ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of July 1, 1999 by and among ADVANSTAR
COMMUNICATIONS INC. ("Buyer"), a New York corporation having a place of business
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇, LLC (together
with its predecessors, "Parent"), a Delaware limited liability company having a
place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; LPL/STYLE GROUP, LLC
("Subsidiary" and together with Parent referred to collectively as "Seller"), a
Delaware limited liability company and wholly-owned subsidiary of Parent having
a principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇-
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY (the "Trust"), a Massachusetts business trust and sole
member of Parent having a place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, individually and as trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Stock
Trust (the "AJL Stock Trust"), the ▇▇▇▇▇ ▇▇▇▇▇▇ Stock Trust (the "DL Stock
Trust"), and the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock Trust (the "JL Stock Trust"); ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇▇
▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, individually and as trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Stock Trust (the "SJL
Stock Trust," and together with the AJL Stock Trust, the DL Stock Trust and the
JL Stock Trust, referred to collectively as the "Stock Trusts"); ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇▇
▇. ▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (all of such individuals, in their individual capacities, are
referred to collectively as the "Principals," and together with the Trust and
the Stock Trusts are referred to collectively as the "Owners").
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer all right, title and interest in and to all of the tangible and
intangible assets (the "Assets") other than the Excluded Assets (as hereinafter
defined) used in connection with the business (the "Business"), as a going
concern, of (a) organizing, promoting, producing and managing the Events (as
hereinafter defined), (b) marketing, selling, producing and distributing the
Publication (as hereinafter defined) and (c) providing Ancillary Products (as
hereinafter defined), on the terms and conditions set forth herein;
WHEREAS, the Principals are the ultimate beneficial owners of all the
interests in the Trust and, indirectly, of Seller;
THEREFORE, in consideration of the mutual promises contained herein,
Buyer, Seller, and the Owners hereby agree as follows:
ARTICLE I
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PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. Upon the terms and conditions herein set
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forth, Seller hereby agrees to sell, convey, transfer, assign, grant and
deliver to Buyer, and Buyer hereby agrees to purchase, acquire and accept
from Seller at the Closing (as hereinafter defined), all of Seller's right,
title and interest in and to the Assets, free and clear of all liabilities,
obligations, pledges, security interests, liens, claims, defenses, setoffs,
equities, encumbrances or charges (collectively, "Encumbrances"), other
than those included in the Assumed Liabilities. The Assets include,
without limitation, the following:
(a) all goodwill of all of Seller's trade shows, expositions and
conferences (the "Events"), including, without limitation,
International Fashion Boutique Show, Style Industrie, International
Fashion Kids Show, International Fashion Fabric Exhibition and Pret
America, including all right to organize, promote, produce and manage
the Events;
(b) all goodwill of Accent (the "Publication"), including, without
limitation, all right to market, sell, produce and distribute the
Publication;
(c) all goodwill of the Business and all of Seller's products and services
ancillary to the Events and/or the Publication (the "Ancillary
Products"), including, without limitation, One Source, including the
right to represent to third parties that Buyer is the successor to the
Business and all right to provide the Ancillary Products;
(d) all lists and databases, in any and all forms and media, of past and
prospective exhibitors, attendees, seminar/conference registrants,
vendors, sponsors, speakers, press, advertisers and other participants
in, subscribers and contributors to, or customers of, the Events, the
Publication, the Ancillary Products and/or the Business, all records
and correspondence related thereto, and all rights to manage, use and
rent the names and addresses contained on such lists;
(e) all work in process with respect to any of the Events to be held after
the Closing Date ("Future Events");
(f) all work in process with respect to any issue of the Publication to be
published as of a date after the Closing Date (the "Future
Publications");
(g) all work in process with respect to any of the Ancillary Products to
be delivered after the Closing Date (the "Future Ancillary Products");
(h) all printed matter relating to the Events, the Publication and/or the
Ancillary Products in the possession and/or control of Seller,
including, without limitation, sales solicitation materials,
promotional materials, seminar/conference materials, direct mail
materials, labels and Event or Publication stationery;
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(i) all correspondence, data, files and records relating to the Events,
the Publication, the Ancillary Products, the Assets and/or the
Business;
(j) all right, title and interest in copyrights to and/or licenses to use
the materials used or generated in the Publication or otherwise in
connection with the Business (the "Copyrights"), and all copyright
applications and registrations therefor;
(k) all right, title and interest in and to the names, service marks,
trademarks, designations and logos other than the Excluded Trademarks
(as hereinafter defined) currently or previously used in connection
with the Business (the "Trademarks"), and all trademark applications
and registrations therefor;
(l) all copies of back and current issues of the Publication in the
possession and/or control of Seller or any affiliates;
(m) all inventory and supplies relating to the Business, including,
without limitation, paper, editorial material, photographs, film,
artwork, illustrations, printing plates, stationery and other
production materials;
(n) all research materials relating to the Business, including, without
limitation, event research, readership studies and advertising
research;
(o) all permissions, consents, releases, waivers and licenses related to
the Publication and/or editorial material included in the Assets;
(p) all subscriptions to Future Publications;
(q) except as set forth on Schedule 1.2(d), all furniture, fixtures,
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computers, communication devices and other equipment and machinery
used in connection with the Business;
(r) the proprietary software (if any) and the non-proprietary software (to
the extent assignable) used in connection with the Business;
(s) any URLs or websites used in connection with the Business;
(t) the Closing Assets (as hereinafter defined);
(u) accounts receivable (and the proceeds thereof) from unaffiliated third
parties generated in connection with Events held prior to the Closing
Date ("Seller's Events"), the Publication published as of a date prior
to the Closing Date ("Seller's Publications") or in connection with
Ancillary Products delivered prior to the Closing Date ("Seller's
Ancillary Products");
(v) all of Seller's right, title and interest in and to tentative bookings
at the Javits Convention Center; and
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(w) all of Seller's right, title, and interest in and to the following
(collectively, the "Assumed Contracts"): Exhibitor Contracts (as
hereinafter defined), the Advertiser Contracts (as hereinafter
defined) and all other contracts, agreements, leases, licenses,
employment agreements, contributor agreements, consulting agreements,
facility contracts, facility date reservations, hotel or housing
arrangements, service contracts, sponsorship agreements, list rental
agreements, barter arrangements or other arrangements of any nature
whether written or oral, to which Seller is a party and which
primarily relate to or are necessary for the operation of the Business
and/or the conduct of any Future Events, Future Publications or Future
Ancillary Products, except for Excluded Contracts (as hereinafter
defined).
1.2 Excluded Assets. The following assets of Seller (the "Excluded Assets")
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are not included in the Assets and shall be retained by Seller:
(a) cash and cash equivalents;
(b) all of Parent's right, title and interest in and to the shares of the
capital stock or membership interests, as the case may be, of Easy
Soft, Inc., Clearlink Corporation and AES Internet, LLC and any and
all tangible and intangible assets (including, without limitation, any
assets of a nature described in Section 1.1 of this Agreement) used by
Parent and/or such entities exclusively in connection with the
businesses conducted by such entities;
(c) all of Parent's right, title and interest in and to Subsidiary and in
the capital stock, membership interests or other equity interests in
any of the other entities listed on Schedule 4.1;
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(d) the assets listed on Schedule 1.2(d);
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(e) accounts receivable (and the proceeds thereof) due to Seller from any
affiliate of Seller or other related party;
(f) all of Seller's right, title, and interest in and to any contracts,
agreements and other arrangements listed on Schedule 1.2(f)
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(collectively, the "Excluded Contracts");
(g) all of Seller's right, title and interest in and to the magazines
Musical Merchandise Review and School Band & Orchestra (the "Excluded
Publications"), and all tangible and intangible assets (including,
without limitation, assets of a nature described in Section 1.1 of
this Agreement) used by Seller exclusively in connection with the
Excluded Publications and the businesses related thereto;
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(h) all right, title and interest in and to the names ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and
any combination or derivation thereof, and all service marks,
trademarks, designations and logos related thereto (collectively, the
"Excluded Trademarks"), and all trademark applications and
registrations therefor;
(i) the Plans (as hereinafter defined);
(j) the Insurance Policies (as hereinafter defined) and all life insurance
policies on the lives of certain of the Principals;
(k) tax refunds and rebates attributable to the ownership of the Assets or
the operation of the Business prior to the Closing Date; and
(l) accounts receivable (and the proceeds thereof) generated in connection
with the Excluded Publications.
1.3 Assumption of Liabilities.
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(a) Except as expressly provided in this Section 1.3(a), Buyer shall
assume no liabilities or obligations relating to the Events, the
Publication, the Ancillary Products, the Business, the Assets, Seller
or the Owners. Without limitation of the foregoing, Buyer shall
assume no liability or obligation for (i) Taxes (as hereinafter
defined) of Seller and the Owners for any period, or imposed in
connection with the Events, the Publication, the Ancillary Products,
the Business or the Assets for any periods ending prior to the Closing
Date, (ii) any liability of any of the foregoing persons for the
unpaid Taxes of any person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) or as a
transferee or successor, by contract or otherwise, and (iii) except as
provided in Section 9.3, any Taxes imposed upon Seller or any of the
Owners in connection with the transactions set forth in this Agreement
(the liabilities referred to in (i), (ii) and (iii) above are referred
to herein collectively as "Tax Liabilities"). All such liabilities
and obligations (including, without limitation, indebtedness, Tax
Liabilities, accounts payable, obligations to employees, contractual
obligations and all Litigation, whether or not listed on Schedule
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4.5), fixed or contingent, known or unknown, which were incurred by
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Seller or the Owners or arose from the operation of the Business prior
to the Closing Date (as hereinafter defined) are and remain the
liabilities and obligations of Seller or the Owners, as the case may
be. Seller and the Owners hereby covenant to discharge in full in a
due and timely manner all such liabilities and obligations; provided
that nothing contained herein shall prevent Seller from contesting any
such liabilities or obligations in good faith. Notwithstanding the
foregoing, except to the extent that any such liability or obligation
represents a Tax Liability, Buyer shall assume the following
liabilities and obligations of Seller at the Closing (collectively,
the "Assumed Liabilities"):
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(i) the obligation for Seller's performance after the Closing Date
under the Assumed Contracts;
(ii) accounts payable, due to unaffiliated third parties, incurred by
Seller in the ordinary course prior to the Closing Date, in
respect to Future Events, Future Publications and/or Future
Ancillary Products;
(iii) the Closing Liabilities (as hereinafter defined); and
(iv) any and all obligations and liabilities incurred by Buyer
relating to the ownership of the Assets or the operation of the
Business by Buyer from and after the Closing Date.
(b) Notwithstanding anything to the contrary contained in Section 1.3(a),
neither this Agreement nor any other agreement referenced herein shall
constitute an assignment of any contract or right or benefit arising
thereunder if such assignment would constitute a breach or otherwise
adversely affect the rights of Buyer thereunder. In the event that
Seller does not obtain any required consent or waiver for the transfer
of any Assumed Contract to Buyer prior to Closing, Seller shall
continue to use reasonable efforts to obtain such consent or waiver.
