<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
MECKLERMEDIA CORPORATION
(NAME OF SUBJECT COMPANY)
INTERNET WORLD MEDIA, INC.;
PENTON MEDIA, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
584007-10-8
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PRESTON L. VICE
SENIOR VICE PRESIDENT
PENTON MEDIA, INC.
1100 SUPERIOR AVENUE, N.E.
CLEVELAND, OHIO 44114
(216) 696-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
------------------------
COPY TO:
CHRISTOPHER M. KELLY
JONES, DAY, REAVIS & POGUE
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
------------------------
OCTOBER 7, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
------------------------
CALCULATION OF FILING FEE
<TABLE>
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Transaction Valuation(1) Amount of Filing Fee(2)
$284,603,883 $56,921
</TABLE>
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
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Amount previously paid: ------------------------------ Filing party: ------------------------------------------
Form or registration no.: ------------------------------ Date filed: --------------------------------------------
</TABLE>
Note: The remainder of this cover page is only to be completed if this
Schedule 14D-1 (or amendment thereto) is being filed, inter alia, to satisfy the
reporting requirements of Section 13(d) of the Securities Exchange Act of 1934.
See General Instructions D, E and F to Schedule 14D-1.
(Continued on following page(s))
(Page 1 of 8 Pages)
- ---------------
(1) This amount assumes the purchase at $29.00 per share, pursuant to the Offer
to Purchase, of all the 9,109,542 shares of common stock (the "Shares") of
Mecklermedia Corporation outstanding as of October 6, 1998, 699,885 of the
Shares issuable upon exercise of certain options and 4,500 of the Shares
issuable upon exercise of certain warrants.
(2) The fee, calculated in accordance with Rule 0-11(d) of the Securities
Exchange Act of 1934, is 1/50 of one percent of the aggregate of the cash
offered by the Bidders.
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<PAGE> 2
SCHEDULE 14D-1 AND 13D
CUSIP NO. 584007-10-8 PAGE 2 OF 8
<TABLE>
<S> <C> <C>
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Penton Media, Inc.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO (See Item 4)
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON**
2,381,120
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES*
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)**
26% of the Shares issued and outstanding as of October 6,
1998.
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10. TYPE OF REPORTING PERSON*
CO
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</TABLE>
** See Section 10 ("The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the Company") of the
Offer to Purchase, which is incorporated herein by reference, for a
description of the Tender, Voting and Option Agreement, dated October 7,
1998, among, Penton Media, Inc., Internet World Media, Inc., Mecklermedia
Corporation and Alan M. Meckler.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE> 3
SCHEDULE 14D-1 AND 13D
CUSIP NO. 584007-10-8 PAGE 3 OF 8
<TABLE>
<S> <C> <C>
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Internet World Media, Inc.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO (See Item 4)
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON**
2,381,120
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES*
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)**
26% of the Shares issued and outstanding as of October 6,
1998.
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10. TYPE OF REPORTING PERSON*
CO
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</TABLE>
** See Section 10 ("The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the Company") of the
Offer to Purchase, which is incorporated herein by reference, for a
description of the Tender, Voting and Option Agreement, dated October 7,
1998, among, Penton Media, Inc., Internet World Media, Inc., Mecklermedia
Corporation and Alan M. Meckler.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE> 4
This Schedule 14D-1 relates to the offer by Internet World Media, Inc. (the
"Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Penton
Media, Inc., a Delaware corporation ("Parent"), to purchase all outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of Mecklermedia
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$29.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which together constitute the "Offer"), which
are annexed to and filed with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2),
respectively. This Schedule 14D-1 is being filed on behalf of the Purchaser and
Parent.
This Schedule 14D-1 also constitutes a Statement on Schedule 13D with
respect to the acquisition by Parent and the Purchaser of beneficial ownership
of the Shares pursuant to the Tender, Voting and Option Agreement.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Mecklermedia Corporation. The
address of its principal executive offices is 20 Ketchum Street, Westport,
Connecticut 06880.
(b) Reference is hereby made to the information set forth in the
"Introduction," Section 1 ("Terms of the Offer") and Section 10 ("The Merger
Agreement; Tender, Voting and Option Agreement; Statutory Requirements;
Appraisal Rights; Plans for the Company") of the Offer to Purchase, which is
incorporated herein by reference.
(c) Reference is hereby made to the information set forth in Section 6
("Price Range of the Shares") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning Parent and the
Purchaser") and Schedule I (Directors and Executive Officers of Parent and the
Purchaser) of the Offer to Purchase, which is incorporated herein by reference.
(e)-(f) During the last five years, neither Parent nor the Purchaser, nor,
to the best of their knowledge, any of their respective executive officers and
directors listed in Schedule I (Directors and Executive Officers of Parent and
the Purchaser) of the Offer to Purchase, which is incorporated herein by
reference, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, Federal or State
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) Reference is hereby made to the information set forth in the
"Introduction," "Special Factors--Background of the Offer; Contacts with the
Company," Section 9 ("Certain Information Concerning Parent and the Purchaser")
and Section 10 ("The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the Company") of the Offer
to Purchase, which is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is made to the information set forth in Section 11
("Source and Amount of Funds") of the Offer to Purchase, which is incorporated
herein by reference.
(c) Not applicable.
4
<PAGE> 5
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) Reference is hereby made to the information set forth in the
"Introduction," "Special Factors--Background of the Offer; Contacts with the
Company," Section 7 ("Possible Effects of the Offer on the Market for the
Shares; Nasdaq Quotation; Exchange Act Registration; Margin Regulations"),
Section 10 ("The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the Company") and Section 12
("Dividends and Distributions") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) Reference is hereby made to the information set forth in Section 9
("Certain Information Concerning Parent and the Purchaser") and Schedule I
(Directors and Executive Directors of Parent and the Purchaser) of the Offer to
Purchase, which is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in the
"Introduction," "Special Factors--Background of the Offer; Contacts with the
Company," Section 9 ("Certain Information Concerning Parent and the Purchaser")
and Section 10 ("The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the Company") of the Offer
to Purchase, which is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in the "Introduction"
and Section 15 ("Certain Fees and Expenses") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Reference is hereby made to the information set forth in Section 9
("Certain Information Concerning Parent and the Purchaser") of the Offer to
Purchase, which is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Reference is hereby made to the information set forth in the
"Introduction," "Special Factors--Background of the Offer; Contacts with the
Company," and Section 10 ("The Merger Agreement; Tender, Voting and Option
Agreement; Statutory Requirements; Appraisal Rights; Plans for the Company") of
the Offer to Purchase, which is incorporated herein by reference.
(b)-(c) Reference is hereby made to the information set forth in the
"Introduction," Section 10 ("The Merger Agreement; Tender, Voting and Option
Agreement; Statutory Requirements; Appraisal Rights; Plans for the Company") and
Section 14 ("Certain Legal Matters; Required Regulatory Approvals") of the Offer
to Purchase, which is incorporated herein by reference.
(d) Reference is hereby made to the information set forth in Section 7
("Possible Effects of the Offer on the Market for the Shares; Nasdaq Quotation;
Exchange Act Registration; Margin Regulations") of the Offer to Purchase, which
is incorporated herein by reference.
(e) To the best knowledge of Parent and the Purchaser, no such proceedings
are pending or have been instituted.
(f) Reference is hereby made to the entire texts of the Offer to Purchase
and the related Letter of Transmittal, which are incorporated herein by
reference.
5
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
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(a)(1) Offer to Purchase, dated October 15, 1998
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(4) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(5) Notice of Guaranteed Delivery
(a)(6) Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Press release issued by Parent on October 8, 1998
(a)(8) Form of Summary Advertisement, dated October 15, 1998
(b)(1) Financing Commitment Letter dated October 7, 1998, by and
among Parent, DLJ Capital Funding, Inc., DLJ Bridge Finance,
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
(c)(1) Confidentiality Agreement between Parent and the Company,
dated September 23, 1998
(c)(2) Letter agreement between Parent and the Company, dated
September 25, 1998
(c)(3) Agreement and Plan of Merger, dated as of October 7, 1998 by
and among the Company, the Purchaser, Parent and Alan M.
Meckler
(c)(4) Tender, Voting and Option Agreement, dated October 7, 1998
by and among Parent, the Purchaser, the Company and Alan M.
Meckler
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 15, 1998
PENTON MEDIA, INC.
By: /s/ PRESTON L. VICE
------------------------------------
Name: Preston L. Vice
Title: Senior Vice President
INTERNET WORLD MEDIA, INC.
By: /s/ PRESTON L. VICE
------------------------------------
Name: Preston L. Vice
Title: Secretary
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated October 15, 1998
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(4) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(5) Notice of Guaranteed Delivery
(a)(6) Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Press release issued by Parent on October 8, 1998
(a)(8) Form of Summary Advertisement, dated October 15, 1998
(b)(1) Financing Commitment Letter, dated October 7, 1998, by and
among Parent, DLJ Capital Funding, Inc., DLJ Bridge Finance,
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
(c)(1) Confidentiality Agreement between Parent and the Company,
dated September 23, 1998
(c)(2) Letter agreement between Parent and the Company, dated
September 25, 1998
(c)(3) Agreement and Plan of Merger dated as of October 7, 1998 by
and among the Company, the Purchaser, Parent and Alan M.
Meckler
(c)(4) Tender, Voting and Option Agreement, dated October 7, 1998
by and among Parent, the Purchaser, the Company and Alan M.
Meckler
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
8
<PAGE> 1
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
MECKLERMEDIA CORPORATION
by
INTERNET WORLD MEDIA, INC.,
a wholly-owned subsidiary of
PENTON MEDIA, INC.
at
$29.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, NOVEMBER 18, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH OF
THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER, THE
MERGER AND THE IWORLD TRANSACTION (AS SUCH TERMS ARE DEFINED HEREIN), IS FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE
OFFER AND ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
PRIOR TO THE EXPIRATION OF THE OFFER AND NOT PROPERLY WITHDRAWN A NUMBER OF
SHARES OF COMMON STOCK WHICH, TOGETHER WITH THE SHARES OF COMMON STOCK OF THE
COMPANY TO BE ACQUIRED PURSUANT TO THE TENDER, VOTING AND OPTION AGREEMENT (AS
DEFINED HEREIN), REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY ON A FULLY DILUTED BASIS. THE
OFFER IS ALSO SUBJECT TO THE CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTION 13.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver it together with the certificate(s)
representing tendered Shares and any other required documents to the Depositary
(as defined herein) or tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 or (b) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect such
transaction. A stockholder whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or the
Dealer Manager or from brokers, dealers, commercial banks and trust companies.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
October 15, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION............................................................. 1
SPECIAL FACTORS.......................................................... 2
THE OFFER................................................................ 5
1. Terms of the Offer ......................................... 5
2. Acceptance for Payment and Payment ......................... 7
3. Procedures for Accepting the Offer and Tendering Shares .... 8
4. Withdrawal Rights .......................................... 10
5. Certain Tax Consequences ................................... 11
6. Price Range of the Shares; Dividends ....................... 11
7. Possible Effects of the Offer on the Market for the Shares;
Nasdaq Quotation; Exchange Act Registration; Margin
Regulations ................................................ 12
8. Certain Information Concerning the Company ................. 13
9. Certain Information Concerning Parent and the Purchaser .... 16
10. The Merger Agreement; Tender, Voting and Option Agreement;
Statutory Requirements; Appraisal Rights; Plans for the
Company .................................................... 17
11. Source and Amount of Funds ................................. 33
12. Dividends and Distributions ................................ 34
13. Certain Conditions of the Offer ............................ 35
14. Certain Legal Matters; Required Regulatory Approvals ....... 36
15. Certain Fees and Expenses .................................. 39
16. Miscellaneous .............................................. 40
Schedule I -- Directors and Executive Officers of Parent and the
Purchaser.............................................................. S-I-1
</TABLE>
<PAGE> 3
TO: ALL HOLDERS OF SHARES OF COMMON STOCK OF MECKLERMEDIA CORPORATION:
INTRODUCTION
Internet World Media, Inc. (the "Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Penton Media, Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of Mecklermedia Corporation, a Delaware
corporation (the "Company"), at a purchase price of $29.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together, and with any amendments or supplements hereto or
thereto, constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of Harris
Trust Company of New York, as Depositary (the "Depositary"), MacKenzie Partners,
Inc., as Information Agent (the "Information Agent") and Donaldson, Lufkin &
Jenrette Securities Corporation, which is acting as Dealer Manager (the "Dealer
Manager"), in connection with the Offer. See Section 15.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH
OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT (AS DEFINED BELOW),
INCLUDING THE OFFER, THE MERGER (AS DEFINED BELOW) AND THE IWORLD TRANSACTION
(AS HEREINAFTER DEFINED), IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE MERGER AGREEMENT
AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
Allen & Company, Incorporated ("Allen & Company"), the Company's financial
advisor, has delivered to the Board of Directors of the Company a written
opinion dated October 7, 1998 to the effect that, as of such date, the
consideration to be received by the holders of Shares, and the holders of
options and warrants to purchase Shares, pursuant to the Offer and the Merger is
fair to such holders from a financial point of view. A copy of such opinion is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders concurrently
herewith. Stockholders are urged to read the opinion in its entirety for a
description of the assumptions made, matters considered and limitations of the
review undertaken by Allen & Company.
In connection with the execution of the Merger Agreement, Parent,
Purchaser, the Company and Alan M. Meckler, who beneficially owns approximately
26% of the Shares, entered into a Tender, Voting and Option Agreement (the
"Tender, Voting and Option Agreement") pursuant to which Mr. Meckler agreed,
among other things, to tender his Shares pursuant to the Offer. See Section 10.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT PROPERLY WITHDRAWN A
NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES TO BE ACQUIRED PURSUANT TO THE
TENDER, VOTING AND OPTION AGREEMENT, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL
NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS AS SET FORTH IN
THIS OFFER TO PURCHASE. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 18, 1998, UNLESS EXTENDED. SEE SECTIONS 1, 13, AND
14 BELOW.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 7, 1998 (the "Merger Agreement"), among the Company, the
Purchaser, Parent and Mr. Meckler pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation (the "Surviving Corporation"). In the
Merger, each outstanding Share (other than Shares held by Parent or any
subsidiary of Parent or in the treasury of the Company, which will be cancelled
with no payment being made with respect thereto, and other than Shares
("Dissenting Shares"), if any, held by stockholders who perfect their appraisal
rights under the Delaware General Corporation Law (the "GCL")) will, by virtue
of the Merger and without any action by the holder thereof, be converted into
the right to receive $29.00 in cash (the "Merger Consideration"), payable to the
holder thereof, without interest thereon, upon the surrender of the certificate
<PAGE> 4
formerly representing such Share. The Merger Agreement is more fully described
in Section 10 below. Certain tax consequences of the sale of Shares pursuant to
the Offer and the Merger, as the case may be, are described in Section 5 below.
The Company's Certificate of Incorporation and the GCL require the
affirmative vote of holders of a majority of the outstanding Shares to approve
the Merger. As a result, if the Minimum Condition and the other conditions to
the Offer are satisfied and the Offer is consummated, the Purchaser will own a
sufficient number of Shares to ensure that the Merger will be approved. Under
the GCL, if after consummation of the Offer, the Purchaser owns at least 90% of
the Shares then outstanding, the Purchaser will be able to cause the Merger to
occur without a vote of the Company's stockholders. If, however, after
consummation of the Offer, the Purchaser owns less than 90% of the then
outstanding Shares, a vote of the Company's stockholders will be required under
the GCL to approve the Merger, and a significantly longer period of time will be
required to effect the Merger. See Section 10.
The Company has informed the Purchaser that, as of October 6, 1998, there
were 9,109,542 Shares issued and outstanding, 699,885 Shares reserved for
issuance upon the exercise of outstanding stock options ("Options") granted
under the Company's stock option or similar plans (the "Stock Plans") and 4,500
Shares reserved for issuance upon the exercise of currently outstanding warrants
("Warrants").
As of the date of this Offer to Purchase, neither Parent nor Purchaser
beneficially owns any Shares. Pursuant to the Tender, Voting and Option
Agreement, Parent has an option exercisable upon the occurrence of certain
future events to acquire all of the Shares beneficially owned by Mr. Meckler,
which represents approximately 26% of the outstanding Shares. See Section 10.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See Section 10.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
SPECIAL FACTORS
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
Parent regularly evaluates potential acquisitions to expand and strengthen
its activities in selected markets. Parent believes that the acquisition of
other media businesses complements its existing services and improves its
competitive position with current and potential customers. The primary focus of
Parent's acquisition strategy is to strengthen current market positions and to
add value to the acquired business through existing market knowledge and core
competencies. Parent's acquisition strategy also includes acquisitions of
business media properties that would provide Parent with a premier position in
new attractive markets. In addition, Parent has established an emerging
technology initiative to identify media opportunities in emerging technology
markets.
On September 15, 1998, Thomas L. Kemp, Chief Executive Officer of Parent,
and Daniel J. Ramella, President and Chief Operating Officer of Parent, met with
representatives of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
the Parent's financial advisor, and discussed, among other things, possible
acquisition candidates. Prior to this meeting, DLJ had compiled a list of
potential acquisition candidates that, in its judgment, might have an interest
in a strategic transaction with Parent. DLJ identified the Company as one of the
most logical candidates with potentially a high degree of interest in a
transaction. Mr. Kemp instructed DLJ to contact Alan M. Meckler, Chief Executive
Officer of the Company, to discuss a possible transaction with the Company.
Prior to this time, there had been no contacts between Parent and the Company
with respect to any possible combination between them.
Pursuant to Mr. Kemp's instructions, representatives of DLJ contacted Mr.
Meckler on September 16, 1998. Mr. Meckler informed DLJ that he had been
contacted by other parties interested in a strategic transaction with the
Company and requested that they contact Allen & Company, the Company's financial
advisor. Between
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September 17, 1998 and September 21, 1998, representatives of DLJ and Allen &
Company spoke periodically and discussed issues related to Parent's ability to
complete an acquisition of the Company. Legal counsel to the Company delivered a
draft confidentiality agreement to DLJ on September 21, 1998.
On September 21, 1998, Mr. Meckler and Mr. Kemp had a conversation in which
Mr. Meckler informed Mr. Kemp that the Company was considering potential
strategic transactions, including a possible sale of the Company, and agreed to
meet with Mr. Kemp and representatives of Parent and the Company at DLJ's
offices in New York, New York on September 24, 1998.
On September 23, 1998, Parent and the Company entered into a
confidentiality agreement providing for the disclosure by the Company of certain
non-public information to Parent. At their meeting on September 24, 1998, Mr.
Kemp presented a draft letter of intent to Mr. Meckler that provided, among
other things, for Parent to acquire the Company at a price of $29.00 per Share.
Between the afternoon of September 24, 1998, and the evening of September
25, 1998, representatives of the Company and representatives of Parent
negotiated the terms of a letter of intent between the Company and Parent. In
the evening on September 25, 1998, Parent, the Company and Mr. Meckler executed
a letter of intent that (a) outlined the general terms of (i) a potential
acquisition of the Company by Parent at a price of $29.00 per Share and (ii)
concurrently with such acquisition, the sale to Mr. Meckler for $15.0 million of
a 50% economic interest in the Internet Web site business currently operated by
the Company, the proceeds of which would partially fund Parent's acquisition of
the Company, and (b) provided for exclusive negotiations between the Company and
Parent through October 7, 1998, with respect to executing definitive
documentation regarding these transactions. The letter of intent expressly
provided that the transactions outlined in such letter were subject to a
satisfactory due diligence review by Parent, the approval of such transactions
by the Boards of Directors of Parent and the Company and the execution of
definitive documentation.
Parent began an intensive due diligence review of the Company on September
26, 1998. Negotiation of the Merger Agreement and the related agreements
commenced on September 27, 1998, when the Company furnished Parent with a draft
of a merger agreement. During the course of negotiations, Parent and Mr. Meckler
agreed that Parent would increase the percentage ownership it would sell to Mr.
Meckler in the Internet Web site business to 80.1% in exchange for an increase
in the sales price to $18.0 million. The price per Share offered to the
stockholders of the Company remained at $29.00.
At a meeting held on October 6, 1998, the Board of Directors of Parent
unanimously approved (with two directors absent) the Merger Agreement,
contingent upon negotiation of final documentation. The parties concluded
negotiations on October 7, 1998, and the Board of Directors of the Company
unanimously approved the Merger Agreement at a meeting held in the evening on
October 7, 1998. The parties then executed the Merger Agreement in the evening
on October 7, 1998, and publicly announced the transaction on the morning of
October 8, 1998.
FAIRNESS OF THE OFFER AND THE MERGER
Parent and the Purchaser have concluded that the consideration to be
received by the unaffiliated holders of Shares pursuant to the Offer and the
Merger is fair to such holders based on (i) the factors considered by, the
analysis and conclusions of, and the unanimous approval by, the Board of
Directors of the Company set forth in the Schedule 14D-9, including the fairness
opinion rendered by Allen & Company, which factors, analysis and conclusion, as
set forth therein, are incorporated by reference herein, (ii) the fact that the
terms of the Merger Agreement, including the sale of an 80.1% interest in iWorld
(as hereinafter defined) to Mr. Meckler, were the result of arm's-length
negotiations between the Company and its advisors and Parent and its advisors
and (iii) the fact that (a) during the negotiation of the Merger Agreement the
interests of the unaffiliated stockholders of the Company were represented by
the Board of Directors of the Company and the Company's independent legal and
financial advisors and the interests of Parent and the Purchaser were
represented by their legal and financial advisors and (b) such parties had
different economic and other interests. In reaching their conclusion, Parent and
the Purchaser have adopted the analysis of the factors referred to in the
Schedule 14D-9 as having been taken into account by the Board of Directors of
the Company and discussed in Allen & Company's opinion. Parent and the Purchaser
did not find it practicable to, and did not, quantify or otherwise attach
relative weights to such factors
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<PAGE> 6
or determine that any factor was of particular importance independent of the
Board of Directors' and Allen & Company's analysis in reaching their respective
conclusions as to fairness.
The Offer is conditioned upon, among other things, there being validly
tendered prior to the Expiration Date and not properly withdrawn a number of
Shares which, together with the Shares to be acquired pursuant to the Tender,
Voting and Option Agreement, represents at least a majority of the total number
of outstanding Shares on a fully-diluted basis. Pursuant to the Tender, Voting
and Option Agreement, Mr. Meckler has agreed to tender the 26% of the
outstanding Shares he beneficially owns into the Offer within fifteen business
days of the date hereof. If the Minimum Condition is satisfied, the Purchaser
will own enough Shares to approve the Merger without the vote of any other
stockholder of the Company. Thus, the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, are not structured to require the
approval of at least a majority of the unaffiliated stockholders of the Company.
Parent and the Purchaser have been informed by the Company that (i) the
Board of Directors of the Company did not consider it necessary to retain an
unaffiliated representative to act solely on behalf of the unaffiliated
stockholders of the Company for the purpose of negotiating the terms of the
Merger Agreement and (ii) the Offer, the Merger and the iWorld Transaction were
approved by all of the directors of the Company who are not employees of the
Company.
Parent and the Purchaser have not received, nor sought to obtain, any
report, opinion or appraisal from an outside party, including without
limitation, an investment banker's opinion, relating to the consideration or
fairness of the consideration offered to the unaffiliated stockholders of the
Company in the Offer and the Merger or the fairness of the Offer and the Merger
to the Company, Parent, the Purchaser or any unaffiliated stockholders of the
Company.
PURPOSE AND STRUCTURE OF THE TRANSACTION; EFFECTS OF THE TRANSACTION
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. As discussed above, the acquisition of
the Company by Parent implements Parent's strategy of acquiring business media
properties that provide Parent with a premier position in new attractive
markets. Following completion of the Offer, Parent intends to acquire any
remaining equity interest in the Company not then owned by Parent or the
Purchaser by consummating the Merger. If the Purchaser acquires at least 90% of
the outstanding Shares through the Offer or through the Offer and pursuant to
the Tender, Voting and Option Agreement, Parent intends to cause the Purchaser
to consummate the Merger through a short-form merger under the GCL without the
vote of any other stockholder. In any event, the Purchaser intends, should it
purchase Shares pursuant to the Offer, to cause the Merger to occur (subject to
satisfaction or waiver of the conditions contained in the Merger Agreement).
The acquisition of the entire equity interest in the Company has been
structured as a cash tender offer followed by a cash merger in order to provide
a prompt and orderly transfer of ownership of the Company from the public
stockholders to Parent and to provide cash to the holders of Shares. Following
the Merger, the interest of Parent in the Company's net book value and net
income will be 100%. Parent, as the sole stockholder of the Company, will
thereafter benefit from any increases in the value of the Company and also bear
the risk of any decreases in the value of the Company's operations. Conversely,
following the Offer and the Merger, persons who were stockholders of the Company
immediately prior to the Offer and the Merger will no longer have the
opportunity to continue their interests in the Company as an ongoing corporation
and therefore will not share in its future earnings and potential growth.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares
and could adversely affect the liquidity and market value of the remaining
Shares held by the public and have other consequences with respect to Nasdaq
quotation, registration under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and availability of margin credit. See Section 7. For a
discussion of certain tax consequences related to the Offer, see Section 5.
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INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
Certain members of the Company's management and Board of Directors may be
deemed to have certain interests in the Merger that are in addition to their
interests as stockholders of the Company generally. The Company has informed
Parent that the Company's Board of Directors was aware of and discussed these
interests in connection with its consideration and approval of the Merger
Agreement. In considering the recommendation of the Board of Directors with
respect to the Offer and the Merger, the stockholders of the Company should be
aware of these interests which may present actual or potential conflicts of
interest.
Pursuant to the Merger Agreement, the Company has agreed to use all
reasonable efforts to provide that, upon consummation of the Merger, each then
outstanding Option or Warrant to purchase Shares, whether or not then
exercisable or vested, will be acquired by the Company for cancellation in
consideration for payment to the holders of such Options and Warrants of an
amount in respect thereof equal to the excess of the Merger Consideration over
the exercise price thereof multiplied by the number of Shares subject thereto.
The amounts to be received by Mr. Meckler, Christopher S. Cardell, Carl S. Pugh
and Christopher J. Baudouin, the executive officers of the Company, in respect
of such options are $5,071,650, $861,470, $442,500 and $85,310, respectively.
Pursuant to the Merger Agreement, Parent has agreed to cause the Surviving
Corporation to indemnify each director, officer, employee, fiduciary or agent of
the Company against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement arising out of any matter existing or occurring at or prior to the
effective time of the Merger (the "Effective Time") to the fullest extent
permitted by applicable law. Parent has also agreed to cause the Surviving
Corporation to maintain policies of directors' and officers' liability insurance
equivalent to the current policies of the Company, subject to certain
limitations, for six years after the Effective Time.
Pursuant to the Merger Agreement, Parent has agreed to (A) contribute all
assets (the "iWorld Assets") of iWorld Corporation, a Delaware corporation and
wholly owned subsidiary of the Company, to a newly formed Delaware limited
liability company ("iWorld") and (B) sell to Mr. Meckler and/or one or more
persons under his control an 80.1% equity interest in iWorld for an aggregate
purchase price of $18.0 million (the "iWorld Transaction). At the Effective
Time, Parent, the Purchaser and iWorld have agreed to enter into certain
agreements with respect to the operation of iWorld. See "The Merger Agreement;
The iWorld Agreements" in Section 10. See also "Special Factors -- Background of
the Offer; Contacts with the Company" above.
Pursuant to the Merger Agreement, at the Effective Time, Parent will enter
into an agreement with Mr. Meckler, pursuant to which, for a period of three
years following the consummation of the Merger, Mr. Meckler will render
consulting services to Parent and the Surviving Corporation and will abide by a
covenant not to compete with the business of Parent, the Surviving Corporation
or any entities controlled by either in exchange for an annual fee of $100,000
payable monthly during such period. See "Consulting Agreement" in Section 10.
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will, as soon as practicable after the Expiration
Date (as defined below), accept for payment and thereby purchase all Shares
validly tendered on or prior to such Expiration Date and not withdrawn in
accordance with the procedures set forth in Section 4. The Offer shall remain
open until 12:00 midnight, New York City time, on Wednesday, November 18, 1998
(the "Expiration Date"), unless and until the Purchaser shall have extended the
period of time for which the Offer is open (but not beyond Friday, November 27,
1998, without the prior written consent of the Company), in which event the term
"Expiration Date" shall mean the time and date at which the Offer, as so
extended by the Purchaser, shall expire. During any such extension, all Shares
previously tendered and not withdrawn will remain
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<PAGE> 8
subject to the Offer and subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. See Section 4.
Pursuant to the Merger Agreement, the Expiration Date may not be extended
beyond Friday, November 27, 1998, without the prior written consent of the
Company. In order to ensure that any Shares tendered into the Offer pursuant to
the guaranteed delivery procedures described in Section 3 hereof are received
prior to that date, the Purchaser has set the Expiration Date for November 18,
1998. If, at any Expiration Date, the conditions to the Offer described in
Section 13 hereof shall not have been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), to extend the Offer from time
to time by giving oral or written notice to the Depositary, but not beyond
Friday, November 27, 1998, without the prior written consent of the Company.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), the Purchaser also expressly reserves the right,
in its sole discretion, at any time or from time to time, to (i) delay
acceptance for payment of, or regardless of whether such Shares were theretofore
accepted for payment, payment for such Shares pending receipt of any regulatory
or governmental approvals specified in Section 14; (ii) terminate the Offer
(whether or not any Shares have theretofore been accepted for payment) if any
condition referred to in Section 13 has not been satisfied or upon the
occurrence of any event specified in Section 13; (iii) waive any condition
(except, without the prior written consent of the Company, the Minimum
Condition); or (iv) except as set forth in the Merger Agreement, otherwise amend
the Offer in any respect, in each case, by giving oral or written notice of such
termination, waiver or amendment to the Depositary. In the Merger Agreement, the
Purchaser has agreed that, without the prior written consent of the Company, it
will not (i) decrease the price per Share or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought to be purchased
in the Offer, (iii) impose additional conditions to the Offer or (iv) amend any
other term of the Offer in any manner adverse to the holders of Shares.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 13. Any extension,
termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information that approaches the significance of price and
the percentage of securities sought, a minimum of ten business days may be
required to allow for adequate dissemination and investor response. With respect
to a change in price, a minimum ten business day period from the date of such
change is generally required under applicable Commission rules and regulations
to allow for adequate dissemination to stockholders. The requirement to extend
the Offer will not apply to the extent that the number of business days
remaining between the occurrence of the change and the then-scheduled Expiration
Date equals or exceeds the minimum extension period that would be required
because of such amendment. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or a Federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be
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furnished by the Purchaser to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), the Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not properly withdrawn (in
accordance with Section 4) prior to the Expiration Date promptly after the later
to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the
conditions to the Offer set forth in Section 13. See Sections 1 and 13. In
addition, subject to applicable rules of the Commission, the Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory or governmental approvals specified in Section
14. See Section 14.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares ("Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or Philadelphia Depository
Trust Company (collectively, the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3; (ii) the appropriate Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined below) in
connection with a book-entry transfer; and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Depositary of
the Purchaser's acceptance of such Shares for payment pursuant to the Offer. In
all cases, upon the terms and subject to the conditions of the Offer, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to validly tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE PURCHASER.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
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The Purchaser reserves the right, subject to the provisions of the Merger
Agreement, to assign, in whole or from time to time in part, to one or more of
Parent's subsidiaries or affiliates the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but no such assignment will relieve
Parent of its obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees or an Agent's Message in connection with a
book-entry delivery of Shares and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
and either (i) Share Certificates representing tendered Shares must be received
by the Depositary or tendered pursuant to the procedure for book-entry transfer
set forth below and Book-Entry Confirmation must be received by the Depositary,
in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at each of the Book-Entry Transfer
Facilities for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of any Book-Entry Transfer Facility may make book-entry delivery of
Shares by causing such Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at such Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents must, in any case, be
transmitted to and received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date,
or the guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for Shares not tendered or not accepted for purchase are to
be issued or returned to, a person other than the registered holder, then the
tendered certificates must be endorsed or accompanied by appropriate stock
powers, signed exactly as the name or names of the registered holder or holders
appear on the certificates, with the signatures on the certificates or stock
powers guaranteed by an Eligible Institution as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
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If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares may nevertheless be tendered
if all of the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
Nasdaq National Market trading days after the date of execution of such
Notice of Guaranteed Delivery. A "Nasdaq trading day" is any day on which
The Nasdaq Stock Market Inc.'s ("Nasdaq") Nasdaq National Market is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery and a representation that the stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or, of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the appropriate Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time, and will depend upon when Share Certificates are
received by the Depositary or Book-Entry Confirmations of such Shares are
received into the Depositary's account at a Book-Entry Transfer Facility.
Backup Federal Income Tax Withholding. Under the backup federal income tax
withholding laws applicable to certain stockholders (other than certain exempt
stockholders, including, among others, all corporations and certain foreign
individuals), the Depositary may be required to withhold 31% of the amount of
gross proceeds payable to such stockholders pursuant to the Offer or the Merger.
To prevent backup federal income tax withholding, each such stockholder must
provide the Depositary with such stockholder's correct taxpayer identification
number and certify that such stockholder is not subject to backup federal income
tax withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See Instruction 9 of the Letter of Transmittal.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser, and each of them,
as such stockholder's agents, attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase. All such
powers of attorney and proxies shall be considered irrevocable and coupled with
an interest in the tendered Shares. Such appointment will be effective upon the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Upon such acceptance for payment, all other powers of
attorney and proxies given by such stockholder with respect to such Shares and
such other securities or rights prior to such payment will be revoked, without
further action, and no subsequent powers of attorney and proxies may be given by
such stockholder (and, if given, will
9
<PAGE> 12
not be deemed effective). The designees of the Purchaser will, with respect to
the Shares and such other securities and rights for which such appointment is
effective, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual or
special meeting of the Company's stockholders, or any adjournment or
postponement thereof, or by consent in lieu of any such meeting or otherwise. In
order for Shares to be deemed validly tendered, immediately upon the acceptance
for payment of such Shares, the Purchaser or its designee must be able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it not to be in proper form or the acceptance of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer (other than the
Minimum Condition, which may not be waived without the consent of the Company)
or any defect or irregularity in any tender of Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of other stockholders.
The Purchaser's interpretation of the terms and conditions of the Offer
will be final and binding. No tender of Shares will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived by the Purchaser. None of Parent, the Purchaser or any
of their respective affiliates or assigns, the Depositary, the Information Agent
or any other person or entity will be under any duty to give any notification of
any defects or irregularities in tenders or incur any liability for failure to
give any such notification.
The Purchaser's acceptance for payment of Shares tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after December 13, 1998.
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept
for payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to exercise and duly exercises withdrawal rights as described in this
Section 4. Any such delay will be by an extension of the Offer to the extent
required by law.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will
be deemed not validly
10
<PAGE> 13
tendered for purposes of the Offer, but may be tendered at any subsequent time
prior to the Expiration Date by following any of the procedures described in
Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of Parent, the
Purchaser or any of their respective affiliates or assigns, the Depositary, the
Information Agent or any other person or entity will be under any duty to give
any notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. For
federal income tax purposes, each selling or exchanging stockholder would
generally recognize gain or loss equal to the difference between the amount of
cash received and such stockholder's tax basis for the Shares tendered in
exchange therefor. Gain or loss will be determined separately for each block of
Shares (i.e., Shares acquired at the same time and price) exchanged pursuant to
the Offer or the Merger. Such gain or loss will be capital gain or loss
(assuming the Shares are held as a capital asset) and any such capital gain or
loss will be long term if, as of the date of sale or exchange, the Shares were
held for more than one year or will be short term if, as of such date, the
Shares were held for one year or less.
A holder of Shares who perfects his appraisal rights in the Merger, if any,
under the GCL will probably recognize gain or loss at the Effective Time in an
amount equal to the difference between the "amount realized" and such
stockholder's adjusted tax basis of such Shares. For this purpose, although
there is no authority to this effect directly on point, the amount realized
should generally equal the trading value per share of the Shares at the
Effective Time. Ordinary interest income and/or capital gain or (capital loss),
assuming that the Shares were held as capital assets, should be recognized by
such stockholder at the time of actual receipt of payment, to the extent that
such payment exceeds (or is less than) the amount realized at the Effective
Time.
The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations, or
entities that are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986, as amended (such as financial institutions, insurance
companies, tax-exempt entities, dealers in securities and regulated investment
companies).
THE FOREGOING SUMMARY IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS BASED
ON UNITED STATES FEDERAL INCOME TAX LAW NOW IN EFFECT, WHICH IS SUBJECT TO
CHANGE, POSSIBLY RETROACTIVELY. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND
MERGER, INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997, (the "Form 10-K"), the Shares are traded on the Nasdaq
National Market under the symbol "MECK." The following table sets forth, for the
periods indicated, the reported high and low sale prices for the Shares on the
Nasdaq National Market as reported in the Form 10-K with respect to calendar
periods occurring in 1996 and the first three calendar quarters of 1997, and as
reported thereafter by published financial sources with respect to the fourth
calendar quarter of 1997 and the four calendar quarters of 1998.
11
<PAGE> 14
MECKLERMEDIA CORPORATION
<TABLE>
<CAPTION>
HIGH LOW
1996 ---- ---
<S> <C> <C> <C> <C>
First Quarter............................................ $16 $ 8 1/2
Second Quarter........................................... 24 1/2 11 1/4
Third Quarter............................................ 21 3/4 14 1/2
Fourth Quarter........................................... 23 16 3/4
1997
First Quarter............................................ $29 31/64 $17 3/4
Second Quarter........................................... 27 1/8 17
Third Quarter............................................ 26 1/8 17 7/8
Fourth Quarter........................................... 24 7/8 18 1/8
1998
First Quarter............................................ $29 1/8 $23 3/8
Second Quarter........................................... 26 9/16 19 1/4
Third Quarter............................................ 26 1/2 19 5/8
Fourth Quarter (through October 14)...................... 27 5/8 18 1/2
</TABLE>
On October 7, 1998, the last full day of trading prior to the announcement
of the execution of the Merger Agreement, according to published sources, the
reported closing price on the Nasdaq National Market for the Shares was $20 3/16
per Share. On October 14, 1998, the last full day of trading prior to the
commencement of the Offer, according to published sources, the reported closing
price on Nasdaq National Market for the Shares was $26 7/8 per Share.
According to the Form 10-K, the Company has never declared or paid a cash
dividend and does not anticipate doing so in the foreseeable future. The Company
has agreed in the Merger Agreement that it will not pay any dividend or other
distribution payable in cash, stock or property with respect to the Shares.
On December 23, 1996, the Company's Board of Directors authorized the
Company to purchase up to $2.0 million of the Shares in the public market. On
May 15, 1997, the Company purchased 10,000 Shares for $172,000. On December 2,
1997, the Company's Board of Directors authorized the Company to purchase up to
an additional $5.0 million of the Shares in the public market. On December 2,
1998, the Company purchased 150,000 Shares and on December 30, 1997, the Company
purchased 100,000 Shares, for an aggregate purchase price of $5.1 million.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer price
therefor.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in Nasdaq. According to Nasdaq's published guidelines, the Shares would not be
eligible to be included for quotation if, among other things, the number of
publicly held Shares falls below 500,000, the number of holders of Shares falls
below 400 or the aggregate market value of such publicly held Shares falls below
$3,000,000. If these standards are not met, the Shares might continue to be
quoted on The Nasdaq SmallCap Market, Inc., but if the number of holders of the
Shares falls below 300, or if the number of publicly held Shares falls below
100,000, or if the aggregate market value of such publicly held Shares
12
<PAGE> 15
falls below $200,000 or there are not at least two registered and active market
makers (one of which may be a market maker entering a stability bid), Nasdaq
rules provide that the securities would no longer qualify for inclusion in
Nasdaq and Nasdaq would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company or by a beneficial owner of
more than 10% of the Shares will ordinarily not be considered as being publicly
held for purposes of these standards. In the event the Shares are no longer
eligible for Nasdaq quotation, quotations might still be available from other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the number of holders of such Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act as described below and other factors.
Purchaser has been advised by the Company that as of October 12, 1998,
there were approximately 76 holders of record of the Shares. The Company has
advised the Purchaser that it believes that the number of beneficial owners of
the Shares as of October 13, 1998 is in excess of 4,200.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for termination of registration under the Exchange Act.
Registration of the Shares may be terminated upon application by the Company to
the Commission if the Shares are not listed on a "national securities exchange"
and there are fewer than 300 record holders of Shares. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirements of
furnishing a proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) or 14(c) and the related requirement of an annual report, no
longer applicable to the Company. If the Shares are no longer registered under
the Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions would no longer be applicable to the
Company. Furthermore, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended,
may be impaired or, with respect to certain persons, eliminated. If registration
of the Shares under the Exchange Act were terminated, the Shares would no longer
be "margin securities" or eligible for stock exchange listing or Nasdaq
reporting. The Purchaser believes that the purchase of the Shares pursuant to
the Offer may result in the Shares becoming eligible for termination of
registration under the Exchange Act, and it is the intention of the Purchaser to
cause the Company to make an application for termination of registration of the
Shares as soon as possible after successful completion of the Offer if the
Shares are then eligible for such termination.
If registration of the Shares is not terminated prior to the Merger, then
following the consummation of the Merger, the Shares will no longer be eligible
for Nasdaq quotation and the registration of the Shares under the Exchange Act
will be terminated.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer, the Shares might no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 20 Ketchum Street, Westport, Connecticut 06880. The following
description of the Company's business has been derived in part from
13
<PAGE> 16
the Company's Registration Statement on Form S-3 filed with the Commission on
June 15, 1998 and is qualified in its entirety by reference to such Form S-3:
The Company is a leading provider of information about the Internet
through its (i) Internet World and ISPCON trade shows and conferences,
(ii) publication of Internet World, a weekly controlled circulation
newspaper, (iii) publication of Boardwatch, a monthly general
circulation magazine, (iv) publication of the Directory of Internet
Service Providers, a periodic general circulation publication, and (v)
Internet.com (formerly iWorld), the Company's network of Web sites for
Internet news and information resources.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the Form 10-K
and the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1998. More comprehensive financial and other information is included in such
reports (including management's discussion and analysis of financial condition
and results of operations) and in other reports and documents filed by the
Company with the Commission. The financial information set forth below is
qualified in its entirety by reference to such reports and documents filed with
the Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth below.
MECKLERMEDIA CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FISCAL YEAR ENDED SEPTEMBER 30,
----------------------------- --------------------------------
JUNE 30, 1998 JUNE 30, 1997 1997 1996 1995
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $49,835 $44,272 $55,193 $30,594 $14,487
------- ------- ------- ------- -------
Cost of sales and direct costs......... 26,254 25,273 31,862 18,631 8,862
------- ------- ------- ------- -------
Gross profit........................... 23,581 18,999 23,331 11,963 5,625
Operating expenses:
Advertising, promotion and selling... 7,907 10,089 12,514 9,890 4,913
General, administrative and
amortization...................... 7,824 6,844 8,923 6,807 3,566
------- ------- ------- ------- -------
Operating income (loss)................ 7,850 2,066 1,894 (4,734) (2,854)
Other income, net...................... 2,700 825 1,123 1,001 1,624
------- ------- ------- ------- -------
Income (loss) before income taxes...... $10,550 $ 2,891 $ 3,017 $(3,733) $(1,230)
------- ------- ------- ------- -------
Net income (loss)...................... $ 6,407 $ 3,664 $ 3,744 $(3,868) $(1,275)
======= ======= ======= ======= =======
Income (loss) per share................ $ 0.73 $ 0.42 $ 0.43 $ (0.46) $ (0.17)
======= ======= ======= ======= =======
Book value per share................... 4.08 2.24 2.28 1.70 2.14
Weighted-average shares outstanding.... 8,526 $ 8,773 8,762 8,422 7,306
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, cash equivalents and marketable
securities........................... $ 6,456 $23,971 $19,859 $19,442
Total assets........................... 70,943 51,781 34,586 26,700
Long-term debt......................... -- -- -- --
Stockholders' equity................... 37,169 19,416 14,393 17,889
</TABLE>
The Company is subject to the informational reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission
14
<PAGE> 17
relating to its business, financial condition and other matters. Certain
information, as of particular dates, concerning the Company's business,
principal physical properties, capital structure, material pending legal
proceedings, operating results, financial condition, directors and officers
(including their remuneration and the stock options granted to them), the
principal holders of the Company's securities, any material interests of such
persons in transactions with the Company and certain other matters is required
to be disclosed in proxy statements and annual reports distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Chicago, Illinois 60606 and 7 World Trade Center,
New York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may be obtained electronically by visiting the Commission's
web site on the Internet at http://www.sec.gov. The Common Stock of the Company
is traded on the Nasdaq National Market. Reports, proxy statements and other
information concerning the Company should also be available for inspection at
the National Association of Securities Dealers, Inc., at 1735 K Street, N.W.,
Washington D.C. 20006.
Although neither Parent nor the Purchaser has any knowledge that any such
information is untrue, neither Parent nor the Purchaser takes any responsibility
for the accuracy or completeness of information contained in this Offer to
Purchase with respect to the Company or any of its subsidiaries or affiliates or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information.
In the course of the discussions between representatives of Parent and the
Company, certain forecasts of future operating performance were furnished to
Parent's representatives.
THESE FORECASTS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS, AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THEY WERE
PROVIDED TO PARENT. NEITHER PARENT, THE PURCHASER NOR THE COMPANY ASSUMES ANY
RESPONSIBILITY FOR THE ACCURACY OF THESE FORECASTS. WHILE PRESENTED WITH
NUMERICAL SPECIFICITY, THESE FORECASTS ARE BASED UPON A VARIETY OF ASSUMPTIONS
(NOT ALL OF WHICH WERE STATED THEREIN AND NOT ALL OF WHICH WERE PROVIDED TO
PARENT) RELATING TO THE BUSINESSES OF THE COMPANY WHICH MAY NOT BE REALIZED AND
ARE SUBJECT TO SIGNIFICANT FINANCIAL, MARKET, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT
ACCURATELY, MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY AND PARENT.
THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL BE REALIZED, AND ACTUAL
RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. THE INCLUSION OF THE PROJECTIONS
SET FORTH BELOW SHOULD NOT BE REGARDED AS A REPRESENTATION BY PARENT OR ANY OF
ITS AFFILIATES OR REPRESENTATIVES OR BY THE COMPANY OR ITS REPRESENTATIVES THAT
THE PROJECTED RESULTS WILL BE ACHIEVED.
Set forth below is a summary of these projections. The projections should
be read together with the financial statements of the Company referred to
herein.
