Subsidiaries or other similar transaction or
business combination involving Penton or any of its Subsidiaries or
participate in any negotiations regarding, or furnish to any other
Person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other Person to do or seek any of the
foregoing. Pittway shall promptly notify Penton and the ▇-▇
Shareholders if any such proposal or offer, or any inquiry from or
contact with any Person with respect thereto, is made and shall
promptly provide Penton and the ▇-▇ Shareholders with such information
regarding such proposal, offer, inquiry or contact as Penton and the
▇-▇ Shareholders may request.
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(b) During the period prior to the Effective Time,
except as permitted by the final paragraph of Section 6.1, Penton shall
not, directly or indirectly, through any officer, director, agent or
otherwise, solicit, initiate or encourage submission of any proposal or
offer from any Person (including any of its officers or employees)
relating to any liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of all or a material portion
of the assets of, or any equity interest in, Penton or any of its
Subsidiaries or other similar transaction or business combination
involving Penton or any of its Subsidiaries or participate in any
negotiations regarding, or furnish to any other Person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other Person to do or seek any of the foregoing. Penton shall promptly
notify the ▇-▇ Shareholders and Pittway if any such proposal or offer,
or any inquiry from or contact with any Person with respect thereto, is
made and shall promptly provide the ▇-▇ Shareholders and Pittway with
such information regarding such proposal, offer, inquiry or contact as
the ▇-▇ Shareholders and Pittway may request.
(c) During the period prior to the Effective Time,
the ▇-▇ Shareholders shall not (nor shall they permit ▇-▇ to), directly
or indirectly, through any officer, director, agent or otherwise,
solicit, initiate or encourage submission of any proposal or offer from
any Person (including any officers or employees of ▇-▇) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or
acquisition or purchase of all or a material portion of the assets of,
or any equity interest in, ▇-▇ or other similar transaction or business
combination involving ▇-▇ or participate in any negotiations regarding,
or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to
do or seek any of the foregoing. The ▇-▇ Shareholders shall promptly
notify Penton and Pittway if any such proposal or offer, or any inquiry
from or contact with any Person with respect thereto, is made and shall
promptly provide Penton and Pittway with such information regarding
such proposal, offer, inquiry or contact as Penton and Pittway may
request.
7.6 EXPENSES. Subject to Section 9.2, and provided that Penton
will bear the costs and expenses of the audit of ▇-▇'s financial statements
required for the registration statement referred to in Section 8.1(i), the ▇-▇
Shareholders, jointly and severally, will bear the costs and expenses (including
legal fees and expenses) incurred by ▇-▇ or the ▇-▇ Shareholders in connection
with the transactions contemplated hereby, Pittway will bear its costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby and Penton will bear its
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
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7.7 INDEMNIFICATION AND HOLD HARMLESS AGREEMENTS.
(a) PENTON INDEMNIFICATION PROVISIONS FOR BENEFIT
OF THE ▇-▇ SHAREHOLDERS. Penton agrees to indemnify, defend and hold
harmless the ▇-▇ Shareholders from and against any Adverse Consequences
asserted against or imposed upon or incurred by either of them
resulting from, relating to, or by reason of
(i) any breach by Penton of any of the
representations and warranties set forth in Article 3 (after
giving effect to any disclosures made by Penton pursuant to
Section 7.9) or any breach by Penton or Combination Subsidiary
of any covenant thereof in this Agreement, or
(ii) any liability of any former Subsidiary of
Penton (as of immediately prior to the Effective Time) other
than any Subsidiary referred to under the caption "Possible
Dispositions" in the Penton Disclosure Letter (it being
understood that such Liabilities shall include without
limitation any Tax Liabilities of any such former Subsidiary,
but only to the extent not directly attributable to Penton or
its Subsidiaries (as of immediately prior to the Effective
Time), and any Control Group Liability of Penton to the extent
it is directly attributable to any such former Subsidiary).
(b) ▇-▇ SHAREHOLDERS INDEMNIFICATION PROVISIONS FOR
BENEFIT OF PENTON AND COMBINATION SUBSIDIARY. The ▇-▇ Shareholders,
jointly and severally, agree to indemnify, defend and hold harmless
Penton and Combination Subsidiary and their respective directors,
officers, employees and agents from and against any Adverse
Consequences asserted against or imposed upon or incurred by any of
them resulting from, relating to, or by reason of
(i) any breach by the ▇-▇ Shareholders of
any of the representations and warranties set forth in Article
4 (after giving effect to any disclosures made by the ▇-▇
Shareholders pursuant to Section 7.9) or any breach by ▇-▇ or
either ▇-▇ Shareholder of any covenant thereof in this
Agreement,
(ii) any Liability of any current or former
Affiliate of ▇-▇ (as of immediately prior to the Effective
Time) (it being understood that such Liabilities shall include
without limitation any Tax Liabilities of any such Affiliate,
but only to the extent not directly attributable to ▇-▇, and
any Control Group Liability of ▇-▇ to the extent it is
directly attributable to any such Affiliate), or
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(iii) any untrue or alleged untrue
statement of material fact contained in any registration
statement or filing made by Penton of the kind described in
Section 7.2(g), or any amendment or supplement to any of the
foregoing, or any omission or alleged omission of a material
fact required to be stated in any of the foregoing or
necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or alleged
untrue statement or such omission or alleged omission relates
to ▇-▇ or its Affiliates or the ▇-▇ Shareholders or their
respective Affiliates (in each case not including Penton
notwithstanding the occurrence of the Effective Time) and is
contained in any information furnished in writing by a ▇-▇
Shareholder pursuant to Section 7.2(g) or is deemed approved
by the ▇-▇ Shareholders pursuant to Section 7.2(i).
(c) PITTWAY INDEMNIFICATION PROVISIONS FOR BENEFIT
OF PENTON. Pittway agrees to indemnify, defend and hold harmless Penton
and its Subsidiaries and its and their directors, officers, employees
and agents from and against the entirety of any Adverse Consequences
asserted against or imposed upon or incurred by any of them resulting
from, relating to, or by reason of
(i) any breach by Pittway of any of the
representations and warranties set forth in Article 5 (after
giving effect to any disclosures made by Pittway pursuant to
Section 7.9) or any covenant of Pittway in this Agreement,
(ii) except as provided under the caption
"Possible Dispositions" in the Penton Disclosure Letter, any
Tax Liabilities of Pittway's Affiliated Group for periods (or
portions thereof) ended at the time of or prior to the
consummation of the Spinoff which are not directly
attributable to Penton or its then or former Subsidiaries, and
any Control Group Liability arising out of events occurring or
circumstances existing as of or prior to the Spinoff which is
not directly attributable to Penton or its then or former
Subsidiaries, or
(iii) any Tax imposed on Penton or its
Subsidiaries resulting from the failure, as a result of the
failure of Pittway to maintain control of Penton until the
Spinoff as described in Section 368(c) of the Code or of
actions taken after the Spinoff by Pittway or any company
which after the Spinoff is a Subsidiary of Pittway, of the
Spinoff to qualify as a tax-free (to Pittway and the
stockholders of Pittway) distribution under Section 355 of the
Code.
Notwithstanding the foregoing or any other provision of this Agreement, in no
event shall Pittway be obligated to indemnify, defend and hold harmless under
this Section 7.7(c) or otherwise be obligated with respect to any Adverse
Consequences arising out of the condition or sufficiency of the assets or stock
of Penton or any of its Subsidiaries
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or the existence of any Security Interests relating to such assets or stock, it
being expressly understood that Pittway is making no representations or
warranties directly or indirectly with respect to such assets or stock.
(d) PENTON INDEMNIFICATION PROVISIONS FOR BENEFIT
OF PITTWAY. Penton agrees to indemnify, defend and hold harmless
Pittway, the Post-Spinoff Pittway Subsidiaries, its and their
directors, officers, employees and agents, and any Person who or which
because of a relationship to Pittway or one of its Subsidiaries at the
time of or prior to the consummation of the Spinoff would be liable
(jointly and severally or otherwise) with respect to Liabilities of
Pittway or of any Subsidiary of Pittway, from and against any Adverse
Consequences asserted against or imposed upon or incurred by any of
them resulting from, relating to, or by reason of
(i) any Liability arising out of the
operations, acts, omissions or status of Penton or any of its
Subsidiaries (including without limitation any such Liability
arising out of events occurring or circumstances existing
prior to the Spinoff),
(ii) any breach by Penton of any covenant
of Penton in this Agreement (including without limitation any
covenant set forth in Section 7.4), or
(iii) any untrue or allegedly untrue
statement of material fact contained in any filing of Pittway
of the kind described in Section 7.2(h), or any amendment or
supplement to any of the foregoing, or any omission or alleged
omission of a material fact required to be stated in any of
the foregoing or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement
or alleged untrue statement or such omission or alleged
omission relates to Penton or any of its Subsidiaries or their
respective Affiliates (other than Pittway or any Post-Spinoff
Pittway Subsidiary), or to ▇-▇ or an Affiliate of ▇-▇, or to
either ▇-▇ Shareholder or his Affiliates, or is contained in
any information furnished in writing by Penton or a ▇-▇
Shareholder pursuant to Section 7.2(g) or (h) or is deemed
approved by the ▇-▇ Shareholders pursuant to Section 7.2(i).
Notwithstanding the foregoing, in no event shall Penton be obligated to
indemnify, defend and hold harmless under this Section 7.7(d) with respect to
any Adverse Consequences from and against which Pittway has agreed to indemnify,
defend and hold harmless Penton and its Subsidiaries and its and their
directors, officers, employees and agents pursuant to Section 7.7(c) or with
respect to any Adverse Consequences by reason of Taxes which Pittway has agreed
to pay pursuant to the final sentence of Section 7.12(a).