Seller shall keep such Assumed Contract in effect for the benefit of
Buyer until such consent or waiver is obtained at no additional
expense to Seller or any of the Owners.
ARTICLE II
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PAYMENT TO SELLER
2.1 Consideration for the Assets. Subject to the terms and conditions of this
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Agreement, in consideration of the sale, assignment, transfer and delivery
of the Assets to Buyer, for the services to be rendered to Buyer pursuant
to the Consulting Agreements (as hereinafter defined) and for the covenants
of Seller and the Owners contained in Article IX, Buyer shall pay to
Seller, on behalf of the Seller and the Owners, the aggregate amount of (x)
if the Closing occurs on or before July 30, 1999, One Hundred Thirty-Three
Million Dollars ($133,000,000), (y) if the Closing occurs after July 30,
1999 but before August 8, 1999, One Hundred Thirty-One Million Three
Hundred Fifty Thousand Dollars ($131,350,000) and (z) if the Closing occurs
on or after August 8, 1999, One Hundred Thirty-One Million Dollars
($131,000,000), in any case as adjusted by Section 2.2 (the "Purchase
Price"); provided, however, that if the failure of the Closing to occur has
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been caused by or resulted from a breach by Buyer of any of its
representations, warranties or agreements contained in this Agreement, the
Purchase Price shall equal One Hundred Thirty-Three Million Dollars
($133,000,000) as adjusted by Section 2.2. The Purchase Price shall be
paid as follows: (a) the applicable amount set forth in the immediately
preceding sentence less $6,000,000 (the "Closing Payment") shall be paid at
the Closing to Seller by wire transfer of immediately available funds to
the account designated on Schedule 2.1(a); and (b) the remaining $6,000,000
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shall be payable in two installments, one of $2,000,000
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payable on the first anniversary of the Closing Date and one of $4,000,000
payable on the second anniversary of the Closing Date, which installments
shall be represented by promissory notes (the "Notes") of Buyer in the
aggregate principal amount of $6,000,000 in the forms of Exhibit A-1 and ▇-
▇, to be reduced by Buyer to set-off sums owed by Seller to Buyer under the
indemnification provisions of Article VIII of the Agreement. At the
Closing, Buyer and Seller shall also execute and deliver an Escrow
Agreement (as hereinafter defined) establishing an escrow account at The
Chase Manhattan Bank (the "Escrow Agent"). Buyer shall also cause to be
delivered to the Seller, on behalf of Seller and the Owners, an irrevocable
standby letter of credit from The Chase Manhattan Bank in substantially the
form of Exhibit A-3 hereof (the "Letter of Credit") providing for a draw-
down only in the event of a default by Buyer under the Notes, with any
draw-down payment to be made by wire transfer of immediately available
funds in accordance with the terms of the Letter of Credit either directly
to Seller or to an escrow account created by the Escrow Agreement.
2.2 Adjustment to the Purchase Price.
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(a) Attached hereto as Schedule 2.2 is a preliminary statement (the
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"Preliminary Closing Statement") of the amounts of certain Assets and
Assumed Liabilities of Seller as of the date hereof. The Preliminary
Closing Statement includes only the following items: (i) prepaid
expenses of the Business, (ii) accounts receivable of the Business
described in Section 1.1(u) that were generated on or after April 28,
1999 (clauses (i) and (ii) collectively, the "Closing Assets"), and
(iii) deferred revenue, accounts payable and other current liabilities
(including, without limitation, customer credits, accrued vacation and
sick pay of Seller's employees) of the Business (the "Closing
Liabilities"). The Closing Liabilities shall not include any Tax
Liabilities. Two business days prior to the Closing Date, Seller
shall provide Buyer with an updated Preliminary Closing Statement (the
"Updated Closing Statement") which, in Seller's best judgment,
estimates the amounts of the Closing Assets and the Closing
Liabilities as of the Closing Date.
(b) The "prepaid expenses" included in the Closing Assets (i) shall be
direct expenses incurred and paid by Seller prior to the Closing Date
to unaffiliated third parties which inure to the benefit of Buyer from
and after the Closing Date, including, without limitation, expenses in
respect to Future Events, Future Publications and/or Future Ancillary
Products; (ii) shall not include any management fees, salaries, other
employee compensation or benefits, internal allocations, general
office expenses or other overheads of the Business, whether incurred
and/or paid by Seller; and (iii) shall include only those direct
expenses which have been incurred and paid by Seller in the ordinary
course of business consistent with Seller's past practice in operating
the Business. The accounts receivable included in the Closing Assets
shall include only those which arose in the ordinary course of
business.
(c) The "deferred revenue" included in the Closing Liabilities (i) shall
consist of all exhibitor deposits, cancellation and forfeiture
amounts, contractor commissions
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(if any), show and conference registration fees, sponsorship fees,
advertising revenue, subscription revenue, prepayments and other
miscellaneous revenue received by Seller as of the effective date of
such statement in respect to Future Events, Future Publications or
Future Ancillary Products, (ii) shall include only deferred revenue
which has been received by Seller in the ordinary course of business
consistent with Seller's past practice in operating the Business and
(iii) shall be recorded at fulfillment cost in the case of unfulfilled
paid subscriptions to the Publication. The "accounts payable" included
in the Closing Liabilities shall include all unpaid expenses of Seller
of any nature which are related to Seller's Events, Seller's
Publications, Seller's Ancillary Products or otherwise related to the
operation of the Business prior to the effective date of such
statement. The "other current liabilities" included in the Closing
Liabilities shall include all outstanding customer credits, accrued
vacation, sick pay and other current liabilities of the Business as of
the effective date of such statement.
(d) For purposes of this Agreement, the "Preliminary Adjustment" shall be
the positive or negative, as applicable, amount by which the Closing
Assets exceed the Closing Liabilities as set forth in the Updated
Closing Statement. In the event that the Preliminary Adjustment is a
positive amount, then the Purchase Price (and, correspondingly, the
Closing Payment) shall be increased by the amount of the Preliminary
Adjustment. In the event that the Preliminary Adjustment is a
negative amount, then the Purchase Price (and, correspondingly, the
Closing Payment) shall be decreased by the amount of the Preliminary
Adjustment.
(e) As soon as reasonably practicable after the Closing Date but not later
than seventy-five (75) days following the Closing Date, Buyer and
Seller shall jointly establish a definitive statement of Closing
Assets and Closing Liabilities as of the Closing Date (the "Final
Closing Statement"). The Final Closing Statement (i) shall include
only the Closing Assets and the Closing Liabilities, (ii) shall be
prepared on a basis consistent with and shall follow the format of the
Preliminary Closing Statement and the Updated Closing Statement, and
(iii) shall further update the Updated Closing Statement by reflecting
any changes to the Updated Closing Statement which are necessary as a
result of disbursements or receipts which were made or received too
late to be reflected in the Updated Closing Statement, computational
or other errors which may have been made in preparing the Updated
Closing Statement, or for any other reason consistent with this
Agreement. For purposes of this Agreement, the "Final Adjustment"
shall be the amount by which the Closing Assets exceed the Closing
Liabilities as set forth in the Final Closing Statement.
(f) In the event that the parties are unable to resolve any dispute
regarding the preparation of the Final Closing Statement within
seventy-five (75) days following the Closing Date hereof (or such
longer period as the parties may hereafter agree), the parties shall
submit all matters that remain in dispute to Deloitte & Touche, LLP
or, if such firm is unavailable for any reason, another nationally
recognized firm of independent public accountants (which firm shall
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not be the auditor for any party and shall otherwise be selected by
mutual agreement of the parties), for accounting arbitration. The
parties shall use all reasonable efforts to cause such firm to render
a decision resolving the matters submitted to it and, thereby,
establish the amount of the Final Adjustment within thirty (30) days
following submission. Judgment may be entered upon the determination
of such firm in any court having jurisdiction over the party against
which such determination is to be enforced. The fees and expenses of
such firm shall be paid by the party whose calculation of the Final
Adjustment is further (in dollar amount) from the calculation of the
Final Adjustment by the firm. Absent fraud or manifest error, the
determination of such firm as to the Final Adjustment shall be final.
(g) If the Final Adjustment is a greater amount than the Preliminary
Adjustment, Buyer shall, within ten (10) business days after the date
of such determination, pay to Seller the amount of such difference by
wire transfer in immediately available funds. If Buyer fails to make
such payment within such ten (10) business day period, (i) such
payment shall accrue interest from and after such date at the prime
rate as published in The Wall Street Journal plus two percent (2%) and
(ii) Buyer shall pay all of Seller's costs of collection (including
reasonable attorney fees). If the Final Adjustment is a lesser amount
than the Preliminary Adjustment, Seller shall, within ten (10)
business days after the date of such determination, pay to Buyer the
amount of such difference by wire transfer in immediately available
funds. If Seller fails to make such payment within such ten (10)
business day period, Buyer shall be entitled to set-off the amount of
such payment against the Notes in accordance with the terms thereof.
2.3 Allocation of the Purchase Price. The parties acknowledge and agree that
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the Purchase Price shall be allocated for all purposes (including, without
limitation, Tax reporting purposes) as indicated on Schedule 2.3 hereto.
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The parties each agree to file IRS Form 8594 and all Tax returns in a
manner consistent with such allocation and shall use their reasonable best
efforts to sustain such allocation in any subsequent Tax audit or Tax
dispute. Seller and each Owner acknowledge and agree that the
consideration allocated to the covenants contained in Section 9.10 and the
Consulting Agreements is not an adequate measure of the damages which would
be sustained by Buyer as a result of a breach by Seller and/or each Owner
of their obligations under such covenants and/or agreements, and that such
allocated consideration shall not under any circumstances be admissible as
evidence of damages or for any other purpose in any legal or equitable
proceeding brought by Buyer to enforce such obligations or obtain damages
in respect of a breach thereof.
ARTICLE III
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THE CLOSING
3.1 Closing. The closing of the purchase and sale of the Assets hereunder (the
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"Closing") shall take place on the
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date (the "Closing Date") which, unless otherwise agreed by the parties, is (a)
two business days after the fulfillment of the conditions described in Sections
7.1(d) and 7.2(d); (b) not earlier than July 27, 1999 without Buyer's consent;
and (c) not later than September 23, 1999. The Closing shall take place at the
offices of Buyer's counsel, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Closing shall be effective as of the close of
business on the Closing Date.
3.2 Delivery of Items by Seller and the Owners. Seller and the Owners shall
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deliver to Buyer at the Closing the items listed below:
(a) executed consents in regard to the execution, delivery and performance
by Seller of this Agreement and the transactions contemplated herein;
(b) a certificate, duly executed by the sole member of Seller, on behalf
of Seller, that (i) all representations and warranties of Seller and
the Owners are true and correct in all material respects as of the
Closing, (ii) all obligations of Seller required to be performed prior
to the Closing have been performed, and (iii) all conditions to
Closing contained in Section 7.1 have been satisfied.