The Company provided Parent with a forecast dated September 22, 1998 (the
"Forecast"), of its consolidated income statement for the fiscal years ending
September 30, 1998 and 1999, which estimated revenues for the fourth fiscal
quarter 1998 and the full fiscal year 1999 of $14.5 million and $78.1 million,
respectively, operating income of $1.8 million and $18.8 million, respectively,
and net income of $1.1 million and $11.6 million, respectively. Subsequently,
the Company provided Parent with its consolidated 1999 budget (the "Budget") for
the fiscal year ended September 30, 1999, which budgeted total revenues for such
year of $77.7 million, operating income of $18.7 million and net income of $11.5
million. The Budget was prepared approximately one week after the Forecast and
represented a refinement of the data provided in the Forecast. The Forecast and
the Budget were prepared by the Company's management in the ordinary course of
the Company's annual budgeting process and makes certain assumptions with
respect to revenue growth (including the amount of square feet, price per square
foot, number of attendees and admission fees with respect to the Company's trade
shows, and number of issues and total advertising pages with respect to the
Company's publications), cost of sales and direct costs, operating expenses
(including general and administrative expenses), net interest expense
15
<PAGE> 18
and certain other future conditions. The Company has not, and is under no
obligation to, update the Forecast or the Budget as of a more recent date.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is a Delaware corporation with its principal executive offices
located at 1100 Superior Avenue, Cleveland, Ohio 44114. Founded in 1892 by John
Augustus Penton, Parent is a leading business media company. Parent's principal
media platforms, including magazines, trade shows and conferences, and
electronic media products, provide proprietary information to business users,
and integrated marketing solutions to industry suppliers. Parent's publications,
trade shows and conferences, and electronic media products serve the
electronics, design/engineering, manufacturing, supply chain/aviation,
mechanical systems/construction, food service/hospitality,
government/compliance, management markets, and the convenience store/baking
market. Parent's diverse array of products provide business-to-business
marketers with the tools to communicate effectively with their customers, and
provide current information to the markets served. Parent had total revenue of
approximately $205.0 million in 1997.
The Purchaser's principal executive offices are located care of Penton
Media, Inc., 1100 Superior Avenue, Cleveland, Ohio 44114. The Purchaser is a
newly formed Delaware corporation and a wholly-owned subsidiary of Parent. The
Purchaser has not conducted any business other than in connection with the Offer
and the Merger.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Parent and the Purchaser are set forth in Schedule I.
Parent is subject to the informational reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning Parent's business, principal physical properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their remuneration and
stock options granted to them), the principal holders of Parent's securities,
any material interests of such persons in transactions with Parent and certain
other matters is required to be disclosed in proxy statements and annual reports
distributed to Parent's stockholders and filed with the Commission. Such
reports, proxy statements and other information may be inspected and copied at
the Commission's public reference facilities and should also be available for
inspection at the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
Set forth below is certain consolidated financial information with respect
to Parent and its consolidated subsidiaries for its fiscal years ended and as of
December 31, 1997, 1996 and 1995. More comprehensive financial and other
information is included in Parent's Registration Statement on Form S-1 filed
with the Commission on August 3, 1998 (including management's discussion and
analysis of financial condition and results of operations) and in other reports
and documents filed by Parent with the Commission since such date, each of which
is incorporated herein by reference. The financial information set forth below
is qualified in its entirety by reference to such reports and documents filed
with the Commission and the financial statements and related notes contained
therein. These reports and other documents may be examined and copies thereof
may be obtained in the manner set forth above.
16
<PAGE> 19
PENTON MEDIA, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue.................................................. $204,931 $188,557 $179,900
Net Income............................................... 14,874 10,956 8,577
Net income per share, basic and diluted.................. $ 0.70 $ 0.52 $ 0.40
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................................... $(25,316) $ 14,363 $ 20,670
Total assets............................................. 156,426 108,799 116,494
Total debt............................................... 34,170 -- --
Shareholders' equity..................................... 69,613 59,151 70,763
</TABLE>
Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (i) neither Parent nor the Purchaser nor, to the knowledge of Parent or
the Purchaser, any of the persons listed in Schedule I hereto or any associate
or majority-owned subsidiary of Parent or the Purchaser or any of the persons so
listed, beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company; (ii) neither Parent nor the Purchaser nor, to
the knowledge of Parent or the Purchaser, any of the persons or entities
referred to in clause (i) above or any of their executive officers, directors or
subsidiaries has effected any transaction in the Shares or any other equity
securities of the Company during the past 60 days; (iii) neither Parent nor the
Purchaser nor, to the knowledge of Parent or the Purchaser, any of the persons
listed in Schedule I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the Company
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations); (iv) there have been no transactions which would require
reporting under the rules and regulations of the Commission between Parent or
the Purchaser or any of their respective subsidiaries or, to the knowledge of
Parent or the Purchaser, any of the persons listed in Schedule I hereto, on the
one hand, and the Company or any of its executive officers, directors or
affiliates, on the other hand; and (v) there have been no contacts, negotiations
or transactions between Parent or the Purchaser or any of their respective
subsidiaries or, to the knowledge of Parent or the Purchaser, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or any of its
subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets. Neither Parent nor the Purchaser nor any of the persons listed in
Schedule I hereto makes any recommendation to the stockholders of the Company
regarding the Offer.
10. THE MERGER AGREEMENT; TENDER, VOTING AND OPTION AGREEMENT; STATUTORY
REQUIREMENTS; APPRAISAL RIGHTS; PLANS FOR THE COMPANY
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement
and is qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which is filed with the Commission as Exhibit (c)(3) to the
Schedule 14D-1 and is incorporated herein by reference. The Merger Agreement
should be read in its entirety for a more complete description of the matters
summarized below. Defined terms used below and not defined herein have the
respective meanings assigned to those terms in the Merger Agreement.
The Offer. The Merger Agreement contemplates the commencement of the Offer
and prescribes conditions to consummation of the Offer. The Merger Agreement
provides that, without the prior written consent of the Company, the Purchaser
may not (i) decrease the amount offered per Share or change the form of
consideration
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payable in the Offer, (ii) decrease the number of Shares sought to be purchased
in the Offer, (iii) amend or waive the Minimum Condition, (iv) impose additional
conditions to the Offer, or (v) amend any other term of the Offer in any manner
adverse to the holders of Shares. If on the initial Expiration Date, which shall
be November 18, 1998, all conditions to the Offer shall not have been satisfied
or waived, the Purchaser may extend the Expiration Date up to an additional six
(6) business days to the extent necessary to permit such condition to be
satisfied; provided, however, that the Expiration Date may not be extended
beyond November 27, 1998, except with the written consent of the Company. The
Purchaser will, on the terms and subject to the prior satisfaction or waiver of
the conditions of the Offer, accept for payment and purchase all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
such Expiration Date of the Offer.
The Company made representations and warranties to Parent in the Merger
Agreement that (a) the Board of Directors of the Company (the "Board of
Directors"), at a meeting duly called and held, (i) unanimously approved and
adopted the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger (such approval being sufficient to render
Section 203 of the GCL inapplicable to the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger), (ii) recommended that
the stockholders of the Company accept the Offer, tender their Shares pursuant
to the Offer and approve the Merger Agreement and the transactions contemplated
thereby, including the Merger, and (iii) determined that the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
are fair to and in the best interests of the stockholders of the Company and (b)
Allen & Company, the Company's financial advisor, rendered its opinion to the
Board of Directors that the consideration to be received by the holders of
Shares, Options and Warrants of the Company pursuant to the Offer and the Merger
is fair to such holders from a financial point of view.
The Merger Agreement provides that promptly upon the payment by the
Purchaser for Shares pursuant to the Offer, and from time to time thereafter,
Parent is entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors as is equal to the product of the total
number of directors on the Board of Directors (determined after giving effect to
the directors so elected pursuant to such provision) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Parent or
its affiliates bears to the total number of Shares then outstanding. At such
times, if requested by Parent, the Company will also cause each committee of the
Board of Directors to include persons designated by the Parent constituting the
same percentage of each such committee as Parent's designees are of the Board of
Directors. The Company shall, upon request by Parent, promptly increase the size
of the Board of Directors or exercise its best efforts to secure the
resignations of such number of directors as is necessary to enable Parent
designees to be elected to the Board of Directors and shall cause Parent's
designees to be so elected; provided, however, that, in the event that Parent's
designees are appointed or elected to the Board of Directors, until the
Effective Time the Board of Directors shall have at least one director who is a
director on the date the Merger Agreement and who is neither an officer of the
Company nor a designee, stockholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (one or more of such directors, the
"Independent Directors"); provided further, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of Parent, and such person shall be deemed
to be an Independent Director for purposes of the Merger Agreement.
The Merger. The Merger Agreement provides that, at the Effective Time,
subject to the terms and conditions of the Merger Agreement and the GCL, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Certificate of Incorporation of the Purchaser, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and of the Merger Agreement and applicable law. The By-Laws
of the Purchaser in effect at the time of the Effective Time shall be the
By-Laws of the Surviving Corporation until amended, as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
Subject to applicable law, the directors of the Purchaser immediately prior
to the Effective Time will be the initial directors of the Surviving
Corporation, and the officers of the Purchaser immediately prior to the
Effective
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Time will be the initial officers of the Surviving Corporation, in each case
until their successors are elected appointed and qualified.
At the Effective Time, by virtue of the Merger and without any action on
the part of the Purchaser, the Company or any holder of Shares, each Share
issued and outstanding immediately prior to the Effective Time (other than (A)
Shares held by Parent, any wholly owned subsidiary of Parent or, in the treasury
of the Company, which will be canceled and retired immediately before the
Effective Time and (B) Dissenting Shares) will be canceled and retired and will
be converted into the right to receive $29.00 net per Share in cash, payable to
the holder thereof, without interest thereon (the "Per Share Amount"), upon
surrender of the certificate formerly representing such Share. At the Effective
Time, each share of common stock of the Purchaser, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time will thereafter
represent one validly issued, fully paid and non-assessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the Company shall use all reasonable
efforts to provide that, upon consummation of the Merger, each then outstanding
option to purchase Shares (the "Options") granted under any of the Company's
stock option plans (the "Option Plans") and each then outstanding warrant to
purchase Shares (the "Warrants") granted under any of the warrant agreements
(the "Warrant Agreements"), whether or not then exercisable or vested, shall be
acquired by the Company for cancellation in consideration of payment to the
holders of such Options and Warrants of an amount in respect thereof equal to
the product of (A) the excess if any, of the Per Share Amount over the per share
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes); provided that the Company
shall obtain any consents required of holders of Options and Warrants to effect
the foregoing. As promptly as practicable following the consummation of the
Offer, the Purchaser shall provide the Company with the funds necessary to
satisfy the foregoing obligations.
The Company has agreed pursuant to the Merger Agreement that it shall cause
the Option Plans and Warrant Agreements to terminate as of the Effective Time
and shall ensure that following the Effective Time no person, including any
holder of Options or Warrants or any participant in the Option Plans, will have
any right to acquire any equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
The Company has agreed pursuant to the Merger Agreement that, if required
by applicable law in order to consummate the Merger, following the purchase of
and payment for Shares by the Purchaser pursuant to the Offer, the Company shall
(i) promptly take all action necessary in accordance with the GCL and its
Certificate of Incorporation and By-Laws to convene a special meeting of its
stockholders, (ii) use its best efforts to solicit from stockholders of the
Company proxies in favor of the Merger, if necessary, and (iii) take all other
action necessary or, in the reasonable opinion of Parent, advisable to secure
any vote or consent of stockholders required by the GCL to effect the Merger.
Parent has agreed in the Merger Agreement that it will vote, or cause to be
voted, all of the Shares then directly or indirectly beneficially owned by it in
favor of the approval of the Merger.
The Merger Agreement further provides that, notwithstanding the foregoing,
if Parent, the Purchaser or any other subsidiary of Parent acquires at least 90%
of the outstanding Shares of the Company pursuant to the Offer or otherwise, the
parties to the Merger Agreement will take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after the
acceptance for payment of and payment for the Shares by the Purchaser pursuant
to the Offer without a meeting of the stockholders of the Company, in accordance
with Section 253 of the GCL.
Representations and Warranties of the Company. Pursuant to the Merger
Agreement, the Company has made representations and warranties with respect to,
among other things, (i) the organization, corporate powers and qualifications of
the Company and each of its significant subsidiaries; (ii) the capitalization of
the Company and its significant subsidiaries; (iii) the corporate power and
authority to enter into the Merger Agreement and, subject to obtaining any
necessary stockholder approval of the Merger, to carry out its obligations
thereunder; (iv) due authorization, execution and delivery of the Merger
Agreement by the Company and the consummation by the Company of the transactions
contemplated thereby, subject to the approval of the Merger by the Company's
stockholders in accordance with Delaware law; (v) the absence of any conflicts
between the Merger Agreement and the transactions contemplated thereby with any
law, regulation, court order, judgment, decree,
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permit or license, agreements, contracts or other instruments and obligations;
(vi) the absence of required waivers, consents or approvals; (vii) the accuracy
of the documents filed with the Commission; (viii) the Company's financial
statements and its financial condition; (ix) the compliance of the Company and
its subsidiaries with all laws, including those relating to the protection of
the environment; (x) required permits, licenses, variances, exemptions, orders,
regulations and approvals of governmental authorities for the conduct of
business by the Company and its subsidiaries; (xi) an opinion from Allen &
Company; (xii) the absence of certain litigation; (xiii) the accuracy and
completeness of the information supplied by the Company in connection with the
Offer or any other document to be filed with the Commission or any other
governmental entity in connection with the transactions contemplated by the
Merger Agreement; (xiv) action taken by the Board of Directors to render Section
203 of GCL inapplicable to the Offer, the Merger, the Merger Agreement, the
Tender, Voting and Option Agreement and any of the transactions contemplated
thereby; (xv) employee benefit plans; (xvi) patents, trademarks and other
intellectual property; (xvii) certain tax returns required to be filed and
certain taxes required to be paid by the Company and its subsidiaries; (xviii)
the absence of certain events since September 30, 1997, including that there has
not been any change in or effect on the business of the Company that is or can
be reasonably expected to be materially adverse to the business, assets,
properties (including intangible properties), condition (financial or
otherwise), results of operations, prospects (other than changes in general
economic conditions but including changes in the industry in which the Company
operates), liabilities or regulatory status of the Company and the subsidiaries
taken as a whole (a "Company Material Adverse Effect"); (xix) the vote required
by the stockholders of the Company to approve the Merger; (xx) transactions with
affiliates; (xxi) certain contractual obligations; (xxii) the absence of
brokerage or finders fees or commissions payable in connection with the Merger
Agreement and the transactions contemplated thereby (other than with respect to
fees payable to Allen & Company); and (xxiii) the accuracy of the information
contained in the Merger Agreement and each certificate or other instrument
furnished by the Company to Parent or the Purchaser.
Representations and Warranties of Parent and the Purchaser. Pursuant to the
Merger Agreement, Parent and the Purchaser have made representations and
warranties with respect to, among other things, (i) the organization, corporate
powers and qualifications of Parent and the Purchaser; (ii) the corporate power
and authority to execute and deliver the Merger Agreement and to consummate the
transactions contemplated thereby; (iii) the absence of any conflicts between
the Merger Agreement and the transactions contemplated thereby with any laws,
regulations, agreements, contracts or other instruments and obligations; (iv) a
commitment letter from DLJ Capital Funding, Inc., DLJ Bridge Finance, Inc. and
DLJ to provide debt financing in an amount of up to $325.0 million which Parent
believes will be sufficient to perform its obligations pursuant to the Merger
Agreement; (v) obligations or liabilities of the Purchaser other than those
incurred in connection with its incorporation or organization or the
consummation of the Merger Agreement or transactions contemplated thereby; (vi)
the absence of brokerage or finders fees or commissions payable in connection
with the Merger Agreement and the transactions contemplated thereby (other than
with respect to the fees payable to DLJ); and (vii) the accuracy of documents
filed with the Commission.
Covenants. The Merger Agreement obligates the Company and its subsidiaries,
from the date of the Merger Agreement until the Effective Time, to conduct their
operations only in the ordinary and usual course of business consistent with
past practice and obligates the Company and its subsidiaries to use their
reasonable efforts to preserve intact their business organizations, to keep
available the services of their present officers, employees and consultants and
to preserve the goodwill of those having business relationships with them. The
Merger Agreement also contains specific covenants as to certain impermissible
activities of the Company prior to the Effective Time, which provide that the
Company will not (and will not permit any of its subsidiaries to): (i) adopt any
amendment to its Certificate of Incorporation or By-Laws or comparable
organizational documents; (ii) (A) issue, sell, transfer, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or any of
its Subsidiaries, other than (1) the issuance of Shares, in accordance with the
terms of the instruments governing such issuance on the date of the Merger
Agreement, and previously disclosed to Parent in writing (2) issuances to
employees pursuant to any of the Option Plans of stock options to purchase in
the aggregate up to 10,000 shares of Common Stock which options are exercisable
at a price (which price shall be set no earlier than after the tenth trading day
following the date of the Merger Agreement) equal to
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or greater than fair market value (as defined in the relevant Option Plan) on
the date of grant; (B) incur any long-term indebtedness or incur short-term
indebtedness other than under lines of credit existing on the date of the Merger
Agreement; (C) redeem, purchase or otherwise acquire directly or indirectly any
of its capital stock or other securities; or (D) enter into, amend, terminate,
renew or fail to use reasonable efforts to renew in any material respect any
Material Contract except in the ordinary course of business consistent with past
practice; (iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property) in respect to its capital stock; (iv)
split, combine, subdivide reclassify or redeem, purchase or otherwise acquire,
or propose to redeem or purchase or otherwise acquire, any shares of its capital
stock, or any of its other securities; (v) except for normal increases in the
ordinary course of business consistent with past practice or pursuant to
employment contracts in effect as of the Merger Agreement (A) grant any increase
in the compensation or benefits payable or to become payable by the Company or
any of its Subsidiaries to any employee; (B) adopt, enter into, amend or
otherwise increase, or accelerate the payment or vesting of the amounts,
benefits or rights payable or accrued or to become payable to or accrued under
any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (C) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries; (vi) change the accounting principles used by it
unless required by GAAP (or, if applicable with respect to the Subsidiaries,
foreign generally accepted accounting principles); (vii) except as disclosed in
the Merger Agreement, acquire by merging or consolidating with, by purchasing an
equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire any assets of any other
person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business consistent with past practice) for an amount that in
the aggregate is material, individually or in the aggregate, to the Company and
its Subsidiaries, taken as a whole; (viii) except as disclosed in the Merger
Agreement, sell, lease, exchange, transfer or otherwise dispose of, or agree to
sell, lease, exchange, transfer or otherwise dispose of, any of its assets
except in the ordinary course of business consistent with past practice; (ix)
release any third party from its obligations (A) under any existing standstill
agreement or arrangement relating to a proposed Acquisition Transaction (as
defined herein); unless the Board of Directors determines in its good faith,
reasonable judgment, after consultation with its financial advisors and outside
legal counsel, that the failure to do so would create a reasonable possibility
of a breach of the fiduciary duties of the Board of Directors under applicable
law, or (B) otherwise under any confidentiality or other similar agreement,
except for modifications of any such obligations under existing commercial
arrangements in the ordinary course of business consistent with past practice;
(x) except as disclosed in the Merger Agreement, mortgage, pledge, hypothecate,
grant any security interest in, or otherwise subject to any other lien on any of
its properties or assets; (xi) compromise, settle, grant any waiver or release
relating to or otherwise adjust any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), including
any litigation, except for any such compromise, settlement, waiver, release or
adjustment (A) in the ordinary course of business consistent with past practice,
or involving a payment by the Company or any of its Subsidiaries not in excess
of $50,000 in the aggregate, or (B) set forth in the Merger Agreement, following
prior notice to and consultation with the Purchaser; and (xii) enter into an
agreement, contract, commitment or arrangement to do any of the foregoing.
Parent and the Purchaser have agreed that, between the date of consummation
of the Offer and the Effective Time or earlier termination of the Merger
Agreement, the business of iWorld Corporation (a wholly owned subsidiary of the
Company) shall be conducted only in, and neither Parent nor the Purchaser shall
take any action except in, the ordinary course of business (as in effect with
respect to the iWorld Assets) and in a manner consistent with iWorld
Corporation's past practices; and Parent and the Purchaser will use their
reasonable efforts to preserve substantially intact the business organization of
iWorld Corporation, to keep available the services of the present officers,
employees and consultants of the Company with respect to iWorld Corporation and
to preserve the present relationships of iWorld Corporation with customers,
suppliers and other Persons with which iWorld Corporation has significant
business relations.
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Access to Information. The Merger Agreement provides that, until the
Effective Time, the Company will give Parent and its representatives reasonable
access, at all reasonable times, to its officers, employees, agents, properties,
offices and other facilities and to the books and records of the Company and its
subsidiaries, subject to Parent's maintaining the confidentiality of any
non-public information disclosed to them.
Efforts. The parties have agreed to use their best efforts to take or cause
to be taken all actions and to do or cause to be done all things necessary,
proper or advisable to consummate the transactions contemplated by the Merger
Agreement and to use their best efforts to obtain all necessary waivers,
consents and approvals, and to effect all necessary filings under the Exchange
Act and the HSR Act. The parties also agreed to cooperate in responding to
inquiries from, and making presentations to, regulatory authorities. In
addition, Parent and the Purchaser have agreed to use all reasonable efforts to
take or cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate the financing.
Public Announcements. The Merger Agreement provides that the Company and
Parent will consult with each other prior to issuing any press release or
otherwise making any public statement with respect to the Offer or the Merger
and not issue any press release or make any public statement prior to such
consultation and review, unless required by applicable law or any listing
agreement with a securities exchange.
Employee Benefit Arrangements. With respect to employee benefit matters,
the Merger Agreement provides that at the Effective Time, the Surviving
Corporation shall continue as the plan sponsor of each of the Company's employee
benefits plans. The Merger Agreement provides that participants' rights to the
employer-provided benefits for nonunion employees under the employee benefit
plans as in effect as of the Effective Time shall be continued under the same or
an equivalent plan and shall not be reduced for at least one year following the
Effective Time, except (i) for termination of the Option Plans or (ii) as
required by applicable law (including as required to preserve any favorable tax
treatment afforded such benefits as of the Effective Time). Thereafter, such
participants shall be credited with their service with the Company in
determining their right to participate and vesting under any successor employee
benefits plans.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that the Certificate of Incorporation and By-Laws of the Surviving
Corporation shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who as of the date of the Merger Agreement were
directors, officers, employees, fiduciary, agents of the Company or otherwise
entitled to indemnification under the Certificate of Incorporation, By-Laws or
indemnification agreements (the "Indemnified Parties") and such Certificate of
Incorporation of the Surviving Corporation shall include provisions providing
for advancement of expenses to such Indemnified Parties in accordance with
Article VII of the Company's Certificate of Incorporation and in accordance with
the GCL. Parent has agreed that from and after the Effective Date it will cause
the Surviving Corporation, to the fullest extent permitted under the GCL, to
indemnify, defend and hold harmless, each Indemnified Party against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, loses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, including without
limitation liabilities arising out of the Merger Agreement and the transactions
contemplated thereby, to the extent that it was based on the fact that such
Indemnified Party is or was a director, officer or employee of the Company and
arising out of actions or omissions or alleged actions or omissions occurring at
or prior to the Effective Time, and in the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) the Company or the Surviving Corporation, as applicable, shall pay
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, as promptly as statements therefor are received, and (ii) the
Company and the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and further,
provided, that neither the Company nor the Surviving Corporation shall be
obliged to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action. The Merger
Agreement provides further that for six years after the Effective Time, the
Surviving
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Corporation shall be required to maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently covered
by the Company's officers and directors liability insurance policy on terms not
less favorable than those in effect on the date of the Merger Agreement in terms
of coverage and amounts; provided, however, that the Surviving Corporation will
not be required to expend in any year an amount in excess of 200% of the annual
aggregate premiums currently paid by the Company for such insurance; and
provided, further, that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation will be obligated to obtain a policy with
the best coverage available, in the reasonable judgment of its Board of
Directors, for a cost not exceeding such amount. Parent has agreed to cause the
Surviving Corporation to reimburse all expenses, including reasonable attorney's
fees and expenses, incurred by any person to enforce the foregoing obligations
of Parent and the Surviving Corporation. Parent has agreed that these provisions
will survive consummation of the Merger and be binding on all successors and
assigns.
Notification of Certain Matters. Parent and the Company have agreed to
promptly notify each other of (i) the occurrence or non-occurrence of any fact
or event which would be reasonably likely to cause either (A) any representation
or warranty contained in the Merger Agreement to be untrue or inaccurate in any
material respect at any time from the date of the Merger Agreement to the
Effective Time or (B) any condition described in Section 13 to be unsatisfied in
any material respect at any time from the date of the Merger Agreement to the
date Parent purchases Shares pursuant to the Offer and (ii) any material failure
of the Company, the Purchaser or Parent, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement.
The iWorld Agreements. The following is a summary of the material terms of
certain agreements to be entered into with respect to the iWorld Transaction and
is qualified in its entirety by reference to Exhibits A, B, C and D of the
Merger Agreement, which has been filed as an exhibit to the Schedule 14D-1, each
of which Exhibits is incorporated herein by reference.
Pursuant to the Merger Agreement, at the Effective Time, Parent has agreed
to (A) contribute the iWorld Assets to iWorld and (B) sell to Mr. Meckler and/or
one or more persons under his control of 80.1% of the equity interests in iWorld
for an aggregate purchase price of $18.0 million. The iWorld Assets constitute
the Company's network of Web sites for Internet news and information resources.
Parent will retain the remaining 19.9% equity interest in iWorld and has the
right to acquire up to an additional 10% equity interest in iWorld pursuant to a
warrant agreement (the "Warrant Agreement"). In addition, at the Effective Time,
Parent, the Purchaser and Mr. Meckler will enter into agreements with respect to
(i) the operation of iWorld (the "Operating Agreement"), (ii) licensing certain
trademarks of the Company to iWorld (the "License Agreement") and (iii) the
provision of certain services between Parent and the Purchaser, on the one hand,
and iWorld on the other hand (the "Services Agreement").
The Warrant Agreement provides that Purchaser will have the right to
purchase, at any time between the Effective Time and the earlier of (i) the time
iWorld completes an initial public offering and (ii) three years from the
Effective Time, for $3 million, up to an additional 10% equity interest in
iWorld. The Warrant Agreement provides unlimited piggyback registration rights
to the Purchaser, except with respect to the initial public offering, subject to
customary cutbacks. The Operating Agreement contains customary provisions for
documents of this type given the relative equity ownership of the Purchaser and
Mr. Meckler in iWorld, including provisions regarding tax issues, rights of
first refusal, tag and drag-along rights and restrictions on transfer. The
License Agreement provides that Purchaser will grant iWorld a royalty-free
license to use certain trademarks of the Purchaser for a period of three years
from the Effective Time. The License Agreement will automatically renew for
three-year terms unless the Purchaser terminates the License Agreement upon six
months prior written notice to iWorld.
At the Effective Time, Parent, the Purchaser and iWorld have agreed to
enter into a Services Agreement, pursuant to which, for a period of three years,
Parent and the Purchaser will provide certain services to iWorld in exchange for
certain services provided to Parent and the Purchaser by iWorld. The Purchaser
has agreed to provide iWorld a royalty-free license to use certain intellectual
property of the Company pursuant to the License Agreement and certain privileges
with respect to the Purchaser's trade magazines, trade shows and conferences.
Parent has agreed to obtain, or cause iWorld to obtain, a line of credit in an
amount not to exceed $6.0 million,
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which shall be guaranteed severally 30% by Parent and 70% by Meckler. iWorld has
agreed to provide Parent and the Purchaser certain privileges with respect to
iWorld's network of Internet Web sites and to reimburse certain expenses paid or
to be paid by the Company on iWorld's behalf.
Financial Statements; Financing. The Merger Agreement provides that (i) the
Company shall provide to Parent, no later than October 20, 1998, unaudited
financial statements (without accompanying notes) for the Company's fiscal year
ended September 30, 1998, and shall provide to Parent, no later than November
15, 1998, audited financial statements (including accompanying notes) for such
fiscal year and (ii) upon request of Parent, the Company shall provide to Parent
or its representatives such documentation and information as may reasonably be
required in connection with the Purchaser obtaining the Financing.
Tax Indemnity. Pursuant to the Merger Agreement, Mr. Meckler has agreed to
pay and indemnify Parent for any liabilities arising from the Company's failure
to withhold amounts in respect of income taxes due as a result of Mr. Meckler's
exercise of options to purchase Company Common Stock.
No Solicitation. The Merger Agreement provides that the Company and its
Subsidiaries will not, directly or indirectly, through any officer, director,
agent, financial adviser, attorney, accountant or other representative or
otherwise, solicit, initiate or encourage submission of proposals or offers from
any Person relating to, or that could reasonably be expected to lead to an
Acquisition Transaction (as defined below) or participate in any negotiations or
discussions regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek an
Acquisition Transaction; provided, that, prior to the purchase of and payment
for Shares by Parent pursuant to the Offer and prior to such time as Parent
shall have nominated and the Company shall have caused Parent's nominees to
constitute a majority of the Board of Directors (provided that the Company has
complied with its obligation to have Parent's nominees elected to the Board of
Directors), the Company may, in response to an unsolicited written proposal with
respect to an Acquisition Transaction from a third party that the Board of
Directors determines, in its good faith and reasonable judgment, after
consultation with and the receipt of the advice of its financial advisor and
outside counsel, is a Superior Proposal, (i) furnish information to, and
negotiate, explore or otherwise engage in substantive discussions with such
third party, only if the Board of Directors determines, in good faith and
reasonable judgment after consultation with its financial advisors and outside
legal counsel, that failing to take such action would create a reasonable
possibility of a breach of the fiduciary duties of the Board of Directors under
applicable law and (ii) take and disclose to the Company's stockholders a
position with respect to the Merger or another Acquisition Transaction proposal,
or amend or withdraw such position, pursuant to Rules 14d-9 and 14e-2 under the
Exchange Act.
The Merger Agreement provides that neither the Board of Directors of the
Company nor any committee thereof may (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or the Purchaser,
the approval or recommendation by the Board of Directors or such committee of
the Merger or the Merger Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Transaction, or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Transaction (each, an "Acquisition Agreement"). Notwithstanding the foregoing,
prior to the purchase of and payment for Shares by Purchaser pursuant to the
Offer and prior to such time as Parent shall have nominated and the Company
shall have caused Parent's nominees to constitute a majority of the Board of
Directors (provided that the Company has complied with its obligation to have
Parent's nominees elected to the Board of Directors), in response to an
unsolicited Acquisition Transaction proposal, if the Board of Directors
determines, in its good faith, reasonable judgment, after consultation with and
receipt of the advice of its financial advisor and outside counsel, that such
proposal is a Superior Proposal and that failure to do any of the actions set
forth in clauses (i), (ii) or (iii) above would create a reasonable possibility
of a breach of the fiduciary duties of the Board of Directors under applicable
law, the Board of Directors may withdraw or modify its approval or
recommendation of the Offer, the Merger or the Merger Agreement, approve or
recommend an Acquisition Transaction, cause the Company to enter into an
Acquisition Agreement or terminate the Merger Agreement; provided, however that
the Merger Agreement may not be terminated until after the expiration of the
Offer.
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The Merger Agreement requires the Company to (i) immediately (and in any
event, no later than one business day after receipt) advise Parent in writing of
the receipt of a request for information or any inquiries or proposals relating
to an Acquisition Transaction and any actions taken pursuant thereto, specifying
the material terms and conditions of such proposed Acquisition Transaction and
(ii) keep Parent reasonably informed of the status of any such request or
proposed Acquisition Transaction. If any such inquiry or proposal is in writing,
the Company shall promptly deliver to Purchaser a copy of such inquiry or
proposal.
For purposes of the Merger Agreement, (i) "Acquisition Transaction" means
(other than the transactions contemplated by the Merger Agreement) (x) a merger,
consolidation or other business combination, share exchange, sale of shares of
capital stock, tender offer or exchange offer or similar transaction involving
the Company or any of its Subsidiaries, (y) acquisition in any manner, directly
or indirectly, of a material interest in any voting securities of, or a material
equity interest in a substantial portion of the assets of, the Company or any of
its Subsidiaries, including any single or multi-step transaction or series of
related transactions which is structured to permit a third party to acquire
beneficial ownership of a majority or greater equity interest in the Company, or
(z) the acquisition in any manner, directly or indirectly, of any material
portion of the business or assets (other than immaterial or insubstantial assets
or inventory in the ordinary course of business or assets held for sale) of the
Company and (ii) "Superior Proposal" means a proposed Acquisition Transaction
involving at least 50% of the shares of capital stock or a material portion of
the assets of the Company that the Board of Directors determines, after
consulting with the Company's financial advisors and outside counsel, to be more
favorable to the Company's stockholders than the Merger.
Conditions to Consummation of the Merger. Pursuant to the Merger Agreement,
the respective obligations of Parent, the Purchaser, the Company and Mr. Meckler
to consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions: (i) Parent shall have made,
or caused to be made, the Offer and shall have purchased, or caused to be
purchased, the Shares pursuant to the Offer; provided, that this condition shall
be deemed to have been satisfied with respect to the obligation of Parent and
the Purchaser to effect the Merger if Parent fails to accept for payment or pay
for the Shares pursuant to the Offer in violation of the terms of the Offer or
of the Merger Agreement; (ii) the Merger and the Merger Agreement shall have
been approved and adopted by the requisite vote of the stockholders of the
Company, if required by the GCL; and (iii) no statute, rule, regulation,
judgment, writ, decree, order or injunction (whether temporary, preliminary or
permanent) shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken, by any government or governmental,
administrative or regulatory authority or by any court of competent
jurisdiction, that in any of the foregoing cases has the effect of making
illegal or directly or indirectly restraining, prohibiting or restricting the
consummation of the Merger.
The obligations of Parent and the Purchaser to effect the Merger is further
subject to the satisfaction or waiver of the condition that prior to the
Effective Time, the Company shall have performed in all material respects all
obligations and complied in all material respects with all agreements and
covenants of the Company required to be performed or complied with by it under
the Merger Agreement.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval:
(i) By mutual written consent of the Boards of Directors of Parent and
the Company;
(ii) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Merger
Agreement;
(iii) By either Parent or the Company if the Offer has not been
consummated within 120 days of the date of the Merger Agreement (unless
otherwise extended by the parties); provided, that neither Parent nor the
Company may so terminate the Merger Agreement if such party's failure to
fulfill any of its obligations under the Merger Agreement is the reason
that the Effective Time has not occurred on or before said date;
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(iv) By the Company (A) if there shall be a material breach of any of
Parent's or the Purchaser's representations, warranties or covenants under
the Merger Agreement, which breach shall not have been cured within ten
days of the receipt of written notice thereof by Parent from the Company,
(B) if there shall have been a material breach on the part of Parent or the
Purchaser of any of their respective covenants or agreements under the
Merger Agreement, which breach shall not have been cured within ten days of
the receipt of written notice thereof by Parent from the Company, or (C) in
response to a Superior Proposal; provided, that the termination described
in clause (C) shall not be effective unless and until the Company shall
have paid to the Purchaser the termination fee described below; provided,
further, that the Merger Agreement may not be terminated pursuant to clause
(C) until after the Expiration Date of the Offer.
(v) By Parent, if (A) there shall be a material breach of any of the
Company's representations, warranties or covenants under the Merger
Agreement, which breach shall not have been cured within ten days of the
receipt of written notice thereof by the Company from Parent, or (B) there
shall have been a material breach on the part of the Company of any of its
covenants or agreements, which breach shall not have been cured within ten
days of the receipt of written notice thereof by the Company from the
Parent;
(vi) By Parent, at any time prior to the purchase and payment for the
Shares pursuant to the Offer, if (A) the Board of Directors shall withdraw,
modify or change its recommendation or approval in respect of the Merger
Agreement, the Offer or the Merger, (B) the Board of Directors shall have
recommended any proposal other than by Parent in respect of an Acquisition
Transaction, (C) any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more
than 25% of the outstanding Shares (either on a primary or a fully diluted
basis); provided, however, that this provision shall not apply to any
Person that owns more than 25% of the outstanding Shares on the date of the
Merger Agreement or (D) in the case of clauses (A) and (B), the Board of
Directors shall have resolved to take any such action; or
(vii) By either Parent or the Company if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased thereunder by Parent as a result of the occurrence of any of the
events set forth in Section 13; provided, that the termination described in
this section shall not be effective unless and until the Company shall have
paid to Parent the termination fee described below, if payable pursuant to
such provision.
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement, the Merger Agreement will become void and there shall be no
liability on the part of Parent, the Purchaser or the Company, other than
certain specified provisions; provided that no party will be relieved from
liability for any breach of the Merger Agreement.
Termination Fee. If the Merger Agreement is terminated pursuant to clause
(v) of the preceding section other than as a result of the occurrence of an act
of God that causes the Company to be in such breach, then (A) the Company shall
promptly (but not later than two business days after receipt of notice from
Parent) pay to Parent an amount equal to the Parent's actual and reasonably
documented expenses, not to exceed $6.0 million; provided, however, that, (i) if
the Merger Agreement is terminated by Parent as a result of a willful breach by
the Company, Parent may pursue any remedies available to it at law or in equity
and shall, in addition to its expenses (which shall be paid as specified above
and shall be limited to $6.0 million), be entitled to recover such additional
amounts as Parent may be entitled to receive at law or in equity; and (B) if (x)
at the time of the Company's willful breach of the Merger Agreement, there shall
have been a third-party offer or proposal with respect to an Acquisition
Transaction which at the time of such termination shall not have been rejected
by the Company and the Board of Directors and withdrawn by the third party, and
(y) within thirteen months of any termination by Parent, the Company or an
affiliate thereof becomes a subsidiary of such offeror or a subsidiary of an
affiliate of such offeror or accepts a written offer to consummate or
consummates an Acquisition Transaction with such offeror or an affiliate
thereof, then the Company (jointly and severally with its affiliates), upon the
signing of a definitive agreement relating to such an Acquisition Transaction,
or, if no such agreement is signed then at the closing (and as a condition to
the closing) of the Company becoming such a subsidiary or of such Acquisition
Transaction, will pay to Parent a fee equal to $10.0 million in cash; provided
that in no event shall the termination
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fee referred to in this paragraph be payable if the termination fee referred to
in the following paragraph has been paid.
If (A) Parent shall have terminated the Merger Agreement pursuant to clause
(vi) of the preceding section, (B) the Company shall have terminated the Merger
Agreement pursuant to clause (iv)(C) of the preceding section, or (C) the Merger
Agreement is terminated as a result of the Company's material breach of its
obligation to convene the stockholders meeting and to use its best efforts to
procure the necessary votes or consents required to effect the Merger, then in
any such case the Company shall promptly, but in no event later than two
business days after the date of such termination or event, pay Parent a
termination fee of $10.0 million in cash plus an amount, not in excess of $6.0
million, equal to Parent's actual and reasonably documented expenses. No fees or
expense reimbursement shall be paid if Parent shall be in material breach of its
obligations under the Merger Agreement.
Except as described above, each party will bear its own expenses in
connection with the Merger Agreement and the transactions contemplated thereby.
Amendment. The Merger Agreement may be amended by the Company, Parent and
the Purchaser at any time before or after any approval of the Merger Agreement
by the stockholders of the Company but, after any such approval, no amendment
will be made which reduces the amount or changes the type of consideration into
which each Share will be converted upon consummation of the Merger. The Merger
Agreement may not be amended except by an instrument in writing signed by the
parties.
Extension; Waiver. At any time before the Effective Time, any party may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement and (c) waive compliance with any of the
agreements or conditions contained in the Merger Agreement. Any agreement on the
part of a party to any extension or waiver shall be valid only as against such
party and only if set forth in an instrument in writing signed by such party.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of the
party granting such waiver in any other respect or at any other time. Neither
the waiver by any of the parties to the Merger Agreement of a breach of or a
default under any of the provisions of the Merger Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of the Merger Agreement or to exercise any right or privilege under the Merger
Agreement, shall be construed as a waiver of any other breach of default of a
similar nature, or as a waiver of any of such provisions, rights or privileges
under the Merger Agreement. The rights and remedies provided in the Merger
Agreement are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity.
TENDER, VOTING AND OPTION AGREEMENT
The following is a summary of the material terms of the Tender, Voting and
Option Agreement and is qualified in its entirety by reference to the copy of
the Tender, Voting and Option Agreement filed as an exhibit to the Schedule
14D-1 and incorporated herein by reference.
In connection with the execution of the Merger Agreement, Mr. Meckler, who
beneficially owns approximately 26% of the Shares (the "Meckler Shares"), has
entered into the Tender, Voting and Option Agreement with Parent, the Purchaser
and the Company.
Tender of Shares. Mr. Meckler has agreed to validly tender (or cause the
record owner of such Meckler Shares to validly tender) and sell (and not
withdraw) pursuant to and in accordance with the terms of the Offer not later
than the fifteenth business day after commencement of the Offer all of the
Meckler Shares.
Transfer of Shares. Mr. Meckler has agreed that during the term of the
Tender, Voting and Option Agreement, he will not (a) except as provided in such
agreement, tender into any tender or exchange offer or otherwise sell, transfer,
pledge, assign, hypothecate or otherwise dispose of, or encumber, any of the
Meckler Shares, (b) acquire any shares of common stock or other securities of
the Company, including, without limitation, by exercising any stock options, (c)
deposit the Meckler Shares into a voting trust, enter into a voting agreement or
arrangement with respect to the Meckler Shares or grant any proxy or power of
attorney with respect to the
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Meckler Shares, or (d) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect acquisition or sale,
transfer, pledge, assignment, hypothecation or other disposition of any interest
in or the voting of any shares of common stock or any other securities of the
Company.
Grant of Proxy. Mr. Meckler has agreed to revoke any and all prior proxies
or powers of attorney in respect of the Meckler Shares and has constituted and
appointed Parent and the Purchaser, or any nominee of Parent and the Purchaser,
with full power of substitution, during and for the term of the Tender, Voting
and Option Agreement, as his true and lawful proxy, for and in his name, place
and stead, to vote all the Meckler Shares, at any annual, special or adjourned
meeting of the stockholders of the Company (including the right to sign his name
as stockholder to any consent, certificate or other document relating to the
Company) (i) in favor of approval and adoption of the Merger and the
transactions contemplated thereby and (ii) against (A) any Acquisition
Transaction, (B) any action or agreement that would result in a breach in any
respect of any covenant, agreement, representation or warranty of the Company
under the Merger Agreement and (C) the following actions (other than the Merger
and the other transactions contemplated by the Merger Agreement): (1) any
extraordinary corporate transactions, such as a merger, consolidation or other
business combination involving the Company or its Subsidiaries; (2) a sale,
lease or transfer of a material amount of assets of the Company or one of its
Subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or its Subsidiaries; (3) (a) any change in a majority of the
persons who constitute the board of directors of the Company as of the date of
the Tender, Voting and Option Agreement; (b) any change in the capitalization of
the Company or any amendment of the Company's Certificate of Incorporation or
By-Laws, as amended; (c) any other material change in the Company's corporate
structure or business; or (d) any other action that, in the case of each of the
matters referred to in (3)(a), (b), (c) and (d), is intended, or could
reasonably be expected to impede, interfere with, delay, postpone, or adversely
affect the Merger and the other transactions contemplated by the Voting and
Option Agreement and the Merger Agreement. The proxy is coupled with an
interest, and Mr. Meckler has declared it to be irrevocable.
No Solicitation. Mr. Meckler has agreed that he will not, directly or
indirectly, through any agent, financial advisor, attorney, accountant or other
representative or otherwise, (i) solicit, initiate or encourage submission of
proposals or offers from any person relating to, or that could reasonably be
expected to lead to, an Acquisition Transaction or (ii) participate in any
negotiations or discussions regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek an Acquisition Transaction. Mr. Meckler has agreed to
immediately advise Parent in writing of the receipt of request for information
or any inquiries or proposals relating to an Acquisition Transaction.
Grant of Option. Mr. Meckler has granted Parent an option to (i) purchase
the Meckler Shares for $29.00 per Share in cash or (ii) receive from Meckler the
product of (A) 50% of the excess, if any, between (1) the per share value of any
consideration received generally by the stockholders of the Company or, if
greater, the per share value of any consideration actually received by Mr.
Meckler for the Meckler Shares, in any alternate acquisition of the Company
consummated within 13 months of the termination of the Merger Agreement and (2)
$29.00 multiplied by (B) the number of Shares of common stock beneficially owned
by Mr. Meckler.
If Parent exercises the option described in the preceding paragraph and (i)
an alternate acquisition of the Company is consummated within 13 months of the
termination of the Merger Agreement, Parent will pay to Mr. Meckler the product
of (A) 50% of the excess, if any, between (1) the per share value of any
consideration received by Parent in any alternate acquisition of the Company for
the Shares purchased under such option and (2) $31.00 multiplied by (B) the
number of Shares purchased by Parent under such option or (ii) within 13 months
of the termination of the Merger Agreement, Parent acquires the remaining
outstanding Shares, Parent will pay to Mr. Meckler the product of (A) the
excess, if any, between (1) the per share value of any consideration paid by
Parent in such acquisition and (2) $29.00 multiplied by (B) the number of shares
of common stock purchased by Parent under such option.
Exercise of the Option. Pursuant to the Tender, Voting and Option
Agreement, the option may be exercised by Parent, in whole or in part, at any
time or from time to time after (a) the Merger Agreement becomes
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terminable under circumstances that could entitle Parent to termination fees
(regardless of whether the Merger Agreement is actually terminated and whether
such fees are then actually payable), (b) the Offer is consummated but, due to
the failure of Mr. Meckler to validly tender and not withdraw, the Purchaser has
not accepted for payment or paid for all of the Meckler Shares, (c) a tender or
exchange offer for some or all of the Shares has been publicly proposed to be
made or has been made by another person, or (d) it has been publicly disclosed
or Parent or Purchaser has otherwise learned that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or
Purchaser) shall have acquired or proposed to acquire beneficial ownership of
more than 25% of any class or series of capital stock of the Company (including
the Common Stock), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 25% of any class or
series of capital stock of the Company other than acquisitions for bona fide
arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on
file with the SEC on September 1, 1998, (ii) any such person or group which,
prior to September 1, 1998, had filed such a Schedule with the SEC has acquired
or proposed to acquire additional shares of any class or series of capital stock
of the Company constituting 5% or more of any such class or series, or has been
granted the right to acquire additional shares of any class or series of capital
stock of the Company (including the Common Stock) constituting 5% or more of any
such class or series, (iii) any person (other than Parent or Purchaser) has
filed a Notification and Report Form under the HSR Act, or made a public
announcement reflecting an intent to acquire the Company or any assets or
securities of the Company; or (iv) any person or group (other than Parent and
Purchaser) has entered into or offered to enter into a definitive agreement or
an agreement in principle with respect to a merger, consolidation or other
business combination with the Company (each a "Trigger Event").