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(e) ▇-▇ SHAREHOLDERS INDEMNIFICATION PROVISIONS FOR
BENEFIT OF PITTWAY. The ▇-▇ Shareholders, jointly and severally, agree
to indemnify, defend and hold harmless Pittway and its directors,
officers, employees and agents from and against any Adverse
Consequences asserted against or imposed upon or incurred by any of
them resulting from, relating to, or by reason of any untrue or
allegedly untrue statement of material fact contained in any filing of
Pittway of the kind described in Section 7.2(g), or any amendment or
supplement to any of the foregoing, or any omission or alleged omission
of a material fact required to be stated in any of the foregoing or
necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or alleged untrue statement or
such omission or alleged omission relates to ▇-▇ or an Affiliate of
▇-▇, or to either ▇-▇ Shareholder or his Affiliates (in each case not
including Penton notwithstanding the occurrence of the Effective Time),
and is contained in any information furnished in writing by a ▇-▇
Shareholder pursuant to Section 7.2(g) or is deemed approved by the ▇-▇
Shareholders pursuant to Section 7.2(i).
(f) MATTERS INVOLVING THIRD PARTIES. If any third
party shall notify any Party (the "INDEMNIFIED PARTY") with respect to
any matter which may give rise to a claim for indemnification against
any other Party (the "INDEMNIFYING PARTY") under this Section 7.7, then
the Indemnified Party shall notify each Indemnifying Party thereof
promptly; PROVIDED, HOWEVER, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless
(and then solely to the extent that) the Indemnifying Party is damaged
by such delay. In the event any Indemnifying Party notifies the
Indemnified Party, within 15 days after the Indemnified Party has given
notice of the matter, that the Indemnifying Party is assuming the
defense thereof, (i) the Indemnifying Party will defend the Indemnified
Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified Party may
retain separate co-counsel at its sole cost and expense (except that
the Indemnifying Party will be responsible for the fees and expenses of
the separate co-counsel to the extent the counsel the Indemnifying
Party has selected has a conflict of interest), (iii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the matter without the written consent of
the Indemnifying Party (not to be withheld or delayed unreasonably),
and (iv) the Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement,
which does not include a provision whereby the plaintiff or claimant in
the matter releases the Indemnified Party from all Liability with
respect thereto, without the written consent of the Indemnified Party
(not to be withheld or delayed unreasonably). In the event no
Indemnifying Party notifies the Indemnified Party, within 15 days after
the Indemnified Party has given notice of the matter, that such
Indemnifying Party is assuming the defense thereof, the Indemnified
Party may defend against, or
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enter into any settlement with respect to, the matter in any manner the
Indemnified Party may deem appropriate.
(g) DETERMINATION OF ADVERSE CONSEQUENCES. The
Parties shall make appropriate adjustments for Tax benefits and
detriments and insurance proceeds (reasonably certain of receipt and
utility in each case) and for the time cost of money (using a discount
rate of 8% per annum) in determining the amount of Adverse Consequences
for purposes of this Section 7.7.
(h) DETERMINATION OF INDEMNIFICATION REMEDIES. The
Parties agree that a representation or warranty shall be breached if it
is untrue or inaccurate, and that the Adverse Consequences resulting
from such breach shall be the Adverse Consequences that would not have
arisen had such representation or warranty been true and accurate in
all respects. ▇▇▇▇▇▇, ▇-▇ and the ▇-▇ Shareholders further agree that
notwithstanding any other provision of this Agreement, none of them
shall be obligated to indemnify the other with respect to a breach of
representation or warranty relating to the applicability to the
transactions contemplated by this Agreement of, or relating to such
transactions' not violating, any law regarding antitrust or the
competitive impact of business combinations, it being acknowledged that
the risk of any such applicability or violation is viewed by ▇▇▇▇▇▇,
▇-▇ and the ▇-▇ Shareholders as negligible.
(i) LIMITATIONS.
(i) No claim for indemnification under this
Section 7.7 arising out of the breach of any representation or
warranty, including without limitation any claim related to
shares of Penton Common that have been sold, shall be made by
either ▇-▇ Shareholder until after the 15th day after the
conclusion of the Second Reference Period (or, if such day is
not a business day, the first business day thereafter).
(ii) No claim for indemnification under
this Section 7.7 arising out of the breach of any
representation or warranty shall be made after the expiration
of the applicable survival period set forth in Section 10.1.
(iii) Except to the extent such limitation
is prohibited by applicable law and such prohibition is not
waivable by the indemnitee, the indemnification provisions of
this Section 7.7 shall constitute the exclusive remedy of each
indemnitee in connection with this Agreement or the
transactions contemplated herein, including without limitation
for any of the matters described in Sections 7.7(a), (b), (c),
(d) and (e). To the
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maximum extent permitted by applicable law, each indemnitee
waives the benefit of any such prohibition.
(j) BASKET FOR CERTAIN INDEMNIFICATION CLAIMS.
Penton shall have no obligation to indemnify the ▇-▇ Shareholders from
and against any Adverse Consequences resulting from, relating to or by
reason of any breach by Penton of the representations and warranties
set forth in Article 3 (other than in the last sentence of Section
3.3(b) or in Section 3.9) until the ▇-▇ Shareholders have suffered
aggregate Adverse Consequences by reason of all such breaches as to
which claims for indemnification are permitted hereunder and have been
timely made against Penton within the period provided therefor
hereunder in excess of $.5 million (at which point Penton shall be
obligated to indemnify the ▇-▇ Shareholders from and against the
Adverse Consequences exceeding $.5 million resulting from, relating to
or by reason of all such breaches as to which claims for
indemnification are permitted hereunder and have been timely made;
which indemnification obligation shall be discharged in full by
Penton's payment of an amount equal to such excess Adverse
Consequences). The ▇-▇ Shareholders shall have no obligation to
indemnify Penton from and against any Adverse Consequences resulting
from, relating to or by reason of any breach by the ▇-▇ Shareholders of
the representations and warranties contained in Article 4 (other than
in the last four sentences of Section 4.4(b) or in Section 4.12) until
Penton has suffered aggregate Adverse Consequences by reason of all
such breaches as to which claims for indemnification have been timely
made against the ▇-▇ Shareholders within the period provided therefor
hereunder in excess of $.5 million (at which point the ▇-▇ Shareholders
shall be obligated to indemnify Penton from and against the Adverse
Consequences exceeding $.5 million resulting from, relating to or by
reason of all such breaches as to which claims for indemnification have
been timely made).
7.8 EMPLOYEE MATTERS.
(a) EMPLOYEE BENEFIT LIABILITIES. Except as
otherwise set forth in this Agreement, as of the date of consummation
of the Spinoff, Penton shall assume, and Penton shall thereafter bear
and discharge, all Liabilities (whether or not such Liabilities arose
prior to or arise on or after the date of consummation of the Spinoff)
of Pittway and the Post-Spinoff Pittway Subsidiaries relating to
employee benefits with respect to all Covered Penton
Employees/Dependents, including but not limited to Liability for
continuation medical benefits coverage pursuant to Section 4980B of the
Code, Part 6, Subtitle B of Title I of ERISA or applicable state law
and all other post-employment medical benefits coverage; provided,
however, that such Liabilities with respect to employee benefits shall
exclude any Liability directly resulting from Pittway's or a
Post-Spinoff Pittway Subsidiary's willful or negligent failure, if any,
to comply with ERISA or the Code, unless such failure of Pittway or
such Subsidiary is, in whole or in part, caused or contributed to by
any employee or
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former employee of Penton or any of its Subsidiaries. Assets equal to
certain of such Liabilities shall be transferred to Penton in
accordance with the terms of this Section 7.8.
(b) PENTON PENSION PLANS. Effective as of the date
of consummation of the Spinoff, Penton shall establish new Employee
Pension Benefit Plans that meet the qualification requirements of
Section 401(a) of the Code (and related trusts that meet the
requirements of Section 501(a) of the Code) and that are (except as
hereinafter provided in this Section 7.8) identical in all material
respects to the Employee Pension Benefit Plans of Pittway that covered
Penton Employees/Dependents immediately prior to the date of
consummation of the Spinoff. Each Penton Employee Pension Benefit Plan
shall contain terms and conditions sufficient to fulfill the
requirements of Section 411(d)(6) of the Code concerning the
preservation of optional forms of benefits in qualified plan asset
transfers with respect to assets and Liabilities transferred from any
Employee Pension Benefit Plan of Pittway to any such Employee Pension
Benefit Plan of Penton in accordance with this Section 7.8.