(c) satisfactory evidence of the granting of all Consents (as hereinafter
defined) by the applicable third parties listed on Schedule 3.2(c);
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(d) all necessary documentation for the discharge of any registered or
other liens against any of the Assets;
(e) an opinion of counsel for Seller and the Owners, duly executed by such
counsel, covering the matters set forth in Sections 4.1, 4.2 and 4.3
with such qualifications, subject to such assumptions and in such form
as are reasonably satisfactory to Buyer;
(f) a ▇▇▇▇ of sale for the Assets, duly executed by Seller, in
substantially the form attached hereto as Exhibit B;
(g) an assignment of the registered Trademarks, duly executed by Seller,
in substantially the form attached hereto as Exhibit C;
(h) an assignment of any registered Copyrights, duly executed by Seller,
in substantially the form attached hereto as Exhibit D;
(i) an assignment and assumption agreement (the "Contract Assignment") for
the Assumed Contracts, duly executed by Seller, in substantially the
form attached hereto as Exhibit E;
(j) an agreement (each, a "Consulting Agreement") between Buyer and each
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, duly
executed by such person, in substantially the form attached hereto as
Exhibit F;
-10-
(k) an escrow agreement (the "Escrow Agreement"), duly executed by Seller
and the Escrow Agent, in substantially the form attached hereto as
Exhibit G;
(l) a receipt for payment of the Closing Payment, duly executed by Seller;
(m) all tangible property included in the Assets (to be delivered at the
Properties (as hereinafter defined)); and
(n) all Tax good standing and other clearance certificates or similar
documents which are reasonably requested by Buyer or which are
required by any Tax authority to relieve Buyer from (i) any obligation
to withhold any portion of the Purchase Price or (ii) any liability
for the Taxes of Seller or the Owners.
3.3 Delivery of Items by Buyer. Buyer shall deliver to Seller and the Owners
--------------------------
at the Closing the items listed below:
(a) a copy, certified by the Secretary of Buyer, of resolutions duly
adopted by the Board of Directors of Buyer authorizing the execution,
delivery and performance of this Agreement and the transactions
contemplated herein;
(b) a certificate from an authorized officer of Buyer that (i) all
representations and warranties of Buyer are true and correct in all
material respects as of the Closing, (ii) all obligations of Buyer
required to be performed prior to the Closing have been performed, and
(iii) all conditions to Closing contained in Section 7.2 have been
satisfied.
(c) a certificate of incumbency for the officers of Buyer, duly certified
by the Secretary of Buyer;
(d) the Contract Assignment, duly executed by Buyer;
(e) the Notes and the Escrow Agreement, duly executed by Buyer;
(f) the Letter of Credit, duly executed by The Chase Manhattan Bank;
(g) a wire transfer of immediately available funds to Seller constituting
the payment of the Closing Payment; and
(h) an opinion of counsel for Buyer, duly executed by such counsel,
covering the matters set forth in Sections 5.1, 5.2 and 5.3 with such
qualifications, subject to such assumptions and in such form as are
reasonably satisfactory to Seller.
-11-
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE OWNERS
Seller and the Owners, jointly and severally, hereby make the following
representations and warranties to Buyer:
4.1 Organization and Good Standing of Seller. Each of Parent and Subsidiary is
----------------------------------------
a limited liability company duly organized, validly existing and in good
standing under the laws of Delaware. Prior to the Closing, Parent will be
registered and qualified to do business in California, Massachusetts,
Nevada and New York. Seller is not required to be registered or qualified
to do business in any other jurisdiction except for those jurisdictions
where the failure to be so registered or qualified would not have or
reasonably be expected to have a material adverse effect on the Business or
the Assets. Each of Parent and Subsidiary has delivered to Buyer a true
and complete copy of its organization documents as currently in effect.
Except as set forth on Schedule 4.1, Parent does not have any direct or
------------
indirect subsidiaries nor does it own any equity or other proprietary
interest in any corporation, partnership, joint venture, limited liability
company or other entity of any nature whatsoever. Schedule 4.1 is a
------------
complete and correct list of all predecessors of Seller (and their
predecessors).
4.2 Powers; Execution.
-----------------
(a) Each of Parent and Subsidiary has all requisite limited liability
company power and authority (i) to own and operate the Assets; (ii) to
conduct the Business; and (iii) to execute, deliver and perform this
Agreement and all other agreements and/or documents to be executed and
delivered by such entity pursuant to this Agreement (such other
agreements and/or documents, the "Seller Ancillary Agreements"). The
execution and delivery by Parent, Subsidiary, the Trust and each Stock
Trust of this Agreement and the Seller Ancillary Agreements to which
such entity is a party have been duly and validly authorized by all
necessary limited liability company or trust action, as applicable.
This Agreement is, and this Agreement and the Seller Ancillary
Agreements will be as of Closing, the valid and binding obligations of
each of Parent and Subsidiary, enforceable against such entity in
accordance with their respective terms, except to the extent that such
enforcement is limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally.
(b) The Owners have all requisite power and authority to execute, deliver
and perform this Agreement. This Agreement is and will be as of
Closing, the valid and binding obligation of the Owners, enforceable
against the Owners in accordance with its terms, except to the extent
that such enforcement is limited by bankruptcy, insolvency or other
laws affecting the rights of creditors generally.
(c) Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ has all
requisite power and authority to execute, deliver and perform his or
her Consulting
-12-
Agreement. When executed and delivered as of the Closing Date, such
Consulting Agreement will be the valid and binding obligation of such
person, enforceable against him or her in accordance with its terms,
except to the extent that such enforcement is limited by bankruptcy,
insolvency or other laws affecting the rights of creditors generally.
4.3 Breach of Statute or Contract. Except as set forth in Schedule 4.3,
----------------------------- ------------
neither the execution and delivery of this Agreement by Seller and the
Owners nor compliance by Seller and the Owners with the terms and
provisions of this Agreement (a) will conflict with or result in a breach
of any of the terms, conditions or provisions of any of Seller's or Trust's
certificate of incorporation or by-laws (or equivalent governing
instrument) or any contract or other instrument to which any of Seller
and/or the Owners is a party or by which any of Seller and/or the Owners is
or may be bound or constitute a default thereunder which conflict, breach
or default would result or reasonably be expected to result in a material
adverse effect on the Business or the Assets, (b) will result in the
creation or imposition of any Encumbrance upon or give to others any
interest or rights in or with respect to any of the Assets, (c) will
violate any law, or any statute or regulation of any governmental authority
as such law, statute or regulation relates to the Assets or the Business
the violation of which would have or reasonably be expected to have a
material adverse effect on the Business or the Assets, or (d) requires any
approval or consent of any governmental entity or regulatory body, except
for the expiration or early termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
4.4 Owners. Parent is a single member limited liability company wholly owned
------
by the Trust, Schedule 4.4 is a complete and correct list of all of the
------------
Principals and the Stock Trusts and the respective percentage interest
owned beneficially or of record (indicating in each case the nature of
ownership) by each Principal and Stock Trust. There are no outstanding
options, warrants, rights, commitments or agreements of any nature for the
issuance or sale of any membership interest or other equity interest in the
Trust. Except as set forth on Schedule 4.4, there has not at any time
------------
since January 1, 1996 been any redemption, sale or other transfer of any
nature of any ownership interest in Seller.
4.5 No Claims or Litigation. Except as set forth on Schedule 4.5, there is no
----------------------- ------------
pending or, to the knowledge of Seller and any Owner, threatened
litigation, judicial, administrative or arbitral action, proceeding,
governmental investigation or claim (collectively "Litigation") involving
any of Seller and/or the Owners that questions the validity of this
Agreement, or any action taken, or to be taken, by any of Seller and/or the
Owners in connection with this Agreement or that otherwise relates to the
Events, the Publication, the Ancillary Products, the Assets or the
Business. There is no judgment, order, injunction, decree or award
outstanding (whether rendered by a court, administrative agency or
arbitrator), against any of Seller and/or the Owners or by which any of
Seller and/or the Owners is or may be bound which relates to the Events,
the Publication, the Ancillary Products, the Assets or the Business.
-13-
4.6 Legal Compliance. Seller is not in violation of any provision of its
----------------
organization documents or any other instrument, permit, decree, order,
statute, ordinance or governmental regulation the violation of which would
have or reasonably be expected to have a material adverse effect on the
Business or the Assets. Seller has at all times been and is currently
operating the Business in conformity in all material respects with all
applicable laws, ordinances, regulations and directives (including, without
limitation, those pertaining to public health, worker safety, the
environment or the management of pollution or hazardous materials). Seller
has in force all governmental permits, licenses, approvals and
authorizations necessary to conduct the Business except for those the
failure of which to have in force would not have or reasonably be expected
to have a material adverse effect on the Business or the Assets.
4.7 Properties. Seller does not own any real property. Seller leases or
----------
subleases all real property used in the Business (the "Properties").
Schedule 4.7 describes all the Properties, and any Liens thereon,
------------
specifying the name of the lessor or sublessor, the lease term, basic
annual rent and renewal options.
4.8 Financial Statements; Receivables.
---------------------------------
(a) Attached hereto as Schedule 4.8(a) are the following documents
---------------
(collectively, the "Financial Statements"): (i) audited statements of
income of the Business for the fiscal years ended February 28, 1999
and February 28, 1998; and (ii) audited balance sheets of the Business
as of February 28, 1999 and February 28, 1998. The Financial
Statements (i) were prepared in accordance with generally accepted
accounting principles (GAAP) consistently applied throughout the
periods indicated; (ii) are consistent in all material respects with
the books and records of Seller; and (iii) fairly set forth the
results of operations and/or financial position of the Business, for
the period or as of the date indicated, as applicable.
(b) Except as set forth in Schedule 4.8(b), since January 1, 1999, Seller
---------------
(i) has conducted the Business in the ordinary course and consistent
with past practice; (ii) has not experienced any material adverse
change in the Events, the Publication, the Ancillary Products, the
Assets or the Business taken as a whole; and (iii) has not incurred
any liability or transferred or sold any of the assets of the
Business, except for such ordinary course liabilities or transfers
which are consistent in nature and amount with those incurred or
entered into in prior periods.
(c) All accounts receivables described in Section 1.1(u) are valid and
genuine and arose in the ordinary course of business.
(d) Schedule 4.8(d) is a list of certain non-recurring expenses incurred
---------------
by the Business during the fiscal year ended February 28, 1999 and the
compensation paid by the Business to the Principals during the fiscal
year ended February 28, 1999.
-14-
4.9 Title to and Condition of the Assets.
------------------------------------
(a) Seller is the sole and unconditional owner of, and has good title to,
all of the Assets other than certain leasehold or license interests
listed on Schedule 4.12(a). This Agreement and the instruments of
----------------
transfer to be executed and delivered pursuant hereto will effectively
vest in Buyer good title to all of the Assets, other than certain
leasehold or license interests listed on Schedule 4.12(a), free and
-----------------
clear of all Encumbrances other than those included in the Assumed
Liabilities. No Owner has any direct ownership interest in any of the
Assets, and no other person or entity has any ownership interest in
any of the Assets other than assets subject to certain leasehold or
license interests listed on Schedule 4.12(a).