Termination of the Option. The option will terminate (a) upon the purchase
of all the Meckler Shares by the Purchaser pursuant to the Offer or (b) upon the
earliest of: (i) the Effective Time; (ii) termination of the Merger Agreement
other than upon or during the continuance of a Trigger Event; or (iii) 180 days
following any termination of the Merger Agreement upon or during the continuance
of a Trigger Event (or if, at the expiration of such 180-day period the option
cannot be exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise has been removed
or has become final and not subject to appeal).
Conditions to Closing. The obligation of Mr. Meckler to sell the Meckler
Shares to Parent is subject to the conditions that (i) all waiting periods, if
any, under the HSR Act, applicable to the sale of the Meckler Shares or the
acquisition of the Meckler Shares by Parent have expired or have been
terminated; (ii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any court, administrative agency or
other governmental body or authority, if any, required in connection with sale
of the Meckler Shares or the acquisition of the Meckler Shares by Parent have
been obtained or made; and (iii) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or otherwise
restraining such sale or acquisition is in effect.
Registration Rights. Pursuant to the Tender, Voting and Option Agreement,
following termination of the Merger Agreement, Parent may by written notice (the
"Registration Notice") to the Company, request the Company to register under the
Securities Act all or any part of the Shares acquired under the option (the
"Parent Owned Shares" and such Parent Owned Shares requested to be registered
for sale, the "Registrable Securities").
Upon receipt of the Registration Notice, Mr. Meckler will have the option
within nine business days after receipt of the Registration Notice, irrevocably
to agree to purchase for cash at a price (the "Stockholder Option Price") equal
to the product of (i) the number of Registrable Securities to be so purchased by
Mr. Meckler and (ii) the then fair market value of such shares all or any part
of the Registrable Securities proposed to be so sold.
Upon receipt of the Registration Notice, the Company (and/or any person
designated by the Company) will have the option exercisable by written notice
delivered to Parent within ten business days after the receipt of the
Registration Notice, irrevocably to agree to purchase for cash at a price (the
"Company Option Price" and, together with the Stockholder Option Price, the
"Option Price") equal to the product of (i) the number of
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<PAGE> 32
Registrable Securities to be so purchased by the Company and (ii) the then fair
market value of such shares all or any part of the Registrable Securities
proposed to be so sold and not purchased by Mr. Meckler.
If Mr. Meckler and the Company, collectively, do not elect to exercise
their respective options with respect to all Registrable Securities, the Company
shall use commercially reasonable efforts to effect, as promptly as practicable,
the registration under the Securities Act of the unpurchased Registrable
Securities proposed to be so sold; provided, however, that (i) Parent will be
entitled to no more than an aggregate of two effective registration statements
thereunder and (ii) the Company will not be required to file any such
registration statement during any period of time (not to exceed 40 days after
such request in the case of clause (A) below or 90 days in the case of clauses
(B) and (C) below) when (A) the Company is in possession of material non-public
information that it reasonably believes would be detrimental to be disclosed at
such time and, in the opinion of outside counsel to the Company, such
information would have to be disclosed if a registration statement were filed at
that time; (B) the Company is required under the Securities Act to include
audited financial statements for any period in such registration statement and
such financial statements are not yet available for inclusion in such
registration statement; or (C) the Company determines, in its reasonable
judgment, that such registration would interfere with any proposed financing,
acquisition or other material transaction involving the Company or any of its
affiliates. The Company shall use its reasonable best efforts to cause any
Registrable Securities registered to be qualified for sale under the securities
or blue-sky laws of such jurisdictions and Parent may reasonably request and
shall continue such registration or qualification in effect in such
jurisdiction; provided, however, that the Company will not be required to
qualify to do business in, or to consent to general service of process in, any
jurisdiction by reason of this provision.
A registration effected pursuant to the Tender, Voting and Option Agreement
will be effected at the Company's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to Parent (which will be
paid by Parent), and the Company shall provide to the underwriters such
documentation (including certificates, opinions of counsel and "comfort" letters
from auditors) as are customary in connection with unwritten public offerings as
such underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the underwriters
in the customary manner, (ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the manager and the
other underwriters participating in such offering and (iii) to take all further
actions that will be reasonably necessary to effect such registration and sale
(including, if the manager deems it necessary, participating in road-show
presentations).
Termination. The Tender, Voting and Option Agreement will terminate (i)
upon the purchase of all the Shares pursuant to the Offer, or (ii) except with
respect to the option and the profit sharing provisions referred to above, on
the earlier of (A) the Effective Time or (B) the date the Merger Agreement is
terminated in accordance with its terms, or (iii) by mutual consent of Mr.
Meckler, the Board of Directors of the Company and the Board of Directors of
Parent.
CONSULTING AGREEMENT
The following is a summary of the material terms of the Consulting
Agreement, to be entered into between Parent and Mr. Meckler and is qualified in
its entirety by reference to Exhibit E of the Merger Agreement, which has been
filed as an exhibit to the Schedule 14D-1, which Exhibit E is incorporated
herein by reference.
At the Effective Time, Parent will enter into an agreement with Mr.
Meckler, pursuant to which, for a period of three years following the
consummation of the Merger, Mr. Meckler will render consulting services to
Parent and the Surviving Corporation and will abide by a covenant not to compete
with the business of Parent, the Surviving Corporation or any entities
controlled by either in exchange for an annual fee of $100,000 payable monthly
during such period. Pursuant to the agreement, the business of iWorld does not
constitute a competitive business of the Surviving Corporation or Parent.
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EFFECTS OF INABILITY TO CONSUMMATE THE MERGER
Pursuant to the Merger Agreement, following the consummation of the Offer
and subject to certain other conditions, the Purchaser will be merged with and
into the Company. If, following the Offer, approval of the Company's
stockholders is required by applicable law in order to consummate the Merger of
the Purchaser with the Company, provided that the Minimum Condition is satisfied
without being reduced or waived, the Company will submit the Merger to the
Company's stockholders for approval. If the Merger is submitted to the Company's
stockholders for approval, the Merger will require the approval of the holders
of a majority of the outstanding Shares, including the Shares owned by the
Purchaser.
If the Merger is consummated, stockholders of the Company who elected not
to tender their Shares in the Offer will receive the same amount of
consideration in exchange for each Share as they would have received in the
Offer.
If, following the consummation of the Offer, the Merger is not consummated,
Parent, which owns 100% of the Common Stock of the Purchaser, indirectly will
control the number of Shares acquired by the Purchaser pursuant to the Offer.
Under the Merger Agreement, promptly following payment by the Purchaser for
Shares purchased pursuant to the Offer, and from time to time thereafter,
subject to applicable law, the Company has agreed to take all actions necessary
to cause a majority of the directors of the Company selected by Parent to
consist of persons designated by Parent (whether, at the election of the
Company, by means of increasing the size of the board of directors or seeking
the resignation of directors and causing Parent designees to be elected). As a
result of its ownership of such Shares and right to designate nominees for
election to the Company's board of directors, Parent indirectly will be able to
influence decisions of the Board and the decisions of the Purchaser as a
stockholder of the Company. This concentration of influence in one stockholder
may adversely affect the market value of the Shares.
If Parent controls more than 50% of the outstanding Shares following the
consummation of the Offer but the Merger is not consummated, stockholders of the
Company, other than those affiliated with Parent, will lack sufficient voting
power to elect directors or to cause other actions to be taken which require
majority approval. If for any reason following completion of the Offer, the
Merger is not consummated, Parent and the Purchaser reserve the right to acquire
additional Shares through private purchases, market transactions, tender or
exchange offers or otherwise on terms and at prices that may be more or less
favorable than those of the Offer or, subject to any applicable legal
restrictions, to dispose of any or all Shares acquired by Parent and the
Purchaser.
STATUTORY REQUIREMENTS
In general, under the GCL a merger of two Delaware corporations requires
the adoption of a resolution by the Board of Directors of each of the
corporations desiring to merge approving an Agreement of Merger containing
provisions with respect to certain statutorily specified matters and the
approval of such Agreement of Merger by the stockholders of each corporation by
the affirmative vote of the holders of a majority of all the outstanding shares
of stock entitled to vote on such merger. According to the Company's Certificate
of Incorporation, the Shares are the only securities of the Company which
entitle the holders thereof to voting rights.
The GCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect short-form merger
with that subsidiary without the action of the other stockholders of the
subsidiary. Accordingly, if as a result of the Offer or otherwise the Purchaser
acquires or controls the voting power of at least 90% of the Shares, the
Purchaser could, and intends to, effect the Merger without prior notice to, or
any action by, any other stockholder of the Company.
APPRAISAL RIGHTS
No appraisal rights are available in connection with the Offer. If the
Merger is consummated, however, stockholders of the Company who have not
tendered their Shares will have certain rights under the GCL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of, their
Shares. Stockholders who perfect such rights by complying with the procedures
set forth in Section 262 of the GCL ("Section 262") will have the fair value of
their Shares (exclusive of any element of value arising from the accomplishment
or
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expectation of the Merger) determined by the Delaware Court of Chancery and will
be entitled to receive a cash payment equal to such fair value from the
Surviving Corporation. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earning capacity. In
Weinberger v. UOP, Inc., the Delaware Supreme Court stated that "proof of value
by any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered in
an appraisal proceeding. The Weinberger court also noted that under Section 262,
fair value is to be determined "exclusive of any element of value arising from
the accomplishment or expectation of the merger." In Cede & Co. v. Technicolor,
Inc., however, the Delaware Supreme Court stated that, in the context of a
two-step cash merger, "to the extent that value has been added following a
change in majority control before cash-out, it is still value attributable to
the going concern," to be included in the appraisal process. As a consequence of
the foregoing, the fair value determined in any appraisal proceeding could be
the same as or more or less than $29.00 per Share.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, stockholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including Allen & Company's opinion described herein)
are not necessarily opinions as to "fair value" under Section 262.
Several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders that requires that the merger be "entirely
fair" to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and in Rabkin v. Philip A. Hunt Chemical Corp. that although the
remedy ordinarily available to minority stockholders in a cash-out merger that
is found to be not fair to the minority stockholders is the right to appraisal
described above, monetary damages, injunctive relief or such other relief as the
court may fashion may be available if a merger is found to be the product of
procedural unfairness, including fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
GCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED
BY STOCKHOLDERS DESIRING TO EXERCISE ANY DISSENTERS' RIGHTS AVAILABLE UNDER THE
GCL.
THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE GCL.
PLANS FOR THE COMPANY
Following consummation of the Merger, Parent presently intends to operate
the Company as a subsidiary under the name of the Purchaser. However, Parent
will conduct a further review of the Company and its subsidiaries and their
respective assets, businesses, corporate structure, capitalization, operations,
properties, policies, management and personnel. After such review, Parent will
determine what actions or changes, if any, would be desirable in light of the
circumstances which then exist, and reserves the right to effect such actions or
changes. Parent's decisions could be affected by information hereafter obtained,
changes in general economic or market conditions or in the business of the
Company or its subsidiaries, actions by the Company or its subsidiaries and
other factors.
Except as described in this Offer to Purchase, none of the Purchaser,
Parent nor, to the best knowledge of the Purchaser and Parent, any of the
persons listed on Schedule I, has any present plans or proposals that would
relate to or would result in (i) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation,
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involving the Company or any of its subsidiaries, (ii) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, (iii) any
change in the present Board of Directors or management of the Company, (iv) any
material change in the present capitalization or dividend policy of the Company,
(v) any material change in the Company's corporate structure or business, (vi)
causing a class of securities of the Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-
dealer quotation system of a registered national securities association or (vii)
a class of equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act.
"GOING PRIVATE" TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which the Purchaser
seeks to acquire the remaining Shares not held by it. However, the Purchaser
believes that Rule 13e-3 will be inapplicable because it is anticipated that (i)
the Shares will be deregistered under the Exchange Act prior to the Merger or
other business combination or (ii) the Merger or other business combination will
be consummated within one year after the purchase of the Shares pursuant to the
Offer and the amount paid per Share in the Merger or other business combination
is at least equal to the amount paid per Share in the Offer. If Rule 13e-3 were
applicable, it would require, among other things, that certain financial
information concerning the Company and the fairness of the proposed transaction
and the consideration offered to minority stockholders in such transaction be
filed with the Commission and disclosed to stockholders prior to the
consummation of the transaction.
11. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
outstanding Shares pursuant to the Offer, to cash out the Options and the
Warrants and to pay fees and expenses related to the Offer and the Merger is
expected to be approximately $286.0 million. The Purchaser plans to obtain all
funds needed for the Offer and the Merger through a capital contribution that
will be made by Parent. Parent plans to fund such capital contribution with $8.0
million of cash on hand, $18.0 million to be received from Mr. Meckler in
connection with his purchase of an 80.1% interest in iWorld and $260.0 million
of new borrowings. In addition, in connection with the Offer and the Merger,
Parent plans to refinance approximately $40.0 million of its existing debt.
Pursuant to a financing commitment letter (the "Commitment"), dated October
7, 1998, from DLJ Capital Funding, Inc. ("DLJ Capital"), DLJ Bridge Finance,
Inc. ("DLJ Bridge") and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), DLJ Capital has agreed to provide $265.0 million of senior bank credit
facilities and DLJ Bridge has agreed that it or one of its affiliates will
provide $60.0 million of subordinated bridge notes (the "Bridge Notes"), in each
case subject to the terms and conditions set forth in the Commitment (the
"Financing"). The senior bank credit facilities will be comprised of a tranche A
term loan of up to $140.0 million and a tranche B term loan of up to $100.0
million (the "Term Loan Facility") and a revolving credit facility of up to
$25.0 million (the "Revolving Credit Facility" and, together with the Term Loan
Facility, the "Bank Facilities"). The proceeds of the Bank Facilities may be
used to finance the acquisition of Shares pursuant to the Offer and the Merger
and, following such acquisition, to refinance existing indebtedness and to
provide working capital to, and for other general corporate purposes of, Parent
and its subsidiaries. DLJ is entitled, after consultation with Parent, to
decrease the Bank Facilities and increase the Bridge Notes by a corresponding
amount if DLJ determines it is advisable to assure a successful syndication.
The Commitment is conditioned, among other things, upon: (i) there being no
material adverse change in the business, assets (including intangible assets),
properties, condition (financial or otherwise), results of operations, prospects
(other than a change in general economic conditions, but including a change in
the industry in which Parent and its subsidiaries or the Company and its
subsidiaries operate), liabilities or regulatory status of Parent and its
subsidiaries taken as a whole or of the Company and its subsidiaries taken as a
whole, (ii) the accuracy and completeness of all information and financial
projections of Parent, the Company and their subsidiaries made available by
Parent to DLJ, DLJ Bridge or the lenders under the Bank Facilities, and (iii)
the satisfaction of the conditions to be set forth in the definitive
documentation relating to the Bank Facilities and the Bridge Notes. The credit
agreements relating to the Bank Facilities will contain customary
representations and warranties and events of default.
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Interest rates for the first six months under the tranche A term loan and
the Revolving Credit Facility will be, at the option of Parent, either (i) the
Base Rate plus 1.75% per annum or (ii) the reserve adjusted Euro-dollar Rate
plus 2.75% per annum. After the first six months, the spreads on amounts
outstanding under the tranche A term loan and the Revolving Credit Facility will
be based on Parent's debt ratio. Interest rates for the tranche B term loan will
be, at the option of Parent, either (i) at the Base Rate plus 2.5% per annum or
(ii) the reserve adjusted Euro-dollar Rate plus 3.5% per annum. "Base Rate" and
"reserve adjusted Euro-dollar Rate" will have the meanings customary and
appropriate for financings of this type.
Interest rates under the Bridge Notes will be the greater of (i) the prime
rate plus 375 basis points, increasing by an additional 50 basis points at the
end of each subsequent three-month period for so long as the Bridge Notes are
outstanding; (ii) the Treasury Rate (as defined below) plus 775 basis points,
increasing by an additional 50 basis points at the end of each subsequent
three-month period for so long as the Bridge Notes are outstanding; and (iii)
the DLJ High Yield Index Rate plus 75 basis points, increasing by an additional
50 basis points at the end of each subsequent three month period for so long as
the Bridge Notes are outstanding. The "prime rate" means the prime or reference
rate as announced from time to time by The Bank of New York and the "Treasury
Rate" means the rate applicable to the most recent auction of direct obligations
of the United States having a maturity closest to the Bridge Notes, as published
by the Board of Governors of the Federal Reserve System.
Notwithstanding anything to the contrary set forth above, at no time shall
the per annum interest rate on the Bridge Notes exceed nineteen percent
(19.00%), nor shall the per annum interest rate on the Bridge Notes be lower
than twelve percent (12.00%). In addition, that portion, if any, of any interest
payment representing a per annum interest rate in excess of seventeen percent
(17.00%) may be paid by increasing the principal amount of the Bridge Notes by
an amount equal to such excess portion of interest.
Parent has agreed to pay DLJ, DLJ Capital and DLJ Bridge customary
financing, commitment and structuring fees as well as certain fees and expenses
of DLJ, DLJ Capital and DLJ Bridge and their affiliates arising in connection
with the Commitment and the Financing. In addition, Parent has agreed to
indemnify each of DLJ, DLJ Capital and DLJ Bridge and certain related persons
against certain damages and expenses arising out of any investigation or
litigation relating to the transactions contemplated by the Commitment.
The foregoing summary of the Commitment is qualified in its entirety by
reference to the Commitment, which is filed as an exhibit to the Schedule 14D-1.
As a result of the Financing Condition (as defined below) in the Merger
Agreement, the Purchaser's obligation to accept and pay for Shares tendered
pursuant to the Offer is conditioned upon Parent's receipt of the proceeds of
the Financing or otherwise obtaining funds sufficient to pay $29.00 per Share
multiplied by the number of Shares tendered and not validly withdrawn pursuant
to the Offer.
No final decisions have been made concerning the method Parent will use to
refinance and repay the indebtedness incurred by Parent under the Bank
Facilities and the Bridge Notes. Such decisions will be based on Parent's review
from time to time of the advisability of particular actions, including the
availability of cash flow generated by Parent, prevailing interest rates, market
conditions and other financial and economic conditions. Currently, however,
Parent expects that it will repay such amounts with cash flow from operations,
or with the proceeds of subsequent debt or equity placements.
12. DIVIDENDS AND DISTRIBUTIONS
If on or after the date of the Merger Agreement the Company (i) splits,
combines or otherwise changes the Shares or its capitalization, (ii) acquires
Shares or otherwise causes a reduction in the number of Shares, (iii) issues or
sells additional Shares (other than the issuance of Shares reserved of issuance
as of the date of the Merger Agreement under option and employee stock purchase
plans in accordance with their terms as publicly disclosed as of the date of the
Merger Agreement) or any shares of any other class of capital stock, other
voting securities or any securities convertible into or exchangeable for, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing or (iv) discloses that it has taken such action, then, without
prejudice to the Purchaser's rights under Section 13, the Purchaser, in its sole
discretion, may make such adjustments in the per Share price of the Offer and
other terms of the Offer as it deems appropriate to reflect such split,
combination
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or other change or action, including, without limitation, the Minimum Condition
or the number or type of securities offered to be purchased.
If on or after the date of the Merger Agreement the Company declares or
pays any dividend on the Shares or any distribution (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) with respect to the Shares that is payable or
distributable to stockholders of record on a date prior to the transfer into the
name of the Purchaser or its nominees or transferees on the Company's stock
transfer records of the Shares purchased pursuant to the Offer, and if Shares
are purchased in the Offer, then, without prejudice to the Purchaser's rights
under Section 13, (i) the Offer Price shall be reduced by the amount of any such
cash dividend or cash distribution and (ii) any such non-cash dividend,
distribution, issuance, proceeds or rights to be received by the tendering
stockholders shall (A) be received and held by the tendering stockholders for
the account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer or (B) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such non-cash
dividend, distribution, issuance, proceeds or rights and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in the Merger Agreement)
amend or terminate the Offer as to any Shares not then paid for (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, together with the Shares to be acquired by Parent from Mr. Meckler
pursuant to the Tender, Voting and Option Agreement, represents at least a
majority of the number of Shares outstanding on a fully diluted basis (assuming
the exercise of all outstanding options and warrants) (the "Minimum Condition"),
(ii) any applicable waiting period under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer, (iii) Parent shall have
received the proceeds of the financing or otherwise obtained funds sufficient to
pay the $29.00 Offer price multiplied by the number of Shares tendered and not
validly withdrawn pursuant to the Offer (the "Financing Condition") and (iv) the
Company shall have obtained the consent or approval of each person identified in
the Merger Agreement in connection with the Offer, except those for which the
failure to obtain would not have or give rise to a Company Material Adverse
Effect or (B) if at any time after the date of the Merger Agreement and before
the time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any of
the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall have been promulgated, enacted, taken or threatened by a
governmental authority or a governmental, regulatory or administrative
agency or commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any
material portion of its or the Company's business or assets, or compels
Parent (or any of its affiliates or subsidiaries) to dispose of or hold
separate any material portion of its or the Company's business or assets,
(iii) imposes material limitations on the ability of Parent effectively to
acquire or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
Purchaser on all matters properly presented to the stockholders of the
Company, (iv) imposes any material limitation
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on the ability of Parent or any of its affiliates or subsidiaries
effectively to control in any material respect the business and operations
of the Company or which would have a Company Material Adverse Effect; or
(b) there shall be instituted or pending any action or proceeding
before any governmental, regulatory or administrative agency or commission
of competent jurisdiction seeking any injunction, order, decree, judgment
or ruling having any effect set forth in (a) above; or
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(d) (i) any representation or warranty made by the Company in the
Merger Agreement shall not have been true and correct in all material
respects when made, or shall have ceased to be true and correct in all
material respects as of the Expiration Date as if made as of such date, or
(ii) as of the Expiration Date the Company shall not in all material
respects have performed by obligation or agreement and complied with its
material covenants to be performed and complied with by it under the Merger
Agreement; or
(e) there shall have occurred (i) any suspension or limitation of
trading in securities generally on the New York Stock Exchange (not
including any suspension or limitation of trading in any particular
security as a result of computerized trading limits or any intraday
suspension due to "circuit breakers") or any setting of minimum prices of
trading on such exchange, (ii) any banking moratorium declared by the U.S.
Federal or New York authorities or any suspension of payments in respect of
banks in the United States, or (iii) a decline by 15% or more in the
Standard & Poor's Index of 500 Industrial Companies from the level of such
index on the date of the Merger Agreement; or
(f) Parent and the Company shall have agreed that Parent shall amend
the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
(g) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances (including any
action or inaction by the Purchaser) giving rise to any such conditions and may
be waived by the Purchaser in whole or in part at any time and from time to
time, in each case, in the exercise of the good faith judgment of the Purchaser
and subject to the terms of the Merger Agreement. The failure by the Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
A public announcement may be made of a material change in, or wavier of,
such conditions and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
The Purchaser acknowledges that the Commission believes that (i) if the
Purchaser is delayed in accepting the Shares it must either extend the Offer or
terminate the Offer and promptly return the Shares and (ii) the circumstances in
which a delay in payment is permitted are limited and do not include unsatisfied
conditions of the Offer, except with respect to most required regulatory
approvals.
14. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Company with the Commission and other
information regarding the Company, neither Parent nor the Purchaser is aware of
any licenses or regulatory permits that appear to be material to the business of
the Company and its subsidiaries, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Shares (and the indirect acquisition
of the stock of the Company's subsidiaries) as contemplated herein, or any
filings, approvals or other actions by or with any domestic, foreign or
supranational governmental authority or administrative or regulatory agency that
would be required for the acquisition or ownership of the Shares (or the
indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is presently contemplated that such approval or
action would be sought except as described below under "State Takeover Laws."
Should any such approval or other action be
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required, there can be no assurance that any such approval or action would be
obtained at all or without substantial conditions or that adverse consequences
would not result to the Company's or its subsidiaries' businesses, or that
certain parts of the Company's, Parent's, the Purchaser's or any of their
respective subsidiaries' businesses might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action or in the event that such approvals were not obtained or such
actions were not taken. The Purchaser's obligation to purchase and pay for
Shares is subject to certain conditions, including conditions with respect to
litigation and governmental actions. See Introduction and Section 13 for a
description thereof.
State Takeover Laws. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein. To the extent that certain provisions of certain of these
state takeover statutes purport to apply to the Offer or the Merger, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a Federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a Federal district court in Florida held, in Grand
Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
The Purchaser has not attempted to comply with any state takeover statutes
in connection with the Offer or the Merger although, pursuant to the Merger
Agreement, the Company has represented that the Company's Board of Directors has
taken appropriate action to render Section 203 of the GCL inapplicable to the
Offer, the Merger and the transactions contemplated by the Merger Agreement. The
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer or the Merger, and nothing in this
Offer to Purchase nor any action taken in connection herewith is intended as a
waiver of that right. In the event that it is asserted that one or more state
takeover statutes apply to the Offer or the Merger, and it is not determined by
an appropriate court that such statute or statutes do not apply or are invalid
as applied to the Offer or the Merger, as applicable, the Purchaser may be
required to file certain documents with, or receive approvals from, the relevant
state authorities, and the Purchaser might be unable to accept for payment or
purchase Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for purchase, or pay for, any Shares tendered. See Section 13.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the FTC and the Antitrust
Division of the Department of Justice (the "Antitrust Division") and certain
waiting period requirements have been satisfied. The acquisition of Shares
pursuant to the Offer and the Merger is subject to such requirements.
Under the provisions of the HSR Act applicable to the Offer and the Merger,
the purchase of Shares pursuant to the Offer and the Merger may not be
consummated until the expiration of a 15-calendar-day waiting period following
the filing of certain required information and documentary material with respect
to the Offer
37
<PAGE> 40
with the FTC and the Antitrust Division, unless such waiting period is earlier
terminated by the FTC and the Antitrust Division. Parent filed a Premerger
Notification and Report Form with the FTC and the Antitrust Division in
connection with the purchase of Shares pursuant to the Offer and the Merger
under the HSR Act on October 15, 1998, and the required waiting period with
respect to the Offer and the Merger will expire at 11:59 p.m., New York City
time, on October 30, 1998, unless earlier terminated by the FTC or the Antitrust
Division or Parent receives a request for additional information or documentary
material prior thereto. If within such 15-calendar-day waiting period either the
FTC or the Antitrust Division were to request additional information or
documentary material from Parent, the waiting period with respect to the Offer
and the Merger would be extended for an additional period of 10 calendar days
following the date of substantial compliance with such request by Parent. Only
one extension of the waiting period pursuant to a request for additional
information is authorized by the rules promulgated under the HSR Act.
Thereafter, the waiting period could be extended only by court order or with the
consent of Parent. The additional 10-calendar-day waiting period may be
terminated sooner by the FTC or the Antitrust Division. Although the Company is
required to file certain information and documentary material with the FTC and
the Antitrust Division in connection with the Offer, neither the Company's
failure to make such filings nor a request made to the Company from the FTC or
the Antitrust Division for additional information or documentary material will
extend the waiting period with respect to the purchase of Shares pursuant to the
Offer and the Merger.
The Premerger Notification and Report Form filed described above was also
applicable to the option granted to Parent pursuant to the Tender, Voting and
Option Agreement. Under the provisions of the HSR Act applicable to the option,
the purchase of Shares pursuant to the option may not be consummated until the
expiration of a 30-calendar day waiting period following the filing by Parent,
unless both the Antitrust Division and the FTC terminate the waiting period
thereto. If, within such 30-calendar day waiting period, either the Antitrust
Division of the FTC requests additional information or documentary material from
Parent, the waiting period would be extended for an additional 20 calendar days
following substantial compliance by Parent with such request. Thereafter, the
waiting period could be extended only by court order. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order.
Pursuant to the Tender, Voting and Option Agreement, if the option becomes
exercisable, it would continue to be exercisable until 10 days after the waiting
period (including as extended) under the HSR Act has expired.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer and the Merger. At any time before or after the
Purchaser's purchase of Shares, the FTC or the Antitrust Division could take
such action under the antitrust laws as either deems necessary or desirable in
the public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer and the Merger, the divestiture of Shares purchased pursuant to the
Offer or the divestiture of substantial assets of Parent, the Purchaser, the
Company or any of their respective subsidiaries or affiliates. Private parties
as well as state attorneys general may also bring legal actions under the
antitrust laws under certain circumstances. See Section 13.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Purchaser believes that the
acquisition of Shares pursuant to the Offer and the Merger should not violate
the applicable antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer and the Merger on antitrust grounds will not be made, or,
if such challenge is made, what the result will be. See Section 13.
Foreign Approvals. According to publicly available information, the
Company conducts business in a number of other foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to the
Offer or the Merger, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval or consent of, governmental authorities in such countries and
jurisdictions. The governments in such countries and jurisdictions might attempt
to impose additional conditions on the Company's operations conducted in such
countries and jurisdictions as a result of the acquisition of the Shares
pursuant to the Offer or the Merger. If such approvals or consents are found to
be required the parties intend to make the appropriate filings and applications.
In the event such a filing or application is made for the
38
<PAGE> 41
requisite foreign approvals or consents, there can be no assurance that such
approvals or consents will be granted and, if such approvals or consents are
received, there can be no assurance as to the date of such approvals or
consents. In addition, there can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger.
15. CERTAIN FEES AND EXPENSES
DLJ is acting as the Dealer Manager in connection with the Offer and as
financial advisor to Parent and the Purchaser in connection with the proposed
acquisition of the Company. Parent has paid or is obligated to pay DLJ a fee of
$250,000 upon commencement of the Offer (the "Dealer Manager Fee") and
$2,000,000 upon consummation of the Merger or any other acquisition of the
Company in one or a series of transactions or any other business combination
involving Parent and all or a substantial amount of the business, securities or
assets of the Company, or otherwise, or if Parent is entitled to receive a
termination or similar fee in connection with the Merger or any such other
acquisition. In addition, Parent has agreed to reimburse DLJ for its reasonable
expenses incurred in rendering its services (including reasonable legal
expenses) under its engagement agreement with Parent and has agreed to indemnify
DLJ against certain liabilities and expenses in connection with the Offer and
the Merger, including certain liabilities under the federal securities laws. DLJ
from time to time renders various investment banking services to Parent and its
affiliates for which it is paid customary fees.
In the ordinary course of its business, DLJ engages in securities trading,
market-making and brokerage activities and may, at any time, hold long or short
positions and may trade or otherwise effect transactions in securities of the
Company and Parent.
MacKenzie Partners, Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services in
addition to reimbursing the Information Agent for reasonable out-of-pocket
expenses in connection therewith.
In addition, Harris Trust Company of New York has been retained as the
Depositary. The Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws.
It is estimated that the expenses incurred in connection with the
transactions contemplated in this Offer to Purchase (other than those related to
the Financing) will be approximately as set forth below:
<TABLE>
<S> <C>
Filing fees................................................. $ 56,921
Printing and mailing fees................................... 240,000
Accounting fees............................................. 81,150
Legal fees.................................................. 500,000
Dealer Manager Fee.......................................... 250,000
Depositary fees............................................. 10,000
Information Agent fees...................................... 10,000
Miscellaneous............................................... 11,929
----------
Total....................................................... $1,160,000
==========
</TABLE>
None of the foregoing fees will be paid by the Company.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks
39
<PAGE> 42
and trust companies and other nominees will, upon request, be reimbursed by
Parent or the Purchaser for customary clerical and mailing expenses incurred by
them in forwarding offering materials to their customers.
16. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
Parent and the Purchaser have filed with the Commission a Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies may
be obtained from the office of the Commission in the same manner as described in
Section 8 with respect to information concerning the Company, except that copies
will not be available at the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer shall under any circumstances create any implication that there has
been no change in the affairs of Parent, the Purchaser, the Company or any of
their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
INTERNET WORLD MEDIA, INC.
October 15, 1998
40
<PAGE> 43
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Parent are set forth below. Unless otherwise indicated, the business address of
each such director and each such executive officer is 1100 Superior Avenue,
Cleveland, Ohio 44114. Unless otherwise indicated below, each occupation set
forth opposite an individual's name refers to employment with Parent. Unless
otherwise indicated below, all directors and executive officers listed below are
citizens of the United States.
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
-------------------------
<S> <C>
William J. Friend.............. Mr. Friend has served as a Director of Penton since June
1998. Assistant to President/Strategic Planning Manager of
Pittway Corporation (manufacturer and distributor of alarm
and other security products) since August 1996. National
Sales Manager, Xetron (division of Pittway) (April 1994 to
July 1996) and Engineering Product Manager, System Sensor
(division of Pittway) (August 1992 to March 1994).
Don E. Schultz................. Mr. Schultz has served as a Director of Penton since June
1998. President of Agora, Inc. (integrated marketing
communications consulting firm). Professor of Integrated
Marketing Communications at the Medill School of
Journalism, Northwestern University. Senior Partner,
Targetbase Marketing International and the Targetbase
Institute.
Richard B. Swank............... Mr. Swank has served as a Director of Penton since June
1998. Retired. Chairman and Chief Executive Officer of
Advanstar Communications, Inc. (magazine, publishing,
exhibition and marketing services enterprise) from April
1990 to December 1994 and Director until May 1996.
Non-executive Chairman and Director, The Dialog Corp.
(U.S.A.) (an online information and data provider) from
November 1997 to present.
William C. Donohue............. Mr. Donohue has served as a Director of Penton since August
1998. President of Donohue Meehan Publishing Company (a
business publishing company) since January 1987.
Joan W. Harris................. Ms. Harris has served as a Director of Penton since June
1998. President of the Harris Foundation (a private
charitable foundation) since January 1993. President of
the Chicago Music and Dance Theater. Former Commissioner
for Cultural Affairs for the City of Chicago. Past
chairperson of the Illinois Arts Alliance and former
director of National Public Radio (1990-1997).
John J. Meehan................. Mr. Meehan has served as a Director of Penton since August
1998. Executive Vice President of Donohue Meehan Publishing
Company (a business publishing company) since January
1987.
Daniel J. Ramella.............. Mr. Ramella has served as a Director of Penton since July
1990. President and Chief Operating Officer of Penton (since
1990).
</TABLE>
S-I-1
<PAGE> 44
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
-------------------------
<S> <C>
Anthony Downs.................. Mr. Downs has served as a Director of Penton since June
1998. Senior Fellow (since 1977) of Brookings Institution
(non-profit social policy research center); Consultant
(since 1977). Director, Pittway Corporation (manufacturer
and distributor of alarm and other security products),
Bedford Property Investors, Inc. (real estate investment
trust), Essex Property Trust, Inc. (real estate investment
trust), General Growth Properties, Inc. (real estate
investment Massachusetts Mutual Life Insurance Corporation
(insurance company), and National Partnership Foundation
(low-income housing operator).
King Harris.................... Mr. Harris has served as a Director of Penton since May 1987
and as the non-executive Chairman of the Board since May
1998. President, Chief Executive Officer and Director of
Pittway Corporation (manufacturer and distributor of alarm
and other security products) since 1987. Non-executive
Chairman of the Board and Director, Aptar Group, Inc.
(specialty packaging components manufacturer).
Thomas L. Kemp................. Mr. Kemp has served as a Director of Penton since September
1996. Chief Executive Officer of Penton (since September
1996); Chairman of the Board of Penton from September 1996
to May 1998; President and Chief Operating Officer from
January 1996 to August 1996, Executive Vice President from
1994 to 1996, and Senior Vice President, Business and
Special Interest division, from 1992 to 1994, of Miller
Freeman, Inc. (business magazine publisher and exhibition
manager).
Edward J. Schwartz............. Mr. Schwartz has served as a Director of Penton since June
1998. Vice President of Pittway Corporation (manufacturer
and distributor of alarm and other security products)
since 1989.
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
-------------------------
<S> <C>
Thomas L. Kemp................. Mr. Kemp has been Penton's Chief Executive Officer since
1996. Mr. Kemp's publishing career spans more than 24 years.
He spent 22 years with San Francisco-based Miller Freeman,
Inc., and was Miller Freeman's President and Chief
Operating Officer in 1996, when he left the company to
join Penton. From 1994 to 1996, Mr. Kemp was Miller
Freeman's Executive Vice President and Chief Operating
Officer. He also held a series of executive, publishing
management, and sales positions with Miller Freeman
subsequent to joining the company in 1974. Mr. Kemp is a
Director and Treasurer of Business Publications Audit
International and a member of the organization's Executive
Committee. He is a Director of the Business Press
Educational Foundation, and a former Director of American
Business Press and the Association of Medical Publishers.
Mr. Kemp is a frequent speaker at media industry
conferences and events.
</TABLE>
S-I-2
<PAGE> 45
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
-------------------------
<S> <C>
Daniel J. Ramella.............. Mr. Ramella has served as Penton's President and Operating
Officer since 1990, and has worked for Penton for more than
21 years. Mr. Ramella was Senior Vice President,
Publishing from 1989 to 1990, and Vice President,
Foodservice Group from 1987 to 1989. He was publisher of
Restaurant Hospitality magazine from 1985 to 1987. Mr.
Ramella held management positions with Production
Engineering magazine between 1977 and 1985. Before joining
Penton in 1977, he was a Senior Audit Manager for Arthur
Andersen & Co. He is a Director, Secretary, and Executive
Committee Member of American Business Press and has served
as a Director of the Business Press Educational
Foundation. He is a former Director, Treasurer, and
Executive Committee member of Business Publications Audit
International.
Joseph G. NeCastro............. Mr. NeCastro has been Penton's Chief Financial Officer since
June 1998. Before joining Penton in June 1998, Mr. NeCastro
spent 5 years with Reader's Digest Association, Inc. He
was Vice President, Finance for Reader's Digest USA from
1995 until 1998, Corporate Controller in 1994 and 1995,
and held other corporate financial management positions
with the company in 1993 and 1994. Mr. NeCastro was Vice
President and Treasurer for U.S. News & World Report
between 1990 and 1993, and Director of Finance from 1987
to 1990. He held senior business development and finance
positions with MCI Communications Corporation between 1983
and 1987 before moving into the publishing industry.
James D. Atherton.............. Mr. Atherton is Group President of the Mechanical
Systems/Construction, Government/Compliance, Management,
Supply Chain/Aviation, and Industrial Shows of America
Groups. He has worked in business-to-business publishing
at Penton for 45 years. Mr. Atherton was Group President
of Penton's Inside Sales and Electronics Groups from 1991
to 1995, and President of the Electronics Group in 1991.
From 1989 to 1991, he was Senior Vice President of
Publishing, and from 1984 to 1989, he was Publishing Vice
President of New Equipment Digest (NED) and Material
Handling Engineering magazines. From 1981 to 1984, he was
Vice President of NED, and from 1975 to 1981, he was NED's
Publisher.
James A. Zaremba............... Mr. Zaremba is Group President of the Design/Engineering and
Manufacturing Groups and the A/E/C Systems Group. He has
spent most of his 30-year business-to-business publishing
career with Penton. From 1993 to 1995, he was Group
President of the Design/Engineering and Custom
Communications Groups, and from 1991 to 1993, he was Group
President of the Design/ Engineering Group. He was Group
Vice President of the Design/Engineering Group from 1989
to 1991. From 1988 to 1989, he was Publisher of Machine
Design magazine, and from 1983 to 1988, he was Publisher
of PT Design magazine.
</TABLE>
S-I-3
<PAGE> 46
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
-------------------------
<S> <C>
David Nussbaum................. Mr. Nussbaum is Executive Vice President and Group President
of the Electronics Group and the Independent Exhibitions,
Ltd. Group. He joined Penton in September 1998. Mr.
Nussbaum began his business media career in 1980 as an
editor with Gralla Publications, which was acquired in
1991 by Miller Freeman. He moved into sales and marketing
in 1983, was named a group publisher in 1993, was promoted
to vice president in 1994, and was appointed senior vice
president in 1995. He oversaw Miller Freeman's New York
Division, which includes more than 25 magazines serving
markets such as business technology, real estate, travel,
and fine jewelry, and more than 25 trade shows. He was a
member of Miller Freeman's Board of Directors, and sits on
BPA International's Board of Directors.
Preston L. Vice................ Mr. Vice has been Senior Vice President of Publishing
Services since 1989. Mr. Vice has 19 years of business-to-
business publishing experience and 28 years of accounting
and finance experience. He was Penton's Vice President of
Finance from 1982 to 1989, and Director of Finance from
1979 to 1982. Mr. Vice transferred to Penton from Pittway
Corporation in 1979. Previous to his tenure at Pittway he
was with Coopers & Lybrand.
Charles T. Griesemer........... Mr. Griesemer has been Vice President/Controller of Penton
since July 1998. Prior to this, he was Penton's Vice
President of Finance since he joined Penton in 1989. In
the preceding 16 years, he held finance positions at the
Thermos Company, Anchor Swan Corporation Inc., Pittway
Corporation, and Coopers & Lybrand.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the
Purchaser are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is 1100 Superior Avenue,
Cleveland, Ohio 44114. Unless otherwise indicated, all directors and executive
officers listed below are citizens of the United States.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER; BUSINESS ADDRESS; PRINCIPAL
OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
--------------------------------------------------------
<S> <C>
Thomas L. Kemp................. DIRECTOR AND PRESIDENT SINCE 1998. (For further
information, see the information set forth above concerning
Parent.)
Daniel J. Ramella.............. DIRECTOR AND VICE PRESIDENT SINCE 1998. (For further
information, see the information set forth above concerning
Parent.)
Joseph G. NeCastro............. DIRECTOR AND TREASURER SINCE 1998. (For further
information, see the information set forth above concerning
Parent.)
Preston L. Vice................ DIRECTOR AND SECRETARY SINCE 1998. (For further
information, see the information set forth above concerning
Parent.)
</TABLE>
S-I-4
<PAGE> 47
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
For Information Telephone:
(212) 701-7624
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below and will be furnished
promptly at the Purchaser's expense. Stockholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (Collect)
Banks and Brokerage Firms
please call:
(800) 322-2885
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(212) 892-7700 (Call Collect)
<PAGE> 1
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO
TENDER SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 15, 1998
BY
INTERNET WORLD MEDIA, INC.,
A WHOLLY-OWNED SUBSIDIARY OF
PENTON MEDIA, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 18, 1998 UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
For Information Telephone:
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined in the Offer to Purchase dated October 15,
1998 (the "Offer to Purchase")) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of
Shares are to be made by book-entry transfer to an account maintained by Harris
Trust Company of New York (the "Depositary") at The Depository Trust Company
("DTC") or Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry
Transfer Facility" and collectively referred to as the "Book-Entry Transfer
Facilities"), pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. Stockholders who tender Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders."
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) or who cannot complete
the procedures for book-entry transfer on a timely basis, must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER. PLEASE
READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 2
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Name of Book-Entry Transfer Facility:
(Check one)
[ ] The Depository Trust Company (DTC)
[ ] Philadelphia Depository Trust Company (PDTC)
Account Number:
Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
-------------------------------------------------------------------------
Window Ticket Number (if any):
-------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery:
-------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES
SHARE REPRESENTED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated it will be assumed that all Shares represented by
Share Certificates delivered to the Depositary are being tendered. See
Instruction 4.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Internet World Media, Inc. (the
"Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Penton
Media, Inc., a Delaware corporation ("Parent"), the above described shares of
Common Stock, par value $.01 per share (the "Shares"), of Mecklermedia
Corporation, a Delaware corporation (the "Company"), pursuant to the Purchaser's
offer to purchase all outstanding Shares at a price of $29.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together with the Offer
to Purchase constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its subsidiaries or affiliates the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, the Purchaser all right, title and interest in and to
all of the Shares that are being tendered hereby and any and all dividends on
the Shares (including, without limitation, the issuance of additional Shares
pursuant to a stock dividend or stock split, the issuance of other securities,
the issuance of rights for the purchase of any securities, or any cash
dividends) that are declared or paid by the Company on or after the date of the
Offer to Purchase and are payable or distributable to stockholders of record on
a date prior to the transfer into the name of the Purchaser or its nominees or
transferees on the Company's stock transfer records of the Shares purchased
pursuant to the Offer (collectively "Distributions"), and constitutes and
irrevocably appoints the Depositary the true and lawful agent, attorney-in-fact
and proxy of the undersigned to the full extent of the undersigned's rights with
respect to such Shares (and Distributions) with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power coupled with
an interest), to (a) deliver Share Certificates (and Distributions), or transfer
ownership of such Shares on the account books maintained by the Book-Entry
Transfer Facilities, together in either such case with all accompanying
evidences of transfer and authenticity, to or upon the order of the Purchaser
upon receipt by the Depositary, as the undersigned's agent, of the purchase
price, (b) present such Shares (and Distributions) for transfer on the books of
the Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and Distributions), all in accordance with
the terms of the Offer. See Sections 10 and 12 of the Offer to Purchase.
The undersigned hereby irrevocably appoints designees of the Purchaser, and
each of them, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to vote in such manner as each such attorney and
proxy or his or her substitute shall, in his or her sole discretion, deem
proper, and otherwise act (including pursuant to written consent) with respect
to all of the Shares tendered hereby which have been accepted for payment by the
Purchaser prior to the time of such vote or action (and Distributions) which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned meeting), or by
written consent in lieu of such meeting, or otherwise. This power of attorney
and proxy is coupled with an interest in the Company and in the Shares and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke, without further
action, any other power of attorney or proxy granted by the undersigned at any
time with respect to such Shares (and Distributions) and no subsequent powers of
attorney or proxies will be given (and if given will be deemed not to be
effective) with respect thereto by the undersigned. The undersigned understands
that the Purchaser reserves the right to require that, in order for Shares to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Shares, the Purchaser is able to exercise full voting rights with
respect to such Shares and Distributions, including voting at any meeting of
stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and Distributions) and that when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby (and
Distributions). In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of the Purchaser any and all other
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights and
privileges as owner of such Distributions and may withhold the entire purchase
price or deduct from the purchase price of Shares tendered hereby the amount or
value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Stockholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at such Book-Entry
Transfer Facility as such stockholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned recognizes that the
Purchaser has no obligation pursuant to the "Special Payment Instructions" to
transfer any Shares from the name of the registered holder thereof if the
Purchaser does not accept for payment any of such Shares.
<PAGE> 4
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates not To be completed ONLY if Share Certificates not
tendered or not purchased and/or the check for the tendered or not purchased and/or the check for the
purchase price of Shares purchased are to be issued purchase price of Shares purchased are to be sent to
in the name of someone other than the undersigned, someone other than the undersigned, or to the
or if Shares tendered by book-entry transfer which undersigned at an address other than that shown on
are not purchased are to be returned by credit to an the front cover.
account maintained at a Book-Entry Transfer Facility
other than that designated on the front cover.