(i) PENTON 401(k) PLAN. The new Employee
Pension Benefit Plan of Penton that is a Defined Contribution
Plan intended to be qualified under Section 401(a) of the Code
and intended to meet the requirements of Section 401(k) of the
Code (the "PENTON 401(K) PLAN") need not include as an
investment option the stock of any of Pittway, Penton or
AptarGroup, Inc. The Penton 401(k) Plan and each corresponding
tax exempt trust thereunder shall accept transfers of account
balances of the Covered Penton Employees/Dependents from the
Pittway Blue Chip Plan and the trust or trusts established
thereunder. As soon as practicable after the date of
consummation of the Spinoff, but in any event not earlier than
the date as of which Penton submits to Pittway evidence
reasonably acceptable to Pittway that the Penton 401(k) Plan
meets the requirements of Sections 401(a), 401(k), 401(m) and
411(d)(6) of the Code, Pittway shall cause the trustees of the
trust or trusts under the Pittway Blue Chip Plan to transfer
to the trust or trusts established under the ▇▇▇▇▇▇ ▇▇▇(▇)
Plan assets equal to the account balances (including all
vested and unvested portions thereof) of Covered Penton
Employees/Dependents under the Pittway Blue Chip Plan valued
as of the day before the date of transfer. Such account
balances shall include all employee salary reduction
contributions, employer matching contributions and employer
contributions from the prior Penton profit-sharing plan
previously combined with the Pittway BlueChip Plan (and
earnings thereon, if any) made or to be made under the Pittway
Blue Chip Plan with respect to all periods ending on the date
of consummation of the Spinoff. Such transfer of account
balances shall be made in cash or property, or a combination
of cash and property, as mutually agreed upon by Pittway and
Penton. Each Covered Penton Employee/Dependent who,
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as of the date of transfer, has a loan outstanding under the
Pittway Blue Chip Plan shall have such loan transferred to the
Penton 401(k) Plan, and the ▇▇▇▇▇▇ ▇▇▇(▇) Plan shall provide
for such loan to continue on the same terms established under
the Pittway Blue Chip Plan (but in any event in accordance
with applicable law). Pittway shall cause the plan loan
provisions of the Pittway Blue Chip Plan to be timely amended
to provide that, effective as of the date of consummation of
the Spinoff, each Covered Penton Employee/Dependent with a
loan outstanding as of such date shall be permitted to
continue repayment of such loan until the earliest of the date
of the asset transfer contemplated in this Section 7.8(b)(i),
the date on which an event of default occurs with respect to
the loan, or the date the loan (plus all accrued interest
thereon) is fully repaid in accordance with its terms. From
the date of consummation of the Spinoff until the date of the
asset transfer contemplated in this Section 7.8(b)(i), Pittway
agrees to administer and timely pay benefits from the Pittway
Blue Chip Plan and the trust or trusts thereunder with respect
to Covered Penton Employees/Dependents to the extent that any
such benefits become due and payable.
(ii) PENTON PENSION PLAN. The new Employee
Pension Benefit Plan of Penton that is a Defined Benefit Plan
covering Covered Penton Employees/Dependents on and
immediately after the date of consummation of the Spinoff
shall be referred to hereinafter as the "PENTON PENSION PLAN."
As soon as practicable after the date of consummation of the
Spinoff, but in any event not earlier than the date as of
which Penton submits to Pittway evidence reasonably acceptable
to Pittway that the Penton Pension Plan meets the requirements
of Sections 401(a) and 411(d)(6) of the Code, Pittway shall
cause the trustees of the trust under the Pittway Salaried
Plan to transfer to the trust under the Penton Pension Plan
assets (in cash and/or property mutually agreed upon between
Pittway and Penton) equal to $45,000,000 (which will exceed
the aggregate Accumulated Benefit Obligation (as defined in
Financial Accounting Standards Board Statement No. 87 ("FAS
87")) as of the date of consummation of the Spinoff for each
Covered Penton Employee/Dependent (and beneficiary of any
deceased such former employee, as the case may be)) plus a pro
rata portion, based on such amount, of the earnings (or less a
pro rata portion, based on such amount, of the losses) during
the period from January 1, 1998 to the actual date of transfer
on the total assets in the trust under the Pittway Salaried
Plan, adjusted to reflect any benefits payments made during
such period from the Pittway Salaried Plan and the trust
thereunder with respect to Covered Penton Employees/Dependents
pursuant to the final sentence of this Section 7.8(b)(ii) or
otherwise. For purposes of this Section 7.8(b)(ii), the
determination of such Accumulated Benefit Obligation shall be
based on the actuarial assumptions set forth in the
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most recent FAS 87 actuarial valuation for the Pittway
Salaried Plan. The final determination of such Accumulated
Benefit Obligation shall be made by agreement of Pittway and
Penton. If within a reasonable period of time Pittway and
Penton cannot agree on the determination of the amount of
assets to be transferred, such determination shall be made by
a third party mutually agreeable to Pittway and Penton, whose
fees and expenses shall be borne equally by Pittway and Penton
and whose determination shall be binding on Pittway and
Penton. From the date of consummation of the Spinoff until the
date of the asset transfer contemplated in this Section
7.8(b)(ii), Pittway and Penton, in accordance with past
practice, shall administer and cause the timely payment of
benefits from the Pittway Salaried Plan and the trust
thereunder with respect to Covered Penton Employees/Dependents
to the extent that any such benefits become due and payable.
(iii) ADDITIONAL ASSET TRANSFER COVENANTS.
Notwithstanding the foregoing provisions of this Section
7.8(b), each transfer of assets and Liabilities provided for
in this section shall satisfy the requirements of Section
414(l) of the Code. In connection with each such transfer of
assets and Liabilities, Pittway and Penton agree to execute
such documents, to adopt such plan amendments, and to make
such governmental filings as may be necessary or desirable to
effectuate the transfer in a timely manner and in accordance
with applicable law.
(c) PENTON EMPLOYEE WELFARE BENEFIT PLANS.
Effective as of the date of consummation of the Spinoff, Penton shall
establish new Employee Welfare Benefit Plans that are identical in all
material respects to the Employee Welfare Benefit Plans of Pittway that
covered the Covered Penton Employees/Dependents on or immediately prior
to the date of consummation of the Spinoff. Penton's Employee Welfare
Benefit Plans shall credit toward 1998 deductible and co-payment
requirements all deductibles and co-payments made by Covered Penton
Employees/Dependents under Pittway's Employee Welfare Benefit Plans
during the 1998 calendar year, including all such payments made prior
to the date of consummation of the Spinoff.
(i) PENTON 501(c)(9) TRUST. Prior to the
date of consummation of the Spinoff, Penton shall take all
steps necessary to establish the Penton 501(c)(9) Trust (which
shall be identical in all material respects to the Pittway
501(c)(9) Trust) for the purpose of funding medical plan
benefits for Covered Penton Employees/Dependents and Pittway
shall take all steps necessary to transfer to the Penton
501(c)(9) Trust from the Pittway 501(c)(9) Trust an
appropriate amount of assets equal to employee and employer
contributions (plus earnings, if any, thereon) in the Pittway
501(c)(9) Trust as of the date of transfer that are
attributable to Covered Penton Employees/Dependents.
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(ii) HEALTH AND DENTAL EXPENSE CLAIMS. With
respect to Covered Penton Employees/Dependents, Penton shall
assume, bear and discharge all Liabilities with respect to all
health and dental expense claims, whether incurred on, prior
to or after the date of consummation of the Spinoff and
whether reported on, prior to, or after such date.
(iii) OTHER WELFARE BENEFIT CLAIMS. Penton
shall be responsible, under Employee Welfare Benefit Plans of
Penton that provide group universal or other life, accidental
death and dismemberment, business travel accident, personal
accident and/or long-term disability insurance, for all
Liabilities that arise on or after the date of consummation of
the Spinoff for Incidents with respect to the Covered Penton
Employees/Dependents (and Pittway shall not have any Liability
whatsoever for any of such Liabilities) and Pittway shall
retain all Liabilities (and Penton shall not assume any
Liability) under Pittway's Employee Welfare Benefit Plans that
provide group universal or other life, accidental death and
dismemberment, business travel accident, personal accident
and/or long-term disability insurance for Incidents occurring
prior to the date of consummation of the Spinoff with respect
to such individuals; except that Penton shall assume, bear and
discharge all Liabilities with respect to claims under Penton
Retiree Life Insurance regardless of when the related
Incidents occur. For purposes of the preceding sentence,
"Incident" includes, without limitation, injury, disability,
death, and accident.
(d) DISPUTED EMPLOYEE BENEFIT CLAIMS. With respect
to any disputed employee benefit plan claim of any Covered Penton
Employee/ Dependent with respect to any period ending on or prior to
the date of consummation of the Spinoff, Penton shall have the right to
prepare any response or defense thereto (or approve or deny approval of
any response or defense prepared by Pittway) to the extent such claim
is in connection with a Liability assumed by Penton pursuant to this
Agreement.
(e) WORKERS' COMPENSATION CLAIMS. Penton shall be
responsible for all Liabilities for workers' compensation claims made
by any Covered Penton Employee/Dependent, whether made on, prior to or
after the date of consummation of the Spinoff. From and after the
Spinoff, Penton shall be responsible for maintaining any and all
insurance with respect to such Liabilities and/or claims required by
applicable law.
(f) PENTON 1998 STOCK AWARDS PLAN. Effective as of
the date of consummation of the Spinoff, Penton shall establish the
Penton 1998 Stock Awards Plan.
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(g) ▇▇▇▇▇▇ ▇▇▇▇ DIRECTOR STOCK OPTION PLAN.
Effective as of the date of consummation of the Spinoff, Penton shall
establish the ▇▇▇▇▇▇ ▇▇▇▇ Director Stock Option Plan.
(h) PENTON SERP. Effective as of the date of
consummation of the Spinoff, Penton shall establish a Supplemental
Executive Retirement Plan with terms as favorable to ▇▇▇▇▇▇ ▇. ▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as under the respective supplemental executive
retirement plans of Pittway in which they participate pursuant to their
existing Employment Agreements with Penton.
(i) COVERAGE OF SURVIVING CORPORATION'S EMPLOYEES.