----------------
(b) Schedule 4.9 is a complete and correct list of each item of furniture,
------------
fixtures, computers, communications devices, equipment, machinery
and/or other tangible assets included in the Assets which is owned by
Seller which has a net book value in excess of One Thousand Five
Hundred Dollars ($1,500). Each item listed on Schedule 4.9 is in
------------
working condition (subject to ordinary course maintenance and repairs)
sufficient to continue to operate the Business in the ordinary course.
(c) Except for the Excluded Assets, the Assets include all assets used in
connection with the operation of the Business and/or necessary for the
continued operation of the Business by Buyer.
4.10 Exhibitors.
----------
(a) Schedule 4.10(a) hereto contains a complete and correct list of all
----------------
currently outstanding contracts (the "Exhibitor Contracts") with
exhibitors for the rental of exhibit space at any Future Event,
whether written or oral, indicating for each exhibitor the amount of
exhibit space rented, the booth assigned, the total exhibit fee, the
amount of deposit received by Seller and whether a written contract
had been executed by such exhibitor. All of such deposits have been
reflected as deferred revenue in the Closing Liabilities calculated in
accordance with Section 2.2. Except as described on Schedule 4.10(a),
----------------
Seller has not committed to provide any exhibit space, discounts,
barters, rebates or other special concessions for any of the Future
Events.
(b) Except as indicated on Schedule 4.10(b), all Exhibitor Contracts have
----------------
been entered into in the ordinary course of business pursuant to the
standard forms used by Seller for the Future Events, copies of which
forms are attached hereto as Schedule 4.10(b), and at the standard
----------------
rates indicated on Schedule 4.10(b).
----------------
(c) Schedule 4.10(c) is a complete and correct copy of the exhibitor lists
----------------
(indicating for each exhibitor the amount of exhibit space rented and
the rental fee paid) for each of the Events held in or since the
fiscal year ended February 28, 1999, each of which lists is complete
and correct.
-15-
4.11 Advertisers.
-----------
(a) Schedule 4.11(a) hereto contains a complete and correct list of all
----------------
currently outstanding contracts (the "Advertiser Contracts") with
advertisers or other customer for the sale of advertising space in any
Future Publication, whether written or oral, indicating for each
advertiser the amount of advertising space sold, the total advertising
fee, the amount of prepayment received by Seller and whether a written
contract had been executed by such advertiser or customer. All of
such prepayments have been reflected as deferred revenue in the
Closing Liabilities calculated in accordance with Section 2.2. Except
as described on Schedule 4.11(a), Seller has not committed to provide
----------------
any advertising space, discounts, barters, rebates or other special
concessions for any of the Future Publications.
(b) Except as indicated on the deviation report delivered by Seller to
-------------------------------------------
Buyer, all advertising has been sold in the ordinary course of
-----
business pursuant to the standard invoice used by Seller for the
Future Publications, a copy of which invoice is attached hereto as
Schedule 4.11(b), and at the standard rates indicated on Schedule
---------------- --------
4.11(b).
-------
(c) Seller has delivered to Buyer a complete and correct copy of the
-----------------------------
advertiser lists (indicating for each advertiser the amount of
advertising space sold and the advertising fee paid) for each of the
Publication published in or since the fiscal year ended February 1999.
(d) Except as set forth on Schedule 4.11(d), none of the advertisers which
----------------
purchased in excess of Ten Thousand Dollars ($10,000) in advertising
in the Publication during the fiscal year ended February 28, 1999 (i)
has canceled, suspended or materially decreased its level of
advertising in the Publication, or (ii) to the knowledge of Seller or
the Owners, has indicated an intention to do so.
4.12 Contracts.
---------
(a) The items listed on Schedule 4.12(a) consist of all Assumed Contracts
----------------
(other than Exhibitor Contracts and Advertiser Contracts) which (i)
would reasonably be expected to involve the payment of cash or non-
cash consideration in excess of Fifty Thousand Dollars ($50,000) by
any party, (ii) limit the right of Seller to engage in any business
activity or compete with any person or entity in any area or to own,
operate, sell, transfer, pledge or otherwise dispose of or encumber
any Asset or would so limit the right of Buyer after the Closing Date,
(iii) grant a license or other similar right to use any of the
Trademarks or any of the Assets described in Section 1.1(d), (iv)
grant exclusive rights, (v) are not cancelable by Seller on notice of
not more than ninety (90) days and without liability, penalty or
premium, or (vi) are leases, licenses, facility contracts, facility
date reservations or hotel or housing arrangements. Except as set
forth on Schedule 4.12(a), all of the Assumed Contracts are in full
----------------
force and effect, and neither Seller nor, to the
-16-
knowledge of Seller or any Owner, any other party thereto, is in
default in respect of any of the terms or provisions thereof except
for defaults which individually or in the aggregate would not or would
not reasonably be expected to have a material adverse effect on the
Assets or the Business. Except as set forth on Schedule 4.12(a), there
---------------
are no disputes or disagreements pending or, to the knowledge of
Seller or any Owner, threatened among Seller and any other party under
any of the Assumed Contracts, and, to the knowledge of Seller or any
Owner, there is no basis for any such dispute or disagreement. True
and correct copies of the written Assumed Contracts listed on Schedule
--------
4.12(a) have been delivered to Buyer prior to the date hereof.
-------
(b) Schedule 4.12(b) sets forth all of the consents of third parties (the
----------------
"Consents") required pursuant to any of the Assumed Contracts to
effectively assign such Assumed Contracts to Buyer without impairing
upon the rights of Seller (and of Buyer after the Closing) as a result
of the transactions contemplated herein, without regard to the
provisions of Section 1.3(b).
4.13 Attendees.
---------
(a) Schedule 4.13(a) hereto contains a complete and correct list of the
----------------
number of attendees (by relevant categories) at each of the Events
held in or since the fiscal year ended February 28, 1999. Seller has
no currently outstanding legal obligation to provide complimentary or
other admission to any potential attendee for any of the Future
Events, and has not received any payments in respect of such
obligation to provide admission except as included in the Closing
Liabilities. Seller has heretofore provided Buyer with access to
complete and correct lists (the "Attendee Lists") of the registered
attendees at the Events held in or since the fiscal year ended
February 28, 1999.
(b) Except as described on Schedule 4.13(b), neither Seller nor any Owner
----------------
has disclosed, rented and/or otherwise granted any right to use the
Attendee Lists to any other party. Seller has taken all reasonably
necessary actions to maintain the confidentiality of all information
contained on the Attendee Lists, and, to the knowledge of Seller and
any Owner, there have been no breaches of the confidentiality of any
of such information.
4.14 Subscribers.
------------
(a) Schedule 4.14(a) is a complete and correct copy of the two most recent
----------------
audited circulation reports or publisher's circulation statements for
the Publication. Such reports are accurate and complete in all
material respects, and there are no pending claims on such audits.
There has been no material decrease in the qualified circulation of
the Publication since the date of the most recent respective report
included in Schedule 4.14(a). The Publication currently utilizes and
----------------
is eligible to continue to receive second class mailing privileges.
-17-
(b) Seller has no currently outstanding legal obligation to provide
complimentary or discounted copies of any of the Future Publications,
and has not received any payments in respect of such obligation to
provide copies except as included in the Closing Liabilities. Seller
has heretofore provided Buyer with access to complete and correct
lists (the "Subscriber Lists") of the registered subscribers to the
Publication published in or since the fiscal year ended February 28,
1999.
(c) Except as described on Schedule 4.14(c), neither Seller nor any Owner
----------------
has disclosed, rented and/or otherwise granted any right to use the
Subscriber Lists to any other party. Seller has taken all reasonably
necessary actions to maintain the confidentiality of all information
contained on the Subscriber Lists, and, to the knowledge of Seller and
any Owner, there have been no breaches of the confidentiality of any
of such information.
4.15 Promotional Materials. Seller has delivered to Buyer a copy of all
---------------------
attendee, exhibitor, subscriber and/or advertiser promotional materials
used in connection with any of the Events held or to be held, or
Publication published or to be published, in 1998 or 1999.
4.16 The Trademarks. Schedule 4.16 contains a list of all of the Trademarks that
-------------- -------------
are registered trademarks. Except for certain of the Assumed Contracts (as
indicated on Schedule 4.12(a)), Seller has not granted, licensed,
----------------
sublicensed, assigned, transferred or otherwise conveyed any right, title
or interest in or to any of the Trademarks to any other person, and, to the
knowledge of Seller and any Owner, no person or entity other than Seller
has any right to use, license, sublicense or operate under any of the
Trademarks. Schedule 4.16 also sets forth all registrations and
-------------
applications for registration of the Trademarks, together with dates of
registration and the expiration and renewal dates of such registrations.
None of the Trademarks is subject to any pending or, to the knowledge of
Seller and the Owners, threatened challenge or reversion, and the
consummation of the transactions contemplated by this Agreement will not
create any right of termination, cancellation or reversion with respect
thereto anywhere in the world. Except as set forth on Schedule 4.16, to the
-------------
knowledge of Seller and the Owners, there is not currently and has not been
any infringement by others of any of the Trademarks. The use of the
Trademarks by Seller does not infringe, and there has not been any other
infringement by Seller of, any proprietary right, trademark, trade name or
service ▇▇▇▇ of any other party nor has there been any allegation thereof
to any Owner or Seller.
4.17 The Copyrights. Seller is the sole and exclusive owner of the Copyrights
--------------
and has no obligation to pay any royalty, license fee, commission or other
amount howsoever characterized, or to obtain any third-party clearances or
consents in respect of any of the Copyrights or any use thereof. Each issue
of the Publication published since January 1, 1998 has been imprinted with
such copyright notices as conform to the copyright laws of the United
States.
4.18 Insurance. Schedule 4.18 is a complete and correct list of all insurance
--------- -------------
policies of Seller which relate to the Business other than those policies
which are related to the Plans (the "Insurance Policies"). Seller has
delivered to Buyer true copies of all of the Insurance Policies. Seller has
taken all required action to maintain all of the Insurance
-18-
Policies in effect, and has paid all premiums due thereon in a timely
manner. Schedule 4.5 contains a complete and correct list of all claims
------------
which relate to the Business currently pending under any of the Insurance
Policies.
4.19 Related Party Transactions. Schedule 4.19 is a complete and correct
-------------------------- -------------
description of (a) all current agreements, arrangements and understandings
and (b) all transactions since March 1, 1997, between or among Seller, on
the one hand, and any Owner or any party in any way affiliated with any
Owner or Seller, on the other hand.
4.20 Employees and Agents.
--------------------
(a) Schedule 4.20(a) is a complete and correct list of all current
----------------
employees of Seller or employees otherwise dedicated to the Business
(the "Employees"). Except as listed on Schedule 1.2(f) or Schedule
--------------- --------
4.12(a), no Employee is employed by Seller pursuant to an employment
-------
agreement. Seller is in compliance with all applicable labor and
employment laws and regulations (including, without limitation, laws
prohibiting discrimination and sexual harassment) regarding the
Employees and/or any former employees of the Business except where the
failure to comply would not have or reasonably be expected to have a
material adverse effect on the Business or the Assets. Schedule
--------
4.20(a) indicates, as to each Employee, (i) full or part time status;
-------
(ii) current salary, bonus, commissions and any other compensation;
(iii) most recent date and amount of compensation increase; (iv) job
title and/or function; (v) years of service; (vi) any outstanding
amounts due as compensation or otherwise, including accrued and unused
vacation or sick leave entitlement in respect of any period of past
service to Seller; and (vii) any notice, separation pay or other
termination provisions of employment. None of the Employees (other
than the Principals) has notified the Seller or any Owner in writing
of his or her intention to terminate his/her employment with the
Business.