Issue check and/or certificates to: Mail check and/or certificate to:
Name: Name:
---------------------------------------------------- ----------------------------------------------------
(PLEASE PRINT) (PLEASE PRINT)
Address: Address:
---------------------------------------------------- ----------------------------------------------------
---------------------------------------------------- ----------------------------------------------------
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
---------------------------------------------------- ----------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.) (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit unpurchased Shares tendered by book-entry
transfer to the Book-Entry Transfer Facility
account set forth below:
[ ] DTC [ ] PDTC
----------------------------------------------------
(ACCOUNT NUMBER)
</TABLE>
<PAGE> 5
IMPORTANT -- SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary information.
See Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- --------------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name (Please print):
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Dated:
- ------------------------, 1998
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS
AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
inside front cover hereof or (ii) if such Shares are tendered for the account of
a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in
Section 3 of the Offer to Purchase. Share Certificates, or timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at a Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Stockholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary on or
prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof), with any required signature guarantees (or in the case of a
book-entry delivery an Agent's Message) and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three NASDAQ
trading days after the date of execution of such Notice of Guaranteed Delivery.
A "NASDAQ trading day" is any day on which The Nasdaq Stock Market, Inc.'s
Nasdaq National Market is open for business. If Share Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile hereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal or facsimile hereof, waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in the name
of a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
<PAGE> 7
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such person) payable on account
of the transfer to such person will be deducted from the purchase price received
by such holder(s) pursuant to this Offer (i.e., such purchase price will be
reduced) unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If (i) a check is to be issued
in the name of and/or (ii) certificates for unpurchased Shares are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to someone other
than the signer of this Letter of Transmittal or to an address other than that
shown on the front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer (i.e., Book-Entry Stockholders) may request that Shares not purchased
be credited to such account maintained at such Book-Entry Transfer Facility as
such Book-Entry Stockholder may designate hereon. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its addresses set forth below.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, or an adequate basis for exemption, the
Internal Revenue Service may subject the stockholder or other payee to a $50
penalty, and the gross proceeds of any payments that are made to such
stockholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding. If withholding results in an
overpayment of taxes, a refund may be obtained.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing a Substitute Form W-9 certifying (i) that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and
(ii) that (a) such stockholder is exempt from backup withholding or (b) such
stockholder has not been notified by the Internal Revenue Service that such
stockholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (c) the Internal Revenue Service has notified such
stockholder that such stockholder is no longer subject to backup withholding.
Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt holder
must enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" in
Part 2 of such form, and sign and date the form. See the enclosed Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9 (the "W-9
Guidelines") for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8, "Certificate of Foreign Status" signed under penalties of perjury attesting
to such exempt status. Such forms may be obtained from the Payor.
If you do not have a TIN, consult the W-9 Guidelines for instructions on
applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of
the Substitute Form W-9, and sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set forth herein. If you
do not provide your TIN to the Payor within 60 days, backup withholding will
begin and continue until you furnish your TIN to the Payor. NOTE: WRITING
"APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT
YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
The stockholder is required to give the Depositary the TIN of the record
owner of the Shares or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares. If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR
TO THE EXPIRATION DATE.
<PAGE> 8
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS OF SECURITIES
(SEE INSTRUCTION 9)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYOR'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN TIN ------------------------------
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY (Social Security Number
BY SIGNING AND DATING BELOW. or Employer
Identification Number)
------------------------------------------------------------------------------
DEPARTMENT OF PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
THE TREASURY (SEE INSTRUCTIONS)
INTERNAL
REVENUE SERVICE
------------------------------------------------------------------------------
PART 3--CERTIFICATIONS -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The
number shown on this form is my correct Taxpayer Identification Number (or I
PAYER'S REQUEST FOR am waiting for a number to be issued to me) and (2) I am not subject to backup
TAXPAYER IDENTIFICATION withholding either because: (a) I am exempt from backup withholding; or (b) I
NUMBER ("TIN") have not been notified by the Internal Revenue Service (the "IRS") that I am
AND CERTIFICATION subject to backup withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
Signature ______________________________ Date _________________
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or
dividends on your tax return.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN PART 1 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor within 60
days, 31% of all reportable payments made to me will be withheld.
- ------------------------ ------------------------------
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 9
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY
EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER
OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
For Information Telephone:
(212) 701-7624
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or the Dealer Manager as set forth below, and will be
furnished promptly at the Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
Toll Free (800) 322-2885
Banks and Brokerage
Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(212) 892-7700 (Call Collect)
<PAGE> 1
Exhibit (a)(3)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
BY
INTERNET WORLD MEDIA, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
PENTON MEDIA, INC.
AT
$29.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 18, 1998, UNLESS THE OFFER IS EXTENDED.
October 15, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by Internet World Media, Inc., a Delaware
corporation (the "Purchaser"), and Penton Media, Inc., a Delaware corporation
("Parent"), to act as Information Agent in connection with the Purchaser's offer
to purchase all outstanding shares of Common Stock, par value $.01 per share
(the "Shares"), of Mecklermedia Corporation, a Delaware corporation (the
"Company"), at a purchase price of $29.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated October 15, 1998 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which together constitute the "Offer")
enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered prior to the expiration of the Offer and not properly withdrawn a
number of Shares which, together with the Shares to be acquired pursuant to the
Tender, Voting and Option Agreement (as such term is defined in the Offer to
Purchase), represents at least a majority of the total number of outstanding
Shares on a fully diluted basis. The Offer is also subject to the conditions set
forth in the Offer to Purchase. See the Introduction and Sections 1, 13 and 14
of the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated October 15, 1998.
2. The Letter of Transmittal for your use to tender Shares and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if certificates for Shares ("Share Certificates") and all other
required documents are not immediately available or cannot be delivered
<PAGE> 2
to Harris Trust Company of New York (the "Depositary") by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for
book-entry transfer cannot be completed by the Expiration Date.
5. A Letter to stockholders from the Secretary of the Company
accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 18, 1998,
UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, a duly executed and properly completed Letter
of Transmittal and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry delivery of
Shares, and any other required documents should be sent to the Depositary and
either Share Certificates representing the tendered Shares should be delivered
to the Depositary, or Shares should be tendered by book-entry transfer into the
Depositary's account maintained at one of the Book Entry Transfer Facilities (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager and the Information Agent as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant to
the Offer. The Purchaser will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Purchaser will pay or cause to be paid
any stock transfer taxes payable on the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained from, the
undersigned.
Very truly yours,
MacKenzie Partners, Inc.,
as Information Agent
156 Fifth Avenue
New York, New York 10010
(800) 322-2885 (Toll free)
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
BY
INTERNET WORLD MEDIA, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
PENTON MEDIA, INC.
AT
$29.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 18, 1998, UNLESS THE OFFER IS EXTENDED.
October 15, 1998
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated October
15, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by Internet World Media,
Inc., a Delaware corporation (the "Purchaser"), and a wholly-owned subsidiary of
Penton Media, Inc., a Delaware corporation, to purchase all outstanding shares
of Common Stock, par value $.01 per share (the "Shares"), of Mecklermedia
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$29.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal enclosed herewith. Holders of Shares whose
certificates for such Shares (the "Share Certificates") are not immediately
available, or who cannot deliver their Share Certificates and all other required
documents to the Depositary on or prior to the Expiration Date (as defined in
the Offer to Purchase), or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $29.00 per Share net to you in cash without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer is conditioned upon, among other things, there being
validly tendered prior to the expiration of the Offer and not properly
withdrawn a number of Shares which, together with the Shares to be acquired
pursuant to the Tender, Voting and Option Agreement (as such term is
defined in the Offer to
<PAGE> 2
Purchase), represents at least a majority of the total number of
outstanding Shares on a fully diluted basis. The Offer is also subject to
the conditions set forth in the Offer to Purchase. See the Introduction and
Sections 1, 13 and 14 of the Offer to Purchase.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by
the Purchaser pursuant to the Offer.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, November 18, 1998, unless the Offer is
extended.
6. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by Harris Trust Company of New York
(the "Depositary") of (a) Share Certificates or timely confirmation of the
book-entry transfer of such Shares into the account maintained by the
Depositary at The Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities"), pursuant to
the procedures set forth in Section 3 of the Offer to Purchase, (b) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or an Agent's Message (as
defined in the Offer to Purchase), in connection with a book-entry
delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when certificates for or
confirmations of book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
BY
INTERNET WORLD MEDIA, INC.,
A WHOLLY-OWNED SUBSIDIARY
OF
PENTON MEDIA, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 15, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer") in
connection with the offer by Internet World Media, Inc., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Penton Media, Inc., a
Delaware corporation, to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of Mecklermedia Corporation, a Delaware
corporation, at a purchase price of $29.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares to Be Tendered:
- -------------------------------------------------------------------- Shares*
Date:
- ------------------------, 1998
* Unless otherwise indicated, it will be assumed that you instruct us to tender
all Shares held by us for your account.
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PRINT NAME(S))
- --------------------------------------------------------------------------------
(PRINT ADDRESS(ES))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
- --------------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER(S))
- --------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
3
<PAGE> 1
Exhibit (a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
shares of Common Stock, par value $.01 per share (the "Shares"), of Mecklermedia
Corporation, a Delaware corporation (the "Company"), are not immediately
available or time will not permit all required documents to reach Harris Trust
Company of New York (the "Depositary") on or prior to the Expiration Date (as
defined in the Offer to Purchase), or the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or sent by facsimile transmission or mail to
the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(212) 701-7636
For Information Telephone:
(212) 701-7624
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Internet World Media, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Penton Media,
Inc., a Delaware corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated October 15, 1998 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together constitute
the "Offer"), receipt of each of which is hereby acknowledged, the number of
Shares indicated below pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: _______________
Certificate No(s). (if available): _______________
If Share(s) will be tendered by book-entry transfer, check ONE box.
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number: _______________
Date: _______________ Area Code and Telephone Number(s): _________
Name(s) of Record Holder(s): _______________ Signature(s): _______________________________
(PLEASE PRINT)
Address(es): _______________
(ZIP CODE)
</TABLE>
2
<PAGE> 3
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, hereby guarantees to deliver to
the Depositary at one of its addresses set forth above either the certificates
representing all tendered Shares, in proper form for transfer, a Book-Entry
Confirmation (as defined in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of book-entry delivery of
Shares, an Agent's Message (as defined in the Offer to Purchase), and any other
documents required by the Letter of Transmittal within three Nasdaq trading days
after the date of execution of this Notice of Guaranteed Delivery. A "Nasdaq
trading day" is any day on which The Nasdaq Stock Market, Inc.'s Nasdaq National
Market is open for business.
<TABLE>
<S> <C>
Name of Firm:
---------------------------------------
-----------------------------------------------------
Authorized Signature
Address: Name:
------------------------------------------- -----------------------------------------------
(Zip Code) (Please type or print)
Title:
- ----------------------------------------------------- ----------------------------------------------
Area Code and Telephone No.: Date: , 1998
------------------------- ---------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE> 1
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER NAME AND IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--The taxpayer identification number for an individual is the individual's
social security number. Social security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. The taxpayer identification number for an entity
is the entity's employer identification number. Employer identification numbers
have nine digits separated by only one hyphen: i.e., 00-0000000. The table below
will help determine the number to give the payor.
<TABLE>
<CAPTION>
- ------------------------------------------------------
GIVE THE NAME AND TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ------------------------------------------------------
<C> <S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint funds,
either person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor,
the minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent person(3)
committee for a
designated ward,
minor, or
incompetent person
7. a. The usual The grantor-trustee(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
GIVE THE NAME AND TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship The owner(4)
account
9. A valid trust, The legal entity (Do not
estate or pension furnish the identifying
trust number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Association, club, The organization
religious,
charitable,
educational or other
tax-exempt
organization account
12. Partnership account The partnership
13. A broker or The broker or nominee
registered nominee
14. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- ------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service (the "IRS") and
apply for a number.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. Generally, you will then have 60 days to obtain a taxpayer
identification number and furnish it to the requester. If the requester does not
receive your taxpayer identification number within 60 days, backup withholding,
if applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL broker transactions
and interest and dividend payments include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan or a
custodial account under Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding including the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one non-resident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in Code section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON
THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
Exhibit A-7
[PENTON LOGO]
Press Release
Penton Media, Inc.
1100 Superior Avenue
Cleveland, OH 44114-2543 USA
216.696.7000
Fax 216.696.0836
http://www.penton.com
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Gary Wells
Dix & Eaton Incorporated
216-241-4631
ANALYST CONTACT: Lisa Hagerty
Dix & Eaton Incorporated
216-241-4606
PENTON MEDIA AGREES TO ACQUIRE
MECKLERMEDIA CORPORATION IN ALL-CASH TENDER OFFER;
TRANSACTION ACCELERATES PENTON GROWTH STRATEGY
CLEVELAND, OH -- October 8, 1998 -- Penton Media, Inc. (NYSE: PME) today
announced it has entered into a definitive merger agreement to acquire
Mecklermedia Corporation (NASDAQ: MECK) for approximately $274 million. Penton
Media will soon commence a tender offer to acquire all outstanding shares of
Mecklermedia's common stock for $29 per share, which represents a premium of
43.7% over Mecklermedia's closing price yesterday of $20.19. The transaction is
subject to certain terms and conditions, including the valid tender of at least
a majority of the shares outstanding on a fully diluted basis, the financing
referred to below, and normal regulatory approvals. Any shares not purchased in
the tender will be acquired for the same price in cash in a second-step merger.
Alan Meckler, chairman and CEO of Mecklermedia, who controls approximately 30%
of the outstanding shares of Mecklermedia common stock, has entered into an
agreement with Penton in which he has agreed, among other things, to tender his
shares into the offer and to give Penton an option to purchase his shares in the
case of a third party offer for Mecklermedia. Both companies anticipate that the
tender offer will close in November 1998.
The Boards of Directors of Penton Media and Mecklermedia have each unanimously
approved the acquisition by the vote of all directors present.
Penton said the transaction will be financed primarily through additional
borrowings. Donaldson, Lufkin & Jenrette, which initiated the transaction, and
its affiliates have committed to provide the financing necessary for Penton to
consummate the tender offer and the merger, refinance existing Penton
indebtedness, and pay related expenses. DLJ has acted as Penton's financial
advisor in connection with the transaction and is acting as dealer manager for
the tender.
-- more --
<PAGE> 2
Mecklermedia was founded in 1971 by Mr. Meckler. The company is the world's
leading business media company service the Internet industry. Its products
include the Internet World and ISPCON trade shows and conferences, Internet
World, a weekly magazine, and Boardwatch, a monthly magazine. It owns
Internet.com, a network of Web sites (http://www.internet.com), and publishes
the ISDEX, the only 100% Internet stock index featuring 50 leading companies
(http://www.isdex.com). Mecklermedia's global presence includes Internet World
and ISPCON trade shows in 29 countries and licensed publications throughout the
United States, Canada, Mexico, South America, Europe, the Middle East, Asia,
Africa, and Australia.
"Mecklermedia is an excellent strategic fit for Penton Media, and its
acquisition will accelerate our plan to enter new growth markets," said Thomas
L. Kemp, CEO of Penton Media. "Mecklermedia will provide Penton Media with a
strong position in the fast-growing Internet segment of the computer information
industry."
Mr. Kemp added, "Alan Meckler and his team have built cutting-edge businesses
from the ground up that have drawn loyal customers the world over, and have
helped shape information delivery for the worldwide Internet community. We are
truly excited about joining our two organizations to deliver powerful
information to Internet users in business and in learning environments, and to
deliver marketing solutions to the technology product and service providers who
are driving the growth of this market."
"The combination of Mecklermedia and Penton Media resources offers truly
exciting financial and strategic potential for our shareholders, employees and
customers alike," said Mr. Meckler. "I look forward to realizing our timely
partnership and building upon the strong foundations of both Penton and
Mecklermedia."
Mr. Kemp also noted that the addition of Mecklermedia underscores Penton Media's
strategic objectives of significantly increasing the volume of revenues
generated from the trade show and conference component of its operations, and of
expanding its global presence. Trade shows accounted for approximately 70% of
Mecklermedia's $60.8 million in revenues for the 12 months ended June 30, 1998.
The company has launched or acquired over 10 new events in 1998.
Mecklermedia's Spring Internet World trade show in Los Angeles and Fall Internet
World in New York City are among the largest and fastest growing trade show
events in the United States, according to the 1998 Tradeshow Week 200 industry
directory. Each event attracted more than 50,000 visitors.
-- more --
<PAGE> 3
The Mecklermedia acquisition follows Penton Media's 1997 purchases of A/E/C
SYSTEMS International, Industrial Shows of America, Independent Exhibitions,
Ltd. in the UK, and its 1998 purchase of Donohue/Meehan Publishing Company.
Mecklermedia, which employs 185 staff members, is headquartered in Westport, CT,
and has other North American operations in New York City, Burlingame, CA, and
Wellesley, MA, and overseas offices in London and Hong Kong.
Mr. Kemp said Penton Media and Mecklermedia will be joint venture partners in
Mecklermedia's Internet.com business. Mr. Meckler will be Internet.com's
chairman and CEO. He also will be engaged in a consulting relationship with
Penton Media. Internet.com and Penton also will enter into a long-term services
agreement.
Penton Media, Inc. is a diversified business media company that publishes
magazines and electronic information products, produces trade shows and
conferences, and provides marketing and business development products and
services, including direct mail lists, research and custom publishing. Penton
Media serves the design/engineering; electronics; food/hospitality;
government/compliance; information technology; leisure; management;
manufacturing; mechanical systems/construction; and supply chain/aviation
markets. Penton Media was recently spun off from Chicago-based Pittway
Corporation. It began trading on the New York Stock Exchange on August 10.
Statements in this document that are not historical in nature are
forward-looking statements. Although the Company believes that its expectations
are based upon reasonable assumptions within the bounds of its knowledge of its
business, there can be no assurance that the Company's financial goals will be
realized. Numerous factors may affect the Company's actual results and may cause
results to differ materially from those expressed in forward-looking statements
made by or on behalf of the Company. Such factors are detailed in reports filed
with the Securities and Exchange Commission.
# # #
<PAGE> 1
Exhibit (A)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated October
15, 1998, and the related Letter of Transmittal, and any amendments or
supplements thereto, and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Internet World Media, Inc. by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MECKLERMEDIA CORPORATION
BY
INTERNET WORLD MEDIA, INC.
A WHOLLY-OWNED SUBSIDIARY
OF
PENTON MEDIA, INC.
AT
$29.00 NET PER SHARE
Internet World Media, Inc. (the "Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Penton Media, Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of Mecklermedia Corporation, a Delaware
corporation (the "Company"), at a purchase price of $29.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 15, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"). Tendering stockholders who have Shares registered in
their name and who tender directly will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. Following the Offer, the
Purchaser intends to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 18, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of October 7, 1998 (the "Merger Agreement"), by and among the Company,
the Purchaser, Parent and Alan M. Meckler ("Stockholder") pursuant to which,
following the consummation of the Offer and the satisfaction or waiver of
certain conditions set forth therein, the Purchaser will be merged with and into
the Company (the "Merger"), with the Company continuing as the surviving
corporation. On the effective date of the Merger, each outstanding Share (other
than any Shares held by Parent, any wholly-owned subsidiary of Parent, in the
treasury of the Company, and other than
<PAGE> 2
Shares, if any, held by stockholders who perfect their appraisal rights under
Delaware law) will be converted into the right to receive an amount equal to
$29.00 in cash (without interest).
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT
EACH OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE
OFFER AND THE MERGER, IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND ADOPTED THE MERGER AGREEMENT AND
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Parent, the Purchaser, the Company and Stockholder, who beneficially
owns approximately 26% of the outstanding Shares (the "Stockholder Shares"),
have entered into a Tender, Voting and Option Agreement dated October 7, 1998
(the "Tender, Voting and Option Agreement"), pursuant to which Stockholder has
agreed, among other things, (i) to tender in the Offer all of the Stockholder
Shares now owned or which may hereafter be acquired by Stockholder, (ii) to
grant to Parent an option to purchase the Stockholder Shares in certain
circumstances, (iii) to appoint Parent and the Purchaser, or any nominee of
Parent and the Purchaser, as his proxy to vote the Stockholder Shares in
connection with the Merger Agreement and with respect to certain questions put
to the stockholders of the Company, in each case, in accordance with the terms
and conditions of the Tender, Voting and Option Agreement, (iv) not to transfer
any of the Stockholder Shares, and (v) not to acquire any additional Shares
whether pursuant to the exercise of any options or otherwise.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT PROPERLY WITHDRAWN A
NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES TO BE ACQUIRED PURSUANT TO THE
TENDER, VOTING AND OPTION AGREEMENT, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL
NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT
TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1, 13 AND 14 OF
THE OFFER TO PURCHASE.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered and not
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. In all cases, upon the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to validly tendering stockholders. Under no
circumstances will interest on the purchase price for Shares be paid by the
Purchaser. In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates (the
"Share Certificates") for such Shares or timely confirmation of the book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company or Philadelphia Depository Trust Company (collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal delivered with the Offer to
Purchase (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in connection with a book-entry transfer of Shares and (iii) any
other documents required by the Letter of Transmittal.
If the conditions to the Offer specified in Section 13 of the Offer to
Purchase have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), with prior written consent of the Company after
November 27, 1998, to extend the Offer from time to time, by giving oral or
written notice of such extension to the Depositary. Any such extension will be
followed as promptly as practicable by public announcement thereof, and such
announcement will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date (as defined
below).
Tenders of Shares made pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided in the Offer to Purchase, may also be withdrawn at any time after
December 13, 1998. The term "Expiration Date" means 12:00 midnight, New York
City time, on Wednesday, November 18, 1998, unless and until the Purchaser,
subject to the terms of the Merger Agreement, shall have further extended the
period of time for which the Offer is open, in which event the term "Expiration
Date" shall mean the time and date at which the Offer, as so extended by the
Purchaser, shall expire. In order for a withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and
(if Share Certificates have been tendered) the name of the registered holder of
the Shares as set forth in the Share Certificate, if different from that of the
person who tendered such Shares. If Share Certificates have been delivered or
otherwise identified to the Depositary, then prior to the physical release of
such certificates, the tendering stockholder must submit the serial
<PAGE> 3
numbers shown on the particular certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by a
firm that is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program (an "Eligible Institution"), except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer set forth in Section
3 of the Offer to Purchase, the notice of withdrawal must specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with withdrawn Shares, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
this paragraph. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination shall be final and binding. Any Shares
properly withdrawn will be deemed not validly tendered for purposes of the
Offer, but may be tendered at any subsequent time prior to the Expiration Date
by following any of the procedures described in Section 3 of the Offer to
Purchase. None of Parent, the Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
The information required to be disclosed pursuant to Rule
14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, is contained in the Offer to Purchase, and is
incorporated herein by reference.
The Company is providing the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to record
holders of Shares and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers listed below. Additional copies of the Offer to Purchase, the
Letter of Transmittal and the other tender offer documents may be obtained from
the Information Agent or the Dealer Manager, and copies will be furnished
promptly at the Purchaser's expense. No fees or commissions will be paid to
brokers, dealers or other persons (other than the Information Agent and the
Dealer Manager) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
CALL TOLL FREE: (800) 322-2885
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(212) 892-7700 (Call Collect)
October 15, 1998
<PAGE> 1
Exhibit B-1
October 7, 1998
Penton Media, Inc.
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Thomas Kemp
Re: Financing Facilities for the Leveraged Acquisition of
Mecklermedia Corporation
Ladies and Gentlemen:
You have advised us that Penton Media, Inc. ("Penton" or the
"Borrower") intends to acquire (the "Acquisition") all the capital stock,
including outstanding options and warrants to purchase common stock (the
"Shares"), of Mecklermedia Corporation (the "Target"). We understand that the
Acquisition will be accomplished through a tender offer (the "Tender Offer") by
the Borrower for up to 100% of the Shares at a price not to exceed $29.00 per
share, or not more than $274.0 million in the aggregate followed by a merger
(the "Merger") in which any shares not tendered will be cancelled for cash
consideration. We also understand that the Tender Offer will be conditioned on,
among other things, the tender and purchase of at least that number of shares
required to permit the Borrower to cause the Merger to occur. We further
understand that, in connection with the Acquisition, approximately $40.0 million
of existing indebtedness of the Borrower will be repaid. In addition, fees and
expenses related to the foregoing will approximate $12.0 million. In connection
with the foregoing, Alan M. Meckler, a major shareholder of Meckler, will invest
$18.0 million in exchange for 80.1% of the equity of a subsidiary of the
Borrower (the "Investment"). The Acquisition, the Tender Offer, the Merger, the
repayment of the existing indebtedness, the payment of fees and expenses, the
Investment and the related financing transactions described herein are
hereinafter collectively referred to as the "Transactions."
DLJ Capital Funding, Inc. ("DLJ") is pleased to confirm that it commits
to provide all of the $265.0 million of senior bank credit facilities described
below, and DLJ Bridge Finance, Inc. ("DLJ Bridge") is pleased to confirm that it
or one of its affiliates commits to purchase all of the $60.0 million of
subordinated bridge notes (the "Bridge Notes") described below, in each case
subject to the terms and conditions set forth in this letter and the annexes
hereto.
The senior bank credit facilities will be provided to the Borrower, and
will be comprised of a tranche A term loan of up to $140.0 million, and a
tranche B term loan of up to $100.0 million (the "Term Loan Facility") and a
revolving credit facility of up to $25.0 million with a sublimit for letters of
credit in an amount to be determined (the "Revolving Credit Facility"; together
with the Term Loan Facility, the "Bank Facilities"). Certain of the terms of the
Bank Facilities are set forth in the Summary of Terms of the Bank Facilities
attached hereto as ANNEX A (the "Bank Facilities Term Sheet"). The Bridge Notes
will be issued by the Borrower in the amount
<PAGE> 2
of $60.0 million. Certain of the terms of the Bridge Notes are set forth in the
Summary of Terms of the Bridge Facilities attached hereto as ANNEX B (the
"Bridge Facilities Term Sheet"; the Bank Facilities Term Sheet and the Bridge
Facilities Term Sheet are sometimes referred to as the "Term Sheets").
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of
DLJ, proposes to act as lead arranger (the "Lead Arranger") for the Bank
Facilities. The Lead Arranger intends to arrange for other banks, financial
institutions and other "accredited investors" (as defined in SEC regulations;
each such bank, financial institution and accredited investor, including DLJ,
being a "Lender" and, collectively, the "Lenders") to provide a portion of the
Bank Facilities. DLJ will act as syndication agent for the Lenders (the
"Syndication Agent") and a financial institution satisfactory to the Borrower,
the Lead Arranger and the Syndication Agent will act as administrative agent for
the Lenders (the "Administrative Agent"; together with the Syndication Agent,
the "Agents". At our option, a Documentation Agent title will be offered to a
financial institution acceptable to DLJ on terms acceptable to DLJ pursuant to
our previous discussions with you. We hereby agree that no other agents,
co-agents or arrangers will be appointed, no other titles will be awarded and no
compensation, fees, reimbursements or payments of any kind (other than as
expressly set forth in the Bank Facilities Term Sheet and the accompanying fee
letter (the "Fee Letter")) will be paid in connection with the Bank Facilities
unless you and we shall so agree. The Lead Arranger shall be entitled, after
consultation with you, to change the structure, terms, pricing or amounts of any
or all of the facilities comprising the Bank Facilities as set forth in the Bank
Facilities Term Sheet if the Lead Arranger determines that such changes are
advisable in order to ensure a successful syndication including decreasing the
Bank Facilities and increasing the Bridge Notes by a corresponding amount.
You have advised us that the total funds required to consummate the
Transactions are approximately $326.0 million which will be financed as follows:
(i) $240.0 million in borrowings under the Bank Facilities, consisting of the
proceeds of the Term Loan Facility; (ii) $8.0 million in cash provided by the
Borrower; (iii) $60.0 million in proceeds of the Bridge Notes; and (iv) $18.0
million in cash provided by Alan Meckler for the Investment. You have further
advised us that the Revolving Credit Facility will be used to provide for the
working capital requirements and other corporate purposes of the Borrower, and
will not be used to fund amounts necessary to consummate the Acquisition.
We have reviewed certain historical and pro forma financial statements
of Penton and its subsidiaries and of the Target and its subsidiaries and have
met with representatives of management of Penton regarding the transactions
contemplated hereby, and we are pleased to advise you that the results of our
due diligence investigations of Penton, the Target and their subsidiaries to
date are satisfactory. The commitments of DLJ and DLJ Bridge set forth herein
are subject to (1) there being no material adverse change in the business,
assets, properties (including intangible properties), condition (financial or
otherwise), results of operations, prospects (other than a change in general
economic conditions, but including a change in the industry in which Penton and
its subsidiaries or the Target and its subsidiaries operate), liabilities or
regulatory status of Penton and its subsidiaries taken as a whole or of the
Target and its subsidiaries taken as a whole, (2) the accuracy and completeness
of the Information and the Projections described in the immediately succeeding
paragraph and (3) the satisfaction of the conditions to be set forth in the
definitive
2
<PAGE> 3
documentation relating to the Bank Facilities and the Bridge Notes, including
without limitation those conditions set forth in ANNEX C hereto.
Penton hereby represents that, based on its review and analysis, to its
knowledge (a) all information, other than Projections (as defined below), which
has been or is hereafter made available to the Lead Arranger, DLJ Bridge or the
Lenders by you on your behalf in connection with the transactions contemplated
hereby (the "Information") and, as supplemented as contemplated by the next
sentence, is (or will be, in the case of Information made available after the
date hereof) complete and correct in all material respects and does not (or will
not, as the case may be) contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
were or are made, and (b) all financial projections of Penton, the Target and
their subsidiaries that have been or are hereafter made available to the Lead
Arranger, DLJ Bridge or the Lenders by the Borrower or any of its
representatives in connection with the transactions contemplated hereby (the
"Projections") have been (or will be, in the case of Projections made available
after the date hereof) prepared in good faith based upon reasonable assumptions.
You agree to supplement the Information and the Projections from time to time
until the closing date so that the representation and warranty in the preceding
sentence is correct on the closing date. In arranging and syndicating the Bank
Facilities and in purchasing the Bridge Notes, the Lead Arranger and DLJ Bridge,
respectively, will be using and relying on the Information and the Projections
without independent verification thereof. The representations and covenants
contained in this paragraph shall remain effective until definitive financing
agreements are executed and thereafter the disclosure representations contained
herein shall be superseded by those contained in such definitive financing
agreements.
In addition, you agree to use your reasonable efforts to make certain
members of the management of Penton and the Target, as well as their consultants
and advisors, available during regular business hours to answer questions
regarding the Bank Facilities and the Bridge Notes, to review and assist in the
preparation of the syndication memorandum relating to the Bank Facilities, and
to meet with prospective Lenders.
By your signature below you hereby indemnify and hold harmless each of
the Lead Arranger, DLJ Bridge, the Agents and the Lenders and each of their
respective affiliates, directors, officers, agents, attorneys and employees,
and agree to promptly pay all of the fees and expenses, in each case following
demand, as set forth in ANNEX D hereto (with the terms and provisions of such
ANNEX D being incorporated herein by this reference). Neither you (except as
specifically provided herein), nor the Lead Arranger, nor DLJ Bridge, nor any
Agent nor any Lender shall be responsible or liable to any other party or any
other person for consequential damages which may be alleged as a result of this
letter.
In connection with the services to be provided hereunder, DLJ. DLJ
Bridge or the Lead Arranger may employ the services of their affiliates. DLJ,
DLJ Bridge or the Lead Arranger may share with such affiliates, and such
affiliates may share with DLJ, DLJ Bridge or the Lead Arranger, any information
concerning Penton and its subsidiaries, the Target and its subsidiaries;
PROVIDED that DLJ, DLJ Bridge or the Lead Arranger and such affiliates agree to
hold any non-public information confidential in accordance with the provisions
of the letter agreement between Donaldson, Lufkin & Jenrette Securities
Corporation and the Borrower dated October 7, 1998 and
3
<PAGE> 4
the provisions of the letter agreement between the Borrower and the Target
dated September 23, 1998, and their respective customary policies relating to
non-public information, it being acknowledged that in arranging and syndicating
the Bank Facilities and the Bridge Notes, the Lead Arranger and DLJ Bridge will
share certain of the Information and the Projections with potential lenders,
who will agree to hold any non-public information in accordance with their
customary policies. Any such affiliate so employed (and its directors,
officers, employees, agents, attorneys and affiliates) shall be entitled to all
of the benefits afforded to DLJ, DLJ Bridge or the Lead Arranger hereunder.
Each of this letter, the Term Sheets, ANNEX D hereto and the Fee Letter
is confidential and shall not be disclosed by you to any person other than your
accountants, attorneys and other advisors, and, in the case of this letter and
the Term Sheets, to the Target and its attorneys and advisors and then only on
a confidential basis and in connection with the Transactions and the related
transactions contemplated herein. Any disclosure to an advisor may be made for
the sole purpose of evaluating and advising on the offer of financing made in
this letter and may not be used by such advisor in formulating any offer of
financing by such advisor or an affiliate. Additionally, you may make such
disclosures of this letter as are required by law or judicial process or as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation; PROVIDED that you will use your best efforts to
notify us of any such disclosure prior to making such disclosure.
Our offer will terminate on October 9, 1998, unless on or before that
date you sign and return an enclosed counterpart of this letter together with
executed copies of the accompanying letter concerning certain fee arrangements
and the accompanying engagement letter. The Bank Facilities referred to herein,
and DLJ Bridge's commitment to purchase the Bridge Notes shall in no event be
available unless the Tender Offer, the initial borrowing under the Bank
Facilities and the purchase of the Bridge Notes have been consummated on or
prior to December 31, 1998.
This letter agreement shall be governed by and construed in accordance
with the internal laws of the State of New York. EACH OF THE UNDERSIGNED PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF
OR IN CONNECTION WITH, THIS COMMITMENT LETTER, THE ANNEXES HERETO AND THE FEE
LETTER, AND ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH
OR THEREWITH. This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
4
<PAGE> 5
We appreciate having been given the opportunity by you to be involved
in this transaction.
Very truly yours
DLJ CAPITAL FUNDING, INC.
By: Eric S. Swanson
-------------------------------
Title: Managing Director
-----------------------------
DLJ BRIDGE FINANCE, INC.
By: Eric S. Swanson
-------------------------------
Title: Managing Director
-----------------------------
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By: Mark W. Lanigan
-------------------------------
Title: Managing Director
-----------------------------
AGREED AND ACCEPTED
this 7 day of October, 1998
PENTON MEDIA, INC.
By: /s/ Thomas L. Kemp
-------------------------------
Title: Chief Executive Officer
-----------------------------
5
<PAGE> 6
ANNEX A
-------
SUMMARY OF TERMS
OF THE
BANK FACILITIES
The following summarizes selected terms of certain senior bank
credit facilities to be utilized in connection with the proposed leveraged
acquisition (the "Acquisition") of all the capital stock of Mecklermedia
Corporation. This Summary of Terms is intended merely as an outline of certain
of the material terms of such bank credit facilities. It does not include
descriptions of all of the terms, conditions and other provisions that are to be
contained in the definitive documentation relating to such bank credit
facilities and it is not intended to limit the scope of discussion and
negotiation of any matters not inconsistent with the specific matters set forth
herein. All terms defined in the financing letter to which this Summary of Terms
is attached and not otherwise defined herein shall have the same meanings when
used herein. Certain conditions to the bank credit facilities are set forth in
ANNEX C.
I. THE BANK FACILITIES
BORROWER: Penton Media, Inc.
LENDERS: DLJ Capital Funding, Inc. and its affiliates ("DLJ")
and a syndicate of banks, financial institutions and
other accredited investors (the "Lenders").
LEAD ARRANGER: Donaldson, Lufkin & Jenrette Securities Corporation
(the "Lead Arranger").
SYNDICATION AGENT DLJ (in such capacity, the "Syndication Agent").
FOR THE LENDERS:
ADMINISTRATIVE AGENT A financial institution to be mutually determined by
FOR THE LENDERS: the Lead Arranger and the Borrower (the
"Administrative Agent").
CLOSING DATE: The date the initial loans are made under the Bank
Facilities (not later than December 31, 1998).
TYPE AND AMOUNT: The Bank Facilities to be provided to the Borrower
and its subsidiaries shall consist of the Term Loan
Facility and the Revolving Credit Facility.
TERM LOAN FACILITY. The Term Loan Facility will
consist of Tranche A Term Loans and Tranche B Term
Loans (the "Term Loans"). The Term Loans will be made
available, and the Lenders' commitments to lend the
Term Loans will terminate,
A-1
<PAGE> 7
immediately upon consummation of the Tender Offer,
except that, at the option of the Borrower, all or a
portion of the Tranche A Term Loans may be made
available on, and the Lenders' commitments to lend
such portion of the Tranche A Term Loans (the
"Delayed Draw Loans") shall not terminate until, the
earlier to occur of the (i) three-month anniversary
of the Closing Date or (ii) consummation of the
Merger.
TRANCHE A TERM LOANS. The Tranche A Term Loans will
have a final maturity date of six years after the
Closing Date and will be in an original principal
amount of up to $140.0 million. Quarterly
amortization will be required in aggregate annual
amounts to be determined
TRANCHE B TERM LOANS. The Tranche B Term Loans will
have a final maturity date of seven years after the
Closing Date and be in an original principal amount
of up to $100.0 million. Quarterly amortization will
be required in aggregate annual amounts equal to 1%
of the aggregate Tranche B Term Loans in years one
through six, with the balance payable in year seven.
REVOLVING CREDIT FACILITY. The Revolving Credit
Facility will mature six years after the Closing
Date and be in an original amount of up to $25.0
million under which revolving loans may be made and
under which letters of credit may be issued up to a
sublimit to be agreed upon. A portion of the
Revolving Credit Facility in an amount to be agreed
upon shall be made available as a swingline facility.
USE OF PROCEEDS: The funds required to consummate the Acquisition and
the other Transactions will be provided as follows:
(i) $140.0 million in proceeds of the Tranche A Term
Loans and $100.0 million in proceeds of the Tranche B
Term Loans; (ii) cash-on-hand of Penton of not less
than $8.0 million; (iii) $60.0 million in cash
proceeds of subordinated bridge notes (the "Bridge
Financing"); and (iv) $18.0 million in cash provided
by Alan Meckler in connection with the Investment.
GUARANTORS: All existing or future domestic subsidiaries of the
Borrower.
SECURITY: All extensions of credit to the Borrower and all
guaranties of its subsidiaries will be secured by all
existing and after-acquired personal property of the
Borrower and its subsidiaries, including a pledge of
all of the stock of all of its existing or future
domestic subsidiaries and of 66% of the stock of all
its existing or future foreign subsidiaries.
A-2
<PAGE> 8
The Bank Facilities shall also be secured by first
priority liens on all existing and after-acquired
real property fee and leasehold interests of the
Borrower and the subsidiary guarantors, subject to
exceptions to be agreed upon.
To effect such liens securing the Bank Facilities,
the Borrower and the subsidiary guarantors shall
execute and deliver to the Administrative Agent all
security agreements, pledge agreements, financing
statements, deeds of trust, mortgages and other
documents and instruments as are necessary to grant a
first priority perfected security interest in and
lien upon all such property of the Borrower and the
subsidiary guarantors, subject to customary permitted
liens to be agreed upon.
Negative pledge on all assets of Penton and its
subsidiaries, subject to permitted liens to be agreed
upon.
INTEREST RATES: All amounts outstanding under the Bank Facilities
shall bear interest, at Penton's option, at the
spreads over the Base Rate or the reserve adjusted
Euro-dollar Rate set forth on Schedule I; after six
months after the Closing Date, spreads on amounts
outstanding under the Revolving Facility and the
Tranche A Term Loans will be based on the Borrower's
ratio of total debt to EBITDA (the "Leverage Ratio"),
with such spreads to be determined.
INTEREST PAYMENTS: Quarterly for Base Rate Loans; on the last day of
selected interest periods (which shall be 1, 2, 3 and
6 months) for Euro-dollar Loans (and at the end of
every three months, in the case of interest periods
of longer than three months) and upon prepayment, in
each case payable in arrears and computed on the
basis of a 360-day year (365-day year for Base Rate
Loans).
INTEREST RATE Within 90 days after the Closing Date, Penton will
PROTECTION: obtain interest rate protection, pursuant to interest
rate swaps, caps or other similar arrangements
satisfactory to DLJ and the Administrative Agent,
against increases in interest rates (above a per
annum rate to be specified by DLJ and the
Administrative Agent) with respect to a notional
amount equal to not less than 50% of the Term Loans
outstanding on such funding date, such arrangements
to remain in effect for a period of not less than two
years thereafter.
A-3
<PAGE> 9
LETTER OF CREDIT FEE: The letter of credit fee shall be a percentage equal
to the applicable margin for Euro-dollar Loans under
the Revolving Credit Facility, which shall be shared
by all Lenders, and an additional 0.25% per annum,
which shall be retained by the Lender issuing the
letter of credit, based upon the applicable
percentage multiplied by the amount available from
time to time for drawing under such letter of credit.
Customary drawing and amendment fees will be charged
by each issuing Lender.
COMMITMENT FEES: Revolving Credit Facility: Commitment fees equal to
0.50% per annum times the daily average unused
portion of the Revolving Credit Facility shall accrue
from the Closing Date and shall be computed on the
basis of a 360-day year and payable quarterly in
arrears and upon the maturity or termination of the
Revolving Credit Facility. After six months, the
commitment fee percentage will be based on the
Leverage Ratio (percentages to be determined).
Delayed Draw Loans: Commitment fees equal to the per
annum spread over the reserve adjusted Euro-dollar
rate for the Tranche A Term Loans times the daily
average unused portion of the Tranche A Term Loans
shall accrue from the Closing Date and shall be
computed on the basis of a 360-day year and payable
upon the funding of the Delayed Draw Loans or
termination of the commitment to fund the Delayed
Draw Loans.
VOLUNTARY PREPAYMENTS The Bank Facilities may be prepaid in whole or in
AND COMMITMENT part without premium or penalty (Euro-dollar Loans
REDUCTIONS: prepayable only on the last days of related interest
periods or Penton's prepayment of related breakage
fees) and the Lenders' commitments relative thereto
reduced or terminated upon such notice and in such
amounts as may be agreed upon. Voluntary prepayments
of the Term Loan Facility shall be applied on a pro
rata basis to the Tranche A and Tranche B Term Loans
and shall reduce scheduled amortization payments on a
pro rata basis.
MANDATORY PREPAYMENTS Penton shall prepay the loans under the Bank
AND COMMITMENT Facilities and/or the commitments under the Revolving
REDUCTIONS: Credit Facility shall be reduced (subject to certain
exceptions and basket amounts to be agreed upon) in
amounts equal to:
A-4
<PAGE> 10
ASSET SALE PROCEEDS: 100% of the net after-tax
proceeds of any property or assets of the Borrower or
any of its subsidiaries, other than (i) net cash
proceeds of sales or other dispositions of inventory
in the ordinary course of business and (ii), if no
default or event of default has occurred and is
continuing, proceeds (not to exceed amounts to be
agreed upon) reinvested in assets of the Borrower or
a subsidiary within 180 days of receipt thereof,
payable no later than the first business day
following the date of receipt;
PROCEEDS OF EQUITY OFFERINGS: 100% of the net cash
proceeds received from the issuance of equity
securities of Penton or any of its subsidiaries (or
50% of such net cash proceeds after the Leverage
Ratio is less than 4.0:1.0) (other than proceeds used
to refinance in its entirety any bridge financing
incurred at the time of the Acquisition), payable no
later than the first business day following the date
of receipt;
PROCEEDS OF DEBT ISSUANCES: 100% of the net cash
proceeds received from certain issuances of debt
securities by Penton or any of its subsidiaries
(other than proceeds used to refinance in its
entirety any bridge financing incurred at the time of
the Acquisition), payable no later than the first
business day following the date of receipt;
EXCESS CASH FLOW: 50% of excess cash flow (to be
defined) for each fiscal year, payable within 90 days
after the end of the applicable fiscal year.
All mandatory prepayment amounts shall be applied
first to the prepayment of the Term Loan Facility
and thereafter to the prepayment of the Revolving
Credit Facility and the reduction of the commitments
thereunder. All such mandatory prepayments of the
Term Loans shall be applied pro rata to each tranche
and shall reduce scheduled amortization payments on a
pro rata basis.
Notwithstanding the foregoing, in the case of any
mandatory prepayment to be applied to the Tranche B
Term Loans, Penton may elect to offer the holders
thereof the opportunity to waive the right to receive
the amount of such mandatory prepayment. In the event
any such holders elect to waive such right, 100% of
the amount that would otherwise have been applied as
a mandatory prepayment of the Tranche B Term Loans of
such holders shall be used to pay the Tranche A Term
Loans and, if no amounts under the Tranche A Term
Loans are outstanding, amounts outstanding under the
Revolving Credit Facility.
A-5
<PAGE> 11
REPRESENTATIONS Customary and appropriate, including without
AND WARRANTIES: limitation due organization and authorization,
enforceability, financial condition, no material
adverse changes, title to properties, liens,
litigation, payment of taxes, no material adverse
agreements, compliance with laws and licensing
requirements, employee benefit liabilities,
environmental liabilities, perfection and priority of
liens securing the Bank Facilities, full disclosure,
and the accuracy of all representations and
warranties in the definitive acquisition Documents.
COVENANTS: Customary and appropriate affirmative and negative
covenants, including but not limited to limitations
on other indebtedness, liens, investments,
guarantees, restricted junior payments (dividends,
redemptions and payments on subordinated debt),
mergers and acquisitions, sales of assets, capital
expenditures, leases, transactions with affiliates,
conduct of business and other provisions customary
and appropriate for financings of this type,
including exceptions and baskets to be mutually
agreed upon. Financial performance covenants will
include a minimum fixed charge coverage test, a
minimum interest coverage test, minimum EBITDA test
and a maximum Leverage Ratio.
EVENTS OF DEFAULT: Customary and appropriate (subject to customary and
appropriate grace periods), including without
limitation failure to make payments when due,
defaults under other material agreements or
instruments of indebtedness, noncompliance with
covenants, breaches of representations and
warranties, bankruptcy, judgments in excess of
specified amounts, invalidity of guaranties,
impairment of security interests in collateral, and
"changes of control" (to be defined in a mutually
agreed upon manner).
CONDITIONS TO ALL In addition to the conditions set forth in ANNEX C,
BORROWINGS: the conditions to all borrowings will include
requirements relating to prior written notice of
borrowing, the accuracy of representations and
warranties, and the absence of any default or
potential event of default, and will otherwise be
customary and appropriate for financings of this
type.
II. MISCELLANEOUS
INDEMNIFICATION: Penton shall indemnify the Lead Arranger, Agents,
each Lender and each of their respective affiliates,
directors, officers, agents and employees from and
against any losses, claims, damages, liabilities and
other expenses in a manner customary for financings
of this type.