Prior to the Effective Time: (i) ▇-▇ shall take such action as is
necessary to cause each of its employee benefit plans and programs to
terminate immediately prior to the Effective Time and to cause any
distributions required upon such termination pursuant to the terms of
such plans and programs to be made promptly thereafter, it being
understood that ▇-▇ has terminated its Employee Profit Sharing Plan as
of December 31, 1997 and that no distributions will be made thereunder
in respect of any profits of ▇-▇ in 1998 or thereafter; and (ii) Penton
shall take such action as is necessary to cause the active full-time
employees of ▇-▇ immediately prior to the Effective Time to commence
coverage as employees of Surviving Corporation immediately after the
Effective Time under each of Penton's then employee benefit plans and
programs, subject to satisfaction of such requirements for eligibility
and coverage as may be in force from time to time. For purposes of each
of such employee benefit plans and programs of Penton, each such
employee of the Surviving Corporation shall be credited with his or her
years of service with ▇-▇ for eligibility, waiting period and vesting
requirements and (except in the case of any Penton Employee Benefit
Pension Plan) for purposes of benefit levels, and shall be credited
with all deductibles and co-payments made by him or her under ▇-▇'s
Employee Welfare Benefit Plans during the 1998 calendar year, including
all such payments made prior to the Effective Time, for corresponding
1998 deductible and co-payment requirements under Penton's Employee
Welfare Benefit Plans, and any exclusion of a pre-existing condition
from coverage under any medical plan or program shall be waived except
(to the extent permitted by applicable law) to the extent such
exclusion applies to a particular employee immediately prior to the
Effective Time under ▇-▇'s medical plans and programs.
7.9 UPDATE OF DISCLOSURE LETTERS. Immediately prior to the
Effective Time, each of Penton, the ▇-▇ Shareholders and Pittway shall update
its or their respective Disclosure Letter so that, had such updated disclosures
been included in such Disclosure Letter, its or their representations in this
Agreement would be true and correct as of the Effective Time.
7.10 AGREEMENT REGARDING DISTRIBUTION OF PENTON COMMON ON
CERTAIN PITTWAY SHARES. ▇▇▇▇▇▇ Trust and Savings Bank, in its capacity as
successor merger
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exchange agent in connection with the 1989 Merger Agreement (as defined below),
holds certificates representing shares of Pittway capital stock (the "UNCLAIMED
PITTWAY SHARES") for which certificates representing shares of common stock of
Pittway Corporation, a Pennsylvania corporation ("OLD PITTWAY"), have not yet
been surrendered in the manner required in connection with the merger of Old
Pittway into Pittway in December of 1989. Under the terms of the Amended and
Restated Merger Agreement and Plan of Reorganization dated as of October 11,
1989 between Pittway (then known as Standard Shares, Inc.) and Old Pittway (the
"1989 MERGER AGREEMENT"), the Unclaimed Pittway Shares are required to be held
by an exchange agent selected by Pittway until certificates representing such
shares are surrendered to such exchange agent. In the event that any Unclaimed
Pittway Shares are issued upon the surrender of such certificates, however,
Pittway is obligated under the 1989 Merger Agreement to deliver certificates
representing such Unclaimed Pittway Shares along with all dividends that have
been paid with respect thereto after the date of the merger of Old Pittway into
Pittway (including stock dividends such as the distribution of Penton Common in
the Spinoff as well as all dividends paid with respect to shares issued in any
stock dividend such as dividends that may be paid with respect to Penton Common
issued in the Spinoff). Penton Common shall be issued in the Spinoff with
respect to Unclaimed Pittway Shares outstanding as of the record date for the
Spinoff and such Penton Common shall be delivered to ▇▇▇▇▇▇ Trust and Savings
Bank, in its capacity described above. Penton agrees to treat such shares of
Penton Common as outstanding for all purposes, including the payment of
dividends (which shall be paid to ▇▇▇▇▇▇ Trust and Savings Bank in its capacity
described above).
7.11 AGREEMENT REGARDING TRANSITIONAL SERVICES. Pittway agrees
to provide assistance to Penton subsequent to the Effective Time in connection
with Penton's preparation of its Tax returns for periods ending on or prior to
December 31, 1998 and in connection with its other Tax matters for such periods,
as reasonably requested by Penton reasonably in advance. Pittway and Penton
shall negotiate on an arm's length basis an appropriate fee to be paid for any
such assistance so provided. In no event shall Pittway be required to provide,
nor shall it provide, assistance in any tax year (including any short tax year)
of Penton for which fees in excess of $60,000 would be payable.
7.12 AGREEMENT REGARDING POST-SPINOFF TAX RETURNS AND OTHER
POST-SPINOFF TAX MATTERS.
(a) Pittway shall include Penton and its
Subsidiaries in Pittway's federal income Tax Returns (and any state,
local or foreign income Tax Returns) hereafter filed by Pittway
("PITTWAY RETURNS") to the extent permitted by law. To the extent that
they relate to Penton and its Subsidiaries, Pittway shall prepare such
Pittway Returns in a manner consistent with past Pittway Returns.
Pittway shall allow Penton an opportunity to review and comment on such
Pittway Returns to the extent that they relate to Penton and its
Subsidiaries. Pittway shall pay all Taxes reported on such Pittway
Returns and Pittway shall
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pay the cost of preparing such Pittway Returns (it being expressly
understood that Pittway shall not be obligated with respect to any
Taxes arising out of the operations of Penton and its Subsidiaries
that for any reason whatsoever are not reported on such Pittway
Returns).
(b) Pittway and Penton shall cooperate fully, as
and to the extent reasonably requested by the other party, in
connection with any audit, litigation or other proceeding with respect
to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Pittway and Penton agree (A) to retain all books
and records with respect to Tax matters pertinent to Penton and its
Subsidiaries relating to any taxable period beginning before the
consummation of the Spinoff until the expiration of the statute of
limitations (and, to the extent notified by Pittway or Penton, any
extensions thereof) of the respective taxable periods, and to abide by
all record retention agreements related to such books and records
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so
requests, to allow the other party to take possession of such books and
records. Pittway shall promptly notify Penton upon receipt by Pittway
of notice of any pending audits of, or assessments relating to, a
Pittway Return which may result in a Liability of Penton or any of its
Subsidiaries. Pittway shall consult with Penton from time to time with
respect to any such audit or administrative or judicial proceeding to
the extent such audit or proceeding involves a Liability of Penton or
any of its Subsidiaries and will give Penton such information with
respect thereto as Penton may reasonably request.
7.13 ▇-▇ SHAREHOLDERS NON-COMPETE, NON-SOLICITATION. Each of
the ▇-▇ Shareholders hereby acknowledges and agrees that:
(a) The assets of ▇-▇ include trade secrets and
customer lists of and other confidential information concerning ▇-▇.
(b) During the period of three years after the
Effective Time such ▇-▇ Shareholder shall not in any manner, directly
or indirectly, through any person, firm or corporation, alone or as a
member of a partnership or as an officer, director, stockholder,
investor or employee of or in any other corporation or enterprise or
otherwise, engage or be engaged in, or assist any other person, firm,
corporation or enterprise in engaging or being engaged in, anywhere in
the United States, the publishing or production of any Business
Information Product that competes with a Business Information Product
being published or produced by ▇-▇ immediately prior to the Effective
Time.
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(c) During the period of three years following the
Effective Time, such ▇-▇ Shareholder shall not in any manner, directly
or indirectly, (i) induce or attempt to induce any employee of Penton,
the Surviving Corporation or any of Penton's other Subsidiaries to quit
or abandon his employ, or any customer of Penton, the Surviving
Corporation or any of Penton's other Subsidiaries to quit or abandon
its relationship, for any purpose whatsoever, or (ii) in connection
with any business to which (b) above applies, call on, service, solicit
or otherwise do business with any then current or prospective customer
of Penton, the Surviving Corporation or any of Penton's other
Subsidiaries.
Nothing in this Section 7.13 shall prohibit either ▇-▇
Shareholder from being: (i) a stockholder in a mutual fund or a diversified
investment company, (ii) a passive owner of not more than 5% of the outstanding
stock of any class of a corporation which is publicly traded, so long as he has
no active participation in the business of such corporation and (iii) a passive
owner of any or all of the outstanding stock of a corporation which is not
publicly traded, so long as such corporation, if it were such ▇-▇ Shareholder,
would not be in breach of the provisions of (b) and (c) above.
If, at the time of enforcement of this Section against a ▇-▇
Shareholder, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, such ▇-▇ Shareholder agrees that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
Each ▇-▇ Shareholder agrees that Penton would be damaged
irreparably in the event any of the provisions of this Section 7.13 were not
performed in accordance with its specific terms or were otherwise breached and
that money damages would be an inadequate remedy for any such non-performance or
breach. Therefore, Penton or its successors or assigns shall be entitled, in
addition to other rights and remedies existing in their favor, to an injunction
or injunctions to prevent any breach or threatened breach of any of such
provisions and to enforce such provisions specifically (without posting a bond
or other security).
7.14 PENTON DIRECTORS. At the Effective Time, the Board of
Directors of Penton shall consist of the following eleven members: ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ (each of whom shall be elected to serve until Penton's 2000 annual
meeting), King Harris, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and six other members
who shall have been designated by Pittway and each of whom shall have agreed to
serve as such, to be so identified in the registration statement registering the
Spinoff under the Securities Act and to provide the information with respect to
him or her required to be included in such registration statement. At the
Effective Time, King Harris shall be non-executive Chairman of the Board of
Penton. Notwithstanding the foregoing, in the event that prior
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to the Effective Time ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ becomes unable to serve, he shall be
replaced by another individual designated by the ▇-▇ Shareholders and reasonably
agreeable to Pittway, and in the event that prior to the Effective Time ▇▇.
▇▇▇▇▇▇, ▇▇. ▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇ becomes unable to serve, he shall be replaced by
another individual designated by Pittway. Following the Effective Time and prior
to December 31, 1999, the Board of Directors shall at no time consist of more
than fifteen members.