(b) Schedule 4.20(b) is a complete and correct list of all sales agents,
----------------
representatives, consultants, contract personnel, freelancers and
other independent service providers (collectively, "Agents") currently
retained by Seller in connection with the Business. Schedule 4.20(b)
----------------
indicates, as to each Agent, (i) current rate or terms of
compensation; (ii) current assignment or responsibilities; (iii) term
and/or termination provisions of current engagement; and (iv) any
outstanding amounts due as compensation or otherwise.
4.21 Employee Benefit Plans. Schedule 4.21 contains a description of all
---------------------- -------------
employee benefit plans, policies, practices and arrangements (including,
without limitation, those within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended) of Seller
applicable to any of the Employees (collectively, the "Plans"), including,
without limitation, retirement, disability, sick leave, medical, dental and
other health insurance, life insurance, separation, stock options, deferred
compensation and vacation. All of the Plans are and have at all times been
in compliance in all material respects with and have been administered in
all material respects in accordance with all
-19-
applicable laws. Buyer will not acquire any liability, with respect to any
Plan, whether terminated or not on or before the Closing Date, in regard to
any of the Employees, except as included in the Closing Liabilities. Seller
shall remain the plan sponsor of each of its Plans.
4.22 Tax Returns and Payments. For purposes of this Agreement, the term "Tax"
------------------------
or "Taxes" means all federal, state, local, foreign and other taxes,
charges, fees, duties, levies, imposts, customs or other assessments,
including all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, profit share, license, lease,
service, service use, value added, withholding, payroll, employment,
unemployment, disability, social security (or similar), registration,
excise, estimated, severance, stamp, occupation, premium, real property,
personal property, windfall profits, environmental, alternative or add-on
minimum, or other taxes, fees, assessments, customs, duties, levies,
imposts, or charges of any kind whatsoever, together with any interest,
penalties, additions to tax, fines or other additional amounts imposed
thereon or related thereto, and the term "Tax" means any one of the
foregoing Taxes. The term "Tax Returns" means all returns, declarations,
reports, statements and other documents of, relating to, or required to be
filed in respect of, any and all Taxes, and the term "Tax Return" means any
one of the foregoing Tax Returns.
(a) All material Tax Returns required to be filed (taking into account all
extensions) on or before the Closing Date for, by, on behalf of or
with respect to the Seller, including those relating to the Business,
the Assets and the Assumed Liabilities, and those which include or
should include the Seller, the Business, the Assets or the Assumed
Liabilities have been or will be timely filed with the appropriate
foreign, federal, state and local authorities on or before the Closing
Date, and all Taxes owed (whether or not shown as due on such Tax
Returns) have been or will be timely paid in full on or before the
Closing Date unless such Taxes are not due and payable until after the
Closing Date, in which event they will be timely paid on or before the
due date;
(b) All of the Tax Returns have been or will be properly and accurately
completed in all material respects, fairly present or will fairly
present the information purported to be shown therein in all material
respects, and reflected or will reflect all liabilities for Taxes for
the periods covered by those Tax Returns in all material respects;
(c) Except as provided in Schedule 4.22(c), none of the Tax Returns is now
-----------------
under audit or examination by any foreign, federal, state or local
authority and no issues have been raised (and are currently pending)
by any such authority with respect to any Tax Returns and there are no
agreements, waivers or other arrangements providing for an extension
of time with respect to the assessment or collection of any Tax or
deficiency of any nature against the Seller, the Business or the
Assets, or with respect to any of the Tax Returns, or any suits or
other actions, proceedings, investigations or claims now pending or
threatened against the Seller, the Business or the Assets with respect
to any Tax;
-20-
(d) Except as otherwise provided in Section 9.3, Seller will pay all Taxes
that, if not paid, would result in a lien or Encumbrance on Buyer's
assets or the assessment against the Buyer, whether by reason of
transferee liability or otherwise, of any liability for any Tax of
Seller or the Owners in connection with the transactions set forth in
this Agreement or otherwise; and
(e) There are no Tax liens on any of the Assets, and, assuming Buyer's
compliance with its obligations under Section 9.3, none will arise as
a result of the transactions contemplated by this Agreement.
4.23 Environmental Matters. Seller has not caused or allowed, or contracted
---------------------
with any party for, the generation, use, transportation, treatment, storage
or disposal of any Hazardous Substances (as defined below) in connection
with the operation of the Business or otherwise. Seller, the operation of
the Business, and all the Properties are in compliance in all material
respects with all applicable Environmental Laws (as defined below) and
orders or directives of any governmental authorities having jurisdiction
under such Environmental Laws, including, without limitation, any
Environmental Laws or orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances.
Seller has not received any citation, directive, letter or other
communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any person arising out of the occupation of the Properties,
or the conduct of the Business, and neither Seller nor any Owner is aware
of any basis therefor. Seller has obtained and is maintaining in full
force and effect all necessary permits, licenses and approvals required by
all Environmental Laws applicable to the Business, the Properties and the
operations conducted thereon (including operations conducted by other
lessees or sublessees of the Properties) the failure of which to obtain
would have or reasonably be expected to have a material adverse effect on
the Business or the Assets, and is in compliance in all material respects
with all such permits, licenses and approvals. Seller has not caused or
allowed a release, or a threat of release, of any Hazardous Substance onto,
at or near the Properties, and neither the Properties nor, to the knowledge
of Seller or any Owner, any property at or near the Properties has ever
been subject to a release, or a threat of release, of any Hazardous
Substance. For the purposes of this Agreement, the term "Environmental
Laws" shall mean any Federal, state or local law or ordinance or regulation
pertaining to the protection of human health or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency Planning
-- ----
and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and the
-- ----
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.
-- ---
For purposes of this Agreement, the term "Hazardous Substances" shall
include oil and petroleum products, asbestos, polychlorinated biphenyls,
urea formaldehyde and any other materials classified as hazardous or toxic
under any Environmental Laws.
4.24 Software. Schedule 4.24 is a complete and correct list of all computer
-------- -------------
software used in the Business, indicating for each software program whether
Seller licenses such software program or owns such software program and, in
the case of each licensed software
-21-
program, the service release level and/or version. Except as set forth on
Schedule 4.24, each license in respect of the computer software programs
used by Seller is in full force and effect and is validly existing for each
user of such program. All of such computer software programs owned by
Seller was designed or has been successfully modified to store four-digit
years and to accurately process (calculate, compare and sequence) date/time
data after December 31, 1999 in the same manner and with the same
functionality as prior to December 31, 1999, provided that all other
products (for example hardware, software, and firmware) used with such
owned computer software programs properly exchange accurate and century
specific date data with such owned computer software programs. The
foregoing warranty shall not cover hardware, software or firmware
(including interfaces) and other product external to such owned computer
software.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to Seller and
the Owners:
5.1 Organization and Good Standing of Buyer. Buyer is a corporation duly
---------------------------------------
organized, validly existing and in good standing under the laws of the
State of New York.
5.2 Powers; Execution. (a) Buyer has all requisite corporate power and
-----------------
authority (i) to own and operate its assets; (ii) to conduct its business;
and (iii) to execute, deliver and perform this Agreement and all other
agreements to be executed and delivered by Buyer pursuant to this Agreement
(such other agreements, the "Buyer Ancillary Agreements"). The execution
and delivery of this Agreement and the Buyer Ancillary Agreements has been
duly and validly authorized by all necessary corporate action on the part
of Buyer. This Agreement is, and this Agreement and the Buyer Ancillary
Agreements will be as of Closing, the valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms,
except to the extent that such enforcement is limited by bankruptcy,
insolvency or other laws affecting the rights of creditors generally.
5.3 Breach of Statute or Contract. Neither the execution and delivery of
-----------------------------
this Agreement by Buyer nor compliance by Buyer with the terms and
provisions of this Agreement (a) will conflict with or result in a breach
of any of the terms, conditions or provisions of its certificate of
incorporation or by-laws or any contract or other instrument to which Buyer
is a party or by which Buyer is or may be bound or constitute a default
thereunder which conflict, breach or default would result in or reasonably
be expected to result in a material adverse effect on Buyer, or (b) will
violate any law, or any statute or regulation of any governmental authority
as such law, statute or regulation relates to Buyer, the violation of which
would have or reasonably be expected to have a material adverse effect on
Buyer.
5.4 No Claims or Litigation. There is no pending or, to the knowledge of
-----------------------
Buyer, threatened Litigation involving Buyer that questions the validity of
this Agreement, or any action taken, or to be taken, by Buyer in connection
with this Agreement. There is no judgment,
-22-
order, injunction, decree or award outstanding (whether rendered by a
court, administrative agency or arbitrator), against Buyer or by which
Buyer is or may be bound which relates to the transaction contemplated in
this Agreement.
5.5 Financial Capability. At the Closing, Buyer will have funds necessary
---------------------
to satisfy all of its obligations under Section 2.1 of this Agreement.
ARTICLE VI
-----------
CONDUCT OF BUSINESS PENDING CLOSING
6.1 Conduct of Business. Seller and the Owners, jointly and severally,
-------------------
covenant and agree with Buyer that between the date of this Agreement and
the Closing Date:
(a) The Business will be conducted by Seller in the ordinary course and in
substantially the same manner as heretofore conducted;
(b) Seller will maintain insurance on the Assets and the Business as
heretofore in effect;
(c) Without Buyer's prior written approval, no increase in either the base
pay, commission rate, bonus, benefits or other compensation to any of
the Employees or Agents will be announced, instituted or paid (except
for normal merit increases and earned non-discretionary bonuses) and
none of the Employees or Agents will be terminated other than for
cause, provided, that, nothing contained in this Section 6.1(c) shall
-------- --------------
prohibit Seller, with prior notice to Buyer, from paying bonuses or
other payments to Employees in connection with the closing of the
transactions contemplated hereby;
(d) Without Buyer's prior written approval, no material contract or
commitment related to the Business or the Assets (including, without
limitation, canceling, postponing or relocating any of the Events,
scheduling any new Events or creating any new licensing, management or
vendor arrangements pertaining to the Events or any of the Assets)
will be entered into by Seller;
(e) Without Buyer's prior written approval, Seller shall not take any
action or agree to amend, terminate or otherwise alter any of the
Assumed Contracts;
(f) Seller will use commercially reasonable efforts to preserve intact the
Assets and the existing relationships and goodwill of the Business
with its employees, exhibitors, attendees, vendors, sponsors,
speakers, facility lessors, official hotels, customers, and other
third parties involved in the Business;
(g) Except as provided in Section 6.1(a), Seller will not sell, transfer,
license, otherwise dispose of, or create or permit to become effective
any Encumbrance on, any of the Assets, and will not agree or commit to
do any of the foregoing;
-23-
(h) Seller will not take, omit to take, or agree to take any action that
would make any representation or warranty of Seller hereunder
inaccurate in any material respect;
(i) Seller will promptly advise Buyer of the commencement or threat
against Seller or the Business of any material Litigation relating to
or affecting the Assets or the transaction contemplated by this
Agreement; and
(j) Neither Seller nor any Owner nor any of their respective
representatives will, directly or indirectly, solicit, review,
discuss, negotiate or otherwise consider or accept any inquiry or
proposal relating to the sale of any of the Assets, the Events, the
Business or any partnership or other equity interest in Seller other
than in connection with transactions contemplated by this Agreement,
and will promptly inform Buyer of any such inquiry or proposal and
will provide Buyer with copies of all related documentation.