A-6
<PAGE> 12
SYNDICATION: A syndicate of financial institutions will be
arranged by the Lead Arranger. Penton shall cooperate
with the Lead Arranger in the syndication of the Bank
Facilities (such cooperation to include, without
limitation, participating in meetings with the
Lenders and assisting in the preparation of a
Confidential Information Memorandum and other
materials to be used in connection with such
syndication) and shall provide and cause their
respective advisors to provide all information
reasonably deemed necessary by the Lead Arranger to
successfully complete such syndication.
The Lenders may assign all or, in an amount of not
less than $3.0 million (or such lesser amount as may
constitute the assigning Lender's entire commitment),
any part of their shares of the Bank Facilities to
their affiliates, to other Lenders, or to one or more
banks or other entities that are eligible assignees
(to be defined in the Definitive Financing Documents)
which are acceptable to Penton and the Syndication
Agent and the Administrative Agent, such consent not
to be unreasonably withheld, and upon such assignment
any such affiliate, bank or entity shall become a
Lender for all purposes of the Definitive Financing
Documents; PROVIDED that assignments made to
affiliates and other Lenders shall not be subject to
the $3.0 million minimum assignment requirement. The
Lenders will have the right to sell participations,
subject to customary limitations on voting rights, in
their shares of the Bank Facilities.
REQUISITE LENDERS: Requisite Lenders shall mean Lenders holding in the
aggregate more than 50% of the commitments under the
Bank Facilities.
TAXES, RESERVE All payments are to be made free and clear of any
REQUIREMENTS & present or future taxes (other than franchise taxes
INDEMNITIES: and taxes on overall net income), imposts,
assessments, withholdings, or other deductions
whatsoever. Foreign Lenders shall furnish to the
Administrative Agent (for delivery to Penton)
appropriate certificates or other evidence of
exemption from U.S. federal income tax withholding.
Penton shall indemnify the Lenders against all
increased costs of capital resulting from reserve
requirements or otherwise imposed, in each case
subject to customary increased costs, capital
adequacy and similar provisions.
GOVERNING LAW AND Penton will submit to the non-exclusive jurisdiction
JURISDICTION: and venue of the federal and state courts of the
State of New York and will waive any right to trial
by jury. New York law shall govern the Definitive
Financing Documents.
A-7
<PAGE> 13
Counsel to the Lead O'Melveny & Myers LLP.
Arranger and DLJ:
A-8
<PAGE> 14
Schedule I
Interest Rate Provisions
Subject to the provisions of the Commitment Letter to which this
Schedule I is attached with respect to possible changes in structure, terms and
pricing to assure a successful syndication of the Bank Facilities, interest
rates on amounts outstanding under the Bank Facilities will be as follows:
A. For the first six months after the Closing Date, for Tranche A Term
Loans and the loans made under the Revolving Credit Facility:
(i) at the Base Rate plus 1.75% per annum; or
(ii) at the reserve adjusted Euro-dollar Rate plus 2.75% per annum.
After six months, the rates on the Tranche A Term Loans and the loans
made under the Revolving Credit Facility will be based on the
Leverage Ratio.
B. For Tranche B Term Loans:
(i) at the Base Rate plus 2.50% per annum; or
(ii) at the reserve adjusted Euro-dollar Rate plus 3.50% per annum.
Loans outstanding under the swingline facility shall bear interest at
the rate otherwise applicable to Base Rate Loans under the Revolving Credit
Facility minus the commitment fee percentage and such outstanding loans shall
not constitute usage of the Revolving Credit Facility for purposes of
calculating the commitment fee.
As used herein, the terms "Base Rate" and "reserve adjusted Euro-dollar
Rate" shall have meanings customary and appropriate for financings of this type,
and the basis for calculating accrued interest and the interest periods for
loans bearing interest at the reserve adjusted Euro-dollar Rate shall be
customary and appropriate for financings of this type. After the occurrence and
during the continuation of an event of default, interest shall accrue at a rate
equal to the rate on loans bearing interest at the rate determined by reference
to the Base Rate, plus an additional two percentage points (2.00%) per annum and
shall be payable on demand.
I-1
<PAGE> 15
ANNEX-B
-------
SUMMARY OF TERMS
OF THE
BRIDGE FACILITY
B-1
<PAGE> 16
SUMMARY OF TERMS AND CONDITIONS
Set forth below is a summary of the terms of each of the Bridge Notes
and the conditions to the obligation of DLJ Bridge to purchase any Bridge Notes.
Capitalized terms used herein and not otherwise defined have the meaning set
forth in the Commitment Letter to which this Summary of Terms and Conditions is
attached and of which it forms a part.
SENIOR SUBORDINATED INCREASING RATE NOTES
-----------------------------------------
Issuer: Penton
Issue: Senior Subordinated Increasing Rate Notes
(the "Bridge Notes").
Use of Proceeds: Proceeds will be used to finance the
consummation of the Transaction.
Principal Amount: Up to $60,000,000.
Price: 100% of principal amount.
Interest Rate: Interest shall be payable at the greater of
the following on the closing date and at
the beginning of each quarterly period
thereafter: (i) the prime rate plus 375
basis points, increasing by an additional
50 basis points at the end of each
subsequent three month period for so long
as the Bridge Notes are outstanding;
(ii) the Treasury Rate (as defined below)
plus 775 basis points, increasing by an
additional 50 basis points at the end of
each subsequent three month period for so
long as the Bridge Notes are outstanding;
and (iii) the DLJ High Yield Index Rate plus
75 basis points, increasing by an
additional 50 basis points at the end of
each subsequent three month period for so
long as the Bridge Notes are outstanding.
For purposes of this Summary of Terms and
Conditions, the "prime rate" means the
prime or reference rate as announced from
time to time by The Bank of New York and
the "Treasury Rate" means the rate
applicable to the most recent auction of
direct obligations of the United States
having a maturity closest to the Bridge
Notes, as published by the Board of
Governors of the Federal Reserve System.
Notwithstanding anything to the contrary set
forth above, at no time shall the per annum
interest rate on the Bridge Notes exceed
nineteen percent (19.00%), nor shall the per
annum interest rate on the Bridge Notes be
lower than twelve percent (12.00%). In
addition, that portion, if any, of any
interest payment representing a per annum
interest rate in excess of seventeen percent
(17.00%) may be paid by increasing the
principal amount of the Bridge Notes by an
amount equal to such excess portion of
interest.
Maturity: The Bridge Notes will mature on the first
anniversary of the date of funding (the
"First Anniversary") of the Bridge Notes
(the "Funding Date"), provided however, that
the maturity of the Bridge Notes will be
automatically extended until the date which
is six (6) months after the date of the
original final stated maturity of the Bank
Facilities if, on the first Anniversary, the
following conditions are met: (i) there
shall exist no default under the Bridge
Notes; (ii) there shall exist no default
under the Bank Facilities or any other debt
<PAGE> 17
instrument of Penton or any of its
subsidiaries; (iii) all fees and expenses
due to DLJ Bridge and the Lead Arranger as
of such date shall have been paid in full.
Mandatory Redemption: Penton will be required to redeem or
permanently prepay the Bridge Notes, subject
to certain agreed exceptions, with (i) the
net proceeds from the issuance of any debt
or equity securities or other indebtedness
by Penton; or (ii) the net proceeds from
asset sales (to be defined) by Penton not
required to prepay the Bank Facilities; in
each case at par plus accrued interest;
provided, that the redemption price shall be
one hundred and three percent (103.0%) of
par plus accrued interest if the Bridge
Notes are redeemed with or in anticipation
of funds raised by any means other than a
transaction in which Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC")
has acted as sole manager or sole agent to
Penton; provided further, that after the
First Anniversary, the Bridge Notes may be
redeemed or prepaid at 100% of principal
plus accrued interest unless (a) (i) prior
to the First Anniversary delivered to Penton
a proposal to market securities of Penton to
one or more financially responsible
institutional investors (or a commitment
from DLJSC to underwrite the public sale of
securities of Penton, on a firm commitment
basis), on financial and other terms and
conditions no less favorable to Penton than
those generally available in the United
States capital markets to issuers of
securities having a creditworthiness
comparable to that of Penton, in an amount
sufficient to redeem all the Bridge Notes (a
"Bona Fide Proposal") and (ii) Penton did
not authorize DLJSC to execute such Bona
Fide Proposal; it being understood that no
such proposal shall be deemed to be a Bona
Fide Proposal if DLJSC fails to execute such
proposal on substantially the terms
proposed, or (b) Penton and DLJSC have
agreed in their reasonable judgment that no
such Bona Fide Proposal could be made.
Interest Payments: Interest on the Bridge Notes will be payable
in cash, quarterly in arrears (except as
provided above).
Optional Redemption: The Bridge Notes will be callable, in whole
or in part, upon not less than 10 days
written notice, at the option of Penton at
any time at par plus accrued interest to the
redemption date; provided, that the
redemption price shall be one hundred three
percent (103.0%) of par plus accrued
interest if the Bridge Notes are refunded
(whether at the time of redemption or
maturity) with or in anticipation of funds
raised by any means other than a transaction
in which DLJSC has acted as sole agent or
sole underwriter to Penton; provided
however, that after the First Anniversary,
the Bridge Notes may be redeemed or prepaid
at 100% of principal plus accrued interest
unless DLJSC has delivered a Bona Fide
Proposal or Penton and DLJSC have agreed in
their reasonable judgment that no such Bona
Fide Proposal could be made.
Commencing on the earliest to occur of (i)
the First Anniversary and (ii) refusal by
Penton to execute a Bona Fide Proposal (such
earlier date, the "Fixed Rate Sale Date"),
DLJ Bridge shall have the right to resell
the Bridge Notes on a fixed rate basis. In
the event that DLJ Bridge elects to proceed
with such fixed rate sale, the interest rate
on any Bridge Notes may be fixed at a rate
to be determined by DLJ Bridge provided that
such rate will not exceed nineteen percent
(19%). In conjunction with such fixed rate
sale, DLJ Bridge may use any unused Escrowed
Warrants, as defined below, that are in the
reasonable judgment of DLJ Bridge necessary
to facilitate such sale. In such event, any
<PAGE> 18
Bridge Notes will be callable thereafter at
par plus accrued interest plus a make-whole
premium calculated on the basis of a
discount rate equal to the then Treasury
Rate plus one-half percent. DLJ Bridge
agrees that it shall give Penton ten days
notice prior to fixing the rate of the
Bridge Notes.
Subordination: The Bridge Notes will be subordinated to the
Bank Facilities and certain refinancings
thereof (collectively, the "Designated
Senior Debt"). See Exhibit B to the
Commitment Letter.
Guarantees: The subsidiaries of Penton that are
guarantors under the Bank Facilities will
issue senior subordinated guarantees in
favor of the Bridge Notes.
Registration Rights: Penton will file, and will use its best
efforts to cause to become effective, a
"shelf" registration statement with respect
to the Bridge Notes as soon as practicable
after the Fixed Rate Sale Date. Penton will
keep the registration statement for the
Bridge Notes effective until all of the
Bridge Notes have been redeemed or sold. If
a "shelf" registration statement for the
Bridge Notes has either (i) not been filed
within 30 days after the Fixed Rate Sale
Date, or (ii) not been declared effective 90
days after the Fixed Rate Sale Date, the
interest rate on the Bridge Notes shall be
increased by 100 basis points until such
time as such registration statement has
become effective. The interest rate on the
Bridge Notes shall also be increased by 100
basis points for any period of time
following the effectiveness of such
registration statement that the registration
statement is not available for resales
thereunder. All incremental payments made as
a result of an increase in the interest rate
pursuant to this section shall be deemed to
be liquidated damages and shall be paid on
the relevant interest payment date
thereafter. In addition, the holders of the
Bridge Notes will have the right to
"piggyback" in the registration of any debt
or equity securities which are registered by
Penton unless all of the Bridge Notes will
be redeemed from the proceeds of such
securities.
Duration Fee: On each of the six-month anniversary of the
Funding Date, the nine-month anniversary of
the Funding Date and the First Anniversary,
Penton shall pay to the holders of the
Bridge Notes a non-refundable cash duration
fee (the "Duration Fee") in an amount equal
to one percent (1.00%) of the principal
amount of the Bridge Notes outstanding on
such date.
Right to Resell Bridge Financing: DLJ Bridge shall have the absolute and
unconditional right to resell or assign the
Bridge Notes in compliance with applicable
law to any third party at any time.
Representations and Warranties: The Securities Purchase Agreement will
contain representations and warranties to
DLJ Bridge and holders of the Bridge Notes
which are usual and customary for
transactions of this nature or required by
DLJ Bridge for this Transaction in
particular, including, but not limited to,
(i) Corporate Existence and Power, (ii)
Authorization, Execution and Enforceability
of Material Agreements; (iii) Governmental
Authorization; (iv) Non-Contravention of
Laws or Material Agreements; (v) Financial
Information; (vi) Litigation; (vii) Taxes;
(viii) Subsidiaries; (ix) Not an Investment
Company; (x) ERISA; (xi) Environmental;
(xii) Permits; (xiii) Leases; (xiv) Full
Disclosure; (xv) Capitalization; (xvi)
Solicitation; Access to Information; (xvii)
Absence of Any Undisclosed Liabilities;
(xviii) Historical and Pro Forma Financial
Statements; (xix) No Material Adverse
Change; and (xx) Governmental Regulations.
<PAGE> 19
Covenants: The Securities Purchase Agreement will
contain usual and customary covenants for
securities of this nature or required by DLJ
Bridge including but not limited to (i)
Furnishing of Information; (ii) Use of
Proceeds; (iii) Wholly Owned Subsidiaries;
(iv) Compliance with Laws; (v) Restrictions
on Indebtedness; (vi) Restrictions on
Dividends and Redemptions and Repayment of
Subordinated Debt or Pari Passu Debt; (vii)
Restrictions on the Sale of Assets; (viii)
Restrictions on Business Activities; (ix)
Restrictions on Transactions with
Affiliates; (x) Restrictions on Merger or
Consolidation; (xi) Change of Control, (xii)
Restrictions on Liens; (xiii) Refinancing of
Bridge Financing and (xiv) Restrictions on
Investments and Acquisitions and (xv)
additional covenants that may include
covenants regarding accelerated buy-back or
sinking fund requirements.
Event of Default: An Event of Default as defined for the
Bridge Notes will include but not be limited
to: (i) the failure of Penton to pay
principal on the Bridge Notes when due; (ii)
the failure of Penton to pay interest or
fees on the Bridge Notes and the continuance
of such failure for 5 days; (iii) the
failure of Penton to comply with any other
provision, condition, covenant, promise,
warranty or representation in the Securities
Purchase Agreement or the Bridge Notes,
provided that in certain cases such failure
continues for 30 days after notice; (iv) a
default under any instrument or instruments
governing indebtedness of Penton when such
default causes such indebtedness to
accelerate and become due prior to its
stated maturity or failure to pay any such
indebtedness at its stated maturity in an
aggregate principal amount exceeding a
threshold amount to be agreed; (v) final
judgments aggregating in excess of a
threshold amount to be agreed rendered
against Penton and not discharged or stayed
within 60 days; (vi) certain events of
bankruptcy, insolvency or reorganization
with respect to Penton; (vii) material
misrepresentations in the Securities
Purchase Agreement; (viii) unenforceability
of any Guarantee; (ix) certain ERISA
defaults; (x) breach under the Engagement
Letter (defined below) and payment of fees
to DLJ Bridge and the Lead Arranger
described in the Fee Letter or in the
Engagement Letter; (xi) Change of Control of
Penton; or (xii) a default or failure to
satisfy and/or perfect liens pursuant to the
collateral documents required in the Bridge
Note documentation.
In case an Event of Default shall occur and
be continuing, the holders of at least 33
1/3% (a majority where DLJ Bridge, or its
affiliates, hold a majority of the aggregate
principal amount of the Bridge Notes) in
aggregate principal amount of the Bridge
Notes then outstanding, by notice in writing
to Penton and the administrative agent or
lenders under the Bank Facilities, may
declare the principal of and all accrued
interest on all Bridge Notes to be due and
payable immediately, provided that for so
long as the Designated Senior Debt is
outstanding, such acceleration shall not
become effective until the earlier of (i)
five days after the notice of acceleration
is received or (ii) the date on which the
Designated Senior Debt is accelerated. If an
Event of Default specified in clause (vi)
occurs, the principal of and accrued
interest on the Bridge Notes will be
immediately due and payable without any
notice, declaration or other act on the part
of the holders of the Bridge Notes. An
acceleration notice may be annulled and past
defaults (except for monetary defaults not
yet cured) may be waived by the holders of a
majority in aggregate principal amount of
the Bridge Notes. In the event that the
Bridge Notes have been accelerated as a
result of an acceleration under the
Designated Senior Debt and such acceleration
of Designated Senior Debt is rescinded
within five days, the acceleration under the
Bridge Notes will be automatically
rescinded.
<PAGE> 20
If an Event of Default shall occur and for
as long as such Event of Default shall be
continuing, DLJ Bridge shall have the right
to appoint one (1) representative to sit on
Penton's Board of Directors provided,
however, that such right shall terminate if
DLJ Bridge no longer retains at least 50% of
the outstanding Bridge Notes.
Equity Amount Escrowed: On the Funding Date, warrants (the "Escrowed
Warrants") representing seven and one-half
percent (7.5%) of the fully-diluted common
stock of Penton will be placed in an escrow
account.
The Escrowed Warrants will be exercisable at
a price equal to $0.01 per share for a
period of ten (10) years from the date such
Escrowed Warrants are released from escrow
and will have customary anti-dilution
provisions, tag along rights and demand and
"piggy-back" registration rights.
Certain amounts of the Escrowed Warrants
exercisable into the percentage of Penton's
fully-diluted common stock as set forth in
Column B shall be released from escrow in
accordance with the dates outlined in Column
A. Such released warrants shall be
contributed to the holders of the Bridge
Notes pro rata in accordance with the
principal amount of Bridge Notes held by
each holder and such holders shall be
entitled to retain such released Escrowed
Warrants.
A B
-------------------------- -----------
Six-month anniversary of 2.5%
Funding Date
Nine-month anniversary of 2.5%
Funding Date
First Anniversary 2.5%
----
7.5%
===
Any Escrowed Warrants to which the holders
of the Bridge Notes are not entitled at the
time of the permanent retirement of 100% of
the Bridge Notes as set forth above shall be
returned to Penton for cancellation.
Escrow: The Escrowed Warrants will be held, undated,
in escrow by Snoga, Inc., an affiliate of
DLJ Bridge, from the Funding Date.
Defeasance Provision: None.
Governing Law: New York.
DLJ Bridge Legal Counsel: Davis Polk & Wardwell
<PAGE> 21
ANNEX C
-------
The following summarizes certain conditions to the funding of the
Bank Facilities and the purchase of the Bridge Notes described in the financing
letter, and ANNEX A and ANNEX B thereto, to which this ANNEX C is attached.
Terms used without definition have the meanings set forth in such financing
letter and ANNEX A and ANNEX B.
CONDITIONS
CERTAIN CONDITIONS Conditions precedent to the initial funding
PRECEDENT TO INITIAL of the Bank Facilities and the purchase of
FUNDING AND PURCHASE: the Bridge Notes will include, without
limitation, the following:
1. SATISFACTORY DOCUMENTATION. The definitive
documentation evidencing the Bank Facilities
(the "Definitive Bank Financing Documents")
shall be prepared by counsel to DLJ and
shall be documentation typically used in
financings similar to the Bank Facilities
under similar market conditions in form and
substance satisfactory to the Lead Arranger,
the Agents and the Lenders. The definitive
documentation evidencing the Bridge Notes
(the "Definitive Bridge Financing
Documents") shall be prepared by counsel to
DLJ Bridge and shall be documentation
typically used in financings similar to the
Bridge Financing under similar market
conditions in form and substance
satisfactory to DLJ Bridge. The Definitive
Bank Financing Documents and the Definitive
Bridge Financing Documents are sometimes
collectively referred to as the "Definitive
Financing Documents".
2. CORPORATE STRUCTURE, OWNERSHIP. The
corporate, tax, capital and ownership
structure of the Borrower and its
subsidiaries shall be substantially
consistent with such structure as in
existence on the date the financing letter
to which this ANNEX C is attached or as is
otherwise reasonably satisfactory to the
Lead Arranger, DLJ Bridge, the Agents and
the Lenders.
3. ACQUISITION DOCUMENTATION. The documentation
with respect to the Acquisition (the
"Definitive Acquisition Documents") shall be
in form and substance satisfactory to the
Lead Arranger and DLJ Bridge and the
Definitive Acquisition Documents shall be in
full force and effect. The draft of the
Agreement and Plan of Merger (draft
C-1
<PAGE> 22
dated 10/2/98) and the schedules thereto
(draft dated 10/5/98) delivered to the Lead
Arranger and DLJ Bridge is satisfactory to
the Lead Arranger and DLJ Bridge.
4. FEES. The Lenders, the Lead Arranger, DLJ
Bridge and the Agents shall have received
all fees and expenses required to be paid on
or before the Closing Date.
5. FINANCINGS:
Condition to Bank Facilities: On the Closing
Date, Penton shall have received the
proceeds of not less than $60.0 million of
the Bridge Financing. The Bridge Financing
shall have the terms substantially as set
forth on ANNEX B.
Condition to Bridge Financing. On the
Closing Date Penton shall have received
proceeds of not less than $240.0 million of
the Term Facilities and the Revolving
Facility shall be available to Penton. The
Bank Facilities shall have the terms
substantially as set forth in ANNEX A.
6. CONSUMMATION OF THE TRANSACTIONS. On the
Closing Date, the Borrower shall have
completed the Tender Offer pursuant to the
Definitive Acquisition Documents, no
provision of which shall have been
amended, supplemented, waived or otherwise
modified in any material respect without the
prior written consent of the Lead Arranger,
DLJ Bridge and the Agents. The Acquisition
shall include the cash payment of no more
than $274.0 million to shareholders of the
Target and paying of existing indebtedness
of the Borrower of approximately $40.0
million. Fees and expenses associated with
the Transactions shall not exceed $12.0
million. Alan M. Meckler shall have
completed the Investment.
7. EXISTING DEBT. No indebtedness of the
Borrower shall be outstanding after the
Closing Date other than the Bank Facilities
and the Bridge Notes, with exceptions to be
agreed upon.
8. CERTAIN APPROVALS AND AGREEMENTS. All
governmental and third party approvals
necessary or advisable in connection with
the Acquisition, the financings contemplated
thereby and the continuing operations of the
business of Penton, the Target and their
subsidiaries shall have been obtained and be
in full force and effect, and all applicable
waiting periods shall have expired without
any action being taken
C-2
<PAGE> 23
or threatened by any competent authority
which would restrain, prevent or otherwise
impose adverse conditions on the
Acquisition or the financing thereof, in
each case except for such governmental and
third party approvals the failure of which
to obtain would not, individually or in the
aggregate, have a material adverse effect
on the business, assets, properties
(including intangible properties),
condition (financial or otherwise), results
of operations, prospects (other than a
change in general economic conditions, but
including a change in the industry in which
Penton and its subsidiaries or the Target
and its subsidiaries operate), liabilities
or regulatory status of Penton and its
subsidiaries taken as a whole or of the
Target and its subsidiaries taken as a
whole (a "Material Adverse Effect") or have
a Material Adverse Effect on the parties'
ability to consummate the Acquisition
substantially on the terms and conditions
described herein.
9. SECURITY. The Administrative Agent, for the
benefit of the Lenders, shall have been
granted on the Closing Date a perfected
security interest in all assets to the
extent described above under the heading
"Security" and shall have received such
other reports, documents and agreements as
are customarily delivered in connection with
security interests in real property assets.
10. NO MATERIAL ADVERSE CHANGE. Since the date
of the most recent audited Financial
Statements delivered to the Lead Arranger
and DLJ Bridge, there shall have occurred no
material adverse change in the business,
assets, properties (including intangible
assets), condition (financial or otherwise),
results of operations, prospects (other
than a change in general economic
conditions, but including a change in the
industry in which Penton and its
subsidiaries or the Target and its
subsidiaries operate), liabilities or
regulatory status of Penton and its
subsidiaries taken as a whole or of the
Target and its subsidiaries taken as a whole
or in the facts and Information as
represented to date.
11. FINANCIAL DATA. DLJ Bridge and the Lenders
shall have received (i) a PRO FORMA balance
sheet of Penton and its subsidiaries as of
the Closing Date after giving effect to the
Acquisition and the financings contemplated
hereby, (ii) projected financial statements
(including balance sheets and statements of
operations, stockholders' equity and cash
flows of Penton and its subsidiaries) for
the ten-year period after the Closing Date,
(iii) consolidated financial
C-3
<PAGE> 24
statements as are customarily required for a
public sale of securities of Penton and its
subsidiaries, all of the foregoing to be in
form and substance satisfactory to the Lead
Arranger, DLJ Bridge, the Agents and the
Lenders, and (iv) consolidated financial
statements for each month after the date of
the most recent financial statements
delivered pursuant to clause (iii).
12. LITIGATION. There shall exist no pending or
threatened material litigation, proceedings
or investigations that purports to affect
the Transactions, the Bank Facilities or the
Bridge Financing that could reasonably be
expected to have a material adverse effect
on the Transactions, the Bank Facilities or
the Bridge Financing or that could
reasonably be expected to have a Material
Adverse Effect on Penton and its
subsidiaries taken as a whole or the Target
and its subsidiaries taken as a whole.
13. NO DISRUPTION OF FINANCIAL AND CAPITAL
MARKETS. After the date hereof, no "Market
Disruption Event" shall have occurred which
the Lead Arranger reasonably believes would
be expected to materially adversely affect
the syndication of the Bank Facilities or
which DLJ Bridge believes would be expected
to materially adversely affect the
refinancing of the Bridge Notes. A "Market
Disruption Event" shall mean: (i) any
suspension or limitation of trading in
securities generally on the New York Stock
Exchange (not including any suspension or
limitation of trading in any particular
security as a result of computerized trading
limits or any intraday suspension due to
"circuit breakers"), or any setting of
minimum prices for trading on such exchange;
(ii) any banking moratorium declared by U.S.
Federal or New York authorities; or (iii) a
decline by 15% or more in the S&P 500 from
the level of such index on the date of the
financing letter to which this Annex C is
attached.
14. ADDITIONAL INFORMATION. The Borrower shall
reasonably cooperate to enable the Lead
Arranger or DLJ Bridge and the other Lenders
to obtain information that becomes available
after the date of the commitment letter to
which this ANNEX C is attached and shall
make available members of senior management
for discussions of any such information. No
such information shall be materially
inconsistent in an adverse manner with the
information previously disclosed to the Lead
Arranger and DLJ Bridge.
C-4
<PAGE> 25
15. SOLVENCY. The Administrative Agent and DLJ
Bridge shall have received a certificate of
the chief financial officer of the Borrower,
in form and substance satisfactory to the
Lead Arranger, DLJ Bridge, the Agents and
the Lenders, supporting the conclusions
that, after giving effect to the Acquisition
and the related transactions contemplated
hereby, The Borrower will not be insolvent
or be rendered insolvent by the indebtedness
incurred in connection therewith, or be left
with unreasonably small capital with which
to engage in its businesses, or have
incurred debts beyond its ability to pay
such debts as they mature.
16. CUSTOMARY CLOSING DOCUMENTS. All documents
required to be delivered under the
Definitive Financing Documents, including
customary financial statements (if
appropriate), legal opinions, corporate
records, documents from public officials and
officers' certificates, shall have been
delivered.
C-5
<PAGE> 26
ANNEX D
-------
INDEMNIFICATION PROVISIONS
Unless otherwise defined terms used herein shall have the meanings
assigned thereto in the commitment letter (the "Commitment Letter") and term
sheets (the "Term Sheets" to which this ANNEX D is attached.
Penton Media, Inc. (the "Indemnitor") shall pay all fees, costs
and expenses (including all out-of-pocket costs and expenses arising in
connection with the syndication of the Bank Facilities, the purchase of the
Bridge Notes and any due diligence investigation performed by the Lead
Arranger, DLJ Bridge or either Agent, and the fees and expenses of legal
counsel to the Lead Arranger and the Agents, including any local or foreign
legal counsel) arising in connection with the negotiation, preparation,
execution, delivery or administration of the Commitment Letter, the Term
Sheets, the Fee Letter and the Definitive Financing Documents, and the
Indemnitor shall be obligated to pay such fees and expenses whether or not
Definitive Financing Documents are executed or delivered or the Transactions
are consummated.
In addition, the Indemnitor hereby indemnifies and holds harmless
all Indemnified Parties (as defined below) from and against any losses, claims,
damages, judgments, assessments, costs and other liabilities (collectively
"Liabilities"), and will reimburse each Indemnified Person for all fees and
expenses (including the reasonable fees and expenses of counsel) (collectively,
"Expenses") as they are incurred in investigating, preparing, pursuing or
defending any claim, action, proceeding or investigation, whether or not in
connection with pending or threatened litigation or arbitration and whether or
not any Indemnified Person is a party (collectively, "Actions"), arising out of
or in connection with any actions of the Indemnitor or any of its affiliates,
any of the statements contained in the Commitment Letter, Fee Letter or Term
Sheets or relating to the extension of credit, the purchase of the Bridge Notes
or any of the other Transactions contemplated by the Commitment Letter, Fee
Letter or Term Sheets or any use or intended use of the proceeds of such credit
extensions or Bridge Notes, including, but not limited to, losses, claims,
damages, liabilities or expenses arising out of or based upon any untrue
statement or any alleged untrue statement of a material fact or any omission or
any alleged omission to state a material fact in any of the disclosure or
offering or confidential information documents (the "Disclosure Documents")
pertaining to any of the Transactions, including the offer and sale of the
Bridge Notes, the execution, syndication and funding of the Bank Facilities,
and any eventual resale or refinancing of any Bridge Notes or the Bank
Facilities; provided that the Indemnitor will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgement of a court of competent jurisdiction which is not longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above. The Indemnitor also agrees to
reimburse each Indemnified Person for all Expenses as they are incurred in
connection with enforcing such Indemnified Person's rights under the Financing
Letter and the Fee Letter (including, without limitation, its rights under this
ANNEX D). "Indemnified Party" shall mean each of the Lead
D-1
<PAGE> 27
Arranger, the Agents, the Lenders, DLJ Bridge, each affiliate of any of the
foregoing, each other person controlling any of the foregoing within the meaning
of either Section 15 of the Securities Act of 1933, as amended, or Section 20
of the Securities Exchange Act of 1934, as amended, and the respective partners,
agents, employees, officers and directors of any of the foregoing.
In case any Action shall be brought against any Indemnified Party
with respect to which indemnity may be sought against the Indemnitor under this
agreement, such Indemnified Party shall promptly notify the Indemnitor in
writing and the Indemnitor shall, if requested by the Indemnified Party or if
the Indemnified Party desires to do so, assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party and
payment of all reasonable fees and expenses. The failure to so notify the
Indemnitor shall not affect any obligations the Indemnitor may have to such
Indemnified Party hereunder or otherwise unless the Indemnitor is materially
adversely affected by such failure. The Indemnified Party shall have the right
to employ separate counsel in such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party, unless (i) the Indemnitor has failed to assume the
defense and employ counsel reasonably satisfactory to the Indemnified Party or
(ii) the named parties to any such Action (including impleaded parties) include
the Indemnitor and such Indemnified Party, and the Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnitor, in which case, if such Indemnified Party notifies the Indemnitor in
writing that it elects to employ separate counsel at the expense of the
Indemnitor, the Indemnitor shall not have the right to assume the defense of
such Action or proceeding on behalf of such Indemnified Party, provided,
however, that the Indemnitor shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the fees and expenses of more
than one such firm of separate counsel, in addition to any local counsel, which
counsel shall be designated by DLJ. The Indemnitor shall not be liable for any
settlement of any such action effected without the written consent of the
Indemnitor (which shall not be unreasonably withheld) and the Indemnitor agrees
to indemnify and hold harmless the Indemnified Parties from and against any
Liability by reason of settlement of any action effected with the consent of
the Indemnitor. In addition. the Indemnitor will not, without the prior written
consent of DLJ, settle or compromise or consent to the entry of any judgement
in or otherwise seek to terminate any pending or threatened Action in respect
to which indemnification or contribution may be sought hereunder (whether or
not DLJ is a party thereto) unless such settlement, compromise, consent or
termination includes an express unconditional release of all Indemnified
Parties, satisfactory in form and substance to DLJ, from all liability arise
out of such Action.
If, for any reason, the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Indemnitor shall contribute to
the amount paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate as to reflect the relative benefits received by the Indemnitor on
one hand and by the Indemnified Party on the other from the Transactions or (ii)
if the allocation provided by clause (i) is not permitted under applicable law,
in such proportion as is appropriate
D-2
<PAGE> 28
to reflect not only the relative benefits received by the Indemnitor on the one
hand and the Indemnified Party on the other, but also the relative fault of the
Indemnitor and the Indemnified Party, as well as any other relevant equitable
considerations. Notwithstanding the provisions of this ANNEX D, the aggregate
contribution of all Indemnified Parties shall not exceed the amount of fees
actually received pursuant to the Fee Letter executed in connection with the
Commitment Letter. It is hereby further agreed that the relative benefits to
the Indemnitor on the one hand and the Indemnified Parties on the other with
respect to any Transaction shall be deemed to be in the same proportion as (i)
the total value of the Transaction bears to (ii) the fees paid to the
Indemnified Parties with respect to such Transaction. The relative fault of the
Indemnitor on the one hand and the Indemnified Party on the other with respect
to the Transactions shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of material fact or the omission
or alleged omission to state a material fact related to information supplied by
Indemnitor or by the Indemnified Parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act of 1933) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
The Indemnitor also agrees that no Indemnified Person shall have
any liability (whether direct or indirect, in contract or tort or otherwise) to
the Indemnitor for or in connection with advice or services rendered or to be
rendered by any Indemnified Person pursuant to this Commitment Letter, the
Transactions or any Indemnified Person's actions or inactions in connection with
any such advice, services or transactions except for Liabilities (and related
Expenses) of the Indemnitor that are determined by a judgment of a court of
competent jurisdiction which is no longer subject to appeal or further review to
have resulted solely from such Indemnified Person's gross negligence or willful
misconduct in connection with any such advice, actions, inactions or services.
The foregoing provisions of this ANNEX D shall be (i) in addition
to any rights that any Indemnified Party may have at common law or otherwise,
(ii) shall survive the termination of the Commitment Letter, except as described
below, and (iii) shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Indemnified Party.
Any terms or provisions of this ANNEX D to the contrary
notwithstanding, upon (i) the execution and delivery of Definitive Financing
Documents by the Borrower, the Agents and the Lenders and by the Borrower and
DLJ Bridge and (ii) the making of the initial Loans under the Bank Facilities
and the purchase of the Bridge Notes, the terms and provisions of this ANNEX
D shall be superseded in their entirety by the terms and provisions of such
Definitive Financing Documents, and the terms and Provisions of this ANNEX D
shall be of no further force or effect.
D-3
<PAGE> 29
October 7, 1998
Penton Media, Inc.
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Thomas Kemp
Re: Bank Facilities and Bridge Financing for the
Leveraged Acquisition of Mecklermedia
Corporation
Ladies and Gentlemen:
Reference is made to our letter (the "Financing Letter") dated as
of even date herewith concerning the proposed leveraged acquisition of all of
the capital stock of Mecklermedia Corporation. All terms defined in the
Financing Letter shall have the same meanings when used herein. This letter will
supplement the Financing Letter by setting forth the arrangements relating to
compensation for certain services rendered and to be rendered by the Lead
Arranger, DLJ, DLJ Bridge and the Administrative Agent. You agree to pay the
following fees:
1. A financing fee equal to 2.125% of the $265.0 million
aggregate principal amount of the Bank Facilities shall be payable to the Lead
Arranger, such fee to be payable on the earlier of the Closing Date or the date
of consummation of the Acquisition. Such fee shall be payable to the Lead
Arranger in the event the Definitive Financing Documents are not executed and
delivered by the Borrower if, within twelve months of the date of this letter,
the Acquisition is consummated utilizing the proceeds of a similar financing to
the Bank Facilities and the Lead Arranger and DLJ were prepared in good faith to
close the Bank Facilities.
2. A commitment fee equal to 0.50% per annum accruing on a daily
basis of the $265.0 million aggregate principal amount of the Bank Facilities
shall be payable to DLJ on the earliest of the Closing Date, the date of
consummation of the Transactions or the date of the termination of the
commitments of DLJ set forth in the Financing Letter, and shall begin to accrue
upon your acceptance of this letter and the Financing Letter.
3. A structuring fee equal to $1.0 million shall be payable to
the Lead Arranger, $750,000 of which is payable on the date the financing fee is
payable pursuant to Section 1 above, and $250,000 of which is payable on the
date of your acceptance of the Financing Letter.
4. A bridge commitment fee equal to 1.75% of the $60.0 million
aggregate principal amount of the Bridge Notes shall be payable to DLJ Bridge,
such fee to be earned on the date of acceptance of the Financing Letter, but
payable on the date of consummation of the Acquisition or the date of
termination of the Definitive Acquisition Documents. A bridge takedown
<PAGE> 30
fee equal to 2.25% of the $60.0 million aggregate principal amount of the Bridge
Notes shall be payable upon purchase of the Bridge Notes.
5. An annual administrative fee to be mutually determined shall be
payable to the Administrative Agent, such fee to be payable in advance on the
Closing Date and annually in advance thereafter.
6. If you receive a break-up fee as a result of the failure of the
Acquisition to occur, a break-up fee equal to $1,000,000 shall be payable to the
Lead Arranger one Business Day following receipt thereof by you.
The Lead Arranger, DLJ Bridge and DLJ reserve the right to
allocate, in whole or in part, the fees payable under this letter to one or
more of their affiliates.
You acknowledge and agree that references to "this letter"
contained in the indemnification and confidentiality paragraphs of the
Financing Letter are understood to refer to the Financing Letter as
supplemented by this letter.
If you are in agreement with the foregoing, please sign and return
an enclosed counterpart of this letter concurrently with the execution and
delivery of the Financing Letter. The offer contained in this letter and in the
Financing Letter can only be accepted by your acceptance of both letters on or
before October 9, 1998.
This letter agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. This letter
agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
Very truly yours,
DLJ CAPITAL FUNDING, INC.
By: Eric S. Swanson
----------------------------
Title: Managing Director
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: Mark W. Lanigan
----------------------------
Title: Managing Director
<PAGE> 31
DLJ BRIDGE FINANCE, INC.
By: Eric S. Swanson
-------------------------------
Title: Managing Director
-----------------------------
AGREED AND ACCEPTED
this 7 day of October, 1998
PENTON MEDIA, INC.
By: /s/ Thomas L. Kemp
-------------------------------
Title: Chief Executive Officer
-----------------------------
<PAGE> 1
Exhibit C-1
September 23, 1998
Mr. Thomas Kemp
Chief Executive Officer
Penton Media Inc.
1100 Superior Avenue
Cleveland, OH 44144
Dear Mr. Kemp:
You have requested information from Mecklermedia Corporation (the
"Company") in connection with your consideration of a possible transaction with
the Company (a "Possible Transaction"). As a condition to our furnishing such
information to you, we are requiring that you agree, as set forth below, to
treat confidentially such information and any other information that the
Company, its agents or its representatives (including attorneys and financial
advisors) furnishes to you or your directors, officers, employees, agents,
advisors, prospective bank or institutional lenders, affiliates or
representatives of your agents, advisors or prospective lenders (all of the
foregoing collectively referred to as "your Representatives") who need to know
such information for the purpose of evaluating a Possible Transaction (it being
understood that your Representatives shall be informed by you of the
confidential nature of such information and shall be directed by you, and shall
each expressly agree, to treat such information confidentially in accordance
with this Agreement), whether furnished before or after the date of this letter,
and all notes, analyses, compilations, studies or other documents, whether
prepared by you or others, which contain or otherwise reflect such information
(collectively, the "Evaluation Material").
The term "Evaluation Material" does not include information which (i)
becomes generally available to the public other than as a result of a disclosure
by you or your Representatives, (ii) was available to you on a non-confidential
basis prior to its disclosure to you by the Company, its representatives or its
agents, or (iii) becomes available to you on a non-confidential basis from a
source other than the Company, its representatives or its agents, provided that
such source is not bound by a contractual, legal or fiduciary obligation with
the Company, its
<PAGE> 2
Mr. Thomas Kemp
September 23, 1998
Page 2
representatives or its agents or otherwise prohibited from transmitting the
information to you or your Representatives by a contractual, legal or fiduciary
obligation with the Company, its representatives or its agents.
It is understood that you may disclose any of the Evaluation Material
to those of your Representatives who require such material for the purpose of
evaluating a Possible Transaction, subject to the terms of this Agreement. You
agree that the Evaluation Material will be kept confidential by you and your
Representatives and, except with the specific prior written consent of the
Company or as expressly otherwise permitted by the terms hereof, will not be
disclosed by you or your Representatives. You further agree that you and your
Representatives will not use any of the Evaluation Material for any reason or
purpose other than to evaluate a Possible Transaction. You shall agree to be
responsible for any breach of this Agreement by any of your Representatives.
Without the prior written consent of the other party to this Agreement,
neither you and your Representatives nor the Company and its Representatives
will disclose to any person (other than their respective Representatives) (1)
the fact that the Evaluation Material has been made available to you or that you
have inspected any portion of the Evaluation Material, (2) the fact that any
discussions or negotiations are taking place concerning a Possible Transaction,
or (3) any of the terms, conditions or other facts with respect to any Possible
Transaction, including the status thereof, unless and only to the extent that
such disclosure (after using best efforts to avoid such disclosure and after
advising and consulting with the other party to this Agreement about such
party's intention to make, and the proposed contents of, such disclosure) is,
based on the advice of counsel reasonably acceptable to the Company, required by
applicable United States securities laws or by the New York Stock Exchange, in
your case, or the Nasdaq Stock Market, in the case of the Company. The term
"person" as used in this letter shall be broadly interpreted to include without
limitation any corporation, company, partnership and individual.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoena, Civil Investigative Demand or similar process) to disclose
any of the Evaluation Material, it is agreed that you or such Representative, as
the case may be, will provide the Company with prompt notice of such request(s)
so that it may seek an appropriate protective order or other appropriate remedy
and/or waive your or such Representative's compliance with the provisions of
this Agreement. You agree to assist the Company in taking any such steps to
protect the confidentiality of the Evaluation Material. In the event that such
protective order or
-2-
<PAGE> 3
Mr. Thomas Kemp
September 23, 1998
Page 3
other remedy is not obtained, or that the Company grants a waiver hereunder, you
or such Representative may furnish that portion (and only that portion) of the
Evaluation Material which, based on the advice of your counsel reasonably
acceptable to the Company, you are legally compelled to disclose and will
exercise your best efforts to obtain reliable assurance that confidential
treatment will be accorded any Evaluation Material so furnished.
In addition, you hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been or will be advised)
that the United States securities laws restrict persons with material non-public
information about a company obtained directly or indirectly from that company
from purchasing or selling securities of such company, or from communicating
such information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities.
In view of the fact that the Evaluation Material consists of
confidential and non-public information, you agree that for a period of three
years from the date of this letter agreement, neither you nor any of your
affiliates, alone or with others, will in any manner acquire, agree to acquire,
or make any proposal (or request permission to make any proposal) to acquire any
securities (or direct or indirect rights, warrants or options to acquire any
securities) or property of the Company (other than property transferred in the
ordinary course of the Company's business), unless such acquisition, agreement
or making of a proposal shall have been expressly first approved (or in the case
of a proposal, expressly first invited) by the Company's Board of Directors,
solicit proxies from shareholders of the Company or otherwise seek to influence
or control the management or policies of the Company or any of its affiliates or
participate with or assist (including by knowingly providing or arranging
financing for that purpose) any other person in doing any of the foregoing. You
hereby represent that neither you nor any of your officers, directors or
subsidiaries (whether wholly owned or otherwise) beneficially own any shares of
the Common Stock of the Company.
Without the prior written consent of the Company, (1) neither you nor
those of your Representatives who are aware of the Evaluation Material and/or
the possibility of a Possible Transaction will initiate or cause to be initiated
(other than through Allen & Company) any communications with any employee or
representative of the Company concerning the Evaluation Material or any Possible
Transaction and (2) none of your directors, officers or employees who are aware
of the Evaluation Material and/or the possibility of a Possible Transaction
will, for the two-year period from the date of this letter Agreement, solicit or
cause to be solicited the employment or hire of any employee of the Company with
whom you or any of your Representatives have had or subsequently have any
contact, whether in person or
-3-
<PAGE> 4
Mr. Thomas Kemp
September 23, 1998
Page 4
otherwise, during the course of your consideration of a Possible Transaction.
You will promptly upon the written request of the Company deliver to
the Company all documents or other matter furnished by the Company to you or
your Representatives constituting Evaluation Material, together with all copies
thereof in the possession of you or your Representatives. In the event of such
request, all other documents or other matter constituting Evaluation Material
and any other written materials (whatever the form or storage medium) in the
possession of you or your Representatives will be destroyed, with any such
destruction confirmed by you in writing to the Company.
Although you understand that the Company has endeavored to include in
the Evaluation Material information known to it which it believes to be relevant
for the purpose of your investigation, you further understand that neither the
Company nor its agents or its representatives makes any representation or
warranty as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor its agents or its representatives shall have
any liability to you or any of your Representatives resulting from the use of
the Evaluation Material by you or such Representatives. Only those
representations and warranties that may be made to you or your affiliates in a
definitive written agreement for a transaction, when, as and if executed and
subject to such limitations and restrictions as may be specified therein, shall
have any legal effect, and you agree that if you determine to engage in a
transaction such determination will be based solely on the terms of such written
agreement and on your own investigation, analysis and assessment of the business
to be acquired. Moreover, unless and until such a definitive written agreement
is entered into, none of the Company, its affiliates or you will be under any
legal obligation of any kind whatsoever with respect to such a transaction or
any Possible Transaction except for the matters specifically agreed to in this
Agreement. The agreements set forth in this Agreement may be modified or waived
only by a separate writing signed by the Company and you expressly so modifying
or waiving such agreements.
You hereby agree to indemnify and hold harmless the Company from any
damage, loss, cost or liability (including legal fees and the cost of enforcing
this indemnity) arising out of or resulting from any unauthorized use or
disclosure by you or your Representatives of the Evaluation Material. You also
acknowledge that money damages would be both incalculable and an insufficient
remedy for any breach of this Agreement by you or your Representatives and that
any such breach would cause the Company irreparable harm. Accordingly, you also
agree that in the event of any breach or threatened breach of this Agreement,
the Company, in addition to any other remedies at law or in equity it
-4-
<PAGE> 5
Mr. Thomas Kemp
September 23, 1998
Page 5
may have, shall be entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and specific
performance.