7.15 POST-EFFECTIVE TIME CASH CONTRIBUTIONS/RETURN.
(a) In the event that at any time during the period
of 120 days after the Effective Time the Surviving Corporation's cash
and cash equivalents (including for this purpose funds theretofore
withdrawn from the Surviving Corporation by Penton, other than as
payment for products or services provided or as repayment of funds
provided, net of returns thereof) are insufficient to pay its
liabilities and obligations which would then have been paid in the
Ordinary Course of Business of ▇-▇ while maintaining a cash and cash
equivalents balance equal to the then Unpaid Adjusted ▇-▇ Liabilities,
without any capital contribution, loan, advance or other cash infusion
from any other source (including without limitation from the collection
of the Distributed ▇-▇ Accounts Receivable), the ▇-▇ Shareholders,
jointly and severally, will immediately pay to the Surviving
Corporation the amount of the deficit. No such payment shall create any
interest of any ▇-▇ Shareholder in, or claim of any ▇-▇ Shareholder
against, the Surviving Corporation nor shall any such payment be repaid
by the Surviving Corporation, except as provided in (b) below.
(b) In the event that, due to estimating error, at
each time during the period of 120 days after the Effective Time the
Surviving Corporation's cash and cash equivalents (including for this
purpose funds theretofore withdrawn from the Surviving Corporation by
Penton, other than as payment for products or services provided or as
repayment of funds provided, net of returns thereof) exceed an amount
sufficient to pay its liabilities and obligations which would then have
been paid in the Ordinary Course of Business of ▇-▇ while maintaining a
cash and cash equivalents balance equal to the then Unpaid Adjusted ▇-▇
Liabilities, without any capital contribution, loan, advance or other
cash infusion from any other source (including without limitation from
the collection of the Distributed ▇-▇ Accounts Receivable), the
Surviving Corporation will return to the ▇-▇ Shareholders promptly
following the expiration of such period, without any interest thereon,
an amount equal to the smallest such excess.
7.16 POST-EFFECTIVE TIME RECEIVABLES COLLECTION. During the
period of 180 days after the Effective Time (the "COLLECTION PERIOD"), the
Surviving Corporation, as the agent of the ▇-▇ Shareholders, will use efforts to
collect the Distributed ▇-▇ Accounts Receivable comparable to those efforts the
Surviving Corporation uses to collect its own trade accounts receivable of
similar amounts and ages; provided
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however, that the Surviving Corporation will not be required to retain or
utilize legal counsel or any collection service, or to institute legal
proceedings, as a part of its efforts to collect the Distributed ▇-▇ Accounts
Receivable.
If an obligor on any of the Distributed ▇-▇ Accounts
Receivable is also an obligor on one or more trade accounts receivable of the
Surviving Corporation at the time such obligor makes a payment to the Surviving
Corporation to be applied toward such obligor's trade accounts payable, such
payment will be applied as indicated by such obligor. It is understood that an
obligor may indicate an application of an amount paid by it toward its accounts
payable either expressly by reference to a particular invoice or implicitly
because the amount paid corresponds to one or more of such accounts payable. It
is further understood that an express indication regarding the application of a
payment may arise subsequent to the Surviving Corporation's receipt of such
payment, as it will be the Surviving Corporation's practice to request direction
from obligors on its accounts receivable (and the Distributed ▇-▇ Accounts
Receivable) in the event payments on such obligors' accounts payable are not
accompanied by express directions regarding the application thereof.
Within 5 business days after the end of each calendar month
included in the Collection Period, and within 5 business days after the end of
the Collection Period, the Surviving Corporation will pay to the ▇-▇
Shareholders an amount equal to the amounts received by the Surviving
Corporation in good funds as of the end of such calendar month or the end of the
Collection Period, as the case may be, from its collection of the Distributed
▇-▇ Accounts Receivable which the Surviving Corporation has not theretofore paid
to the ▇-▇ Shareholders.
Subsequent to the Collection Period, if either the Surviving
Corporation or the ▇-▇ Shareholders receives a payment on a receivable owned by
the other, it or they will promptly forward such payment to the owner.
ARTICLE 8
CONDITIONS
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of Penton, Combination Subsidiary, ▇-▇ and the ▇-▇ Shareholders to
effect the Merger shall be subject to the condition that the Spinoff shall have
been consummated at or prior to the Effective Time. The respective obligations
of Penton, Combination Subsidiary, ▇-▇ and the ▇-▇ Shareholders to effect the
Merger shall also be subject to, and the obligation of Pittway to effect the
Spinoff shall be subject to, the fulfillment at or prior to the Effective Time
of the following conditions:
(a) all applicable waiting periods (and any
extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired;
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(b) all Governmental Actions (other than routine
qualifications to do business intended to be obtained as needed)
required to be taken, given or obtained that are necessary in
connection with the transactions contemplated by this Agreement shall
(i) have been taken, given or obtained, (ii) be in full force and
effect as of the Effective Time and (iii) not be subject to any pending
proceedings or appeals, administrative, judicial or otherwise (and the
time for appeal with respect to any Governmental Action shall have
expired, or, if an appeal shall have been taken, it shall have been
dismissed);
(c) there shall not be threatened, instituted or
pending any action or proceeding before any court or Governmental
Authority, whether within or outside the United States, (i) challenging
or seeking to make illegal, or to delay or otherwise directly or
indirectly to restrain or prohibit, the consummation of the Spinoff or
the Merger, or seeking to obtain material damages in connection with
the Spinoff or the Merger, (ii) seeking to prohibit direct or indirect
ownership or operation by Penton of all or a material portion of the
business or assets of ▇-▇, or to compel Penton or any of its
Subsidiaries to dispose of or to hold separately all or a material
portion of the business or assets thereof, (iii) seeking to impose or
confirm limitations on the ability of Penton effectively to exercise
directly or indirectly full rights of ownership of the shares of
capital stock of the Surviving Corporation or any of its other
Subsidiaries, including without limitation the right to vote such
shares on all matters properly presented to the shareholders of any
such company, (iv) seeking to require direct or indirect divestiture by
Penton of any shares of capital stock of the Surviving Corporation or
any of its other Subsidiaries, (v) seeking or causing any material
diminution in the direct or indirect benefits expected to be derived by
Penton or the ▇-▇ Shareholders as a result of the transactions
contemplated by this Agreement, (vi) invalidating or rendering
unenforceable any material provision of this Agreement (including
without limitation any of the exhibits or attachments hereto), (vii)
which otherwise is reasonably likely to have a Material Adverse Effect
on Penton or the Surviving Corporation, or (viii) otherwise relating in
any material respect to the Spinoff or the Merger;
(d) there shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed,
enacted, entered, enforced, promulgated, issued or deemed applicable to
the Spinoff or the Merger by any Governmental Authority which is
reasonably likely to, directly or indirectly, result in any of the
consequences referred to in (c) above;
(e) Penton shall have entered into credit
arrangements sufficient to enable it to repay at the time of the
Spinoff its then outstanding indebtedness to Pittway and to provide it
with sufficient working capital for its foreseeable post-Spinoff needs
taking into account the provisions of this Agreement;
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(f) there shall not have occurred and be continuing
(i) any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange or on the National
Association of Securities Dealers Automated Quotation System, National
Markets System, or in the United States over-the-counter market, or
(ii) any action by any Governmental Authority which would limit or
adversely affect the extension of credit to Penton pursuant to the
credit arrangements referred to in (e) above;
(g) the Penton Common shall have been registered
under the Exchange Act pursuant to a registration statement of Penton
and such registration statement shall have become effective and shall
not be subject to any stop order and no stop order proceeding with
respect thereto shall have been initiated or threatened by the
Commission;
(h) if necessary, the Penton Common to be issued to
the ▇-▇ Shareholders pursuant to this Agreement shall have been
registered under all applicable United States state securities or blue
sky laws;
(i) a registration statement of Penton registering
the Spinoff under the Securities Act shall have become effective and
shall not be subject to any stop order and no stop order proceeding
with respect thereto shall have been initiated or threatened by the
Commission;
(j) the Penton Common to be issued in the Spinoff
and to be issued or contingently issued to the ▇-▇ Shareholders
pursuant to this Agreement shall have been approved for listing on the
New York Stock Exchange, or for trading on the National Association of
Securities Dealers Automated Quotation System, National Market System,
upon official notice of issuance;
(k) Pittway shall not have been notified by the IRS
that the Ruling has been withdrawn, invalidated or modified in any way
adverse to Pittway or its stockholders; and Pittway shall not have
determined in good faith that the representations and assumptions
underlying the Ruling are untrue or incorrect in any material respect;
(l) Pittway, and Penton and each of its
Subsidiaries, shall have obtained each consent and approval necessary
in order that the Spinoff and the Merger not constitute a breach or
violation of, or result in a right of termination or acceleration or
any encumbrance on the stock or assets of Penton or any of its
Subsidiaries pursuant to the provisions of, any agreement, arrangement,
understanding, license, franchise or permit to which any of them is a
party or by which any of them is bound, which individually or in the
aggregate would be material;
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(m) ▇-▇ shall have obtained each consent and
approval necessary in order that the Merger not constitute a breach or
violation of, or result in a right of termination or acceleration or
any encumbrance on the stock or assets of the Surviving Corporation
pursuant to the provisions of, any agreement, arrangement,
understanding, license, franchise or permit to which ▇-▇ is a party or
by which it is bound, which individually or in the aggregate would be
material;
(n) except as contemplated in Sections 2.4(d) and
7.14, each person who is a director, officer or employee of Pittway or
any Post-Spinoff Pittway Subsidiary shall have resigned from each
office and directorship held by him at Penton and its Subsidiaries;
(o) at the Closing, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, and ▇▇▇▇▇▇
and Penton, shall have entered into Employment Agreements in the forms
of EXHIBIT E and EXHIBIT F, respectively (the "EMPLOYMENT AGREEMENTS");
and
(p) no party hereto shall have terminated this
Agreement as permitted herein.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ▇-▇ AND THE ▇-▇
SHAREHOLDERS. The obligations of ▇-▇ and the ▇-▇ Shareholders to effect the
Merger are also subject to the following conditions:
(a) except as contemplated by this Agreement, the
representations and warranties of Penton in Article 3 shall be true and
correct in all material respects as of the Effective Time as if made at
and as of the Effective Time (without giving effect to any updating
disclosures made by Penton pursuant to Section 7.9), and each of
Pittway, Penton and Combination Subsidiary shall in all material
respects have performed each obligation and agreement and complied with
each covenant to be performed and complied with by it hereunder at or
prior to the Effective Time;
(b) the ▇-▇ Shareholders shall not have discovered
any Undisclosed Penton Matter, and there shall not have occurred any
Adverse Penton Change, the effect of which, individually or in the
aggregate, is materially adverse to the value of Penton and its
Subsidiaries taken as a whole compared to the value of Penton and its
Subsidiaries reflected in the Penton Financial Statements;
(c) Penton shall have furnished to the ▇-▇
Shareholders a certificate in which Penton shall certify that an
appropriate inquiry has been made of the executive officers of Penton
and its Subsidiaries having principal responsibilities for the matters
as to which representations and warranties have been made by Penton in
this Agreement and for the performance of the
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covenants of Penton set forth in this Agreement, and that after
completion of such inquiry, Penton has no reason to believe that the
conditions set forth in Sections 8.2(a) and (b) have not been
fulfilled;
(d) Penton shall have furnished to the ▇-▇
Shareholders (i) copies of the text of the resolutions by which the
corporate action on the part of Penton necessary to approve this
Agreement and the Merger was taken, (ii) certificates executed on
behalf of Penton and Combination Subsidiary by their respective
corporate secretaries or one of their respective assistant corporate
secretaries certifying to the ▇-▇ Shareholders that such copies are
true, correct and complete copies of such resolutions and that such
resolutions were duly adopted and have not been amended or rescinded,
and (iii) incumbency certificates executed on behalf of Penton and
Combination Subsidiary by their respective corporate secretaries or one
of their respective assistant corporate secretaries certifying the
signature and office of each officer thereof executing this Agreement
or any other agreement, certificate or other instrument executed
pursuant hereto;
(e) the Certificate of Incorporation and By-Laws of
Penton shall have been amended and restated to read as set forth in
EXHIBITS C AND D attached hereto;
(f) the ▇-▇ Shareholders shall have received a
letter addressed to them from ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ongoing
counsel to Penton, or as to certain of the matters in (vii) below from
local counsel to Penton, dated the date of the Closing, based on
customary reliance and subject to customary qualifications, to the
effect that:
(i) Penton is a corporation existing and in
good standing under the laws of the State of Delaware and is
duly qualified to conduct business as a foreign corporation in
the State of Ohio.