6.2 Access to the Employees. From the date of this Agreement to the Closing
-----------------------
Date, Seller shall provide, and the Owners shall ensure that Seller
provides, Buyer with reasonable access, during normal business hours and
upon advance notice, to the Employees (provided that one or more of the
Principals, ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇ are present), books and records of
the Business for Buyer's continuing review of the Business, preparation of
an integration and transition plan for the Business, and review and
solicitation of the Employees pursuant to Section 9.1.
6.3 Best Efforts. From the date of this Agreement to the Closing Date, Buyer,
------------
Seller and the Owners shall use their respective best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary under applicable laws and regulations to consummate
the transactions contemplated by this Agreement. Without limiting the
foregoing, no later than one business day after the date of this Agreement,
Buyer and Seller shall each complete and file their respective Premerger
Notification and Report Forms as required by the HSR Act (requesting early
termination on such filings), and the cost of such filings shall be borne
equally by Buyer and Seller.
6.4 Continuing Disclosure. Seller shall have the continuing obligation
---------------------
promptly to advise Buyer with respect to any matter hereafter arising or
discovered that, if existing or known at the date of this Agreement, would
have been required to be set forth or described in a schedule to this
Agreement, or that constitutes a breach or prospective breach of this
Agreement by Seller. The delivery of any such notice shall not affect
Buyer's remedies hereunder.
-24-
ARTICLE VII
-----------
CONDITIONS TO CLOSING; TERMINATION
7.1 Conditions to the Obligations of Buyer to Close. The obligation of Buyer
-----------------------------------------------
to close hereunder shall be subject to satisfaction or waiver by Buyer of
the following conditions at or prior to the Closing:
(a) Seller and the Owners shall have delivered to Buyer each of the items
listed in Section 3.2;
(b) Each of the representations and warranties of Seller and the Owners
made in or pursuant to this Agreement shall be true and correct in all
material respects as of the Closing Date, subject only to Seller's
delivery of the Updated Closing Statement to Buyer two business days
prior to the Closing Date;
(c) Seller and the Owners shall have fully performed and complied in all
material respects with all of the covenants, obligations, agreements
and conditions required by this Agreement to be performed or complied
with by Seller and the Owners prior to the Closing;
(d) Any applicable waiting period under the HSR Act relating to the
transaction contemplated herein shall have expired or been terminated;
(e) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
Closing; and
(f) There shall have been no material adverse change in the financial
conditions, operations, assets or liabilities of the Business taken as
a whole.
In the event that the condition set forth in Section 7.1(b) cannot be made
and/or the delivery provided for under Section 3.2(b) cannot be made
because of any of the representations or warranties contained in this
Agreement and made by Seller and/or the Owners, which was true and correct
on and as of the date of this Agreement, is not true and correct in all
material respects on and as of the Closing Date, Seller shall notify Buyer
of the reason or reasons therefor (a "Seller Closing Date Disclosure").
Upon notification of a Seller Closing Date Disclosure, Buyer shall have the
option, in addition to its rights under Section 7.3, to (x) waive
compliance with Section 7.1(b) and/or 3.2(b), as applicable, in respect of
such Seller Closing Date Disclosure, and consummate the transactions
contemplated by this Agreement, or (y) require Seller and/or Owners to make
commercially reasonable efforts to cure, to Buyer's reasonable
satisfaction, such failure to be true and correct to the extent susceptible
to cure, it being understood that, in the event that Buyer elects to
exercise its right under clause (x), neither Seller nor any Owner, nor any
of their respective affiliates, directors, officers, shareholders,
employees, agents or representatives shall have any liability or obligation
to Buyer as a result of such Seller Closing Date Disclosure pursuant to
Section 8.2(b).
-25-
7.2 Conditions to the Obligations of Seller to Close. The obligations of
------------------------------------------------
Seller to close hereunder shall be subject to satisfaction or waiver by
Seller of the following conditions at or prior to the Closing:
(a) Buyer shall have delivered to Seller and the Owners each of the items
listed in Section 3.3;
(b) Each of the representations and warranties of Buyer made in or
pursuant to this Agreement shall be true and correct in all material
respects as of the Closing Date;
(c) Buyer shall have fully performed and complied in all material respects
with all of the covenants, obligations, agreements and conditions
required by this Agreement to be performed or complied with by Buyer
prior to the Closing;
(d) Any applicable waiting period under the HSR Act relating to the
transaction contemplated herein shall have expired or been terminated;
and
(e) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
Closing.
7.3 Termination. This agreement may be terminated at any time prior to the
-----------
Closing:
(a) by the mutual written consent of Buyer, Seller and the Owners;
(b) by Buyer or Seller if the Closing shall not have occurred by September
23, 1999; provided, however, that the right to terminate this
-------- -------
Agreement under this Section 7.3(b) shall not be available to any
party if a breach by such party of any of its representations,
warranties or agreements contained in this Agreement has been the
cause of or resulted in the failure of the Closing to occur on or
before such date;
(c) by either Buyer or Seller if any court or governmental body or agency
thereof shall have enacted, promulgated or issued any statute, rule,
regulation, ruling, writ or injunction, or taken any other action,
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and all appeals and means of appeal therefrom have
been exhausted;
(d) by Buyer, if any of the conditions specified in Section 7.1 have not
been met or waived prior to such time and such condition can no longer
be sati sfied; or
(e) by Seller, if any of the conditions specified in Section 7.2 shall not
have been met or waived prior to such time and such condition can no
longer be satisfied.
7.4 Effect of Termination. If this Agreement is validly terminated, this
---------------------
Agreement shall forthwith become null and void and there shall be no
liability on the part of any party hereto, except that, subject to the last
paragraph of Section 7.1 hereof, nothing herein
-26-
shall relieve either party from liability for a breach of this Agreement
prior to the termination hereof.
ARTICLE VIII
------------
INDEMNITIES
8.1 Survival. All of the representations, warranties, agreements and covenants
--------
contained in this Agreement shall be continuing and shall survive the
Closing irrespective of any investigation conducted by or on behalf of any
party hereto; provided, that (a) the representations and warranties of
--------
Seller and the Owners contained in Article IV shall survive the Closing for
two years only, except for those contained in Section 4.9(a), which shall
survive indefinitely and those contained in Sections 4.21, 4.22 and 4.23,
which shall survive for the duration of the applicable statute of
limitation (giving effect to any waiver, mitigation or extension thereof,
except for any caused by Buyer); and (b) the representations and warranties
of Buyer contained in Article V shall survive the Closing for two years
only. Notwithstanding the preceding sentence, the expiration of any
representation or warranty shall not be applicable to any claim as to which
notice has been delivered to the other party prior to the applicable
expiration date.
8.2 General Indemnification by Seller and the Owners. Seller and the Owners,
------------------------------------------------
jointly and severally, agree to protect, defend, indemnify and hold
harmless Buyer and its successors and assigns, from, against and in respect
of any and all losses, costs, damages, charges or expenses on an after-tax
basis of any nature (including reasonable attorney's fees) resulting from
(a) any liabilities of Seller or any Owner in existence as of the Closing
Date and/or related to the conduct of the Business up to the Closing Date
of any nature, whether absolute, contingent or otherwise (including without
limitation Tax Liabilities), except for the Assumed Liabilities; (b)
subject to the last paragraph of Section 7.1, any breach of any
representation or warranty or nonfulfillment of any agreement or covenant
on the part of Seller and/or the Owners contained in this Agreement or in
any of the instruments, documents or agreements delivered by Seller and/or
the Owners in connection herewith; (c) any liability for severance or other
payments or benefits due, pursuant to clause (2) of the fourth sentence of
Section 9.1, to the Employees who accept Buyer's offers of employment but
do not remain in the employ of Buyer for more than six months after the
Closing; and/or (d) any liability associated with the continuation of
health coverage required under Section 4980B of the Code ("COBRA coverage")
for employees or former employees of Seller who have had a "qualifying
event" (as defined in Section 4980B(f)(3) of the Code) on or prior to the
Closing Date. Notwithstanding the foregoing sentence, the indemnification
liability of any Principal for any breach or nonfullfillment of his or her
obligations under Sections 9.10 or 9.11 or a Consulting Agreement shall be
solely such Principal's liability and not joint and several obligations of
Seller and the Owners.
8.3 General Indemnification by Buyer. Buyer agrees to protect, defend,
--------------------------------
indemnify and hold harmless Seller and the Owners and their respective
successors and assigns from, against and in respect of any and all losses,
costs, damages, charges or expenses of any
-27-
nature (including reasonable attorney's fees) resulting from (a) the
Assumed Liabilities; (b) any breach of any representation or warranty or
nonfulfillment of any agreement or covenant on the part of Buyer contained
in this Agreement or in any of the instruments or documents delivered by
Buyer in connection herewith; (c) the ownership, lease, license or use of
the Assets and the operation of the Business by Buyer from and after the
Closing Date (including, without limitation, Taxes related thereto); and/or
(d) use by Buyer of the Excluded Trademarks pursuant to Section 9.7.
8.4 Notification of Claims. The parties hereto shall, in a timely manner (but
----------------------
in any event within ten (10) business days of receipt), (a) provide each
other with prompt notice of all third party actions, suits, proceedings,
claims, demands or assessments subject to the indemnification provisions of
this Article VIII (collectively, "Third Party Claims") brought at any time
following the Closing Date, and (b) provide each other with notice of all
other claims or demands for indemnification pursuant to the provisions of
this Article VII; provided, however, that the failure to provide timely
-------- -------
notice shall not affect the indemnification obligations of any party except
to the extent such party shall have been materially prejudiced as a result
of such failure. The party against whom a Third Party Claim is brought
shall make available to the indemnifying party all relevant information
material to the defense of such claim. The indemnifying party shall have
the right to control the defense of all Third Party Claims with counsel of
its choice, subject to the indemnified party's right to participate in the
defense; provided, that the indemnified party may control such defense at
--------
the indemnifying party's expense in the event of a failure by the
indemnifying party to assume control of the defense of any Third Party
Claim within 30 days after the indemnifying party is notified of such Third
Party Claim. The indemnified party shall have the right to elect to join
or participate in the defense of any Third Party Claim at its sole expense,
and no claim shall be settled or compromised without the consent of the
indemnified party, which consent shall not be unreasonably withheld or
delayed; provided, however, that in the event the indemnified party refuses
-------- -------
to consent to a settlement acceptable to the indemnifying party which is
capable of settlement by the payment of money by the indemnifying party
only, the indemnifying party may pay the amount of the proposed settlement
to the indemnified party and shall thereupon be released from any further
liability with respect to such action, suit or proceeding, if such proposed
settlement (i) does not require an admission of liability or wrong doing on
the part of the indemnified party, (ii) does not limit conduct of
indemnified party's business or impose a future obligation on the
indemnified party to do or refrain from doing anything and (iii) does not
affect the indemnified party's business reputation.