You further understand and agree that (i) the Company and Allen &
Company shall be free to conduct the process for a Possible Transaction as they
in their sole discretion shall determine without notice to you, (ii) any
procedures relating to such Possible Transaction may be changed at any time
without notice to you or any other person and (iii) you shall not have any claim
whatsoever against the Company, Allen & Company and/or any of their respective
directors, officers, employees, stockholders, affiliates, agents or
representatives arising out of any Possible Transaction.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
letter agreement, which shall remain in full force and effect.
You agree and consent to personal jurisdiction and service and venue in
any federal or state court within the State of New York having subject matter
jurisdiction, for the purposes of any action, suit or proceeding arising out of
or relating to this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
-5-
<PAGE> 6
Mr. Thomas Kemp
September 23, 1998
Page 6
If you are in agreement with the foregoing, please sign and return one
copy of this letter, which thereupon will constitute our Agreement with respect
to the subject matter hereof.
Very truly yours,
MECKLERMEDIA CORPORATION
By /s/ Christopher Cardell
------------------------------------
Christopher Cardell
President and Chief Operating
Officer
Confirmed and agreed to as of the date first above written:
PENTON MEDIA INC.
By /s/ Thomas L. Kemp
-------------------------------------
Name:
Title:
-6-
<PAGE> 1
Exhibit C-2
[PENTON LETTERHEAD]
Thomas L. Kemp
Chief Executive Officer
September 25, 1998
Mecklermedia Corporation
20 Ketchum Street
Westport, Connecticut 06880
Attention: Mr. Alan M. Meckler
Chief Executive Officer
Mr. Alan M. Meckler
c/o Mecklermedia Corporation
20 Ketchum Street
Westport, Connecticut 06880
Gentlemen:
This Letter of Intent sets forth the understandings that exist
between Penton Media, Inc. ("Penton"), Mecklermedia Corporation
("Mecklermedia"), and Alan M. Meckler, who beneficially owns approximately 30%
of the outstanding common stock of Mecklermedia (the "Stockholder"), concerning
the proposed transaction whereby a newly-formed, wholly-owned subsidiary of
Penton will acquire Mecklermedia (the "Transaction").
The principal terms of the Transaction are as follows:
1. CONSIDERATION. Penton will acquire Mecklermedia in a merger
transaction in which (i) each issued and outstanding share of common stock of
Mecklermedia (the "Common Stock") will be converted into the right to receive
$29.00 in cash and (ii) each outstanding option and warrant to purchase Common
Stock will be cashed out at $29.00 less the exercise price thereof.
2. DUE DILIGENCE. The execution of a definitive agreement is
conditioned upon Penton's satisfactory completion of its due diligence
investigation (including with respect to business, legal, accounting, tax and
environmental matters) of Mecklermedia. Consequently, such investigation will
not be a condition to closing the Transaction in the definitive agreement.
Penton is prepared to commence its due diligence investigation of Mecklermedia
immediately and will complete such investigation as expeditiously as possible,
and, in any event, no later than twelve days after the date hereof.
<PAGE> 2
Mecklermedia Corporation
Mr. Meckler
September 25, 1998
Page 2
3. DEFINITIVE AGREEMENTS.
(a) Merger Agreement: The Transaction would be effected
pursuant to a definitive merger agreement and related
transaction documents containing customary
representations, warranties, covenants, conditions,
no-shop and termination fee provisions and other
terms and provisions as are appropriate for a
transaction of this nature and which are mutually
agreed upon by the parties.
(b) Stockholder's Agreement: As a condition to entering
into a definitive merger agreement, Penton and the
Stockholder would enter into an agreement pursuant to
which the Stockholder would (i) agree to vote all
shares of Common Stock beneficially owned by the
Stockholder at the time of such vote (x) in favor of
approval and adoption of the definitive merger
agreement and the Transaction and (y) against any
alternate acquisition of Mecklermedia or any
corporate action that would impair or delay
consummation of the Transaction and (ii) grant Penton
an option to (x) purchase from the Stockholder for
$29.00 per share in cash all of the Common Stock
beneficially owned by the Stockholder or (y) receive
from the Stockholder the product of (A) 50% of the
difference between (1) the per share value of any
consideration received generally by the stockholders
of Mecklermedia or, if greater, the per share value
of any consideration actually received by the
Stockholder for his Common Stock, in any alternate
acquisition of Mecklermedia consummated within 13
months of the termination of the definitive merger
agreement and (2) $29.00 multiplied by (B) the number
of shares of Common Stock beneficially owned by the
Stockholder. If Penton exercises the option granted
in clause (ii)(x) of the immediately preceding
sentence and (i) an alternate acquisition of
Mecklermedia is consummated within 13 months of the
termination of the definitive merger agreement,
Penton will pay to Stockholder the product of (A) 50%
of the difference between (1) the per share value of
any consideration received by Penton in any alternate
acquisition of Mecklermedia for the Common Stock
purchased under such option and (2) $31.00 multiplied
by (B) the number of shares of Common Stock purchased
by Penton under such option or (ii) within a certain
time period after termination of the merger
agreement, such time period to be mutually agreed
upon by Penton and the Stockholder, Penton acquires
the remaining outstanding Common Stock, Penton will
pay to Stockholder the product of
<PAGE> 3
Mecklermedia Corporation
Mr. Meckler
September 25, 1998
Page 3
(A) the difference between (1) the per share value of
any consideration paid by Penton in such acquisition
and (2) $29.00 multiplied by (B) the number of shares
of Common Stock purchased by Penton under such
option.
(c) Joint Venture Agreement. Penton and the Stockholder
would also enter into an agreement pursuant to which
the Stockholder would be entitled to purchase for $15
million in cash a 50% economic interest in
Internet.com, which will be operated by a
newly-formed entity of Penton or Mecklermedia
("Webco"). Such agreement would contain provisions
(i) regarding the governance and operation of Webco
and other terms and provisions as are appropriate for
a transaction of such type, (ii) providing for
flexibility in structuring the business such that
Penton would be able to spinoff such subsidiary
tax-free to Penton's stockholders in the future if it
so desires, and (iii) that are mutually agreed upon
by the parties thereto. In addition, the parties will
negotiate in good faith a services agreement between
Penton and Webco.
4. CONDITIONS. Consummation of the Transaction would be
subject to, among other things, (i) negotiation and execution of a definitive
merger agreement and a definitive stockholder's agreement, including obtaining
board approvals by Penton and Mecklermedia, (ii) the satisfaction or waiver of
the conditions precedent set forth therein, (iii) obtaining all required
governmental and regulatory approvals and all third party consents and approvals
required or deemed desirable and identified by Penton in connection with the
Transaction, (iv) obtaining approval by the stockholders of Mecklermedia, (v)
Mecklermedia conducting its business and operations in the ordinary course
consistent with good business practice, including but not limited to the
maintenance of good relationships with suppliers, customers, employees and
creditors, (vi) the absence of any material adverse change, as defined in the
definitive merger agreement, and (vii) the absence of any temporary restraining
order, preliminary or permanent injunction or other order prohibiting
consummation of the Transaction.
5. COVENANTS. Mecklermedia agrees to provide Penton and its
representatives such information concerning Mecklermedia and its business as
Penton may reasonably request, and such access to the properties, books and
records of Mecklermedia as Penton shall reasonably require to complete its due
diligence investigation of Mecklermedia and its business; provided, however,
that any on-site visits will be arranged and conducted in a manner so as to
minimize any disruption to Mecklermedia's normal business operations. Penton and
Mecklermedia will cooperate with each other in good faith in the preparation and
negotiation of the definitive merger agreement, the definitive stockholder's
agreement and any related documentation contemplated hereby and thereby.
<PAGE> 4
Mecklermedia Corporation
Mr. Meckler
September 25, 1998
Page 4
6. PUBLICITY. This Letter of Intent is confidential, and none
of Mecklermedia, the Stockholder or Penton will make any public announcement
concerning this Letter of Intent or the transactions contemplated hereby without
the other parties' prior written consent. This Letter of Intent will terminate
automatically in the event that any of the terms, or the existence, hereof are
disclosed to any person or entity without the other parties' prior written
consent. Notwithstanding the two preceding sentences of this paragraph 6,
nothing herein prohibits Penton or Mecklermedia from making any public
announcement or other disclosure required by law or the policy of any exchange
on which such party's securities are traded.
7. EXCLUSIVITY. Penton is prepared to work diligently to
complete due diligence, negotiate a definitive agreement and work toward the
consummation of the Transaction as soon as practicable. Before committing to the
significant expenditures of time, effort and money that will be required,
however, we request that Mecklermedia and the Stockholder make a similar
commitment. Therefore, the Transaction is additionally conditioned upon
Mecklermedia and the Stockholder agreeing that until 5:00 p.m., Eastern Time, on
the 12th day from the date hereof (unless this Letter of Intent is terminated
sooner pursuant to paragraph 10 below) (the "Expiration Date"), Mecklermedia and
the Stockholder will deal exclusively with Penton in connection with the
Transaction or any similar transaction, such that none of the Stockholder,
Mecklermedia or any of its affiliates or any of their respective representatives
(including but not limited to their directors, officers, agents, employees,
financial advisors and counsel) will, directly or indirectly, solicit, encourage
or initiate any inquiries or the making of any offer or proposal from, or engage
in any negotiations or discussions with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Penton and
its representatives) (a "Person") concerning the sale of Mecklermedia or any of
its assets or securities or any merger, consolidation, tender or exchange offer,
joint venture, liquidation, restructuring, recapitalization or similar
transaction involving Mecklermedia or any of its subsidiaries or divisions (a
"Transaction Proposal"). Mecklermedia will notify Penton immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, Mecklermedia, or if the Board of Directors of Mecklermedia has undertaken
to engage or participate in any negotiations or discussions concerning or
provide any information or data to any Person relating to a Transaction
Proposal.
8. COSTS AND EXPENSES. Penton and Mecklermedia will each bear
their own costs and expenses incurred in connection with the Transaction.
9. NONBINDING NATURE OR PROPOSAL. This Letter of Intent
constitutes a statement of interest with respect to the Transaction and does not
constitute an offer capable of being accepted or a binding commitment by us in
any respect. A binding commitment with
<PAGE> 5
Mecklermedia Corporation
Mr. Meckler
September 25, 1998
Page 5
respect to the Transaction would result only from the execution and delivery of
a definitive merger agreement and any other necessary documentation, subject to
the conditions expressed therein. Notwithstanding the two preceding sentences of
this paragraph 9, this sentence and the provisions of paragraphs 5, 6, 7, 8, 10,
11 and 12 of this Letter of Intent are intended to be fully binding upon the
parties hereto with respect to the matters therein upon the execution of this
Letter of Intent by Mecklermedia and the Stockholder. The provisions of this
paragraph 9 supersede any conflicting provisions in the Confidentiality
Agreement, dated September 23, 1998, between Penton and Mecklermedia (the
"Confidentiality Agreement").
10. TERMINATION. This Letter of Intent may be terminated by
any party hereto and (except as provided in paragraph 9) no party hereto will
have any obligation to any other party with respect to the subject matter hereof
if a definitive agreement in respect of a Transaction has not been executed by
the Expiration Date, unless terminated earlier by the mutual written agreement
of the parties hereto.
11. GOVERNING LAW. This Letter of Intent will be governed by
and construed in accordance with the laws of the State of New York, without
regard to the conflicts of laws principles thereof.
12. ENTIRE AGREEMENT. This Letter of Intent embodies the
complete understanding among the parties hereto with respect to the subject
matter hereof and supersedes all previous and contemporaneous agreements between
the parties (whether written or oral), relating to the subject matter hereof,
other than the Confidentiality Agreement as modified by paragraph 9 hereof.
13. COUNTERPARTS. This Letter of Intent may be executed in one
or more counterparts, each of which will be deemed an original, but all of which
will be deemed one instrument.
<PAGE> 6
Mecklermedia Corporation
Mr. Meckler
September 25, 1998
Page 6
If the foregoing correctly sets forth your understanding of
our mutual intentions with respect to the transactions described herein, please
so indicate by signing the enclosed copy of this letter in the space provided
below and returning it to us.
Very truly yours,
PENTON MEDIA, INC.
By: /s/ Thomas L. Kemp
---------------------------------
Thomas L. Kemp
Chief Executive Officer
Accepted and Agreed to:
MECKLERMEDIA CORPORATION
By: /s/ Alan M. Meckler
------------------------------
Alan M. Meckler
Chief Executive Officer
/s/ Alan M. Meckler
- ---------------------------------
Alan M. Meckler
<PAGE> 1
Exhibit C-3
===============================================================================
MECKLERMEDIA CORPORATION,
PENTON MEDIA, INC.,
INTERNET WORLD MEDIA, INC.
AND
ALAN M. MECKLER
============================
AGREEMENT AND PLAN OF MERGER
============================
=============================
Dated as of October 7, 1998
=============================
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I....................................................................................2
SECTION 1.1. THE OFFER. ............................................................2
SECTION 1.2. COMPANY ACTION.........................................................3
SECTION 1.3. DIRECTORS .............................................................4
ARTICLE II...................................................................................6
SECTION 2.1. THE MERGER ............................................................6
SECTION 2.2. EFFECTIVE TIME.........................................................6
SECTION 2.3. EFFECT OF THE MERGER; CLOSING..........................................6
SECTION 2.4. SUBSEQUENT ACTIONS.....................................................6
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS..........7
SECTION 2.6. CONVERSION OF SECURITIES...............................................7
SECTION 2.7. DISSENTING SHARES......................................................8
SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS..............................9
SECTION 2.9. STOCK PLANS AND WARRANT AGREEMENTS....................................10
ARTICLE III..................................................................................11
SECTION 3.1. CORPORATE ORGANIZATION................................................11
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT..................................11
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................12
SECTION 3.4. FINANCING ARRANGEMENTS................................................13
SECTION 3.5. NO PRIOR ACTIVITIES...................................................13
SECTION 3.6. BROKERS ..............................................................13
SECTION 3.7. PROXY STATEMENT.......................................................14
ARTICLE IV...................................................................................14
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..........................15
SECTION 4.2. CAPITALIZATION........................................................15
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT..................................16
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................17
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.....................................17
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS..................................18
SECTION 4.7. LITIGATION ...........................................................19
SECTION 4.8. EMPLOYEE BENEFIT PLANS................................................19
SECTION 4.9. PROXY STATEMENT.......................................................21
SECTION 4.10. BROKERS .............................................................22
SECTION 4.11. CONTROL SHARE ACQUISITION............................................22
SECTION 4.12. CONDUCT OF BUSINESS..................................................22
SECTION 4.13. TAXES ...............................................................23
SECTION 4.14. INTELLECTUAL PROPERTY................................................25
SECTION 4.15. CONTRACTS ............................................................26
SECTION 4.16. ENVIRONMENTAL MATTERS................................................29
SECTION 4.17. REQUIRED VOTE BY COMPANY STOCKHOLDERS................................30
SECTION 4.18. OPINIONS OF FINANCIAL ADVISOR........................................30
SECTION 4.19. AFFILIATE TRANSACTIONS...............................................30
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.21. DISCLOSURE ..........................................................31
ARTICLE V....................................................................................31
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.................31
SECTION 5.2. NO SHOPPING ..........................................................34
ARTICLE VI...................................................................................36
SECTION 6.1. PROXY STATEMENT.......................................................36
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY................................36
SECTION 6.3. ADDITIONAL AGREEMENTS.................................................37
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS.......................................37
SECTION 6.5. ACCESS TO INFORMATION.................................................37
SECTION 6.6. PUBLIC ANNOUNCEMENTS..................................................38
SECTION 6.7. BEST EFFORTS; COOPERATION.............................................38
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.....................................39
SECTION 6.9. EMPLOYEE BENEFITS.....................................................40
SECTION 6.10. RELATED AGREEMENTS...................................................40
SECTION 6.11. TRANSFER TAXES.......................................................41
ARTICLE VII..................................................................................42
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER..........42
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB TO EFFECT
THE MERGER..........................................................42
ARTICLE VIII.................................................................................42
SECTION 8.1. TERMINATION ..........................................................43
SECTION 8.2. EFFECT OF TERMINATION.................................................44
ARTICLE IX...................................................................................45
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS............46
SECTION 9.2. NOTICES ..............................................................46
SECTION 9.3. EXPENSES..............................................................47
SECTION 9.4. CERTAIN DEFINITIONS...................................................47
SECTION 9.5. HEADINGS..............................................................47
SECTION 9.6. SEVERABILITY..........................................................47
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES........................47
SECTION 9.8. ASSIGNMENT............................................................48
SECTION 9.9. GOVERNING LAW.........................................................48
SECTION 9.10. AMENDMENT ............................................................48
SECTION 9.11. WAIVER............................................................... 48
SECTION 9.12. COUNTERPARTS..........................................................49
DISCLOSURE SCHEDULE
EXHIBIT A FORM OF IWORLD AGREEMENT
EXHIBIT B FORM OF SERVICES AGREEMENT
</TABLE>
(ii)
<PAGE> 4
EXHIBIT C FORM OF LICENSING AGREEMENT
EXHIBIT D FORM OF WARRANT AGREEMENT
EXHIBIT E FORM OF CONSULTING AGREEMENT
EXHIBIT F LIST OF CONSENTS REQUIRED
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
TABLE OF DEFINITIONS
<S> <C>
Acquisition Transaction......................................................................................5.2(c)
Affiliate....................................................................................................9.4(a)
Agreement..................................................................................................Recitals
Blue Sky.....................................................................................................4.4(b)
Board of Directors.........................................................................................Recitals
Certificates.................................................................................................2.8(b)
Closing.........................................................................................................2.3
Closing Date....................................................................................................2.3
Code............................................................................................................3.8
Company....................................................................................................Recitals
Company Common Stock............................................................................................4.2
Company Material Adverse Effect.................................................................................4.1
Company Preferred Stock.........................................................................................4.2
Company Stockholders' Meeting...................................................................................4.9
Computer Software...........................................................................................4.14(b)
Confidentiality Agreement....................................................................................6.5(b)
Control......................................................................................................9.4(b)
Delaware Law...............................................................................................Recitals
Disclosure Schedule......................................................................................Article IV
Dissenting Shares............................................................................................2.7(a)
Effective Time..................................................................................................4.2
Employee Plans..................................................................................................4.8
ERISA...........................................................................................................4.8
Exchange Act....................................................................................................2.9
Exchange Agent...............................................................................................2.8(a)
HSR Act......................................................................................................3.3(b)
Indemnified Parties..........................................................................................6.8(a)
Independent Directors........................................................................................2.3(a)
Intellectual Property.......................................................................................4.14(c)
Merger.....................................................................................................Recitals
Offer......................................................................................................Recitals
Offer Documents..............................................................................................1.1(c)
Offer to Purchase............................................................................................1.1(c)
Options......................................................................................................2.9(a)
Option Plans.................................................................................................2.9(a)
Per Share Amount...........................................................................................Recitals
Person.......................................................................................................9.4(d)
Proxy Statement.................................................................................................4.9
Purchaser Information...........................................................................................3.7
Purchaser Material Adverse Effect............................................................................3.3(a)
Purchaser Representatives....................................................................................6.5(b)
SEC..........................................................................................................4.5(a)
SEC Reports..................................................................................................4.5(a)
Shares.....................................................................................................Recitals
Subsidiary......................................................................................................4.1
Superior Proposal............................................................................................5.2(c)
Surviving Corporation...........................................................................................2.1
Tax Return..................................................................................................4.13(f)
Taxes.......................................................................................................4.13(e)
</TABLE>
(i)
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 7, 1998
(this "AGREEMENT"), among Mecklermedia Corporation, a Delaware corporation (the
"COMPANY"), Penton Media, Inc., a Delaware corporation (the "PURCHASER"),
Internet World Media, Inc., a Delaware corporation and a wholly owned subsidiary
of the Purchaser ("MERGER SUB") and Alan M. Meckler, an individual (the
"Stockholder").
W I T N E S S E T H
WHEREAS, the Boards of Directors of the Company and the
Purchaser have each determined that it is in the best interests of their
respective stockholders for the Purchaser to acquire the Company upon the terms
and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the
Purchaser will make a cash tender offer (the "OFFER") to purchase all of the
issued and outstanding shares of common stock, $.01 par value, of the Company
(the "SHARES"), for $29.00 per Share (the "PER SHARE AMOUNT"), or such higher
price as may be paid in the Offer, net to the seller in cash; and
WHEREAS, also in furtherance thereof, the Boards of Directors
of the Company, the Purchaser and Merger Sub have each approved the merger (the
"MERGER") of Merger Sub with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("DELAWARE
LAW") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has unanimously resolved to recommend acceptance of the Offer and
the Merger to the holders of Shares and has determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the holders of
such Shares and to recommend that the holders of such Shares accept the Offer
and approve the Merger, this Agreement and the transactions contemplated hereby;
and
WHEREAS, in order to induce Purchaser and Merger Sub to enter
into this Agreement, concurrently with the execution and delivery hereof,
Purchaser, Merger Sub, the Company and the Stockholder (who beneficially owns
approximately 30% of the outstanding Shares), are entering into a Tender, Voting
and Option Agreement dated the date hereof (the "Voting and Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and
<PAGE> 7
intending to be legally bound hereby, the Company, the Purchaser and Merger Sub
hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be continuing, the Purchaser or
Merger Sub shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") the Offer as promptly as
practicable, but in no event later than five business days following the
execution of this Agreement, and, subject to the conditions of the Offer, shall
use all reasonable efforts to consummate the Offer. The obligation of the
Purchaser to consummate the Offer and to accept for payment any Shares tendered
pursuant thereto shall be subject to the satisfaction of only those conditions
set forth in Annex I. The Purchaser expressly reserves the right to waive any
such condition or to increase the Per Share Amount. The Per Share Amount shall
be net to the seller in cash, subject to reduction only for any applicable
Federal back-up withholding or stock transfer taxes payable by the seller. The
Company agrees that no Shares held by the Company will be tendered pursuant to
the Offer.
(b) Without the prior written consent of the Company, the
Purchaser shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition (as defined in Annex
I) or (iv) impose additional conditions to the Offer or amend any other term of
the Offer in any manner adverse to the holders of Shares; PROVIDED HOWEVER, that
if on the initial expiration date of the Offer, which shall be November 18,
1998 (together with any extensions thereof, if any, the "EXPIRATION DATE"), all
conditions to the Offer shall not have been satisfied or waived, the Purchaser
may extend the Expiration Date up to an additional six (6) business days to the
extent necessary to permit such condition to be satisfied; provided, further,
however, that the Expiration Date may not be extended beyond November 27, 1998,
except with the written consent of the Company. The Purchaser shall, on the
terms and subject to the prior satisfaction or waiver of the conditions of the
Offer, accept for payment and purchase, as soon as permitted under the terms of
the Offer, all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(c) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in Annex I
hereto. As soon as practicable on the date the Offer is commenced, the Purchaser
shall file with the Securities
(2)
<PAGE> 8
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "SCHEDULE 14D-1")
with respect to the Offer that will comply in all material respects with the
provisions of, and satisfy in all material respects the requirements of, such
Schedule 14D-1 and all applicable Federal securities laws, and will contain
(including as an exhibit) or incorporate by reference the Offer to Purchase and
forms of the related letter of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "OFFER DOCUMENTS").
Each of the Purchaser, Merger Sub and the Company agrees promptly to correct any
information provided by it for use in the Schedule 14D-1 or the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Schedule 14D-1 or the Offer Documents to include any information
that shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and the Purchaser
further agrees to take all steps necessary to cause the Schedule 14D-1, as so
corrected or supplemented, to be filed with the SEC and the Offer Documents, as
so corrected or supplemented, to be disseminated to holders of Shares, in each
case as and to the extent required by applicable Federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC.
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that (i) the Board of Directors, at a meeting duly
called and held on October 7, 1998, at which a majority of the Directors were
present, unanimously and duly approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (such
approval being sufficient to render Section 203 of Delaware Law inapplicable to
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger), recommended that the stockholders of the Company accept the Offer,
tender their Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of the Company
and (ii) Allen & Company, Inc., the Company's financial advisor, has rendered to
the Board of Directors its opinion that the consideration to be received by the
holders of Shares, Options and Warrants of the Company pursuant to the Offer and
the Merger is fair to such holders from a financial point of view.
(3)
<PAGE> 9
(b) The Company shall file with the SEC, simultaneously with
(or at such later date as may be mutually agreed between the Company and
Purchaser) the filing by the Purchaser of the Schedule 14D-1 with respect to the
Offer, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
will comply in all material respects with the provisions of all applicable
Federal securities laws. The Company shall mail such Schedule 14D-9 to the
stockholders of the Company along with the Offer Documents promptly after the
commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of the Purchaser and Merger Sub, with respect to written information
supplied by it specifically for use in the Schedule 14D-9, shall promptly notify
the Company of any required corrections of such information and cooperate with
the Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the Company's stockholders to the extent
required by applicable Federal securities laws. The Purchaser and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 before it is filed with the SEC.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish the Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and security
position listings of Shares held in stock depositories, each as of a recent
date, and shall promptly furnish the Purchaser with such additional information,
including updated lists of stockholders, mailing labels and security position
listings, and such other information and assistance as the Purchaser or its
agents may reasonably request for the purpose of communicating the Offer to the
record and beneficial holders of Shares.
SECTION 1.3. DIRECTORS.
(a) Promptly upon the purchase by the Purchaser of any Shares
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by the Purchaser, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
will give the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Board of Directors (giving
(4)
<PAGE> 10
effect to the directors appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) multiplied by
the percentage that the aggregate number of Shares beneficially owned by the
Purchaser or any affiliate of the Purchaser (including for purposes of this
Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares outstanding.
At such times, if requested by the Purchaser, the Company will also cause each
committee of the Board of Directors to include persons designated by the
Purchaser constituting the same percentage of each such committee as the
Purchaser's designees are of the Board of Directors. The Company shall, upon
request by the Purchaser, promptly increase the size of the Board of Directors
or exercise its best efforts to secure the resignations of such number of
directors as is necessary to enable the Purchaser designees to be elected to the
Board of Directors in accordance with the terms of this Section 1.3 and shall
cause the Purchaser's designees to be so elected; PROVIDED, HOWEVER, that, in
the event that the Purchaser's designees are appointed or elected to the Board
of Directors, until the Effective Time (as defined in Section 2.2 hereof) the
Board of Directors shall have at least one director who is a director on the
date hereof and who is neither an officer of the Company nor a designee,
stockholder, affiliate or associate (within the meaning of the Federal
securities laws) of the Purchaser (one or more of such directors, the
"INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of the Purchaser, and such person shall be
deemed to be an Independent Director for purposes of this Agreement.
(b) Subject to applicable law, the Company shall promptly take
all action necessary pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 mailed to stockholders
promptly after the commencement of the Offer (or an amendment thereof or an
information statement pursuant to Rule 14f-1 if the Purchaser has not
theretofore designated directors) such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this Section 1.3. The Purchaser will
supply the Company and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of the Purchaser's
obligations hereunder
(5)
<PAGE> 11
or (iv) take any other action by the Company in connection with this Agreement
required to be taken by the Board of Directors.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. At the Effective Time (as defined in
Section 2.2) and subject to and upon the terms and conditions of this Agreement
and Delaware Law, Merger Sub shall be merged with and into the Company, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "SURVIVING
CORPORATION."
SECTION 2.2. EFFECTIVE TIME. On or as promptly as practicable
after the Closing Date (as defined in Section 2.3), the parties hereto shall
cause the Merger to be consummated by filing a Certificate of Merger with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law (the time
of such filing being the "EFFECTIVE TIME").
SECTION 2.3. EFFECT OF THE MERGER; CLOSING. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation. The
closing of the Merger (the "CLOSING") shall take place at a time and on a date
(the "CLOSING DATE") to be specified by the parties, which shall be no later
than the third Business Day after satisfaction or waiver of the latest to occur
of the conditions precedent set forth in Article VII, at the offices of Jones,
Day, Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland, Ohio, unless
another time, date or location is agreed to in writing by the parties. "BUSINESS
DAY" means any day other than Saturday, Sunday or a federal holiday.
SECTION 2.4. SUBSEQUENT ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Merger Sub acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the
(6)
<PAGE> 12
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Merger
Sub, all such deeds, bills of sale, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS.
(a) Unless otherwise determined by the Purchaser before the
Effective Time, at the Effective Time the Certificate of Incorporation of Merger
Sub, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation (as the same may be
amended from time to time in the form mutually agreed between Purchaser and the
Company, including any such amendment as shall be required for Purchaser to
comply with Section 6.8(a) of this Agreement) until thereafter amended as
provided by law and such Certificate of Incorporation.
(b) The By-Laws of Merger Sub, as in effect immediately before
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Merger Sub immediately before the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Merger Sub immediately before the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the board of directors of the Surviving Corporation or in
any office of the Surviving Corporation, such vacancy may thereafter be filled
in the manner provided by law.
SECTION 2.6. CONVERSION OF SECURITIES. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 2.6(b)
and any Dissenting Shares (as defined in Section 2.7(a)) shall be canceled and
extinguished and be converted into the right to receive the Per Share Amount in
cash payable to the holder thereof, without interest, upon surrender of the
certificate formerly representing such Share in the manner provided in Section
2.8. All such Shares, when so converted, will no longer be outstanding and will
automatically be canceled
(7)
<PAGE> 13
and retired and will cease to exist, and each holder of a certificate formerly
representing any such Share will cease to have any rights with respect thereto,
except the right to receive the Per Share Amount therefor upon the surrender of
such certificate in accordance with Section 2.8. Any payment made pursuant to
this Section 2.6(a) will be made net of applicable withholding taxes to the
extent such withholding is required by law.
(b) Each Share held in the treasury of the Company and each
Share owned by the Purchaser or any direct or indirect wholly owned subsidiary
of the Purchaser immediately before the Effective Time shall be canceled and
extinguished and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, par value $.Ol per share, of
Merger Sub issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock, par value $.Ol per share, of the Surviving Corporation.
SECTION 2.7. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected his demand
for appraisal of his Shares in accordance with Delaware Law (including but not
limited to ss.262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("DISSENTING SHARES"), shall not
be converted into or represent a right to receive cash pursuant to Section 2.6,
but the holder thereof shall be entitled to only such rights as are granted by
Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any
holder of Shares who demands appraisal of his Shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive cash as provided in Section 2.6(a),
without interest thereon, upon surrender of the certificate or certificates
formerly representing such Shares.
(c) The Company shall give the Purchaser (i) prompt notice of
any written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not voluntarily make any payment with respect to
any demands for appraisal and shall not, except with the prior written consent
of the Purchaser, settle or offer to settle any such demands.
(8)
<PAGE> 14
SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Purchaser shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of Shares in connection with the Merger (the "EXCHANGE AGENT") to
receive the funds necessary to make the payments contemplated by Section 2.6. At
the Effective Time, the Purchaser shall deposit, or cause to be deposited, in
trust with the Exchange Agent for the benefit of holders of Shares the aggregate
consideration to which such holders shall be entitled at the Effective Time
pursuant to Section 2.6.
(b) Each holder of a certificate or certificates representing
any Shares canceled upon the Merger pursuant to Section 2.6(a) (the
"CERTIFICATE(S)") may thereafter surrender such certificate or certificates to
the Exchange Agent, as agent for such holder, to effect the surrender of such
Certificate or Certificates on such holder's behalf for a period ending one year
after the Effective Time. The Purchaser agrees that promptly after the Effective
Time it shall cause the distribution to holders of record of Shares as of the
Effective Time of appropriate materials to facilitate such surrender. Upon the
surrender of Certificates for cancellation, together with such materials, the
Purchaser shall cause the Exchange Agent to pay the holder of such Certificates
in exchange therefor cash in an amount equal to the Per Share Amount multiplied
by the number of Shares represented by such Certificate. Until so surrendered,
each such Certificate (other than Certificates representing Dissenting Shares
and Certificates representing Shares held by the Purchaser or in the treasury of
the Company) shall represent solely the right to receive the aggregate Per Share
Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be
made to a Person other than the Person in whose name a surrendered Certificate
or instrument is registered, it shall be a condition to such payment that the
Certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the Certificate or
instrument surrendered or shall have established to the satisfaction of the
Purchaser or the Exchange Agent that such tax either has been paid or is not
payable.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as
(9)
<PAGE> 15
provided in Section 2.6(a). No interest shall accrue or be paid on any cash
payable upon the surrender of a Certificate or Certificates which immediately
before the Effective Time represented outstanding Shares.
(e) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to the Purchaser all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by the Purchaser or
in the treasury of the Company) may surrender such Certificate to the Purchaser
and (subject to applicable abandoned property, escheat and similar laws) receive
in consideration thereof the aggregate Per Share Amount relating thereto,
without any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 2.8(c), stock transfer
taxes payable by such holder.
(g) In the event any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Per Share Amount
deliverable in respect thereof as determined in accordance with Section 2.6;
provided that the Person to whom the Per Share Amount is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as the Surviving Corporation may direct or otherwise indemnify
the Surviving Corporation in a manner satisfactory to it against any claim that
may be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
SECTION 2.9. STOCK PLANS AND WARRANT AGREEMENTS.
(a) The Company shall use all reasonable efforts (which
include, but are not limited to, satisfying the requirements of Rule 16b-3(e)
which is promulgated under Section 16 of the Exchange Act, without incurring any
liability in connection therewith) to provide that, upon consummation of the
Merger, (i) each then outstanding option to purchase Shares (the "OPTIONS")
granted under any of the Company's stock option plans referred to in Section
4.2, each as amended (collectively, the "OPTION PLANS"), and (ii) each then
outstanding warrant to purchase Shares (the "WARRANTS") granted under any of the
warrant agreements referred to in Section 4.2, each as amended (collectively,
the "WARRANT AGREEMENTS"), whether or not then exercisable or vested, shall be
acquired by the Company for cancellation in consideration of payment to the
holders of such Options and Warrants of an amount in respect thereof equal to
the
(10)
<PAGE> 16
product of (A) the excess, if any, of the Per Share Amount over the per share
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes); provided that the Company
shall obtain any consents required of holders of Options and Warrants to effect
the foregoing. As promptly as practicable following the consummation of the
Offer, the Purchaser shall provide the Company with the funds necessary to pay
in full the consideration payable to holders of Options and Warrants under this
Section 2.9(a).
(b) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company shall cause the Option Plans and Warrant Agreements to
terminate as of the Effective Time and (ii) the Company shall ensure that
following the Effective Time no person, including any holder of Options or
Warrants or any participant in the Option Plans, shall have any right to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND MERGER SUB
The Purchaser and Merger Sub represent and warrant to the
Company as follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of the Purchaser and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority and any necessary governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted.
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. The
execution and delivery of this Agreement by the Purchaser and Merger Sub and the
consummation by the Purchaser and Merger Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser and Merger Sub and no other corporate proceeding is necessary
for the execution and delivery of this Agreement by the Purchaser or Merger Sub,
the performance by the Purchaser or Merger Sub of their respective obligations
hereunder and the consummation by the Purchaser or Merger Sub of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and Merger Sub and, assuming due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding obligation of each such corporation, enforceable against each
of them in accordance with its terms, except that (i) the enforceability hereof
may be subject to applicable bankruptcy, insolvency or other similar
(11)
<PAGE> 17
laws, now or hereinafter in effect, affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Purchaser and Merger Sub do not, and the performance of this Agreement by the
Purchaser and Merger Sub will not, (i) conflict with or violate any law,
regulation, court order, judgment or decree applicable to the Purchaser or
Merger Sub or by which any of their property is bound or affected, (ii) violate
or conflict with either the Certificate of Incorporation or By-Laws of either
the Purchaser or Merger Sub, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination or cancellation of,
or result in the creation of a lien or encumbrance on any of the property or
assets of the Purchaser or Merger Sub pursuant to, any contract, instrument,
permit, license or franchise to which the Purchaser or Merger Sub is a party or
by which the Purchaser or Merger Sub or any of their property is bound or
affected; except in the case of clauses (i) and (iii) for conflicts, violations,
breaches or defaults that individually and in the aggregate would not have or
result in a material adverse effect on the business, results of operations or
financial condition of Purchaser and its Subsidiaries, taken as a whole, or be
reasonably expected to prevent or materially impair or delay the consummation by
Purchaser or Merger Sub of the transactions contemplated hereby (each a
"Purchaser Material Adverse Effect").
(b) Except for applicable requirements, if any, of the
Exchange Act, under Competition Laws (as defined below), and filing and
recordation of appropriate merger documents as required by Delaware Law, neither
the Purchaser nor Merger Sub is required to submit any notice, report or other
filing with any governmental authority, domestic or foreign, in connection with
the execution, delivery or performance of this Agreement or the consummation of
the transactions contemplated hereby, the failure of which to submit would have
a Purchaser Material Adverse Effect. No waiver, consent, approval or
authorization of any governmental or regulatory authority, domestic or foreign,
is required to be obtained or made by either the Purchaser or Merger Sub in
connection with its execution, delivery or performance of this Agreement the
failure of which to obtain or make would have a Purchaser Material Adverse
Effect. "Competition Laws" means statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint
(12)
<PAGE> 18
of trade, and includes the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and, to the extent applicable, equivalent laws of the
European Union or the Member States thereof, Canada and any other country in
which the Company or its Subsidiaries has operations or derives revenue.
SECTION 3.4. FINANCING ARRANGEMENTS. The Purchaser has
received a commitment letter (the "Commitment Letter") from DLJ Capital Funding,
Inc., DLJ Bridge Finance, Inc. and Donaldson Lufkin & Jenrette Securities
Corporation (collectively, "DLJ") dated October 7, 1998, whereby DLJ has
committed, upon the terms and subject to the conditions set forth therein, to
provide debt financing to Purchaser in the amount of up to $325.0 million (the
"Financing"). Purchaser has delivered a complete and correct copy of such letter
as in effect on the date hereof to the Company. As of the date hereof, Purchaser
believes that the aggregate proceeds of the Financing will be sufficient to (i)
pay the Per Share Amount with respect to all outstanding Shares, Options (less
the exercise price thereof) and Warrants (less the exercise price thereof) and
to perform the obligations of Purchaser and Merger Sub hereunder and (ii)
together with cash available to the Surviving Corporation, perform the
obligations of the Surviving Corporation under this Agreement. Neither Purchaser
nor Merger Sub knows of any fact or circumstance that it believes will prevent
it from obtaining the Financing. In addition, Purchaser and Merger Sub represent
and warrant to the Company that the Information (as defined in the Commitment
Letter but excluding Information provided in writing to Purchaser or Merger Sub
by the Company), as supplemented as contemplated by the Commitment Letter, is
(or will be, in the case of Information made available after the date hereof)
complete and correct in all material respects and does not (or will not, as the
case may be) contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were or are
made.
SECTION 3.5. NO PRIOR ACTIVITIES. Except for obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any financing), Merger Sub has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. BROKERS. Except for DLJ, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Purchaser or Merger Sub
that is or will be payable by the Company or any of its Subsidiaries. Purchaser
and Merger Sub are solely responsible for the fees and expenses of DLJ.
(13)
<PAGE> 19
SECTION 3.7. OFFER DOCUMENTS; PROXY STATEMENTS. (a) None of
the information supplied by the Purchaser, Merger Sub, their respective
officers, directors, representatives, agents or employees (the "PURCHASER
INFORMATION"), for inclusion in the Proxy Statement (as defined in Section 4.9),
or in any amendments thereof or supplements thereto, will, on the date the Proxy
Statement is first mailed to stockholders of the Company or at the time of the
Company Stockholders' Meeting (as defined in Section 4.9), contain any statement
which, at such time and in light of the circumstances under which it will be
made, will be false or misleading with respect to any material fact, or will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. Neither the
Offer Documents nor any amendments thereof or supplements thereto will, at any
time the Offer Documents or any such amendments or supplements are filed with
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, the
Purchaser and Merger Sub do not make any representation or warranty with respect
to any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents and any amendments or supplements thereto will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
(b) If required, the Rule 13e-3 Transaction Statement
on Schedule 13E-3 to be filed with the SEC under the Exchange Act and/or mailed
to the stockholders of the Company in connection with the Offer and the Merger
(including any amendment or supplement thereto, the "Schedule 13E-3") (i) will
not, at the date such Schedule 13E-3 is filed with the SEC and/or mailed to the
stockholders of the Company contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (ii) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder; except that no representation is made by Purchaser or Merger Sub
with respect to statements made in the Schedule 13E-3 based on information
supplied by the Company specifically for inclusion therein.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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<PAGE> 20
Except as set forth on the Disclosure Schedule to this
Agreement (the "DISCLOSURE SCHEDULE"), the Company hereby represents and
warrants to the Purchaser and the Merger Sub as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The
Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority and any necessary governmental authority to own, operate or
lease the properties that it purports to own, operate or lease and to carry on
its business as it is now being conducted, and (ii) is duly qualified as a
foreign corporation to do business, and is in good standing, in each other
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except in the
case of clause (ii) for failures which, when taken together with all other such
failures, would not have a Company Material Adverse Effect (as defined below in
this Section 4.1). Section 4.1 of the Disclosure Schedule lists each of the
Company's Subsidiaries and their respective jurisdictions of incorporation or
organization. The term "SUBSIDIARY" means any corporation or other legal entity
of which the Company (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity. The term "COMPANY MATERIAL ADVERSE EFFECT" means any
change in or effect on the business of the Company that is or can be reasonably
expected to be materially adverse to the business, assets, properties (including
intangible properties), condition (financial or otherwise), results of
operations, prospects (other than changes in general economic conditions but
including changes in the industry in which the Company operates), liabilities or
regulatory status of the Company and the Subsidiaries taken as a whole. The
Company has previously delivered to Purchaser a complete and correct copy of
each of its Certificate of Incorporation and By-Laws, as currently in effect.
SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 35,000,000 shares of common stock, $.01 par value, of
the Company (the "Company Common Stock") and 1,000,000 shares of preferred
stock, $.01 par value, of the Company (the "COMPANY PREFERRED STOCK"). As of the
close of business on the date one business day prior to the date hereof, (i)
9,109,542 shares of Company Common Stock were issued and outstanding, all of
which were duly authorized, validly issued, fully paid and nonassessable, (ii)
260,000 shares of Company Common Stock were held in the treasury of the Company,
(iii) no shares of Company Preferred Stock were issued or outstanding, (iv)
1,200,000 shares of Company Common Stock were reserved for issuance under the
Company's employee stock option plans listed on Schedule 4.2(a) of the
Disclosure Schedule in the
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<PAGE> 21
amounts stated in such schedule and (v) 4,500 shares of Company Common Stock
were reserved for issuance upon the exercise of currently outstanding warrants
issued under the warrant agreements listed on Schedule 4.2(a) of the Disclosure
Schedule. Except as disclosed in the SEC Reports (as defined below) or on
Schedule 4.2(a) of the Disclosure Schedule, there are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other equity interest in, the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interests,
(ii) contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
Subsidiary of the Company or (iii) voting trusts or similar agreements to which
the Company or any of its Subsidiaries is a party with respect to the voting of
the capital stock of the Company or any of its Subsidiaries.
(b) Except as set forth on Schedule 4.2(b) of the
Disclosure Schedule and except for directors' qualifying shares (i) all of the
outstanding shares of capital stock (or equivalent equity interests of entities
other than corporations) of each of the Company's Subsidiaries are beneficially
owned, directly or indirectly, by the Company and (ii) neither the Company nor
any of its Subsidiaries owns any shares of capital stock or other securities of,
or interest in, any other Person, or is obligated to make any capital
contribution to or other investment in any other Person.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
has the necessary corporate power and authority to enter into this Agreement
and, subject to obtaining any necessary stockholder approval of the Merger, to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of the Merger by the
Company's stockholders in accordance with Delaware Law. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Purchaser and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except that (i) the enforceability
hereof may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereinafter in effect, affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought..
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<PAGE> 22
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate any law, regulation, court order, judgment or
decree applicable to the Company or by which its property is bound or affected,
(ii) violate or conflict with the Certificate of Incorporation or By-Laws of the
Company, or (iii) except as set forth on Exhibit F, result in any breach of or
constitute a default (or an event which with notice or lapse of time of both
would become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company pursuant to, any contract, instrument,
permit, license or franchise to which the Company is a party or by which the
Company or its property is bound or affected, except in the case of clauses (i)
and (iii) for conflicts, violations, breaches or defaults which, individually or
in the aggregate, would not have a Company Material Adverse Effect.
(b) Except for applicable requirements, if any, of
the Exchange Act, under Competition Laws, and filing and recordation of
appropriate merger or other documents as required by Delaware Law, "takeover" or
"blue sky" laws of various states, the Company is not required to submit any
notice, report or other filing with any governmental authority, domestic or
foreign, in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby the
failure of which to submit would have a Company Material Adverse Effect. No
waiver, consent, approval or authorization of any governmental or regulatory
authority, domestic or foreign, is required to be obtained or made by the
Company in connection with its execution, delivery or performance of this
Agreement the failure of which to obtain or make would have a Company Material
Adverse Effect.
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission
("SEC") since January 1, 1995, and has heretofore delivered or made available to
the Purchaser, in the form filed with the SEC, its (i) Annual Reports on Form
10-K SB for the fiscal years ended September 30, 1995, 1996 and 1997, (ii)
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1997, March
31, 1998 and June 30, 1998, (iii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since October 1, 1995
and (iv) all other forms, reports or registration statements (other than reports
on Form 10-Q not referred to in clause (ii) above) filed by the Company with the
SEC pursuant to the Exchange Act since October 1, 1995 (collectively, whether
filed before, on or after
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<PAGE> 23
the date hereof, the "SEC REPORTS"). The SEC Reports (i) were prepared in
accordance with the requirements of the Exchange Act and the Securities Act of
1933 (the "Securities Act"), as the case may be, and the applicable rules and
regulations of the SEC thereunder and (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained
in the SEC Reports were prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and changes in financial position of the Company and its Subsidiaries
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which should not be materially adverse to the Company and its Subsidiaries taken
as a whole.
(c) Except as reflected or reserved against in the
consolidated financial statements contained in the SEC Reports filed prior to
the date hereof or otherwise disclosed in the SEC Reports filed prior to the
date hereof, neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which in the aggregate would have a Company Material Adverse Effect
or which would be required to be set forth in consolidated financial statements
in accordance with GAAP.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 1997, except as contemplated by this
Agreement or as set forth in the SEC Reports filed prior to the date hereof, (i)
the Company and its Subsidiaries have conducted their respective operations only
in the ordinary course consistent with past practices; (ii) there has not been:
(a) any change which would have a Company Material Adverse
Effect;
(b) any strike, picketing, work slowdown or other labor
disturbance having a Company Material Adverse Effect;
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company having a Company
Material Adverse Effect;
(d) any redemption or other acquisition of Company Common
Stock by the Company or any declaration or payment of any
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<PAGE> 24
dividend or other distribution in cash, stock or property with respect to
Company Common Stock, except for purchases heretofore made pursuant to the terms
of the Company's employee benefit plans before the date hereof;
(e) any change by the Company in accounting principles except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Reports; and
(iii) the Company and its Subsidiaries have not taken action
that if taken after the date hereof would constitute a violation of Section 5.1
hereof.