(ii) Combination Subsidiary is a
corporation existing and in good standing under the laws of
the State of Illinois.
(iii) Each of Penton and Combination
Subsidiary has the corporate power to consummate the
transactions on its part contemplated by this Agreement. Each
of Penton and Combination Subsidiary has duly taken all
requisite corporate action to authorize this Agreement and
such transactions; and this Agreement and the Employment
Agreements, insofar as they purport to obligate Penton or
Combination Subsidiary to the ▇-▇ Shareholders, have been duly
executed and delivered by Penton and Combination Subsidiary
and constitute the valid, binding and enforceable obligations
of Penton or Combination Subsidiary.
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(iv) The authorized capital of Penton
consists of 60,000,000 shares of capital stock designated
"Common Stock," of which the number of shares indicated in
such letter (including shares transferred in the Spinoff) are
outstanding, and 2,000,000 shares of capital stock designated
"Preferred Stock," none of which are outstanding, all of which
outstanding shares of Common Stock were duly and validly
issued and are fully paid and non-assessable (for purposes of
which such counsel may rely upon a certificate of the
Secretary of Pittway as to the number of shares of Pittway
stock outstanding immediately prior to the consummation of the
Spinoff and may assume that such shares are duly and validly
issued and fully paid and non-assessable).
(v) The registration statement pursuant to
which the Penton Common is registered under the Exchange Act
has become effective under the Exchange Act and to such
counsel's knowledge no stop order suspending its effectiveness
has been issued and no proceedings for that purpose are
pending before or are contemplated by the Commission.
(vi) The Penton Common to be issued or
contingently issued to the ▇-▇ Shareholders pursuant to this
Agreement has been duly authorized and will, at the time of
its issuance pursuant to this Agreement, be validly issued,
fully paid and nonassessable.
(vii) Penton wholly owns, directly or
indirectly, all of the outstanding capital stock of each of
its Subsidiaries; and
(g) each of the conditions set forth in Sections
8.3(e), (f) and (h) shall have been satisfied (without giving effect to
any waiver by Penton).
8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PENTON AND
COMBINATION SUBSIDIARY. The obligations of Penton and Combination Subsidiary to
effect the Merger are also subject to the following conditions:
(a) except as contemplated by this Agreement, the
representations and warranties of the ▇-▇ Shareholders in Article 4
shall be true and correct in all material respects as of the Effective
Time as if made at and as of the Effective Time (without giving effect
to any updating disclosures made by the ▇-▇ Shareholders pursuant to
Section 7.9), the representations and warranties of Pittway in Article
5 shall be true and correct in all material respects as of the
Effective Time as if made at and as of the Effective Time (without
giving effect to any updating disclosures made by Pittway pursuant to
Section 7.9), and ▇-▇, the ▇-▇ Shareholders and Pittway shall in all
material respects have performed each obligation and agreement of it,
them and it, respectively, and
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complied with each covenant to be performed and complied with by it,
them and it, respectively, hereunder at or prior to the Effective Time;
(b) Penton shall not have discovered any
Undisclosed ▇-▇ Matter, and there shall not have occurred any Adverse
▇-▇ Change, the effect of which, individually or in the aggregate, is
materially adverse to the value of ▇-▇ compared to the value of ▇-▇
reflected on the ▇-▇ Financial Statements;
(c) the ▇-▇ Shareholders shall have furnished to
Penton a certificate in which each of the ▇-▇ Shareholders shall
certify that an appropriate inquiry has been made of the executive
officers of ▇-▇ having principal responsibilities for the matters as to
which representations and warranties related to ▇-▇ have been made by
the ▇-▇ Shareholders in this Agreement and for the performance of the
covenants of ▇-▇ and the ▇-▇ Shareholders related to ▇-▇ set forth in
this Agreement, and that after completion of such inquiry, neither of
the ▇-▇ Shareholders has any reason to believe that the conditions
relating to the representations and warranties of the ▇-▇ Shareholders
and such performance set forth in Section 8.3(a) and the condition set
forth in Section 8.3(b) have not been fulfilled;
(d) the ▇-▇ Shareholders shall have furnished to
Penton (i) copies of the text of the resolutions by which the corporate
action on the part of ▇-▇ necessary to approve the Merger was taken,
(ii) a certificate executed on behalf of ▇-▇ by its corporate secretary
or one of its assistant corporate secretaries certifying to Penton that
such copy is a true, correct and complete copy of such resolutions and
that such resolutions were duly adopted and have not been amended or
rescinded, and (iii) an incumbency certificate executed on behalf of
▇-▇ by its corporate secretary or one of its assistant corporate
secretaries certifying the signature and office of each officer of ▇-▇
executing any agreement, certificate or other instrument executed
pursuant hereto;
(e) Pittway shall have furnished to Penton a
certificate in which Pittway shall certify that an appropriate inquiry
has been made of the executive officers of Pittway having principal
responsibilities for the matters as to which representations and
warranties have been made by Pittway in this Agreement and for the
performance of the covenants of Pittway set forth in this Agreement,
and that after completion of such inquiry, Pittway has no reason to
believe that the conditions relating to such representations and
warranties and such performance set forth in Section 8.3(a) have not
been fulfilled;
(f) Pittway shall have furnished to Penton (i)
copies of the text of the resolutions by which the corporate action on
the part of Pittway necessary to approve this Agreement and the Spinoff
was taken, (ii) a certificate executed on behalf of Pittway by its
corporate secretary or one of its assistant corporate secretaries
certifying to Penton that such copy is a true, correct and complete
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copy of such resolutions and that such resolutions were duly adopted
and have not been amended or rescinded, and (iii) an incumbency
certificate executed on behalf of Pittway by its corporate secretary or
one of its assistant corporate secretaries certifying the signature and
office of each officer of Pittway executing this Agreement or any other
agreement, certificate or other instrument executed pursuant hereto;
(g) Penton shall have received a letter addressed
to it from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), counsel for
▇-▇ and the ▇-▇ Shareholders, dated the date of the Closing, based on
customary reliance and subject to customary qualifications, to the
effect that:
(i) ▇-▇ is a corporation existing and in
good standing under the laws of the State of Illinois.
(ii) ▇-▇ has the corporate power to
consummate the transactions on its part contemplated by this
Agreement. ▇-▇ has duly taken all requisite corporate action
to authorize this Agreement; and this Agreement, insofar as it
purports to obligate ▇-▇ to ▇▇▇▇▇▇, has been duly executed and
delivered by ▇-▇ and constitutes the valid, binding and
enforceable obligation of ▇-▇.
(iii) The authorized capital of ▇-▇
consists of 700 shares of ▇-▇ Common Stock, 300 shares of
Common Stock - Series B, without par value, and 200 shares of
Preferred Stock, without par value, of which 700 shares of ▇-▇
Common Stock are outstanding, all of which outstanding shares
were validly issued and are fully paid and non-assessable.
(iv) This Agreement, insofar as it purports
to obligate the ▇-▇ Shareholders to Penton, has been duly
executed and delivered by each of the ▇-▇ Shareholders and
constitutes a valid, binding and enforceable obligation of
each of them.