8.5 Limitations. Notwithstanding anything to the contrary contained in this
-----------
Agreement, any indemnity claim by Buyer against Seller and/or the Owners
pursuant to Section 8.2(b) in respect of a breach of a representation
and/or warranty contained in Article IV (other than those representations
and warranties contained in Section 4.9(a), 4.21, 4.22 or 4.23) hereunder
shall be payable by Seller and/or the Owners only in the event that the
aggregate amount of all such claims so payable exceeds the amount of Five
Hundred Thousand Dollars ($500,000), in which event Seller and/or the
Owners shall be liable to Buyer for the full amount of all such claims in
excess of One Hundred Thousand Dollars
-28-
($100,000), including the amount initially excluded hereunder. In no event
shall the aggregate liability of (a) Seller and the Owners to Buyer
pursuant to Section 8.2(b) exceed one-half ( 1/2) of the Purchase Price,
(b) Seller and the Owners to Buyer pursuant to Section 8.2(c) exceed Two
Hundred Fifty Thousand Dollars ($250,000) less the amounts paid by Seller
pursuant to its severance policies as described on Schedule 4.21 to
Employees who do not accept Buyers offer of Employment pursuant to Section
9.1 hereof and (c) any Principal to the Buyer pursuant to Section 8.2
exceed one-seventh (1/7th) of the Purchase Price. Notwithstanding clause
(a) of the foregoing sentence, after the first anniversary of the Closing
Date, the aggregate maximum liability of Seller and the Owners to Buyer
pursuant to Section 8.2(b) shall not exceed the sum of (x) one-third (1/3)
of the Purchase Price and (y) the aggregate amount of any indemnification
claims of Buyer pursuant to Section 8.2(b) made or satisfied before the
first anniversary of the Closing Date, which sum in any event shall not
exceed one-half (1/2) of the Purchase Price.
8.6 Tax and Other Benefits. Payments by an indemnifying party pursuant to this
----------------------
Article VIII shall be limited to any indemnity payment otherwise due
hereunder that remains after deducting therefrom (i) any Tax benefit to the
indemnified party or any affiliate thereof, and (ii) any insurance proceeds
and any indemnity, contribution or other similar payment recoverable by the
indemnified party or its affiliates from any third party with respect
thereto.
8.7 Sole and Exclusive Remedy. The parties hereto hereby acknowledge and agree
-------------------------
that, except as otherwise expressly provided herein or in any of the other
instruments, documents and agreements delivered in connection herewith,
their sole and exclusive remedy with respect to any and all claims relating
to the subject matter of this Agreement and any such other instrument,
document or agreement shall be pursuant to the indemnification provisions
set forth in this Article VIII. In furtherance of the foregoing, each party
hereby acknowledges and agrees that no party shall be liable to any other
party for special, indirect, consequential or punitive damages and each
such party hereby waives, to the fullest extent permitted under applicable
law, any and all rights, claims and causes of action it may have against
any other party hereto arising under or based upon any applicable law.
8.8 Nature of Payments. Payments made pursuant to this Article VIII shall
------------------
constitute adjustments to the Purchase Price.
ARTICLE IX
----------
FURTHER COVENANTS
9.1 Employees. Buyer shall offer to employ all of the Employees who are on
---------
active employment status as of the Closing Date (other than the
Principals), including anyone on maternity leave, effective on the day
immediately following the Closing Date which offer of employment will
include group health plan benefits which do not contain any exclusion or
limitation on the basis of any preexisting condition of such employee (or
the
-29-
employee's spouse and beneficiaries) which will commence on the date of
employment. Seller shall, and the Owners shall ensure that Seller shall
reasonably cooperate with Buyer to secure acceptance of Buyer's offers of
employment by all of such Employees. Except as included in the Closing
Liabilities, (a) Buyer shall not be liable for compensation, separation or
any other payments due to any of the Employees who do not accept Buyer's
offers of employment; (b) Buyer shall not be responsible for any payments
(including, without limitation, those in respect of separation, sick pay
and accrued vacation) which are due from Seller with respect to periods
prior to the commencement of employment with Buyer to any of the Employees
who accept Buyer's offers of employment; and (c) Buyer shall not be
responsible for any entitlements which are due under any of the Plans.
Buyer shall credit the Employees (1) for service with Seller for purposes
of determining vacation entitlement under Buyer's vacation policies and for
purposes of eligibility for participation and vesting under Buyer's 401(k)
plan and (2) with their respective entitlements, as of the date of the
Closing Date, to separation pay under Seller's severance policies as
described on Schedule 4.21 for the purposes of Buyer's separation policies,
-------------
but in no event with more than four weeks salary for any Employee. Seller
shall provide all notices and any continuation of health benefit coverage
required to be provided to any of Seller's employees, former employees, or
the beneficiaries or dependents of such employees or former employees,
under Section 4980B of the Code (herein collectively referred to as
"COBRA"), to the extent such notices and continuation of health benefit
coverage are required to be provided by reason of events occurring prior to
or on the Closing Date or by reason of the transactions contemplated by
this Agreement. Seller shall continue the health coverage required by
COBRA and the provisions of this Agreement irrespective of the elimination
of any health benefit plan of Seller. Seller shall promptly notify Buyer
of the elimination of any health benefit plan of Seller prior to the end of
the maximum coverage period described in Section 4980B(f)(2)(1)(B) and
shall provide Buyer with evidence, to the satisfaction of Buyer, of
continuing compliance with this Section 9.1.
9.2 Other Mail and Communications. Seller and the Owners shall promptly remit
-----------------------------
to Buyer any checks, cash, payments, mail or other communications relating
to the Events, the Publication, the Ancillary Products, the Assets and/or
the Business which are received by Seller and/or the Owners after the
Closing Date. Buyer shall promptly remit to Seller any checks, cash,
payments, mail or other communications relating to the Excluded Assets
which are received by Buyer after the Closing Date.
9.3 Taxes. All Tax Returns and reports of Seller and/or the Owners relating to
-----
the Assets or the Business required to be filed after the Closing Date in
respect to any period prior to or through the Closing Date will be duly and
timely filed (including extensions of time for filing), and all Taxes upon
Seller, the Owners, the Assets or the Business which are due and payable in
respect to such periods, will be paid by Seller and/or the Owners, as
applicable. Any sales, transfer, excise, value added or other similar
taxes which may be imposed by any state or governmental agency in
connection with the sale and transfer of the Assets by Seller to Buyer
shall be borne equally by Buyer and Seller.
-30-
9.4 Access to Records. For a period of four (4) years after the Closing Date,
-----------------
(a) Buyer shall preserve, and give to Seller and the Owners such access to,
the available books and records of the Business included in the Assets (and
to knowledgeable personnel) during normal business hours upon reasonable
advance notice as may be reasonably required by Seller and/or the Owners
for tax, audit or other business purposes, and (b) to the extent not
included in the Assets, Seller shall give Buyer such access to any
available books and records (including, without limitation, audit
workpapers and other records) of Seller relating to the Business (and to
knowledgeable personnel) during normal business hours upon reasonable
advance notice as may be reasonably required by Buyer for securities
reporting, tax, audit or other business purposes. At the expiration of such
four-year period, Buyer shall provide to Seller subject to Section 9.9 at
Seller's expense any books and records in respect of which Seller has
requested access (in writing).
9.5 Further Assurances. Upon the request and at the expense of Buyer, but
------------------
without further consideration, Seller and the Owners shall do, execute,
acknowledge, deliver and file, or shall cause to be done, executed,
acknowledged, delivered and filed, all such further acts, deeds, transfers,
conveyances, assignments or assurances as may be reasonably required for
the efficient transferring, conveying and assigning to Buyer, or for aiding
and assisting in the reducing to possession by Buyer, of any of the Assets.
9.6 Expenses and Finder's Fees. Seller and the Owners, on the one hand, and
---------------------------
Buyer, on the other hand, shall each bear their own expenses incurred in
connection with the negotiation, execution and performance of this
Agreement; provided, that Seller and/or the Owners shall be responsible for
paying and shall indemnify Buyer in respect of all amounts payable for
services rendered to the Seller and the Owners by Veronis, Suhler &
Associates, Inc. in connection with the negotiation, execution and delivery
of this Agreement. Except as set forth in the preceding sentence, the
parties each represent and warrant that they have not engaged or dealt with
any broker, investment banker, finder, or agent so as to create or incur
any obligation for any brokerage fees, finder's fees or other commissions
in connection with this Agreement or the consummation of the transaction
contemplated hereby.
9.7 Excluded Trademarks. Upon the terms and subject to the conditions set forth
-------------------
in this Section 9.7, Seller hereby grants to Buyer a worldwide,
nonexclusive and nontransferable right and license to use (but not to
sublicense) the Excluded Trademarks for the three-year period commencing on
the Closing Date in connection with Buyer's operation of the Business after
the Closing Date. Buyer's use of the Excluded Trademarks shall be in
accordance with Seller's reasonable policies and practices regarding
trademark use as established from time to time by Seller; provided, that
--------
Buyer shall be entitled to use the Excluded Trademarks in the manner as
Seller uses the Excluded Trademarks in the conduct of the Business as the
same is conducted by Seller on the date of this Agreement; and provided,
--------
further, that Buyer shall not indicate or otherwise suggest, in connection
-------
with such use, that Seller owns or operates the Business after the Closing
Date. Buyer agrees and acknowledges that the Excluded Trademarks, together
with the goodwill symbolized thereby, is the sole and exclusive property of
Seller, and that its usage by Buyer shall inure to the benefit of Seller.
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9.8 Bulk Sales Laws. Buyer hereby waives compliance by Seller with the
---------------
provisions of any bulk sales, bulk transfer or similar laws, and Seller and
the Owners agree to indemnify and hold Buyer harmless against any and all
losses, costs, damages, charges or expenses of any nature (including
reasonable attorney's fees) resulting from Seller's non-compliance with
such laws, except to the extent that any liability arising as a result of
such non-compliance relates to any of the Assumed Liabilities.
9.9 Confidential Information. Seller and the Owners shall ensure that neither
------------------------
Seller nor any Owner shall disclose to any person or entity or use for any
purpose any trade secrets or confidential or proprietary documents,
processes, strategic or marketing plans, other strategic or marketing
information, databases, attendee lists, exhibitor lists, advertiser lists,
subscriber lists or financial or other information relating to the Business
and/or the Assets.