SECTION 4.7. LITIGATION. Except as disclosed in the SEC
Reports filed prior to the date hereof, there are no claims, actions, suits,
proceedings or investigations of any nature pending or, to the knowledge of the
Company, threatened against the Company, or any properties or rights of the
Company, before any court, administrative, governmental or regulatory authority
or body, domestic or foreign, which are reasonably likely to have a Company
Material Adverse Effect. As of the date hereof, the Company is not subject to
any order, judgment, injunction or decree which has had or would have or result
in a Company Material Adverse Effect.
SECTION 4.8. EMPLOYEE BENEFIT PLANS. (a) Schedule 4.8(a) of
the Disclosure Schedule sets forth a list of all material employee welfare
benefit plans (as defined in Section 3(l) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), employee pension benefit plans (as
defined in Section 3(2) of ERISA) and all other bonus, stock option, stock
purchase, benefit, profit sharing, savings, retirement, disability, insurance,
incentive, deferred compensation and other similar fringe or employee benefit
plans, programs or arrangements for the benefit of, or relating to, any employee
of, or independent contractor or consultant to, the Company or its Subsidiaries
(together, the "EMPLOYEE PLANS") and any employment severance or termination
agreement. The Company has made or will make available to the Purchaser true and
complete copies of all Employee Plans, as in effect, together with all
amendments thereto which will become effective at a later date, as well as the
latest Internal Revenue Service ("IRS") determination letters obtained with
respect to any Employee Plan intended to be qualified under Section 401(a) or
501(a) of Code. True and complete copies of the (i) most recent annual actuarial
valuation report, if any, (ii) last filed Form 5500 together with Schedule A
and/or B thereto, if any, (iii) summary plan description (as defined in ERISA),
if any, and all modifications thereto communicated to employees, (iv) most
recent annual and periodic accounting of related plan assets, if any, and (v)
such other materials with respect to the Employee Plans reasonably requested by
Purchaser in each case, relating to the Employee Plans, have
(19)
<PAGE> 25
been or will be delivered to the Purchaser and are, or will be, correct in all
material respects.
(b) Except to the extent that any of the following, either
alone or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect: (i) neither the Company nor, to the Company's
knowledge, any of its directors, officers, employees or agents has, with respect
to any Employee Plan, engaged in or been a party to any "prohibited
transaction", as such term is defined in Section 4975 of the Code or Section 406
of ERISA, which could result in the imposition of either a penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, in each case applicable to the Company or any Employee Plan; (ii) all
Employee Plans are and have been at all times in compliance in all respects with
the currently applicable requirements prescribed by all statutes, orders, or
governmental rules or regulations currently in effect with respect to such
Employee Plans, including, but not limited to, ERISA and the Code (except for
such requirements that are not required to be adopted as of the effective date
of the applicable requirement) and, to the knowledge of the Company, there are
no pending or threatened claims, lawsuits or arbitrations (other than routine
claims for benefits), relating to any of the Employee Plans, which have been
asserted or instituted against the Company, any Employee Plan or the assets of
any trust for any Employee Plan, nor, to the knowledge of the Company, is there
any basis for one; (iii) each Employee Plan intended to be qualified under
Section 401(a) of the Code, is so qualified, and has heretofore been determined
by the IRS to be so qualified; (iv) neither the Company nor any trade or
business which, together with the Company, is treated as a single employer under
Section 414(t) of the Code (an "ERISA Affiliate") has, or at any time has had,
an obligation to contribute to a "defined benefit plan" as defined in Section
3(35) of ERISA, a pension plan subject to the funding standards of Section 302
of ERISA or Section 412 of the Code, a "multiemployer plan" within the meaning
of Section 3(37) or 4001(a)(13) of ERISA or Section 414(f) of the Code or a
"multiple employer plan" within the meaning of Section 210(a) of ERISA or
Section 413(c) of the Code; (v) with respect to each group health plan
benefiting any current or former employee of the Company, or any ERISA
Affiliate, that is subject to Section 4980B of the Code, the Company and any
ERISA Affiliate, have complied with (A) the continuation coverage requirements
of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA and
(B) the Health Insurance Portability and Accountability Act of 1996; (vi) all
(A) insurance premiums required to be paid with respect to, (B) benefits,
expenses, and other amounts due and payable under, and (C) contributions,
transfers, or payments required to be made to, any Employee Plan prior to the
Effective Time will have been paid, made or accrued on or before the Effective
Time; (vii) with respect to any insurance policy providing funding for benefits
under any Employee Plan, (A) there is no liability of the Company or any of its
Subsidiaries, in the nature of a retroactive rate
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<PAGE> 26
adjustment, loss sharing arrangement, or other actual or contingent liability,
nor would there be any such liability if such insurance policy was terminated on
the date hereof, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
knowledge of the Company, no such proceedings with respect to any insurer are
imminent; (viii) no Employee Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of service or
retirement other than (A) coverage mandated by law, (B) death or retirement
benefits under any qualified Employee Plan, or (C) deferred compensation
benefits reflected on the books of the Company; (ix) except as disclosed in
Schedule 4.8(b), the execution and performance of this Agreement will not (A)
constitute a stated triggering event under any Employee Plan that will result in
any payment (whether of severance pay or otherwise) becoming due from the
Company or any of the Company's Subsidiaries to any officer, employee, or former
employee (or dependents of such employee), or (B) accelerate the time of payment
or vesting, or increase the amount of compensation due to any employee, officer
or director of the Company; (x) except as disclosed in Schedule 4.8(b), any
amount that could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Employee Plan currently in effect
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code); (xi) except as disclosed in Schedule
4.8(b), the disallowance of a deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amount paid or payable by the
Company or any affiliate of the Company under any contract, Employee Plan,
program, arrangement or understanding currently in effect; (xii) neither the
Company nor any ERISA Affiliate has any current or future liability with respect
to any "employee benefit plans" (within the meaning of Section 3(3) of ERISA),
other than the Employee Plans, previously maintained or contributed to by the
Company, any ERISA Affiliate or any predecessor to either thereof, or to which
the Company, any ERISA Affiliate, or any such predecessor previously had an
obligation to contribute.
SECTION 4.9. OFFER DOCUMENTS; PROXY STATEMENT. (a) The proxy
statement to be sent to the stockholders of the Company in connection with the
meeting of the Company's stockholders to consider the Merger (the "COMPANY
STOCKHOLDERS' MEETING") or the information statement to be sent to such
stockholders, as appropriate (such proxy statement or information statement, as
amended or supplemented, is herein referred to as the "PROXY STATEMENT"), at the
date mailed to the stockholders of the Company and at the time of the Company
Stockholders Meeting (i) will comply in all material respects with the
applicable
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<PAGE> 27
requirements of the Exchange Act and the rules and regulations thereunder and
(ii) will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Schedule 14D-9 will comply in all material respects
with the Exchange Act and the rules and regulations thereunder. Neither the
Schedule 14D-9 nor any of the information relating to the Company or its
affiliates provided by or on behalf of the Company specifically for inclusion in
the Schedule 14D-1 or the Offer Documents will, at the respective times the
Schedule 14D-9, the Schedule 14D-1 and the Offer Documents or any amendments or
supplements thereto are filed with the SEC and are first published, sent or
given to stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. No representation or
warranty is made by the Company with respect to any information supplied by the
Purchaser or Merger Sub specifically for inclusion in the Proxy Statement or the
Schedule 14D-9.
(b) None of the information provided by the Company
specifically for use in any Schedule 13E-3 will at the time the Schedule 13E-3
or any amendments thereto are so filed and/or mailed, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 4.10. BROKERS. Except for Allen & Company
Incorporated, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company. The Company has heretofore furnished to the Purchaser
true and complete information concerning the financial arrangements between the
Company and Allen & Company pursuant to which such firm would be entitled to any
payment as a result of the transactions contemplated hereunder.
SECTION 4.11. CONTROL SHARE ACQUISITION. The Board of
Directors has taken all action necessary to render Section 203 of Delaware Law
inapplicable to the Offer, the Merger, this Agreement, the Voting and Option
Agreement and any of the transactions contemplated hereby and thereby.
SECTION 4.12. CONDUCT OF BUSINESS. (a) Except as disclosed in
the SEC Reports filed prior to the date hereof, the business of the Company is
not being conducted in default or violation of any term, condition or provision
of (i) its Certificate of Incorporation or By-Laws, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease or other
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<PAGE> 28
instrument or agreement of any kind to which the Company is a party or by which
the Company or any of its properties or assets may be bound, or (iii) any
Federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to the Company, except,
with respect to the foregoing clauses (ii) and (iii), defaults or violations
that would not, individually or in the aggregate, have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice, or has knowledge of any claim, alleging any such violation, except for
such violations that individually and in the aggregate would not have or result
in a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all licenses,
permits, variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of any governmental
authority, domestic or foreign, or other Persons necessary for the ownership,
leasing, operation, occupancy and use of their respective property and assets
and the conduct of their respective businesses as currently conducted
("PERMITS"), except where the failure to hold such Permits individually and in
the aggregate would not have or result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received notice that any
Permit will be terminated or modified or cannot be renewed in the ordinary
course of business, and the Company has no knowledge of any reasonable basis for
any such termination, modification or nonrenewal, except for such terminations,
modifications or nonrenewals as individually and in the aggregate would not have
or result in a Company Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewals thereof, except for such violations,
terminations, modifications or nonrenewals thereof as individually and in the
aggregate would not have or result in a Company Material Adverse Effect.
(c) The Company has provided to Purchaser information as to
the standard booth rental rates for space at the Company's 1996, 1997 and 1998
trade shows that, to the best knowledge of the Company, is complete and accurate
in all material respects.
SECTION 4.13. TAXES.
(a) Except as would not, either individually or in the
aggregate, have a material adverse effect, (i) the Company has timely filed with
the appropriate governmental authorities all Tax Returns (as hereinafter
defined) required to be filed by or with respect to the Company, (ii) all Taxes
(as hereinafter defined) shown to be due on such Tax Returns, all Taxes required
to be paid on an estimated or installment basis, and all Taxes
(23)
<PAGE> 29
required to be withheld with respect to the Company have been timely paid or, if
applicable, withheld and paid to the appropriate taxing authority in the manner
provided by law, (iii) the reserve for Taxes set forth on the consolidated
balance sheet of the Company and its Subsidiaries as of September 30, 1997 is
adequate for the payment of all Taxes through the date thereof and no Taxes have
been incurred after September 30, 1997 which were not incurred in the ordinary
course of business, (iv) no Federal, state, local or foreign audits,
administrative proceedings or court proceedings are pending with regard to any
Taxes or Tax Returns of the Company and there are no outstanding deficiencies or
assessments asserted or proposed, and (v) there are no outstanding agreements,
consents or waivers extending the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Company, and the Company
is not a party to any agreement providing for the allocation or sharing of
Taxes.
(b) The Company has not filed a consent to the application of
Section 341(f) of the Code.
(c) The Company is not and has not been a United States real
property holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code.
(e) The Company has not been a member of an affiliated group
filing consolidated or combined Tax Returns other than a federal income tax
group the common parent of which is the Company.
(f) For purposes of this Agreement, "TAXES" means all taxes,
charges, fees, levies or other assessments imposed by any United States Federal,
state, or local taxing authority or by any non-U.S. taxing authority, including
but not limited to, income, gross receipts, excise, property, sales, use,
transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments).
(g) For purposes of this Agreement, "TAX RETURN" means any
return, report, information return or other document (including any related or
supporting information and, where applicable, profit and loss accounts and
balance sheets) with respect to Taxes.
(24)
<PAGE> 30
(h) Purchaser and the Company shall cooperate in the
preparation, execution and filing of all returns, applications or other
documents regarding any real property transfer, stamp, recording, documentary or
other taxes (including, without limitation, any New York State Real Estate
Transfer Tax) and any other fees and similar taxes which become payable in
connection with the Merger (collectively, "TRANSFER TAXES"). From and after the
Effective Date, Purchaser shall pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of Shares, all Transfer
Taxes.
Section 4.14. INTELLECTUAL PROPERTY.
(a) Schedule 4.14 of the Disclosure Schedule contains a true
and complete list of all (i) patents and patent applications, (ii) trademark and
service mark registrations and applications, (iii) Computer Software (as
hereinafter defined)(excluding Computer Software generally available for
purchase by the public), (iv) copyright registrations and applications for works
other than the magazines and Web site, and a description of the procedure
followed in registering copyrights in the magazines and Web site, (v) Internet
domain names used or held for use in connection with the business of the Company
and (vi) all material licenses related to the foregoing.
(b) The term "COMPUTER SOFTWARE" shall mean (i) any and all
computer programs and applications consisting of sets of statements and
instructions to be used directly or indirectly in computer software or firmware
whether in source code or object code form, (ii) databases and compilations,
including without limitation any and all data and collections of data, whether
machine readable or otherwise, (iii) all versions of the foregoing including,
without limitation, all screen displays and designs thereof, and all component
modules of source code or object code or natural language code therefor, and
whether recorded on papers, magnetic media or other electronic or non-electronic
device, (iv) all descriptions, flowcharts and other work product used to design,
plan, organize and develop any of the foregoing and (v) all documentation,
including without limitation all technical and user manuals and training
materials, relating to the foregoing.
(c) Except as set forth in Schedule 4.14(c) of the Disclosure
Schedule, the Company owns or has the valid right to use all intellectual
property used by it in connection with its business, including: (i) trademarks
and service marks (registered or unregistered) and trade names, and all goodwill
associated therewith; (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, processes and computer programs, software and
databases (including source code); (iii) trade secrets and the right to limit
the use or disclosure thereof; (iv) copyrights in all works, including software
programs and mask works; and (v) domain names (collectively "INTELLECTUAL
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PROPERTY"), except where the failure to own or have the valid right to use the
Intellectual Property would not have a Company Material Adverse Effect.
(d) Except as set forth in Schedule 4.14(d) of the Disclosure
Schedule, all grants, registrations and applications for Intellectual Property
that are used in and are material to the conduct of the businesses of the
Company as currently conducted (i) are valid, subsisting, in proper form and
have been duly maintained, including the submission of all necessary filings and
fees in accordance with the legal and administrative requirements of the
appropriate jurisdictions and (ii) have not lapsed, expired or been abandoned.
(e) Except as set forth in Schedule 4.14(e) of the Disclosure
Schedule, to the Company's knowledge, (i) there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Company Material Adverse
Effect, and (ii) the conduct of the businesses of the Company as currently
conducted does not conflict with or infringe any proprietary right of any third
party, which conflict or infringement would have a Company Material Adverse
Effect. Except as set forth in Schedule 4.14(e) of the Disclosure Schedule,
there is no claim, suit, action or proceeding pending or, to the Company's
knowledge, threatened against the Company (i) alleging any such conflict or
infringement with any third party's proprietary rights, or (ii) challenging the
ownership, use, validity or enforceability of the Intellectual Property, except
for claims, suits, actions or proceedings which would not have a Company
Material Adverse Effect.
(f) All consents, filings and authorizations by or with third
parties necessary with respect to the consummation of the transactions
contemplated hereby as they may affect the Intellectual Property have been
obtained, except where the failure to have obtained such consents, filings or
authorizations would not have a Company Material Adverse Effect.
(g) Except as set forth in Schedule 4.14(g) of the Disclosure
Schedule, the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property, except for breaches which would not have a Company
Material Adverse Effect.
(h) Except as set forth in Schedule 4.14(h) of the Disclosure
Schedule, no former or present employees, officers or directors of the Company
hold any right, title or interest directly or indirectly, in whole or in part,
in or to any Intellectual Property.
Section 4.15. CONTRACTS.
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(a) Other than the contracts or agreements of the Company
included as exhibits to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1997, the Company's Quarterly Reports on Form 10-Q for
the fiscal quarters ended December 31, 1997, March 31, 1998 and June 30, 1998,
or any periodic filing made pursuant to the Exchange Act (the "MATERIAL
CONTRACTS"), and contracts or agreements between the Company and its wholly
owned Subsidiaries or between wholly owned Subsidiaries of the Company, each of
the following contracts and agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound (contracts and
agreements of the types described below being "IDENTIFIED CONTRACTS") has been
previously delivered to Purchaser, in each case as such Identified Contract is
in effect on the date hereof:
(i) contracts and agreements for the purchase of inventories,
goods or other materials by, or for the furnishing of services to, the Company
or any of its Subsidiaries that (A) require payments by the Company or any of
its Subsidiaries in excess of $25,000 and (B) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty;
(ii) contracts and agreements for the sale of inventories,
goods or other materials, or for the furnishing of services, by the Company or
any of its Subsidiaries that (A) require payments to the Company or any of its
Subsidiaries in excess of $100,000 and (B) have a term of one year or more and
are not terminable by the Company or Subsidiary party thereto, as the case may
be, on notice of six months or less without penalty;
(iii) manufacturer's representative, sales agency and
distribution contracts and agreements that (A) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty, or (B) are otherwise
material;
(iv) contracts and agreements (A) governing the terms of
indebtedness, or guarantees of indebtedness, of, or secured by assets of, the
Company or any of its Subsidiaries in excess of $100,000 principal amount in the
aggregate, or (B) governing the terms of "synthetic" or capital leases pursuant
to which the Company or any of its Subsidiaries has financial obligations in
excess of $100,000, or (C) providing for all obligations of the Company and its
Subsidiaries in respect of interest rate swap or similar agreements, commodity
swaps or options or similar agreements or foreign currency hedge, exchange or
similar agreements or any other derivative instrument;
(v) shareholder, voting trust or similar contracts and
agreements relating to the voting of shares or other equity or debt interests of
the Company or any of its Subsidiaries;
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(vi) contracts and agreements entered into since January 1,
1995 providing for the acquisition or disposition of assets having a value in
excess of $500,000 other than sales or purchases of inventories in the ordinary
course of business and sales of obsolete equipment;
(vii) all of the leases, subleases, licenses and other
agreements relating to or constituting real property, each with a term of one
year or more and an annual payment obligation in excess of $50,000;
(viii) joint venture agreements, partnership agreements and
other similar contracts and agreements involving a sharing of profits and
expenses;
(ix) contracts and agreements governing the terms of
indebtedness of third parties (A) owed to the Company or any of its
Subsidiaries, other than receivables arising from the sale of goods or services,
or loans or advances not exceeding $60,000 in the aggregate made to employees of
the Company or any of its Subsidiaries, by the Company or such Subsidiary in the
ordinary course of business consistent with past practice, or (B) to or
guaranteed by the Company or any of its Subsidiaries;
(x) contracts and agreements prohibiting or materially
restricting the ability of the Company or any of its Subsidiaries to conduct its
business, to engage in any business or operate in any geographical area or to
compete with any Person, other than (A) distribution (including independent
sales representative) contracts and agreements that have a term of less than one
year or are terminable by the Company or any Subsidiary of the Company party
thereto, as the case may be, on notice of six months or less without penalty,
and, in each case, which are not material to the Company and its Subsidiaries
taken as a whole and (B) supplier and customer agreements relating to
non-disclosure of confidential information of the other party which are not
material to the Company and its Subsidiaries taken as a whole;
(xi) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of the Company
or any of its Subsidiaries; and
(xii) contracts and agreements that are material to the
business, operations, results of operations, condition (financial or otherwise),
assets or properties of the Company and its Subsidiaries taken as a whole.
(b) Each contract or agreement to which the Company or any of
its Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to the
actual knowledge of the Company, any other Person, is in breach of, or default
under, any such contract or agreement, and no event has occurred that with
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notice or passage of time or both would constitute such a breach or default
thereunder by the Company or any of its Subsidiaries, or, to the actual
knowledge of the Company, any other Person, except for such failures to be in
full force and effect and such breaches and defaults as individually and in the
aggregate would not have or result in a Company Material Adverse Effect.
Section 4.16. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the SEC Reports filed prior to the
date hereof or as disclosed on Schedule 4.16(a) of the Disclosure Schedule and
except for those noncompliance matters that have been and are resolved, the
Company and its Subsidiaries are in compliance with all applicable Environmental
Laws (as hereinafter defined).
(b) Except as disclosed in the SEC Reports filed prior to the
date hereof or as disclosed on Schedule 4.16(b) of the Disclosure Schedule,
there are no Environmental Claims (as hereinafter defined) pending or, to the
actual knowledge of the Company, threatened, against the Company or any of its
Subsidiaries that individually or in the aggregate would have or result in a
Company Material Adverse Effect.
(c) The Company has disclosed and, where requested, made
available to Purchaser all material information, including such studies,
analyses and test results, in the possession, custody or control of or otherwise
known and available to the Company or any of its Subsidiaries relating to the
environmental conditions on, under or about any of the properties or assets
owned, leased, or operated by any of the Company and its Subsidiaries or any
predecessor in interest thereto at the present time or in the past.
(d) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the Company or any
of its Subsidiaries by any Person or entity alleging any potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, or
penalties) arising out of, based on, or resulting from the presence, or Release
into the environment, of any Hazardous Substance (as hereinafter defined) at any
location, whether or not owned, leased, operated or used by the Company or its
Subsidiaries;
(ii) the term "Environmental Laws" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous Substances,
or otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental
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Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act, and (2) the Occupational Safety and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and oil and
petroleum products, (2) any substance that is or contains friable asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials, (3) any
substance that requires removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste" or "hazardous substance"
thereunder, or (4) any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous; in
each case in clauses (1)-(4) above which is regulated under any Environmental
Law; and
(iv) the term "Release" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping,
emptying, migration, transporting, placing and the like, including into or upon,
any land, soil, surface water, ground water or air, or otherwise entering into
the environment.
Section 4.17. REQUIRED VOTE BY COMPANY STOCKHOLDERS. The
affirmative vote of the holders of a majority of the outstanding Shares entitled
to vote hereon is the only vote of any class of capital stock of the Company
required by Delaware law or the Certificate of Incorporation or the By-Laws of
the Company to adopt this Agreement and approve the transactions contemplated
hereby. Each of the directors and executive officers of the Company has informed
the Company that he intends to vote any Shares he owns in favor of approval and
adoption of the Merger Agreement.
Section 4.18. OPINIONS OF FINANCIAL ADVISOR. The Company has
received an opinion of Allen & Company Incorporated to the effect that, as of
the date hereof, the consideration to be received by the holders of Shares,
Options and Warrants of the Company pursuant to the Offer and the Merger is fair
to such holders from a financial point of view.
Section 4.19. AFFILIATE TRANSACTIONS. Schedule 4.19 of the
Disclosure Schedule contains a complete and correct list of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business, to
or by which the Company or any of its Subsidiaries, on the one hand, and
Stockholder or any of his affiliates (other than the Company or any of its
Subsidiaries), on the other hand, are or have been a party or otherwise bound or
affected, and that (i) are currently pending or in effect or (ii) involve
continuing liabilities and obligations that, individually or in the aggregate,
have been,
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are or will be material to the Company and its Subsidiaries taken as a whole.
Section 4.20. OPTION AGREEMENTS. Each outstanding option
agreement executed in connection with an option grant pursuant to the Option
Plans is in substantially the form attached as an exhibit to the Company's 1995
Stock Option Plan.
Section 4.21. DISCLOSURE. To the actual knowledge of the
Company, this Agreement and each certificate or other instrument required to be
furnished by or on behalf of the Company to Purchaser or Merger Sub pursuant
hereto at or prior to the Closing, taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. CONDUCT OF BUSINESS PENDING THE MERGER. (i) The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time or earlier termination of this Agreement, unless the Purchaser
shall otherwise consent in writing:
(a) the business of the Company shall be conducted only in,
and the Company s all not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company will
use its reasonable efforts to preserve substantially intact the business
organization of the Company, to keep available the services of the present
officers, employees and consultants of the Company and to preserve the present
relationships of the Company with customers, suppliers and other Persons with
which the Company has significant business relations.
(b) the Company will not amend its Certificate of
Incorporation or By-Laws;
(c) the Company will not declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock; and neither the Company nor any of its Subsidiaries will
(i) issue, sell, transfer, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class of the Company or any of its Subsidiaries, other than (A) issuances
of Shares pursuant to securities, options, warrants, calls, commitments or
rights existing at the date hereof and previously disclosed to the
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Purchaser in writing (including as disclosed in the SEC Reports) or (B)
issuances to employees pursuant to any of the Option Plans of stock options to
purchase in the aggregate up to 10,000 shares of Common Stock which options are
exercisable at a price (which price shall be set no earlier than after the tenth
trading day following the date of this Agreement) equal to or greater than fair
market value (as defined in the relevant Option Plan) on the date of grant; (ii)
incur any long-term indebtedness (whether evidenced by a note or other
instrument, pursuant to a financing lease, sale-leaseback transaction, or
otherwise) or incur short-term indebtedness other than under lines of credit
existing on the date hereof; (iii) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock or other securities; or (iv)
enter into, amend, terminate, renew or fail to use reasonable efforts to renew
in any material respect any (x) Material Contract or (y) Identified Contract
except in the ordinary course of business consistent with past practice;
(d) except as set forth on Schedule 5.1(d) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries will, except for
normal increases in the ordinary course of business consistent with past
practice or pursuant to employment contracts in effect on the date hereof, (i)
grant any increase in the compensation or benefits payable or to become payable
by the Company or any of its Subsidiaries to any employee; (ii) adopt, enter
into, amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries;
(e) neither the Company nor its Subsidiaries will change the
accounting principles used by it unless required by GAAP (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting principles);
(f) except as set forth on Schedule 5.1(f) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or
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vendors in the ordinary course of business consistent with past practice) for an
amount that in the aggregate is material, individually or in the aggregate, to
the Company and its Subsidiaries, taken as a whole;
(g) except as set forth on Schedule 5.1(g) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets except in the ordinary
course of business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall
release any third party from its obligations (i) under any existing standstill
agreement or arrangement relating to a proposed Acquisition Transaction (as
defined in Section 5.2(c)), unless the Board determines in its good faith,
reasonable judgment, after consultation with its financial advisors and outside
legal counsel, that the failure to do so would create a reasonable possibility
of a breach of the fiduciary duties of the Board of Directors under applicable
law, or (ii) otherwise under any confidentiality or other similar agreement,
except for modifications of any such obligations under existing commercial
arrangements in the ordinary course of business consistent with past practice;
(i) except as set forth on Schedule 5.1(i) of the Disclosure
Schedule, the Company and its Subsidiaries shall not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets;
(j) neither the Company nor its Subsidiaries shall compromise,
settle, grant any waiver or release relating to or otherwise adjust any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any Litigation, except for any such
compromise, settlement, waiver, release or adjustment (x) in the ordinary course
of business consistent with past practice, or involving a payment by the Company
or any of its Subsidiaries not in excess of $50,000 in the aggregate, or (y) set
forth on Schedule 5.1(j) of the Disclosure Schedule, following prior notice to
and consultation with the Purchaser; and
(k) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing.
(ii) Purchaser and Merger Sub covenant and agree that, between
the date of consummation of the Offer and the Effective Time or earlier
termination of this Agreement, the business of iWorld shall be conducted only
in, and neither Purchaser nor Merger Sub shall take any action except in, the
ordinary course of business (as in effect with respect to the iWorld Assets (as
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defined in Section 6.10) as of the date of consummation of the Offer) and in a
manner consistent with iWorld's past practice; and Purchaser and Merger Sub will
use their reasonable efforts to preserve substantially intact the business
organization of iWorld, to keep available the services of the present officers,
employees and consultants of the Company with respect to iWorld and to preserve
the present relationships of iWorld with customers, suppliers and other Persons
with which iWorld has significant business relations.
Section 5.2. NO SHOPPING. (a) The Company and its subsidiaries
will not, directly or indirectly, through any officer, director, agent,
financial adviser, attorney, accountant or other representative or otherwise,
solicit, initiate or encourage submission of proposals or offers from any Person
relating to, or that could reasonably be expected to lead to, an Acquisition
Transaction or participate in any negotiations or discussions regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek an Acquisition
Transaction; PROVIDED, that, prior to the purchase of and payment for Shares by
Purchaser pursuant to the Offer and prior to such time as Purchaser shall have
nominated and the Company shall have caused Purchaser's nominees to constitute a
majority of the Board of Directors (provided that the Company has complied with
the requirements set forth in Section 1.3 of this Agreement), the Company may,
in response to an unsolicited written proposal with respect to an Acquisition
Transaction from a third party that the Board of Directors determines, in its
good faith and reasonable judgment, after consultation with and the receipt of
the advice of its financial advisor and outside counsel, is a Superior Proposal,
(i) furnish information to, and negotiate, explore or otherwise engage in
substantive discussions with such third party, only if the Board of Directors
determines, in good faith and reasonable judgment after consultation with its
financial advisors and outside legal counsel, that failing to take such action
would create a reasonable possibility of a breach of the fiduciary duties of the
Board of Directors under applicable law and (ii) take and disclose to the
Company's stockholders a position with respect to the Merger or another
Acquisition Transaction proposal, or amend or withdraw such position, pursuant
to Rules 14d-9 and 14e-2 under the Exchange Act.
(b) Except as expressly permitted by this Section 5.2(b),
neither the Board of Directors nor any committee thereof may (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Purchaser or Merger Sub, the approval or recommendation by the Board of
Directors or such committee of the Offer, the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Transaction, or (iii) cause the Company to enter into any letter of
intent, agreement in
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principle, acquisition agreement or other similar agreement related to any
Acquisition Transaction (each, an "ACQUISITION AGREEMENT"). Notwithstanding the
foregoing, prior to the purchase of and payment for Shares by Purchaser pursuant
to the Offer and prior to such time as Purchaser shall have nominated and the
Company shall have caused Purchaser's nominees to constitute a majority of the
Board of Directors (provided that the Company has complied with the requirements
set forth in Section 1.3 of this Agreement), in response to an unsolicited
Acquisition Transaction proposal, if the Board of Directors determines, in its
good faith, reasonable judgment, after consultation with and the receipt of the
advice of its financial advisor and outside counsel, that such proposal is a
Superior Proposal and that failure to do any of the actions set forth in clauses
(i), (ii) or (iii) above would create a reasonable possibility of a breach of
the fiduciary duties of the Board of Directors under applicable law, the Board
of Directors may withdraw or modify its approval or recommendation of the Offer,
the Merger or this Agreement, approve or recommend an Acquisition Transaction,
cause the Company to enter into an Acquisition Agreement or terminate this
Agreement pursuant to Section 8.1(d)(iii); PROVIDED, however, that the Merger
Agreement may not be terminated until after the expiration of the Offer.
(c) The Company will (i) immediately (and in any event, no
later than one business day after receipt) advise Purchaser in writing of the
receipt of request for information or any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 5.2(a),
specifying the material terms and conditions of such proposed Acquisition
Transaction and (ii) keep Purchaser reasonably informed of the status of any
such request or proposed Acquisition Transaction. If any such inquiry or
proposal is in writing, the Company shall promptly deliver to Purchaser a copy
of such inquiry or proposal.
(d) For purposes of this Agreement, (i) "ACQUISITION
TRANSACTION" means (other than the transactions contemplated by this Agreement)
(x) a merger, consolidation or other business combination, share exchange, sale
of shares of capital stock, tender offer or exchange offer or similar
transaction involving the Company or any of its Subsidiaries, (y) acquisition in
any manner, directly or indirectly, of a material interest in any voting
securities of, or a material equity interest in a substantial portion of the
assets of, the Company or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions which is structured to
permit a third party to acquire beneficial ownership of a majority or greater
equity interest in the Company, or (z) the acquisition in any manner, directly
or indirectly, of any material portion of the business or assets (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale) of the Company and (ii) "SUPERIOR PROPOSAL"
means a proposed Acquisition Transaction involving at least 50% of the shares of
capital stock or a material portion of the assets of
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the Company that the Board of Directors determines, after consulting with the
Company's financial advisors and outside counsel, to be more favorable to the
Company's stockholders than the Merger.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT. (a) If required by applicable
law in order to consummate the Merger, as promptly as practicable after the
purchase of and payment for Shares by Purchaser pursuant to the Offer, the
Company shall prepare and file with the SEC, and shall use all reasonable
efforts to have cleared by the SEC, and promptly thereafter shall mail to its
stockholders, the Proxy Statement. The Proxy Statement shall contain the
recommendation of the Board of Directors that stockholders of the Company
approve and adopt this Agreement and approve the Merger and the other
transactions contemplated hereby. The Company agrees not to mail the Proxy
Statement to its stockholders until Purchaser confirms that the information
provided by Purchaser continues to be accurate. If at any time prior to the
Company Stockholders Meeting any event or circumstance relating to the Company
or any of its Subsidiaries or affiliates, or its or their respective officers or
directors, should be discovered by the Company that is required to be set forth
in a supplement to the Proxy Statement, the Company shall promptly inform
Purchaser and Merger Sub, so supplement the Proxy Statement and mail such
supplement to its stockholders.
(b) If required, the Company, Purchaser and Merger Sub shall
cooperate with one another in the preparation and filing of the Schedule 13E-3
and shall use all reasonable efforts to promptly obtain and furnish the
information required to be included in the Schedule 13E-3 and to respond
promptly to any comments or requests made by the SEC with respect to the
Schedule 13E-3. Each party hereto shall promptly notify the other parties of the
receipt of comments of, or any requests by, the SEC with respect to the Schedule
13E-3, and shall promptly supply the other parties with copies of all
correspondence between such party (or its representatives) and the SEC (or its
staff) relating thereto. The Company, Purchaser and Merger Sub each agrees to
correct any information provided by it for use in the Schedule 13E-3 which shall
have become, or is false or misleading..
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY. (a) If
required by applicable law in order to consummate the Merger, following the
purchase of and payment for Shares by Purchaser pursuant to the Offer, the
Company shall promptly take all action necessary in accordance with Delaware Law
and its Certificate of Incorporation and By-Laws to convene the Company
Stockholders Meeting. The Company shall use its best efforts to
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solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of the
Purchaser, advisable to secure any vote or consent of stockholders required by
Delaware Law to effect the Merger. The Purchaser agrees that it shall vote, or
cause to be voted, in favor of the Merger all Shares directly or indirectly
beneficially owned by it.
(b) Notwithstanding Section 6.2(a) hereof, in the event that
Purchaser, the Merger Sub or any other Subsidiary of Purchaser acquires at least
90% of the outstanding Shares pursuant to the Offer or otherwise, the parties
hereto agree, at the request of Purchaser or Merger Sub, to take all necessary
and appropriate action to cause the Merger to become effective in accordance
with Section 253 of Delaware Law without a meeting of stockholders of the
Company as soon as practicable after the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer.
SECTION 6.3. ADDITIONAL AGREEMENTS. The Company, the Purchaser
and Merger Sub will each comply in all material respects with all applicable
laws and with all applicable rules and regulations of any governmental authority
in connection with its execution, delivery and performance of this Agreement and
the transactions contemplated hereby. Each of the parties hereto agrees to use
all reasonable efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to the Purchaser, and the Purchaser shall give prompt
notice to the Company, of (i) the occurrence or non-occurrence of any event
whose occurrence or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (B) any condition set forth in Annex I to be unsatisfied in
any material respect at any time from the date hereof to the date the Purchaser
purchases Shares pursuant to the Offer and (ii) any material failure of the
Company, the Purchaser or Merger Sub, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.4
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.5. ACCESS TO INFORMATION.
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<PAGE> 43
(a) From the date hereof to the Effective Time, the Company
shall, and shall cause each of its subsidiaries, its officers, directors,
employees, auditors and agents to, afford the Purchaser Representatives (as
defined in Section 6.5(b)) reasonable access at all reasonable times to its
officers, employees, agents, properties, offices and other facilities and to all
books and records, and shall furnish the Purchaser and Merger Sub with all
financial, operating and other data and information as the Purchaser or Merger
Sub, through the Purchaser Representatives, may reasonably request.
(b) The Purchaser agrees that it shall, and shall cause its
affiliates and each of their respective officers, directors, employees,
financial advisors, agents and other authorized representatives (the "PURCHASER
REPRESENTATIVES"), to hold in strict confidence all data and information
obtained by them from the Company (unless such information is or becomes
publicly available without the fault of any of the Purchaser Representatives or
public disclosure of such information is required by law in the opinion of
counsel to the Purchaser) and shall insure that the Purchaser Representatives do
not disclose such information to others without the prior written consent of the
Company. Notwithstanding anything herein to the contrary, the terms of the
Confidentiality Agreement, dated September 23, 1998 (the "CONFIDENTIALITY
AGREEMENT"), executed by the Purchaser shall remain in full force and effect.
(c) In the event of the termination of this Agreement, the
Purchaser shall, and shall cause its affiliates to, return promptly every
document furnished to them by the Company or any of its representatives in
connection with the transactions contemplated hereby and any copies thereof
which may have been made, and shall cause the Purchaser Representatives to whom
such documents were furnished promptly to return such documents and any copies
thereof any of them may have made, other than documents filed with the SEC or
otherwise publicly available.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. The Purchaser and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer or the Merger
and shall not issue any such press release or make any such public statement
before such consultation, except as may be required by law or applicable stock
exchange rules.
SECTION 6.7. BEST EFFORTS; COOPERATION. Upon the terms and
subject to the conditions hereof, each of the parties hereto agrees to use its
best efforts to take or cause to be taken all actions and to do or cause to be
done all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and shall use its best efforts to obtain all
necessary waivers, consents and approvals, and to effect all necessary filings
under the Exchange Act and the HSR Act. The parties shall cooperate in
responding to inquiries
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<PAGE> 44
from, and making presentations to, regulatory authorities. In addition,
Purchaser and Merger Sub shall use all reasonable efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable to consummate the Financing.
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.
(a) The Certificate of Incorporation and By-Laws of
the Surviving Corporation shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who as of the date hereof
were directors, officers, employees, fiduciary, agents of the Company or
otherwise entitled to indemnification under the Certificate of Incorporation,
By-Laws or indemnification agreements (the "INDEMNIFIED PARTIES") and such
Certificate of Incorporation of the Surviving Corporation shall include
provisions providing for advancement of expenses to such Indemnified Parties in
accordance with Article VII of the Company's certificate of incorporation and in
accordance with Section 145 of Delaware Law. It is understood and agreed that
the Company shall, to the fullest extent permitted under Delaware law and
regardless of whether the Merger becomes effective, indemnify, defend and hold
harmless, and after the Effective Time, the Purchaser will cause the Surviving
Corporation, to the fullest extent permitted under Delaware Law, to indemnify,
defend and hold harmless, each Indemnified Party against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, including without limitation
liabilities arising out of this transaction, to the extent that it was based on
the fact that such Indemnified Party is or was a director, officer or employee
of the Company and arising out of actions or omissions or alleged actions or
omissions occurring at or prior to the Effective Time, and in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Company or the Surviving Corporation, as
applicable, shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation will cooperate in
the defense of any such matter; PROVIDED, HOWEVER, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
FURTHER, PROVIDED, that neither the Company nor the Surviving Corporation shall
be obliged pursuant to this Section 6.8 to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single action except to
the extent that, in the opinion of counsel for the Indemnified Parties, two or
more of such Indemnified Parties have conflicting interests in the
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<PAGE> 45
outcome of such action. For six years after the Effective Time, the Surviving
Corporation shall be required to maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently covered
by the Company's officers and directors liability insurance policy on terms not
less favorable than those in effect on the date hereof in terms of coverage and
amounts; provided, however, that the Surviving Corporation will not be required
to expend in any year an amount in excess of 200% of the annual aggregate
premiums currently paid by the Company for such insurance; and provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation will be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of its Board of Directors,
for a cost not exceeding such amount. This Section 6.8 shall survive the
consummation of the Merger. The Purchaser shall cause Surviving Corporation to
reimburse all expenses, including reasonable attorney's fees and expenses,
incurred by any person to enforce the obligations of the Purchaser and the
Surviving Corporation under this Section 6.8. Notwithstanding Section 9.7
hereof, this Section 6.8 is intended to be for the benefit of and to grant third
party rights to Indemnified Parties whether or not parties to this Agreement,
and each of the Indemnified Parties shall be entitled to enforce the covenants
contained herein.
(b) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.8.
Section 6.9. EMPLOYEE BENEFITS. At the Effective Time, the
Surviving Corporation shall continue as the Plan Sponsor of each Employee Plan.
Each of the parties hereto agrees that participants' rights to the
employer-provided benefits for nonunion employees under the Employee Plans as in
effect as of the Effective Time shall be continued under the same or an
equivalent plan and shall not be reduced for at least one year following the
Effective Time, except (i) to the extent provided in Section 2.9 hereof or (ii)
as required by applicable law (including as required to preserve any favorable
tax treatment afforded such benefits as of the Effective Time). Thereafter, such
participants shall in any event be credited with their service with the Company
in determining their right to participate and vesting under any successor
Employee Plans.
Section 6.10. RELATED AGREEMENTS. At the Effective Time, (i)
Purchaser shall cause (A) all assets (the "iWorld Assets") of iWorld
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
to be contributed to a newly formed Delaware limited liability company
("iWorld") and
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<PAGE> 46
(B) the acquisition by the Stockholder and/or one or more Persons under his
control (such acquisition to be structured by the parties hereto so as to comply
with the Securities Act) of 80.1% of the equity interests in iWorld for an
aggregate purchase price of $18.0 million and (ii) (A) the agreement in
substantially the form attached hereto as Exhibit A (the "iWORLD AGREEMENT"),
(B) the Services Agreement between iWorld and Purchaser in substantially the
form attached hereto as Exhibit B, (C) the Trademark Licensing Agreement between
iWorld and Purchaser in substantially the form attached hereto as Exhibit C, (D)
the Warrant Agreement between Purchaser, the Stockholder and iWorld in
substantially the form attached hereto as Exhibit D and (E) the Consulting
Agreement between Purchaser and the Stockholder in substantially the form
attached hereto as Exhibit E shall each be duly executed and delivered by the
parties thereto. Schedule 6.10 sets forth a substantially complete list of the
iWorld Assets. The Purchaser and the Company shall each use their best efforts
to reach a definitive agreement regarding which of the Company's assets shall
constitute all of the iWorld Assets.
Section 6.11. TRANSFER TAXES. The Purchaser and the Company
shall cooperate in the preparation, execution and filing of all returns,
applications or other documents regarding any real property transfer, stamp,
recording, documentary or other taxes (including, without limitation, any New
York State Real Estate Transfer Tax) and any other fees and similar taxes which
become payable in connection with the Merger (collectively, "TRANSFER TAXES").
From and after the Effective Date, the Purchaser shall pay or cause to be paid,
without deduction or withholding from any amounts payable to the holders of
Shares, all Transfer Taxes.
Section 6.12. FINANCIAL STATEMENTS; FINANCING. (a) The
Company shall provide to the Purchaser, no later than October 20, 1998,
unaudited financial statements (without accompanying notes) for the Company's
fiscal year ended September 30, 1998, and shall provide to the Purchaser, no
later than November 15, 1998, audited financial statements (including
accompanying notes) for such fiscal year.
(b) Upon request of the Purchaser and subject to Section 6.5
of this Agreement, the Company shall provide to the Purchaser or its
representatives such documentation and information as may reasonably be required
in connection with the Purchaser obtaining the Financing (including, if DLJ
deems it necessary, participation in road show presentations).
Section 6.13. Tax Indemnity. The Stockholder agrees to pay and
indemnify Purchaser for any liabilities arising from the Company's failure to
withhold amounts in respect of income taxes due as a result of the Stockholder's
exercise of options to purchase Company Common Stock.
(41)
<PAGE> 47
ARTICLE VII.
CONDITIONS OF MERGER
Section 7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all of which may be waived by the parties hereto in
writing, in whole or in part, to the extent permitted by applicable law):
(a) OFFER. The Purchaser shall have made, or caused to be
made, the Offer and shall have purchased, or caused to be purchased, the Shares
pursuant to the Offer; PROVIDED, that this condition shall be deemed to have
been satisfied with respect to the obligation of the Purchaser and Merger Sub to
effect the Merger if the Purchaser fails to accept for payment or pay for Shares
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
(b) STOCKHOLDER APPROVAL. The Merger and this Agreement shall
have been approved and adopted by the requisite vote of the stockholders of the
Company, if required by Delaware Law.
(c) NO CHALLENGE. No statute, rule, regulation, judgment,
writ, decree, order or injunction (whether temporary, preliminary or permanent)
shall have been promulgated, enacted, entered or enforced, and no other action
shall have been taken, by any government or governmental, administrative or
regulatory authority or by any court of competent jurisdiction, that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
Section 7.2. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER
SUB TO EFFECT THE MERGER. The obligations of Purchaser and Merger Sub to effect
the Merger shall be further subject to the satisfaction or waiver of the
following condition prior to the Effective Time:
(a) The Company shall have performed in all material respects
all obligations and complied in all material respects with all agreements and
covenants of the Company required to be performed or complied with by it under
this Agreement, including, without limitation, its obligations under Section 5.1
hereof.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
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<PAGE> 48
SECTION 8.1. TERMINATION. This Agreement may be terminated at
any time before the Effective Time, whether before or after stockholder
approval:
(a) By mutual written consent of the Boards of Directors of
the Purchaser and the Company; or
(b) By either the Purchaser or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use their best
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
(c) By either the Purchaser or the Company if the Offer has
not been consummated within 120 days of the date of this Agreement (unless
otherwise extended by the parties hereto); PROVIDED, that no party may terminate
this Agreement pursuant to this paragraph (c) if such party's failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date; or
(d) By the Company (i) if there shall be a material breach of
any of the Purchaser's or Merger Sub's representations, warranties or covenants
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by Purchaser from the Company, (ii) there shall have
been a material breach on the part of Purchaser or Merger Sub of any of their
respective covenants or agreements hereunder, which breach shall not have been
cured within ten days of the receipt of written notice thereof by Purchaser from
the Company, or (iii) in accordance with Section 5.2(b); PROVIDED that the
termination described in this clause (iii) shall not be effective unless and
until the Company shall have paid to the Purchaser the fee described in Section
8.2(b) hereto; PROVIDED, FURTHER, that this Agreement may not be terminated
pursuant to this clause (iii) until after the Expiration Date of the Offer; or
(e) By the Purchaser, if (i) there shall be a material breach
of any of the Company's representations, warranties or covenants hereunder,
which breach shall not have been cured within ten days of the receipt of written
notice thereof by the Company from Purchaser or (ii) there shall have been a
material breach on the part of the Company of any of its covenants or agreements
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by the Company from Purchaser; or
(f) By the Purchaser, at any time prior to the purchase of and
payment for the Shares pursuant to the Offer, if (i) the Board of Directors
shall withdraw, modify or change its
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<PAGE> 49
recommendation or approval in respect of this Agreement, the Offer or the
Merger, (ii) the Board of Directors shall have recommended any proposal other
than by the Purchaser in respect of an Acquisition Transaction, (iii) any Person
or group (as defined in Section 13(d)(3) of the Exchange Act) other than the
Purchaser, Merger Sub or any of their respective subsidiaries or affiliates
shall have become the beneficial owner of more than 25% of the outstanding
Shares (either on a primary or a fully diluted basis); provided, however, that
this provision shall not apply to any Person that owns more than 25% of the
outstanding Shares on the date hereof or (iv) in the case of clauses (i) and
(ii), the Board of Directors shall have resolved to take any such action; or
(g) By either the Purchaser or the Company if the Offer
expires or is terminated or withdrawn pursuant to its terms without any Shares
being purchased thereunder by the Purchaser as a result of the occurrence of any
of the events set forth in Annex I; PROVIDED that the termination described in
this Section 8.1(g) shall not be effective unless and until the Company shall
have paid to the Purchaser the fee described in Section 8.2(b) hereof, if
payable pursuant to such provision.