(v) The ▇-▇ Shareholders own of record all
of the outstanding capital stock of ▇-▇, as follows: ▇▇▇▇▇▇▇ -
350 shares of ▇-▇ Common Stock; ▇▇▇▇▇▇ - 350 shares of ▇-▇
Common Stock;
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(h) Penton shall have received a letter addressed
to it from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for Pittway, dated the date of the
Closing, based on customary reliance and subject to customary
qualifications, to the effect that:
(i) Pittway is a corporation existing and
in good standing under the laws of the State of Delaware and
is duly qualified to conduct business as a foreign corporation
in the State of Illinois.
(ii) Pittway has duly taken all requisite
corporate action to authorize this Agreement; and this
Agreement has been duly executed and delivered by Pittway and,
insofar as this Agreement purports to obligate Pittway to
Penton, constitutes the valid, binding and enforceable
obligation of Pittway; and
(i) ▇-▇'s cash and cash equivalents shall be in an
amount sufficient, in the good faith estimate of the ▇-▇ Shareholders,
to enable the Surviving Corporation to pay its liabilities and
obligations as and when they would be paid in the Ordinary Course of
Business of ▇-▇ at all times during the period of 120 days after the
Effective Time while maintaining at all times during such period a cash
and cash equivalents balance equal to the Unpaid Adjusted ▇-▇
Liabilities, without any capital contribution, loan, advance or other
cash infusion from any other source (including without limitation from
the collection of the Distributed ▇-▇ Accounts Receivable).
8.4 ADDITIONAL CONDITIONS TO OBLIGATION OF PITTWAY. The
obligation of Pittway to effect the Spinoff is also subject to the following
conditions:
(a) Penton, Combination Subsidiary, ▇-▇ and the ▇-▇
Shareholders shall in all material respects have performed each
obligation and agreement and complied with each covenant to be
performed and complied with by it or them hereunder at or prior to the
Spinoff;
(b) Penton shall have furnished to Pittway a
certificate in which Penton shall certify that an appropriate inquiry
has been made of the executive officers of Penton and Combination
Subsidiary having principal responsibilities for the performance of the
covenants of Penton and Combination Subsidiary set forth in this
Agreement, and that after completion of such inquiry, Penton has no
reason to believe that the condition relating to Penton and Combination
Subsidiary set forth in Section 8.4(a) has not been fulfilled;
(c) the ▇-▇ Shareholders shall have furnished to
Pittway a certificate in which each of the ▇-▇ Shareholders shall
certify that an appropriate inquiry has been made of the executive
officers of ▇-▇ having principal responsibilities for the performance
of the covenants of ▇-▇ and of the
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▇-▇ Shareholders related to ▇-▇ set forth in this Agreement, and that
after completion of such inquiry, neither of the ▇-▇ Shareholders has
any reason to believe that the condition relating to ▇-▇ and the ▇-▇
Shareholders set forth in Section 8.4(a) has not been fulfilled;
(d) Penton shall have furnished to Pittway (i) a
copy of the text of the resolutions by which the corporate action on
the part of Penton and Combination Subsidiary necessary to approve this
Agreement was taken, (ii) a certificate executed on behalf of Penton
and Combination Subsidiary by their respective corporate secretaries or
one of their respective assistant corporate secretaries certifying to
Pittway that such copy is a true, correct and complete copy of such
resolutions and that such resolutions were duly adopted and have not
been amended or rescinded, and (iii) an incumbency certificate executed
on behalf of Penton and Combination Subsidiary by their respective
corporate secretaries or one of their respective assistant corporate
secretaries certifying the signature and office of each officer of
Penton or Combination Subsidiary executing this Agreement or any other
agreement, certificate or other instrument executed pursuant hereto;
(e) Pittway shall have received a letter addressed
to it from ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ongoing counsel for Penton,
dated the date of the Closing, based on customary reliance and subject
to customary qualifications, to the effect that:
(i) Penton is a corporation existing and in
good standing under the laws of the State of Delaware and is
duly qualified to conduct business as a foreign corporation in
the State of Ohio.
(ii) Penton has duly taken all requisite
corporate action to authorize this Agreement; and this
Agreement has been duly executed and delivered by Penton and,
insofar as this Agreement purports to obligate Penton to
Pittway, constitutes the valid, binding and enforceable
obligation of Penton;
(f) Pittway shall have received a letter addressed
to it from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), counsel for
▇-▇ and the ▇-▇ Shareholders, dated the date of the Closing, based on
customary reliance and subject to customary qualifications, to the
effect that this Agreement has been duly executed and delivered by each
of the ▇-▇ Shareholders and, insofar as this Agreement purports to
obligate the ▇-▇ Shareholders to Pittway, constitutes a valid, binding
and enforceable obligation of each of them;
(g) ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall each
have resigned as an officer of Pittway and of any Post-Spinoff Pittway
Subsidiaries;
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(h) ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have
released Pittway from all obligations under the respective Employment
Agreements in effect on the date hereof between them and Penton,
including without limitation all obligations under the supplemental
executive retirement plans provided for therein; and
(i) Penton shall have repaid its indebtedness to
Pittway outstanding immediately prior to the time of the Spinoff.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of a duly authorized officer
of Penton, the ▇-▇ Shareholders and a duly authorized officer of
Pittway; or
(b) by Penton, the ▇-▇ Shareholders or Pittway if
the Merger shall not have been consummated by August 31, 1998;
provided, however, that no Party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right shall be
primarily attributable to such Party or to any Affiliate of such Party.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement, this Agreement shall become void and there shall be no liability or
further obligation hereunder on the part of any Party or any Party's
stockholders, officers or directors, except as set forth in Section 7.6 and the
second to last paragraph of Section 7.1 and except that:
(i) in the event Pittway declines to effect
the Spinoff for any reason other than the exercise of its
rights under Sections 8.1, 8.4 and 9.1, or in the event Penton
or Combination Subsidiary declines to effect the Merger for
any reason other than the exercise of its rights under
Sections 8.1, 8.3 and 9.1, Pittway shall reimburse the ▇-▇
Shareholders for their damages resulting therefrom (including
but not limited to $250,000 plus all reasonable legal and
other costs and expenses incurred by the ▇-▇ Shareholders in
connection with this Agreement and the transactions
contemplated hereby); and
(ii) in the event either ▇-▇ Shareholder or
▇-▇ declines to effect the Merger for any reason other than
the exercise of his or its rights under Sections 8.1, 8.2 and
9.1, the ▇-▇ Shareholders shall
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reimburse Pittway, Penton and Combination Subsidiary for their
damages resulting therefrom (including but not limited to all
reasonable legal and other costs and expenses incurred by them
in connection with this Agreement and the transactions
contemplated hereby); and
(iii) in the event any Party terminates
this Agreement pursuant to Section 9.1(b) on account of
non-satisfaction of a condition set forth in Section
8.1(e),(i) or (j) or the first clause of Section 8.1(k),
Penton shall reimburse the ▇-▇ Shareholders for all reasonable
legal and other costs and expenses incurred by the ▇-▇
Shareholders in connection with this Agreement and the
transactions contemplated hereby.
9.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of each of the Parties.
9.4 WAIVER. At any time prior to the Effective Time, Penton
may (a) extend the time for the performance of any of the obligations or other
acts of Pittway, D-M or any ▇-▇ Shareholder or (b) waive compliance with any of
the agreements of Pittway, D-M or any ▇-▇ Shareholder or with any conditions to
the obligations of Penton, in each case only to the extent such obligations,
agreements and conditions are intended for the benefit of Penton. At any time
prior to the Effective Time, the ▇-▇ Shareholders may (a) extend the time for
the performance of any of the obligations or other acts of Pittway, Penton or
Combination Subsidiary or (b) waive compliance with any of the agreements of
Pittway, Penton or Combination Subsidiary or with any conditions to the
obligations of ▇-▇ and the ▇-▇ Shareholders, in each case only to the extent
such obligations, agreements and conditions are intended for the benefit of ▇-▇
and the ▇-▇ Shareholders. At any time prior to the Effective Time, Pittway may
(a) extend the time for the performance of any of the obligations or other acts
of Penton, Combination Subsidiary, ▇-▇ or either ▇-▇ Shareholder or (b) waive
compliance with any of the agreements of Penton, Combination Subsidiary, ▇-▇ or
either ▇-▇ Shareholder or with any conditions to the obligations of Pittway, in
each case only to the extent such obligations, agreements and conditions are
intended for the benefit of Pittway.
ARTICLE 10
GENERAL PROVISIONS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Penton contained in Article 3 and of Pittway
contained in Article 5 shall survive the consummation of the Spinoff and the
Merger (even if the Party or any of the Parties to which or to whom such
representation or warranty is made knew or had reason to know of any
misrepresentation or breach of
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warranty at the Effective Time) and shall continue in full force and effect
until the third anniversary of the Effective Time; and each of the
representations and warranties of the ▇-▇ Shareholders contained in Article 4
shall survive the consummation of the Spinoff and the Merger (even if the Party
or any of the Parties to which or to whom such representation or warranty is
made knew or had reason to know of any misrepresentation or breach of warranty
at the Effective Time) and shall continue in full force and effect until the
20th day after the conclusion of the Second Reference Period (or, if such day is
not a business day, the first business day thereafter); in each case, other than
any representation and warranty relating to Taxes, each of which shall to the
extent it relates to Taxes continue in full force and effect until 30 days after
the applicable statute of limitations has expired.