9.10 Non-Competition. Each of Seller and each of the Owners, severally and not
---------------
jointly, agrees that, during the period (the "Restrictive Period") of five
years from and after the Closing Date, he, she or it will not, without the
prior written consent of Buyer, directly or indirectly, individually or
jointly with others, in whole or in part, own, sponsor, organize, promote,
operate, produce, manage, control, advise, consult with, render services
for or otherwise be associated, affiliated or involved with any organizing,
promoting, producing or managing any exhibition or conference, or
marketing, selling, producing or distributing any publication or ancillary
business-to-business marketing product or service (collectively, a
"Competing Business") anywhere in the United States, Canada and Mexico (the
"Restricted Territory") which (a) is marketed to, promoted to, sold to or
otherwise involved, exclusively or non-exclusively, with the fashion and/or
apparel industry; (b) is directed toward an exhibitor or attendee base
substantially the same as the exhibitor or attendee base of Events
conducted by Seller prior to the Closing; (c) is directed toward an
advertiser or circulation base substantially the same as the advertiser or
circulation base of the Publication published by Seller prior to the
Closing; and/or (d) otherwise competes with any of the Future Events,
Future Publications or Future Ancillary Products as operated by Buyer
during the Restrictive Period consistent with Seller's operation prior to
the Closing Date. Each of Seller and each of the Owners acknowledges and
agrees that (a) many of the exhibitors and attendees who participate in the
Events do or could solicit sales and/or operate throughout the Restricted
Territory and therefore any such event held anywhere in the Restricted
Territory would be a Competing Business and (b) that many of the
advertisers who advertise in the Publication do or could advertise and/or
operate throughout the Restricted Territory and that therefore any such
publication circulated anywhere in the Restricted Territory would be a
Competing Business. Each of Seller and each of the Owners further
acknowledges and agrees that the duration, scope and geographical limit of
the foregoing covenant is reasonable and necessary to protect the
legitimate interest of the Business and Buyer. Notwithstanding the
foregoing, at no time shall Seller or any of the Owners be prohibited from
owning not more than one percent of the outstanding securities of any
publicly traded entity; provided, that such ownership does not involve the
rendering of any services or otherwise violate any aspect (other than the
ownership aspect) of the foregoing covenant. Buyer
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acknowledges and agrees that the businesses as conducted by Seller on the
date of this Agreement in connection with the Excluded Publications, AES
Internet LLC and Easy Soft, Inc. are not Competing Businesses.
9.11 Non-Retention. Each of Seller and each of the Owners, severally and
-------------
not jointly, agrees that, during the Restricted Period, he, she or it will
not, without the prior written consent of Buyer, directly or indirectly,
individually or jointly with others, solicit for employment, employ as an
employee or retain as an independent contractor any of the Employees or any
other person who is then or was at any time during the prior twelve months
employed by Buyer in connection with the Business.
9.12 Damages and Equitable Relief.
----------------------------
(a) Each of Seller and each of the Owners, severally and not jointly,
acknowledges and agrees that any breach of Sections 9.9, 9.10 and/or
9.11 by such party will cause the Business and Buyer irreparable
injury and damage. Each of Seller and each of the Owners, therefore,
severally and not jointly, expressly agrees that Buyer shall be
entitled to injunctive and/or other equitable relief to prevent an
anticipatory or continuing breach and to secure enforcement of any
part of Sections 9.9, 9.10 and/or 9.11. Nothing herein shall be
construed as a waiver by Buyer of any right it may now have or
hereafter acquire to monetary damages by reason of any injury to its
property, business or reputation or otherwise arising out of any such
breach or any otherwise wrongful act or omission by Seller and/or any
of the Owners.
(b) While the restrictions and covenants set forth in Sections 9.9, 9.10
and 9.11 are considered by the parties to be reasonable in all the
circumstances, it is recognized that restrictions and covenants of the
nature in question may fail for technical reasons unforeseen, and
accordingly it is hereby agreed and declared that if any of such
restrictions or covenants shall be adjudged to be void as going beyond
what is reasonable in all the circumstances for the protection of the
interests of Buyer but would be valid if part of the wording thereof
were deleted or modified, the time period thereof reduced, the range
of activities reduced in scope, the geographic area covered thereby
reduced and/or any other modification made, the said restriction or
covenant shall apply with such modifications as may be necessary to
make it valid and effective. In case any one or more of the provisions
of this Agreement should be found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceable
nature of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
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ARTICLE X
---------
GENERAL
10.1 Waiver. Any failure of any of the parties hereto to comply with any of its
------
obligations or agreements or to fulfill any conditions herein contained may
be waived only by a written waiver from the other parties. No failure by
any party hereto to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder by such party preclude any other or
future exercise of that right or any other right hereunder by that party.
10.2 Notices. All notices, requests or other communications required or
-------
permitted hereunder shall be given in writing by hand delivery, registered
mail, certified mail or overnight courier, return receipt requested,
postage prepaid, to the party to receive the same at its respective address
set forth below, or at such other address as may from time to time be
designated by such party to the other in accordance with this Section 10.2:
If to Parent, Subsidiary, the Trust,
any Stock Trust or any Principal,
to such entity or person: c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Squadron, Ellenoff, Present & Sheinfeld, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
and: Lemelman & Lemelman
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to Buyer, to: Advanstar Communications Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman & CEO
and ▇▇▇▇ ▇. ▇▇▇▇▇▇, VP & General Counsel
with copy to: ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
All such notices and communications hereunder shall be deemed given when
delivered in person, two business days after having been sent by registered
or certified mail, or on the next business day when sent by overnight
courier service (receipt and signature required).
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10.3 No Third Party Beneficiaries. Neither this Agreement nor any provision
----------------------------
hereof, nor any Schedule hereto or document executed or delivered
herewith, shall create any right in favor of or impose any obligation
upon any person or entity other than the parties hereto and their
respective successors and assigns.
10.4 Headings. Captions and paragraph headings used herein are for convenience
--------
only, are not a part of this Agreement and shall not be used in
construing it.
10.5 Entire Agreement. The making, execution and delivery of this Agreement by
----------------
the parties has been induced by no representations, statements,
warranties or agreements other than those herein expressed. This
Agreement, together with the schedules, other agreements and documents
referred to herein, embodies the entire understanding of the parties and
there are no other agreements or understandings, written or oral, in
effect between the parties relating to the subject matter hereof, except
as specifically referenced herein. This Agreement may be amended or
modified only by a written instrument signed by the parties. This
Agreement supersedes and terminates all prior discussions, negotiations,
understandings, arrangements and agreements between the parties relating
to the subject matter hereof.
10.6 Counterparts. This Agreement may be executed in any number of duplicate
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
10.7 Assignability. None of the parties hereto may assign this Agreement
-------------
without the prior written consent of the other, which consent will not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Buyer
may assign its rights, but not its obligations, under this Agreement to
any wholly-owned direct or indirect subsidiary of its ultimate parent
company or to a third party which acquires ownership of the Business
without the consent of Seller or the Owners. Any impermissible attempted
assignment of this Agreement without such prior written consent shall be
void.
10.8 Successors and Assigns. This Agreement and the provisions thereof shall
----------------------
be binding upon and inure to the benefit of the respective successors and
permitted assigns of the parties hereto.
10.9 Knowledge. The term "knowledge" or words to that effect shall mean all
---------
facts of which such party has written or oral notice or other actual
knowledge.
10.10 Governing Law. The parties hereto have agreed that the validity,
-------------
construction, operation and effect of any and all of the terms and
provisions of this Agreement shall be determined and enforced in
accordance with the substantive laws of the Commonwealth of Massachusetts
without giving effect to principles of conflicts of law thereunder.
10.11 Submission to Jurisdiction; Agent for Service of Process. To the
--------------------------------------------------------
fullest extent permitted by applicable law, each party hereto irrevocably
submits to the jurisdiction of
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any federal or state court in Boston, Massachusetts, in any suit or
proceeding based on or arising under this Agreement, and irrevocably
agree that all claims in respect of such suit or proceeding may be
determined in any such court. Each party hereto, to the fullest extent
permitted by applicable law, irrevocably and fully waives the defense of
inconvenient forum to the maintenance of such suit or proceeding. Parent,
Subsidiary and each Owner hereby designate and appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
an individual residing on the date of this Agreement at ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as his, her or its authorized agent
upon whom process may be served in any such suit or proceeding (the
"Process Agent"). By his execution and delivery of this Agreement, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ has accepted his designation and appointment as the Process
Agent. Parent, Subsidiary and each Owner hereby irrevocably authorize and
direct the Process Service to accept such service and further agree that
service of process upon the Process Agent in accordance with the
provisions of Section 10.2 of this Agreement shall be deemed in every
respect effective service of process upon Parent, Subsidiary or such
Owner, as the case may be, in any such suit or proceeding. Nothing herein
shall affect the right of any person to serve process in any other manner
permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly signed this Agreement the day and
year first written above.
ADVANSTAR COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief Executive Officer
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
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By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
PRINCIPALS AND OWNERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, as Owner, and as Principal,
and as Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock
Trust, the ▇▇▇▇▇ ▇▇▇▇▇▇ Stock Trust and the
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock Trust
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Owner, and as Principal,
and as Trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Stock
Trust
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Principal
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Principal
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Principal
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Principal
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Owner
LPL/STYLE GROUP, LLC
-38-
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Manager
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EXHIBITS
--------
A-1 One-Year Note
A-2 Two-Year Note
A-3 Letter of Credit
B - ▇▇▇▇ of Sale and General Assignment
C - Registered Trademark Assignment
D - Registered Copyright Assignment
E - Assignment and Assumption Agreement
F - Form of Consulting Agreement
G - Escrow Agreement
SCHEDULES
---------
1.2(d) -- Excluded Assets
1.2(f) -- Excluded Contracts
2.1(a) -- Seller's Account
2.2 -- Preliminary Closing Statement
2.3 -- Purchase Price Allocation
3.2(c) -- Closing Consents
4.1 -- Subsidiaries and Predecessors
4.3 -- Breaches
4.4 -- Owners
4.5 -- Litigation
4.7 -- Properties
4.8(a) -- Financial Statements
4.8(b) -- Material Changes
4.8(d) -- Certain Expenses
4.9 -- Tangible Assets
4.10(a) -- Exhibitor Contracts
4.10(b) -- Exhibitor Contract form, rates and deviations
4.10(c) -- Past Exhibitor Lists
4.11(a) -- Advertiser Contracts
4.11(b) -- Advertiser invoice and rates
4.11(d) -- Canceled Advertisers
4.12(a) -- Material Contracts
4.12(b) -- Consents
4.13(a) -- Number of Attendees
4.13(b) -- Use of Attendee Lists
4.14(a) -- Circulation Reports
4.14(c) -- Use of Subscriber Lists
4.16 -- Trademarks
4.18 -- Insurance
4.19 -- Related Party Transactions
4.20(a) -- Employees
4.20(b) -- Agents
4.21 -- Plans
4.22(c) -- Tax Returns
4.24 -- Software