10.2 PUBLIC STATEMENTS. Except as required by applicable law
(including, without limitation, in any Schedule 13D of any ▇-▇ Shareholder, or
amendment thereto, required by applicable law), no Party shall make or permit
any Affiliate of such Party to make any public announcement or statement with
respect to this Agreement, the Spinoff, the Merger or any of the other
transactions contemplated herein without the approval of each other Party (for
purposes of which, any approval given by the ▇-▇ Shareholders shall be deemed
also given by ▇-▇ and any approval given by Penton shall be deemed also given by
Combination Subsidiary), which approval will not be unreasonably withheld or
delayed. It is expressly understood, however, that the Parties will issue a
mutually agreed upon press release promptly following the execution and delivery
of this Agreement and that Pittway shall have the right to make and permit
public announcements and statements with respect to the Spinoff and the Merger
without the approval of any other Party.
10.3 DESIGNATION OF ▇-▇ SHAREHOLDERS AS REPRESENTATIVE. ▇-▇
hereby designates the ▇-▇ Shareholders as its representative for all purposes
under this Agreement, including without limitation the receipt of disclosures,
the granting of all consents and waivers by ▇-▇ under this Agreement and the
receiving of all notices given to ▇-▇ pursuant to this Agreement.
10.4 NOTICES. All notices and other communications hereunder
shall be given to each of the Parties in all cases, shall be in writing, and
shall be sufficiently given if made by hand delivery, by reputable express
courier service (charges prepaid), by telecopier, or by registered or certified
mail (postage prepaid and return receipt requested) to the Parties at the
following addresses (or at such other address for a Party as shall be specified
to the other Parties by it by like notice):
if to Penton, Combination Subsidiary or the Surviving Corporation:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
Northpoint
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
if to Pittway:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: King Harris
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
if to ▇-▇ or the ▇-▇ Shareholders prior to the Effective Time
or to the ▇-▇ Shareholders after the Effective Time:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
All such notices and other communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; three
business day after being deposited with a reputable express courier service
(charges prepaid); five business days after being deposited in the mail, postage
prepaid, if delivered by mail; when answered back, if telexed; and when receipt
acknowledged (by a telecopy machine or otherwise), if telecopied.
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10.5 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein", "hereinafter", "hereof", "hereto", "hereby" and "hereunder", and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires and the singular shall include the plural and the plural
the singular if the context requires.
10.6 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated and the Parties
shall negotiate in good faith to modify this Agreement to preserve each Party's
anticipated benefits under this Agreement.
10.7 DISPUTES.
(a) In the event any dispute between or among any
Parties shall arise relating to this Agreement or the transactions
contemplated hereby, such Parties shall use their reasonable good faith
efforts to resolve such dispute. At the request of any such Party, the
other Party or Parties to the dispute shall provide such Party with
written notice describing in reasonable detail the nature of such
dispute and such other Party's or Parties' proposed resolution of such
dispute. If and to the extent that such dispute is not resolved to the
mutual satisfaction of all Parties thereto within 45 days of the
delivery of such notice, the Parties thereto agree to resolve such
dispute pursuant to Section 10.7(b).
(b) Any Party may submit to arbitration any
disputed matter which may arise relating to this Agreement or the
transactions contemplated hereby which remains unresolved after the
Parties to such dispute have fulfilled their obligations under Section
10.7(a). The arbitration procedure set forth in this Section 10.7(b)
shall be the sole and exclusive method for resolving any such
remaining disputed matter and no Party to such dispute shall commence
any litigation on the basis of any such remaining disputed matter
except litigation to enforce a decision made by the arbitrators
selected in accordance with this Section 10.7(b). In each case in
which it shall become necessary to resort to arbitration, the Party or
Parties desiring arbitration of a disputed matter (the "CLAIMANT(S)")
shall give written notice to that effect to the other Party or Parties
to such dispute (the "RESPONDENT(S)"), specifying in such notice the
name and address of the person designated to act as arbitrator on
behalf of the Claimant(s), which arbitrator shall be a competent and
impartial person. Within ten (10) days after its or their receipt of
such notice, the Respondent(s) shall
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give written notice to the Claimant(s) specifying the name and address
of the person designated to act as arbitrator on behalf of the
Respondent(s), which arbitrator shall be a competent and impartial
person. If the Respondent(s) fail to notify the Claimant(s) of the
person designated to act as arbitrator on behalf of the Respondent(s),
as aforesaid, within the time above specified, then the appointment of
the second arbitrator shall be made in the same manner as hereinafter
provided for the appointment of a third arbitrator in a case where the
two arbitrators appointed hereunder are unable to agree upon such
appointment. The arbitrators so chosen shall meet within ten (10)
days after the second arbitrator is appointed and if, within thirty
(30) days after the second arbitrator is appointed, such two
arbitrators shall not agree upon the resolution of the matter in
dispute, they shall themselves appoint a third arbitrator, who shall
be a competent and impartial person. In the event such two arbitrators
are unable to agree upon such appointment within ten (10) days after
the time aforesaid, then either the Claimant(s) or the Respondent(s),
on behalf of both the Claimant(s) and the Respondent(s), may request
such appointment by the American Arbitration Association in accordance
with its rules then prevailing or in the event of the failure for ten
(10) days, refusal or inability of the American Arbitration
Association to appoint said third arbitrator, then either the
Claimant(s) or the Respondent(s) may apply to the Chief Judge of the
United States District Court for the Northern District of Illinois for
the appointment of such third arbitrator, and the Respondent(s) or the
Claimant(s), as the case may be, shall not raise any question as to
the Court's full power and jurisdiction to entertain the application
and make the appointment. The decision of the arbitrators so chosen
(or the majority decision of the arbitrators so chosen if three
arbitrators are so chosen) shall, if practicable, be given within the
period of thirty (30) days after the appointment of the final
arbitrator and such decision shall in all cases be binding and
conclusive upon the Parties. Unless otherwise determined by the
decision of the arbitrators (or the majority decision of the
arbitrators if three arbitrators are chosen): (i) each Party shall pay
the fees and expenses of the one of the two original arbitrators
appointed by such Party, or in whose stead as above provided such
arbitrator was appointed; and (ii) the fees and expenses of the third
arbitrator, if any, shall be borne equally by the Claimant(s) and the
Respondent(s). All arbitration hereunder shall, unless otherwise
agreed to by each of the Claimant(s) and Respondent(s), be conducted
in Chicago, Illinois in accordance with the then-current rules of the
American Arbitration Association. Anything herein contained to the
contrary notwithstanding, the Parties to a disputed matter shall have
the right to waive the provisions of this Section 10.7 calling for the
appointment of two or three arbitrators, and by mutual agreement may
select one arbitrator whose decision as to the disputed matter shall
be binding and conclusive upon such Parties.
10.8 JURISDICTION AND SERVICE OF PROCESS. Any suit, action or
proceeding against any Party to enforce a decision made by the arbitrators
selected in accordance with Section 10.7(b) or to enforce the obligations of any
Party to resolve
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disputes pursuant to the arbitration procedure set forth in Section 10.7 shall
be brought in state court in the State of Illinois, or in the United States
District Court for the Northern District of Illinois, and each Party hereby
irrevocably waives, to the fullest extent permitted by law, any objection that
such Party may have, whether now or in the future, to the laying of venue in or
to the jurisdiction of, any and each of such courts for the purpose of any such
suit, action or proceeding and further waives any claim that any such suit,
action or proceeding has been brought in an inconvenient forum, and each Party
hereby submits to such jurisdiction. Each of the ▇-▇ Shareholders hereby further
irrevocably consents to the service of process in any suit, action or proceeding
with respect to this Agreement in any such court by the mailing thereof by
Penton or Pittway by registered or certified mail, charges prepaid, to such ▇-▇
Shareholder at the then current address for notices to such ▇-▇ Shareholder
pursuant to Section 10.4. Nothing herein shall in any way be deemed to limit the
ability of Penton or Pittway to serve such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over any ▇-▇
Shareholder in such other jurisdictions, and in such manner, as may be permitted
by applicable law.
10.9 MISCELLANEOUS. The representations and warranties
contained in this Agreement, in any Disclosure Letters, in any Exhibits attached
hereto and in other documents and agreements executed in connection herewith are
the sole and exclusive representations and warranties made by the Parties in
connection herewith, and no other representation or warranty shall be implied
hereunder or thereunder. This Agreement (together with the Confidentiality
Agreement and all other documents and instruments referred to herein): (a)
constitutes the entire agreement, and supersedes all other prior agreements and
undertakings, both written and oral, among the Parties, with respect to the
subject matter hereof (including, without limitation, the Letter of Intent); (b)
shall be binding upon the Parties and their respective heirs, executors,
personal representatives, successors and assigns and shall inure to the benefit
of the Parties and their respective heirs, executors, personal representatives,
successors and permitted assigns; (c) is not intended to confer upon any other
Person any rights or remedies hereunder; (d) shall not be assigned by operation
of law or otherwise except that this Agreement may be assigned by operation of
law to the Surviving Corporation and, provided such corporation assumes all of
the obligations of Pittway or Penton (as the case may be) hereunder, to any
corporation with or into which Pittway or Penton may be merged; and (e) shall be
governed by and construed in accordance with the domestic laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Illinois. This Agreement may be executed in two or more counterparts
which together shall constitute a single agreement.
* * * * *
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IN WITNESS WHEREOF, each of the undersigned has hereunto subscribed on
this the date first written above.
Penton Media, Inc.
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇. Vice By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- -----------------------------
Its: Assistant Secretary Its: Chief Executive Officer
----------------------------- -----------------------------
▇-▇ Acquisition Corp.
Attest:
By: /s/ ▇▇▇▇▇▇▇ Zermuehlein By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- -----------------------------
Its: Secretary Its: Vice President
----------------------------- -----------------------------
Pittway Corporation
Attest:
By: /s/ ▇▇▇▇▇▇▇ Zermuehlein By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
Its: Assistant Secretary Its: Vice President
----------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Publishing Company
Attest:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- -----------------------------
Its: Executive Vice President Its: President
----------------------------- -----------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