SECTION 8.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided
in Section 8.1 hereof, this Agreement shall forthwith become void and there
shall be no liability on the part of the Purchaser, Merger Sub or the Company,
except (i) as set forth in Sections 6.5 (b) and (c), 8.2(b) and 9.3 hereof and
(ii) nothing herein shall relieve any party from liability for any breach of
this Agreement.
(b) (i) If this Agreement is terminated at such time that this
Agreement is terminable pursuant to Section 8.1(e) other than as a result of the
occurrence of an act of God that causes the Company to be in such breach, then
(A) the Company shall promptly (but not later than two business days after
receipt of notice from Purchaser) pay to Purchaser an amount equal to the
Purchaser's actual and reasonably documented Expenses, not to exceed $6.0
million; PROVIDED, HOWEVER, that, if this Agreement is terminated by Purchaser
as a result of a willful breach by the Company, Purchaser may pursue any
remedies available to it at law or in equity and shall, in addition to its
Expenses (which shall be paid as specified above and shall be limited to $6.0
million), be entitled to recover such additional amounts as Purchaser may be
entitled to receive at law or in equity; and (B) if (x) at the time of the
Company's willful breach of this Agreement, there shall have been a third-party
offer or proposal with respect to an Acquisition Transaction which at the time
of such termination shall not have been rejected by the Company and the Board of
Directors and withdrawn by the third party, and (y) within thirteen months of
any
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<PAGE> 50
termination by the Purchaser, the Company or an affiliate thereof becomes a
subsidiary of such offeror or a subsidiary of an affiliate of such offeror or
accepts a written offer to consummate or consummates an Acquisition Transaction
with such offeror or an affiliate thereof, then the Company (jointly and
severally with its affiliates), upon the signing of a definitive agreement
relating to such an Acquisition Transaction, or, if no such agreement is signed
then at the closing (and as a condition to the closing) of the Company becoming
such a subsidiary or of such Acquisition Transaction, will pay to the Purchaser
a fee equal to $10.0 million in cash; provided that in no event shall the
termination fee provided for in Section 8.2(b)(ii) be payable if the termination
fee referred to in this Section 8.2(b)(i)(B) has been paid.
(ii) If (A) the Purchaser shall have terminated this Agreement
pursuant to Section 8.1(f), (B) the Company shall have terminated this Agreement
pursuant to Section 8.1(d)(iii) or (C) this Agreement is terminated as a result
of the Company's material breach of Section 6.2, then in any such case the
Company shall promptly, but in no event later than two business days after the
date of such termination or event, pay the Purchaser a termination fee of $10.0
million in cash plus an amount, not in excess of $6.0 million, equal to the
Purchaser's actual and reasonably documented Expenses, which amount shall be
payable by wire transfer to such account as the Purchaser may designate in
writing to the Company. No fee or expense reimbursement shall be paid pursuant
to this Section 8.2(b) if the Purchaser shall be in material breach of its
obligations hereunder.
(iii) This Section 8.2(b) will survive any termination of this
Agreement. The term "Expenses" means all out-of-pocket fees, costs and other
expenses incurred or assumed by Purchaser or Merger Sub or incurred on their
behalf in connection with this Agreement or any of the transactions contemplated
hereby, including but not limited to in connection with the negotiation,
preparation, execution and performance of this Agreement, the structuring and
financing of the Merger and the other transactions contemplated hereby, or any
commitments or agreements relating to such financing, including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other Persons and their respective agents and
counsel for arranging, committing to provide or providing any financing for the
Merger and any other transactions contemplated hereby or structuring,
negotiating or advising with respect to such transactions or such financing, and
all fees and expenses of counsel, accountants, experts and environmental,
actuarial, insurance and other consultants to Purchaser or Merger Sub.
ARTICLE IX.
(45)
<PAGE> 51
GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.8 and Section 6.10 shall survive the Effective
Time indefinitely and those set forth in Sections 6.5(b), 6.5(c), 8.2(b) and 9.3
shall survive termination indefinitely.
SECTION 9.2. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made (i) as of the date delivered or sent by facsimile if
delivered personally or by facsimile, and (ii) on the third business day after
deposit in the U.S. mail, if mailed by registered or certified mail (postage
prepaid, return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to the Purchaser or the Merger Sub:
Penton Media, Inc.
1100 Superior Avenue
Cleveland, OH 44114
Attention: Chief Executive Officer
Facsimile: 216-931-9891
With a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Attention: Christopher M. Kelly, Esq.
Facsimile: (216) 579-0212
(b) if to the Company:
Mecklermedia Corporation
20 Ketchum Street
Westport, CT 06880
Attention: Alan M. Meckler
Facsimile: 203-226-8023
(46)
<PAGE> 52
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: William J. Grant, Jr., Esq.
Facsimile: (212) 728-8111
SECTION 9.3. EXPENSES. Except as expressly set forth in
Section 8.2(b), all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
SECTION 9.4. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "CONTROL" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise; and
(c) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or any unincorporated
organization.
SECTION 9.5. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.6. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement, the Voting and Option Agreement, the iWorld Agreement, the
Services Agreement, the Warrant
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<PAGE> 53
Agreement, the Trademark Licensing Agreement, the Consulting Agreement and the
Confidentiality Agreement constitute the entire agreement and supersede any and
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and, except
as otherwise expressly provided herein, this Agreement is not intended to confer
upon any other Person any rights or remedies hereunder.
SECTION 9.8. ASSIGNMENT. This Agreement shall not be assigned
by operation of law or otherwise, except that the Purchaser and Merger Sub may
assign all or any of their rights hereunder to any affiliate of the Purchaser
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State.
SECTION 9.10. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by the Purchaser and Merger Sub, and by action
taken by or on behalf of the Company's Board of Directors at any time before the
Effective Time and at any time before or after approval by the stockholders of
the Company; PROVIDED, HOWEVER, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share will be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.11. WAIVER. At any time before the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only as against such party
and only if set forth in an instrument in writing signed by such party. Any such
waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies herein
provided are cumulative
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<PAGE> 54
and none is exclusive of any other, or of any rights or remedies that any party
may otherwise have at law or in equity.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
(49)
<PAGE> 55
IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
MECKLERMEDIA CORPORATION
By: /S/ ALAN M. MECKLER
---------------------------------------
Name: Alan M. Meckler
Title: Chief Executive Officer
PENTON MEDIA, INC.
By: /s/ THOMAS L. KEMP
---------------------------------------
Name: Thomas L. Kemp
Title: Chief Executive Officer
INTERNET WORLD MEDIA, INC.
By: /s/ THOMAS L. KEMP
---------------------------------------
Name: Thomas L. Kemp
Title: President
ALAN M. MECKLER, solely with respect
to Sections 6.10(ii) and 6.13 of this
Agreement
/s/ ALAN M. MECKLER
---------------------------------------
(50)
<PAGE> 56
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for (A) unless the following conditions shall have been
satisfied: (i) there shall be validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Company Common Stock which,
together with the shares of Company Common Stock to be acquired by Purchaser
from the Stockholder pursuant to Section 7 or Section 11 of the Voting and
Option Agreement, represents at least a majority of the number of Shares
outstanding on a fully diluted basis (assuming the exercise of all outstanding
Options and Warrants) (the "MINIMUM CONDITION"), (ii) any applicable waiting
period under the HSR Act shall have expired or been terminated prior to the
expiration of the Offer, (iii) Purchaser shall have received the proceeds of the
Financing or otherwise obtained funds sufficient to pay the Per Share Amount
multiplied by the number of shares tendered and not validly withdrawn pursuant
to the Offer and (iv) the Company shall have obtained the consent or approval of
each person identified on Exhibit F in connection with the Offer, except those
for which the failure to obtain would not have or give rise to a Company
Material Adverse Effect or (B) if at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer,)
any of the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of competent
jurisdiction or a statute, rule, regulation, executive order or other action
shall have been promulgated, enacted, taken or threatened by a governmental
authority or a governmental, regulatory or administrative agency or commission
of competent jurisdiction which in any such case (i) restrains or prohibits the
making or consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by the Purchaser (or any of
its affiliates or subsidiaries) of any material portion of its or the Company's
business or assets, or compels the Purchaser (or any of its affiliates or
subsidiaries) to dispose of or hold separate any material portion of its or the
Company's business or assets, (iii) imposes material limitations on the ability
of the Purchaser effectively to acquire or to hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by the Purchaser on all
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matters properly presented to the stockholders of the Company, (iv) imposes any
material limitations on the ability of the Purchaser or any of its affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company or (v) which otherwise would have a Company Material
Adverse Effect; or
(b) there shall be instituted or pending any action or
proceeding before any governmental, regulatory or administrative agency or
commission of competent jurisdiction seeking any injunction, order, decree,
judgment or ruling having any effect set forth in (a) above; or
(c) this Agreement shall have been terminated by the Company
or the Purchaser in accordance with its terms; or
(d) (i) any representation or warranty made by the Company in
this Agreement shall not have been true and correct in all material respects
when made, or shall have ceased to be true and correct in all material respects
as of the Expiration Date (as defined in the Offer Documents) as if made as of
such date, or (ii) as of the Expiration Date the Company shall not in all
material respects have performed any obligation or agreement and complied with
its material covenants to be performed and complied with by it under this
Agreement; or
(e) there shall have occurred (i) any suspension or limitation
of trading in securities generally on the New York Stock Exchange (not including
any suspension or limitation of trading in any particular security as a result
of computerized trading limits or any intraday suspension due to "circuit
breakers") or any setting of minimum prices for trading on such exchange, (ii)
any banking moratorium declared by the U.S. Federal or New York authorities or
any suspension of payments in respect of banks in the United States, or (iii) a
decline by 15% or more in the S&P 500 from the level of such index on the date
of this Agreement; or
(f) the Purchaser and the Company shall have agreed that the
Purchaser shall amend the Offer to terminate the Offer or postpone the payment
for Shares pursuant thereto; or
(e) there shall have occurred any event that, individually or
when considered together with any other matter, has had or is reasonably likely
in the future to have a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the circumstances
(including any action or inaction by the Purchaser) giving rise to any such
conditions and may be waived by the Purchaser in whole or in part at any time
and from time to time, in each case, in the exercise of the good faith judgment
of the Purchaser and
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subject to the terms of this Agreement. The failure by the Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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EXHIBIT A
FORM OF iWORLD AGREEMENT
<PAGE> 60
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
IWORLD LLC
A DELAWARE LIMITED LIABILITY COMPANY
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
IWORLD LLC, a Delaware limited liability company (the "Company"), dated as of
_____, 1998, by and among Alan M. Meckler ("Meckler"), Internet World Media,
Inc. ("Internet World") and the additional persons and entities listed on
EXHIBIT A hereto (the "Members").
W I T N E S E T H:
WHEREAS, Internet World (the "Original Member") has formed a
limited liability company pursuant to the provisions of the Delaware Limited
Liability Company Act, DEL. CODE tit. 6, Section 18-101, ET SEQ., as amended
from time to time (the "Act");
WHEREAS, pursuant to that certain [Purchase Agreement] dated
as of ____, 1998 (the "Purchase Agreement"), the Original Member has agreed to
sell an 80.1% interest in the Company to Meckler under the terms and conditions
set forth therein;
WHEREAS, effective immediately upon consummation of the
transactions described in the Purchase Agreement, the Original Member wishes to
amend and restate the Agreement to (i) admit Meckler as the Managing Member;
(ii) reduce the Interest of the Original Member; and (iii) provide for the
affairs of the Company to be conducted as set forth herein; and
WHEREAS, the Members hereby constitute themselves a limited
liability company for the purposes and on the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the
parties hereto, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed by and among
the parties hereto as follows:
ARTICLE I.
INTRODUCTORY PROVISIONS
Section 1.1. CERTAIN DEFINITIONS. As used herein:
"ACT" shall have the meaning set forth in the preamble.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account Balance
of a Member increased by such Member's share of "partner
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minimum gain" and "partner nonrecourse debt minimum gain" as determined pursuant
to Treasury Regulations ss. 1.704-2.
"AFFILIATE" shall mean, with respect to any Person, any other
Person who directly or indirectly controls, is controlled by or is under common
control with such Person, or, in the case of a natural person, any immediate
family member of such Person.
"AGREEMENT" shall mean this Amended and Restated Limited
Liability Company Agreement of iWorld LLC, as originally executed and as
amended, modified or supplemented pursuant to the provisions hereof.
"BOOK VALUE" shall have the meaning given to it in
SECTION 2.2.
"BOARD" shall have the meaning given to it in SECTION 3.2.
"CAPITAL ACCOUNT" has the meaning specified in SECTION 4.1.
"CAPITAL CONTRIBUTION" means a contribution by a Member to the
capital of the Company pursuant to this Agreement. A Capital Contribution may be
in cash or in such other form, including tangible and intangible assets, at such
valuation as shall be established by the Board.
"CERTIFICATE" means the Certificate of Formation of the
Company as filed with the Secretary of State of Delaware, as it may be amended
from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended.
Any reference to a section of the Code shall include a reference to any
amendatory or successor provision thereto.
"FISCAL YEAR" has the meaning specified in SECTION 4.3.
"INDEMNIFIED PERSONS" has the meaning specified in
SECTION 3.3.
"MANAGING MEMBER" shall mean Meckler.
"NET PROFITS" and "NET LOSSES" means the income and loss of
the Company as determined in accordance with the accounting methods followed by
the Company for Federal income tax purposes but including as an item of profit
income exempt from tax and described in Code Section 705(a)(1)(B), treating as
deductions items of expenditure described in, or under Treasury Regulations
deemed described in, Code Section 705(a)(2)(B) and treating as an item of gain
(or loss) both any increase (decrease) in the Book Value of the Partnership's
property under Section 2.2(c) and the excess (deficit), if any, of the fair
market value (taking Section 7701(g) of the Code into account) of
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distributed property over (under) its Book Value. Depreciation, depletion,
amortization, income and gain (or loss) with respect to Company assets shall be
computed with reference to their Book Value rather than to their adjusted bases
in an amount consistent with Treasury Regulations ss. 1.704-1(b)(2)(iv)(g).
Profit or loss resulting from the disposition of assets shall be determined by
reference to Book Value rather than adjusted tax basis.
"NOTICES" has the meaning specified in SECTION 8.1(A).
"OWNERSHIP PERCENTAGE" means the percentage that is equal to
the number of Units held by a Member divided by the total number of Units
outstanding, each as specified on EXHIBIT A hereto, as such Exhibit may be
amended from time to time.
"PERSON" means an individual, corporation, association,
limited liability company, limited liability partnership, partnership, estate,
trust, unincorporated organization or a government or any agency or political
subdivision thereof.
"TRANSFER" has the meaning specified in SECTION 2.6(A).
"TREASURY REGULATIONS" means the regulations promulgated by
the U.S. Department of the Treasury under the Code.
"UNIT" has the meaning set forth in SECTION 2.1.
Section 1.2. NAME. The name of the Company shall be
"iWorld LLC."
Section 1.3. PRINCIPAL PLACE OF BUSINESS. The Company's
principal place of business shall be at such place as the Managing Member shall
designate from time to time.
Section 1.4. PURPOSES. The purposes of the Company shall be to
conduct the Business (as hereinafter defined), as well as any other lawful
business, purpose or activity related to the Internet industry and otherwise
permitted under the laws of the State of Delaware, and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of such purposes. For purposes of this Agreement,
the Company's "Business" consists of an Internet web site that contains the
latest news and resources for the Internet industry, directories of Internet
products and services, back issues of Internet World's print publications and
information about Internet World's Internet World trade shows and conferences.
Section 1.5. DURATION. The Company was formed upon the filing
of a Certificate of Formation with the Office of the Secretary of State of
Delaware pursuant to the Act and shall continue until dissolved pursuant to
SECTION 7.1.
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Section 1.6. LIMITATION OF LIABILITY. All debts, obligations
and liabilities of the Company shall be debts, obligations and liabilities of
the Company as an entity, and shall be paid or satisfied from the assets of the
Company. In no event shall any of the debts, obligations or liabilities of the
Company be payable in whole or in part by (a) any Member, employee, agent,
advisor or other representative of the Company; (b) any direct or indirect
member, general or limited partner or shareholder in, or ultimate beneficial
owner of, a Member, or any other Affiliate (other than the Company itself) of a
Member; or (c) any board member, managing director, officer, employee, agent,
advisor or other representative of any of the Persons referred to in the
preceding clause (b).
ARTICLE II.
CAPITAL CONTRIBUTIONS; OTHER FINANCING;
UNITS
Section 2.1. CAPITAL CONTRIBUTIONS; UNITS. (a) The Capital
Contributions of each Member shall be represented by membership units or
fractions thereof ("Units," and each, a "Unit"). At the initial date of this
Agreement, the number of Units and the corresponding Capital Contribution (which
shall, in the case of Meckler and his Affiliates, be equal to the amount paid by
Meckler and his Affiliates to Internet World for their respective interests in
the Company) and Ownership Percentage for each Member shall be as set forth on
Exhibit A attached hereto. Exhibit A shall be amended from time to time in
accordance with the terms hereof to reflect (i) the admission of new Members and
(ii) appropriate adjustments to such Ownership Percentages and Capital
Contributions.
(b) Except as provided in SECTION 2.7 or SECTION 3.2, no
Person (including any Member) shall be required or permitted to make any
additional Capital Contribution to the Company.
Section 2.2. DETERMINATION OF BOOK VALUE OF COMPANY ASSETS.
(a) BOOK VALUE. Except as set forth below, Book Value of any
Company asset is its adjusted basis for federal income tax purposes.
(b) INITIAL BOOK VALUE. The initial Book Value of any assets
contributed by a Member to the Company shall be the gross fair market value of
such assets at the time of such contribution.
(c) ADJUSTMENTS. The Book Values of all of the Company's
assets shall be adjusted by the Company to equal their
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respective gross fair market values, as determined by the Board by unanimous
vote, as of the following times: (a) the admission of a new Member to the
Company or the acquisition by an existing Member of an additional interest in
the Company from the Company; (b) the distribution by the Company of money or
property to a retiring or continuing Member in consideration for all or a
portion of such Member's interest in the Company; (c) the liquidation of the
Company; and (d) such other times as determined by the Board by unanimous vote.
(d) DEPRECIATION AND AMORTIZATION. The Book Value of a Company
asset shall be adjusted (i) for the depreciation and amortization of such asset
taken into account in computing Net Profits and Net Losses and (ii) for Company
expenditures and transactions that increase or decrease the asset's Federal
income tax basis.
Section 2.3. WITHDRAWAL OF CAPITAL; LIMITATION ON
DISTRIBUTIONS. No Member shall be entitled to withdraw any part of its Capital
Contributions to, or to receive any distributions from, the Company except as
provided in SECTION 6.1 and SECTION 7.2. No Member shall be entitled to demand
or receive (i) interest on its Capital Contributions or (ii) any property from
the Company other than cash except as provided in SECTION 7.2(a).
Section 2.4. ALLOCATION OF NET PROFITS AND NET LOSSES.
(a) (i) Net Profits shall first be allocated in the order of,
in proportion to, and to the extent of, the excess of prior allocations of Net
Losses under SECTION 2.4(b)(ii) below over prior allocations of Net Profits
under this SECTION 2.4(a)(i) and, then, (ii) among the Members in proportion to
their Ownership Percentages.
(b) (i) Net Losses shall first be allocated among the Members
in proportion to their Ownership Percentages until the Capital Account of any
Member is reduced to zero, then (ii) among the Members in proportion to, and to
the extent of, their positive Capital Account balances and, finally, (iii) to
the Members in proportion to their Ownership Percentages.
(c) Tax credits shall be allocated among the Members in
proportion to their Ownership Percentages or as otherwise required by the Code
or Treasury Regulations.
(d) When the Book Value of a Company asset differs from its
basis for Federal or other income tax purposes, solely for purposes of the
relevant tax and not for purposes of computing Capital Account balances, income,
gain, loss, deduction and credit shall be allocated among the Members under the
traditional method without curative allocations under Treasury Regulations ss.
1.704-3(b).
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(e) Notwithstanding the foregoing, allocations of Net Profit
and Net Loss in the taxable year of the Company in which winding up of the
Company commences, and in all subsequent years, shall be made to make the
Adjusted Capital Accounts of the Members stand in proportion to their respective
Ownership Percentages.
Section 2.5. SPECIAL ALLOCATIONS. Notwithstanding the general
allocation rules set forth in SECTION 2.4, the following special allocation
rules (the "Regulatory Allocations") shall apply under the circumstances
described therein:
(a) DEFICIT CAPITAL ACCOUNT AND NONRECOURSE DEBT RULES. The
special rules in this SECTION 2.5(a) apply, in the following order, to take into
account the possibility of Members having deficit Capital Account balances for
which they are not economically responsible and the effect of the Company or any
entity taxed as a partnership in which the Company has an ownership interest
incurring nonrecourse debt.
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. If there is a net
decrease in "partnership minimum gain" during any year, to be determined in
accordance with Treasury Regulations ss. 1.704-2, including the tiered
partnership rules of Treasury Regulations ss. l.704-2(k), each Member shall be
allocated items of income and gain for such year equal to such Member's share of
the net decrease in partnership minimum gain within the meaning of Treasury
Regulations ss. l.704-2(g)(2), except to the extent not required by Treasury
Regulations ss. 1.704-2(f). To the extent that this SECTION 2.5(a)(i) is
inconsistent with Treasury Regulations ss. l.704-2(f) or 1.704-2(k) or
incomplete with respect to such regulations, the minimum gain chargeback
provided for herein shall be applied and interpreted in accordance with such
regulations.
(ii) PARTNERSHIP MINIMUM GAIN CHARGEBACK. If there is a net
decrease in "partner nonrecourse debt minimum gain" during any year, within the
meaning of Treasury Regulations ss. 1.704-2(i)(2), each Member who has a share
of the partner nonrecourse debt minimum gain attributable to such partner
nonrecourse debt, determined in accordance with Treasury Regulations ss.
1.704-2(i)(5), shall be allocated items of income and gain for such year (and,
if necessary, subsequent years) equal to such Member's share of the net decrease
in partner nonrecourse debt minimum gain. This allocation will be made in
accordance with Treasury Regulations ss. 1.704-2(i)(4) and 1.704-2(f)(5). To the
extent that this SECTION 2.5(a)(ii) is inconsistent with Treasury Regulations
ss. 1.704-2(i) or 1.704-2(k) or incomplete with respect to such regulations, the
partner nonrecourse debt minimum gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulations.
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(iii) DEFICIT CAPITAL ACCOUNT CHARGEBACK AND QUALIFIED INCOME
OFFSET. If any Member has a deficit balance in its Capital Account at the end of
any year, including a deficit balance for such Member caused or increased by an
adjustment, allocation or distribution described in Treasury Regulations ss.
1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Member shall be allocated items of
income and gain (consisting of a pro rata portion of each item of Company
income, including gross income and gain) in an amount and manner sufficient to
eliminate such deficit balance in its Capital Account as quickly as possible to
the extent required by Treasury Regulations ss. 1.704-1(b)(2)(ii). This SECTION
2.5(a)(iii) is intended to constitute a "qualified income offset" pursuant to
Treasury Regulations ss. 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(iv) PARTNER NONRECOURSE DEDUCTIONS. Any partner nonrecourse
deductions for any year or other period shall be allocated to the Member who
bears the economic risk of loss with respect to the partner nonrecourse debt to
which such partner nonrecourse deductions are attributable in accordance with
Treasury Regulations ss. 1.704-2(i) or 1.704-2(k).
(v) CURATIVE ALLOCATIONS. The Regulatory Allocations described
in this SECTION 2.5(a) may not be consistent with the manner in which the
Members intend to divide Net Profits, Net Losses and similar items. Accordingly,
Net Profits, Net Losses and other items will be reallocated among the Members
(in the same year and to the extent necessary, in subsequent years) in a manner
consistent with Treasury Regulations ss. 1.704-1(b) and 1.704-2 so as to prevent
the Regulatory Allocations from distorting the manner in which Net Profits, Net
Losses and other items are intended to be allocated among the Members pursuant
to SECTION 2.4 and in making such reallocations, account shall be taken of
future Regulatory Allocations that will in all likelihood occur.
(vi) SECTION 754 ADJUSTMENTS. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Treasury Regulations ss.
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of profit (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such profit or loss shall be specially
allocated to the Member in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such section of the
Treasury Regulations.
(b) CHANGE IN MEMBER'S INTEREST. If there is a change in any
Member's share of the Company's Net Profits, Net Losses or other items during
any year, allocations among the Members shall be made in accordance with their
interests in the Company from time to time during such year in accordance with
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Section 706 of the Code, using the closing-of-the-books method, except that
depreciation, amortization and similar items shall be deemed to accrue ratably
on a daily basis over the entire year during which the corresponding asset is
owned by the Company for the entire year, and over the portion of a year after
such asset is placed in service by the Company if such asset is placed in
service during the year.
(c) NONRECOURSE DEBT SHARING. For purposes of this Agreement,
the Members shall be deemed to be allocated nonrecourse deductions, within the
meaning of Treasury Regulations ss. 1.704-2(b)(1), in accordance with their
proportionate number of Units. Solely for purposes of determining an Member's
proportionate share of the "excess nonrecourse liabilities" of the Company
within the meaning of Treasury Regulations ss. 1.752-3(a)(3), each Member's
interest in the Company profits is equal to the number of Units owned by such
Member divided by the number of outstanding Units.
Section 2.6. RESTRICTIONS ON TRANSFERS.
(a) TRANSFER OF UNITS. (i) Except as expressly provided in
this Agreement, a Member may not sell, exchange, transfer, assign, pledge,
hypothecate or otherwise dispose of all or any portion of any of such Member's
Units or any interest therein (a "Transfer") (except for a Transfer by Internet
World to any Person or by any Member to a Permitted Transferee) without the
written consent of the Board, which consent may be withheld for any reason. The
Company shall not register any Transfer of a Member's Units or any interest
therein, and any such Transfer or registration of Transfer shall be null and
void, without the written consent of the Board. An assignee who has not been
admitted as a Member shall be entitled only to allocations and distributions
with respect to such interest in accordance with this Agreement, and shall have
no right to any information or, to the fullest extent permitted by law,
accounting of the affairs of the Company, shall not be entitled to inspect the
books or records of the Company and shall not have any of the rights of a Member
under the Act or this Agreement, but shall otherwise assume in writing prior to
such Transfer, other than a pledge (in respect of which such compliance shall be
required after sale or foreclosure), all obligations of the assignor hereunder
as if such assignee were the assignor; no such assignment shall be valid unless
the assumption of obligations described in this sentence has been executed.
Neither a Transfer of Units nor the admission of the Transferee thereof as a
Member shall discharge the transferor from any obligation hereunder.
(ii) The restrictions contained in this SECTION 2.6(a) shall
not apply with respect to any Transfer of Units or any part thereof by any
Member (a) among its Affiliates, (b) to any lender to whom a Member's Units or
any part thereof are assigned or pledged pursuant to a loan agreement, (c) to
any Member's spouse or children or to a trust or the trustee or
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trustees of a trust directly or indirectly for the benefit of the Member's
spouse, children or a charitable organization, (d) to the Member's executors,
administrator, testamentary trustee, legatees or beneficiaries upon the Member's
death, or (e) by gift (all such transferees shall be collectively referred to as
the "Permitted Transferees"); PROVIDED, that the Permitted Transferee shall
execute a counterpart of this Agreement; and PROVIDED, FURTHER that the
restrictions contained in this Agreement shall continue to apply to the Units
after such Transfer by reference to the original Member; and PROVIDED, FURTHER,
that the transferor shall remain liable for all of its obligations under this
Agreement that survive.
(b) RIGHTS OF FIRST REFUSAL. (i) In addition to the
restrictions contained in SECTION 2.6(A), no Member shall Transfer its Units or
any part thereof (other than to a Permitted Transferee) or exercise any
Drag-Along Right unless the Member desiring to make the Transfer or exercise
such Drag-Along Right (hereinafter referred to as the "Transferor") shall have
first made the offers to sell to the other Members (the "Other Members") as
contemplated by SECTION 2.6(b)(ii) through 2.5(b)(vii), and such offers shall
not have been accepted.
(ii) OFFER BY TRANSFEROR. Copies of the Transferor's offer
shall be given to all Other Members and shall consist of an offer to sell to
such Other Members all of the Units then proposed to be transferred by the
Transferor (the "Subject Units") pursuant to a bona fide offer of a third party,
other than an Affiliate of the Transferor, to which copies shall be attached a
statement of intention to Transfer to such third party, the name and address of
the prospective third party transferee, the portion of the Units involved in the
proposed Transfer, and terms of such Transfer which must include (A) all
consideration payable at closing and (B) that the offer is not contingent on any
event other than the non-acceptance of the Transferor's offer by the Other
Members.
(iii) ACCEPTANCE OF OFFER. Within 20 days after the receipt of
the offer described in SECTION 2.6(b)(ii), one or more of the Other Members (the
"Participating Other Members") may, at their option, elect to purchase all, but
not less than all, of the Subject Units, in such proportion per Participating
Other Member as shall be determined by the Participating Other Members;
PROVIDED, that should the Participating Other Members be unable to determine the
proportion of the Subject Units to be purchased by each within 20 days after the
receipt of the offer, each Participating Other Member which has not withdrawn
its election to purchase shall purchase a proportion of the Subject Units equal
to the Subject Units multiplied by the Ownership Percentage of such
Participating Other Member. The Participating Other Members shall exercise such
option by giving notice thereof to the Transferor within such 20-day period. The
notice required to be given by the Participating Other Members (the
"Purchasers") shall specify a date for the closing of the purchase which shall
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not be more than 30 days after the date of the giving of such notice. In the
event that any party shall initiate an appraisal procedure pursuant to SECTION
2.6(b)(v) and (vi), such 20-day period shall be suspended as of (and including)
the date immediately following the date on which notice of such appraisal
procedure is given pursuant to SECTION 2.6(b)(v) and shall resume on (and
including) the date on which the appraisal procedure is completed pursuant to
SECTION 2.6(b)(vi).
(iv) PURCHASE PRICE. The purchase price for the Subject Units
shall be the price for the Subject Units offered to be paid by the prospective
transferee described in the offer, which price shall be paid in cash or, if
described in the offer of the prospective transferee, cash plus deferred
payments of cash in the same proportions, and with the same terms of deferred
payments, as therein set forth.
(v) CONSIDERATION OTHER THAN CASH. If the offer of a Subject
Units under this SECTION 2.6(b) is for consideration other than cash or cash
plus deferred payments of cash, the Purchaser shall pay the cash equivalent of
such other consideration. If the Transferor and the Purchaser cannot agree on
the amount of such cash equivalent within 10 days after the beginning of the
20-day period under SECTION 2.6(b)(iii), any of such parties may, by three days'
written notice to the other, initiate appraisal proceedings under SECTION
2.6(b)(vi) for determination of the cash equivalent. The Purchaser may give
written notice to the Transferor revoking an election to purchase the Subject
Units within 10 days after determination of the appraised value, if it chooses
not to purchase the Subject Units.
(vi) APPRAISAL PROCEDURE. If any party shall initiate an
appraisal procedure to determine the amount of the cash equivalent of any
consideration for a Subject Units under SECTION 2.6(b)(v), then the Transferor,
on the one hand, and the Purchaser, on the other hand, shall each promptly, but
in no event later than 10 days following written notice of such appraisal
procedure pursuant to SECTION 2.6(b)(v), appoint as an appraiser an individual
who shall be a member of a nationally-recognized investment banking firm. Each
appraiser shall, within 30 days of appointment, separately investigate the value
of the consideration for the Subject Units as of the proposed transfer date and
shall submit a notice of an appraisal of that value to each party. Each
appraiser shall be instructed to determine such value without regard to income
tax consequences to the Transferor as a result of receiving cash rather than
other consideration. If the appraised values of such consideration (the "Earlier
Appraisals") vary by less than 10%, the average of the two appraisals shall be
controlling as the amount of the cash equivalent. If the appraised values vary
by more than 10%, the appraisers, within 10 days of the submission of the last
appraisal, shall appoint a third appraiser who shall be a member of a nationally
recognized investment banking firm. The third appraiser shall, within 30 days of
his appointment, appraise the
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value of the consideration for the Subject Units (without regard to the income
tax consequences to the Transferor as a result of receiving cash rather than
other consideration) as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser shall be
controlling as the amount of the cash equivalent unless the value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control.
If any party fails to appoint an appraiser or if one of the two initial
appraisers fails after appointment to submit his appraisal within the required
period, the appraisal submitted by the remaining appraiser shall be controlling.
The cost of the foregoing appraisals shall be shared one-half by the Transferor
and one-half by the Purchaser.
(vii) CLOSING OF PURCHASE. The closing of the purchase shall
take place at the office of the Company or such other location as shall be
mutually agreeable and the purchase price, in cash, shall be paid at the
closing. At the closing, the Transferor shall deliver to the Purchaser or
Purchasers documentation reasonably satisfactory to the Purchaser or Purchasers
evidencing the transfer of ownership of the Subject Units from the Transferor to
the Purchaser or Purchasers.
(c) RIGHT OF CO-SALE. In the event Meckler intends to Transfer
(i) all or part of his equity interest in the Company pursuant to an offering
registered under the Securities Act of 1933, as amended (the "Securities Act")
or (ii) Transfer at least 30% of his Units in any other transaction, other than
to a Permitted Transferee, Meckler shall notify each other Member, in writing,
of such Transfer and its terms and conditions. Within twenty (20) days of the
date of such notice, each Member shall notify Meckler if it elects to
participate in such Transfer. Each Member that so notifies Meckler shall have
the right to sell, at the same price and on the same terms as Meckler, a
percentage of such Member's Units equal to the percentage of Meckler's Units
that the third party actually proposes to purchase. For purposes of this SECTION
2.6(c) only, the term "Meckler" shall include Meckler and/or his Permitted
Transferees or Affiliates and/or their Permitted Transferees or Affiliates, as
the case may be, and the term "Member" shall not include Meckler or his
Affiliates.
(d) DRAG ALONG RIGHT. (i) Subject to SECTION 2.6(b), if, at
any time and from time to time after the date of this Agreement, Meckler wishes
to Transfer in a bona fide arms' length sale (for purposes of this SECTION
2.6(d), the "Proposed Transfer") 30% or more of his Units to any Person or
Persons who are not Affiliates of Meckler (for purposes of this SECTION 2.6(d),
the "Proposed Transferee"), Meckler shall have the right (for purposes of this
SECTION 2.6(d), the "Drag-Along Right") to require each Member to sell to the
Proposed Transferee all or a
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ratable portion of each such Member's Units, as the case may be, (for the same
proportional consideration received by Meckler, taking into account all
consideration received by Meckler under related agreements) then owned by such
Member. Each Member agrees to take all steps necessary to enable him or it to
comply with the provisions of this SECTION 2.6(d). For purposes of this SECTION
2.6(d) only, the term "Meckler" shall include Meckler and/or his Permitted
Transferees or Affiliates and/or their Permitted Transferees or Affiliates, as
the case may be, and the term "Member" shall not include Meckler or his
Affiliates, but only to the extent that Meckler or his Affiliates do not
participate in the Proposed Transfer.
(ii) To exercise a Drag-Along Right, Meckler shall comply with
SECTION 2.6(b) and, if the Other Members do not exercise their rights
thereunder, give each Member a written notice (for purposes of this SECTION
2.6(d), a "Drag-Along Notice") containing (i) the name and address of the
Proposed Transferee and (ii) the proposed purchase price, terms of payment and
other material terms and conditions of the Proposed Transferee's offer. Subject
to SECTION 2.6(b), each Member shall thereafter be obligated to sell its Units
subject to such Drag-Along Notice, PROVIDED, THAT the sale to the Proposed
Transferee is consummated within ninety (90) days of delivery of the Drag-Along
Notice. If the sale is not consummated within such 90-day period, then each
Member shall no longer be obligated to sell such Member's shares pursuant to
that specific Drag-Along Right but shall remain subject to the provisions of
this SECTION 2.6(d).
(iii) Notwithstanding anything contained in this SECTION
2.6(d), in the event that all or a portion of the purchase price consists of
securities and the sale of such securities to the Members would require either a
registration under the Securities Act or the preparation of a disclosure
document pursuant to Regulation D under the Securities Act (or any successor
regulation) or a similar provision of any state securities law, then, at the
Managing Member's option, the Members may receive, in lieu of such securities,
the fair market value of such securities in cash, as determined in good faith by
the Board.
Section 2.7. MANAGEMENT UNIT INCENTIVES. The Company may
authorize Units for grant or sale to key employees of the Company other than
Meckler (the "Option Units"), in such amounts and in such manner -- including
incentive and non-qualified Unit options, restricted Unit grants, Unit bonuses
or other option or incentive programs -- as the Managing Member shall determine
from time to time; PROVIDED, HOWEVER, that in no event shall the outstanding
Option Units exceed 4% of the Units outstanding on a fully diluted basis; and
provided, FURTHER, that it shall be a condition to the issuance of any Option
Units that the employee or other recipient, as the case may be, execute and
deliver to the Company and each party hereto a counterpart of this
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Agreement. Upon such execution and delivery, Exhibit A hereto shall be deemed to
be amended to include the name of such employee or other recipient, as the case
may be, and such employee or other recipient, as the case may be, shall be
deemed to be a Member for all purposes hereof. In the event a Member ceases to
own beneficially Option Units, such Member shall no longer be deemed a Member
for any purpose hereunder. The Ownership Percentage of each Member shall be
diluted proportionally by the issuance of any additional Units pursuant to this
SECTION 2.7.
ARTICLE III.
MANAGEMENT
Section 3.1. MANAGEMENT BY THE MEMBERS.
(a) GENERAL PROVISIONS. The management of the Company shall be
vested in the Managing Member. Except as otherwise provided in this Agreement,
the Managing Member shall have all authority, rights and powers in the
management of the Company business to do any and all acts and things necessary,
proper, appropriate, advisable, incidental or convenient to effectuate the
purposes of this Agreement. Any action taken by the Managing Member on behalf of
the Company in accordance with the foregoing provisions shall constitute the act
of and shall serve to bind the Company.
(b) BOARD. (i) Certain actions by the Company, as further set
forth herein, shall be taken by the Company only upon approval by the Managing
Board (the "Board"), which shall be composed of three persons, consisting of (A)
two Persons (one of whom may be Meckler, and neither of whom need be Members)
designated by Meckler and (B) one Person (who need not be a Member) designated
by Internet World (collectively, "Board Members"). Each of Meckler and Internet
World shall reserve the right to remove and replace at any time any Board Member
that they have designated to sit on the Board pursuant to this SECTION
3.1(b)(i).
(ii) Meetings of the Board shall be held either within or
without the State of Delaware at such times and locations as may be determined
by the Managing Member. Notice of each meeting shall be given by the Managing
Member to each Board Member and shall state the place, date and time of the
meeting. Notice of such meeting shall be mailed, postage prepaid, to each Board
Member addressed to him at his address or usual place of business by first class
mail, at least two (2) days before the day on which such meeting is to be held,
or shall be sent addressed to such Board Member at such place by facsimile,
overnight courier, telex, or be delivered to him personally or by telephone, at
least twenty-four (24) hours before the time at which such meeting is to be
held.
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(iii) A majority of the Board Members shall constitute a
quorum for the transaction of business. If a quorum shall not be present at any
meeting of the Board, the Board Members present thereat may adjourn the meeting
to another time and place. Notice of such time and place of the adjourned
meeting shall be given to all of the Board Members unless such time and place
were announced at the meeting at which the adjournment was taken, in which case
such notice shall only be given to the Board Members who were not present
thereat. At such adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally
called. Wherever approval by the Board is required by this Agreement, such
approval shall, except as otherwise set forth herein, consist of the affirmative
vote of a majority of the Board Members.
(iv) (A) Any action required or permitted to be taken by the
Board may be taken without a meeting if all the Board Members consent in
writing, and (B) one or more Board Members may participate in any meeting of the
Board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation in the meeting pursuant to this SECTION 3.1(b)(iv)(b) shall
constitute presence in person at the meeting.
(c) DELEGATION OF POWERS. The Managing Member may by
instrument in writing delegate its powers, but not its responsibilities, to
officers or agents or employees of the Company or of any Member or to any other
Person; PROVIDED, HOWEVER, that no Person shall be entitled to rely on such
delegation unless presented with a copy of such written instrument.
(d) BANK ACCOUNTS. The Managing Member shall cause the Company
to open and maintain bank accounts, and all funds of every kind and nature
received by the Company shall be deposited in such accounts. Signatories for
such accounts shall be authorized from time to time by the Managing Member.
Section 3.2. ADMISSION OF NEW MEMBERS; SALE OF ADDITIONAL
UNITS.
(a) Subject to SECTION 3.2(b), the Company may sell additional
Units on such terms and conditions as the Board shall from time to time
determine. The Ownership Percentage of each Member shall be diluted
proportionally by the issuance of any additional Units. All persons to whom
additional Units are sold shall be admitted as Members. In the event of the
admission of new or additional Members, EXHIBITS A and B hereto shall be amended
accordingly.
(b) In the event that the Company determines to issue any
Units, other than (i) pursuant to SECTION 2.7, (ii) the
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issuance of additional Units and admittance of additional Members in connection
with any acquisition, merger, reorganization or other business combination by or
involving the Company or (iii) in connection with any initial public offering of
the securities of the Company pursuant to a registration statement filed under
the Securities Act, the Company shall first offer to each Member the right to
subscribe for a portion of such Units in an amount equal to the product of (i)
the total number of Units to be issued by the Company pursuant to this SECTION
3.2(b) and (ii) a fraction, the numerator of which is the number of Units held
by such Member prior to such issuance, and the denominator of which is the total
number of Units held prior to such issuance by all Members other than Members
that acquired their interest pursuant to SECTION 2.7. For a period of 30 days
after such offer, each Member shall have the right, but not the obligation, to
acquire such Units. After the expiration of such 30 day period, the Company
shall have the right, during the 90 days after the expiration of the 30 day
period, to sell the unsubscribed portion of such Units to any third party on
terms (including payment terms) not less favorable to the Company than those on
which the Units were offered to the Members. If the Company is able to sell the
unsubscribed Units to third parties, or if all of the offered Units are
subscribed by Members, then each subscribing Member shall be obligated to, and
shall, purchase its subscribed portion of the offered Units. If the Company is
not able to sell the unsubscribed Units to third parties, or if all of the
offered Units are not subscribed by Members, respectively, then each subscribing
Member shall have the right, but not the obligation, to purchase its subscribed
portion of the offered Units on the terms of its subscription.
(c) Internet World may exercise its rights under the [Warrant
Agreement] dated ____, 1998 by and among Internet World, Meckler and the Company
(the "Warrant Agreement"). SECTION 3.2(b) shall not apply to any interest
acquired by Internet World pursuant to the Warrant Agreement.
Section 3.3. INDEMNIFICATION. Any Person made, or threatened
to be made, a party to any action or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such Person is or
was (i) a Member, or (ii) an employee, officer, director, shareholder or partner
of a Member, or (iii) such other persons (including employees of the Company) as
the Board may designate from time to time, in its sole and absolute discretion
(collectively, the "INDEMNIFIED PERSONS"), shall be indemnified by the Company
for any losses or damage sustained with respect to such action or proceeding,
and the Company shall advance such Indemnified Person's reasonable related
expenses to the fullest extent permitted by law. The Company shall have the
power to purchase and maintain insurance on behalf of the Indemnified Persons
against any liability asserted against or incurred by them. The duty of the
Company to indemnify the Indemnified Persons under this SECTION 3.3 shall not
extend to actions or omissions of any Indemnified Person
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which are grossly negligent or which involve fraud, misrepresentation, bad
faith, or other willful misconduct by such Indemnified Person or which are in
material breach or violation by such Indemnified Person of this Agreement, in
each case as determined by a court of competent jurisdiction. No Indemnified
Person shall be liable to the Company or any other Member for actions taken in
good faith. The Company may indemnify other Persons of the Company. The duty of
the Company to indemnify the Indemnified Persons under this SECTION 3.3 shall be
limited to the assets of the Company, and no recourse shall be available against
any Member for satisfaction of such indemnification obligations of the Company.
ARTICLE IV.
BOOKS; ELECTIONS; BUDGETS; FISCAL YEAR
Section 4.1. ADMINISTRATIVE SERVICES, BOOKS, RECORDS AND
REPORTS. The Managing Member shall cause to be performed all general and
administrative services on behalf of the Company in order to assure that
complete and accurate books and records of the Company are maintained at the
Company's principal place of business showing the names, addresses and number of
Units of each of the Members, all receipts and expenditures, assets and
liabilities, profits and losses, and all other records necessary for recording
the Company's business and affairs, including a capital account for each Member
(a "CAPITAL ACCOUNT"). Each Member's Capital Account shall be increased by:
(i) the amount of any money contributed by
the Member to the Company;
(ii) the fair market value of any property
contributed by the Member to the Company;
(iii) the amount of Net Profits allocated to
the Member; and
(iv) the amount of any Company liabilities
assumed by such Member (or taken subject to) if property is
distributed to the Member by the Company;
and shall be decreased by:
(v) the amount of any money distributed to
the Member by the Company;
(vi) the fair market value of any property
distributed to the Member by the Company;
(vii) the amount of Net Losses allocated to
the Member; and
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(viii) the amount of any Member liabilities
assumed by the Company (or taken subject to) if property is
contributed to the Company by the Member.
The Capital Accounts shall be adjusted by all other adjustments required by
Treasury Regulations ss. 1.704-1(b)(2)(iv). The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations under Section 704(b)
of the Code and, to the extent not inconsistent with the provisions of this
Agreement, shall be interpreted and applied in a manner consistent with such
Regulations.
Section 4.2. FEDERAL INCOME TAX ELECTIONS; METHOD OF
DEPRECIATION. The Managing Member shall determine the method of depreciation to
be utilized by the Company for tax purposes and all elections to be made by the
Company for tax purposes. The Managing Member shall be the "tax matters partner"
for all purposes of the Code but shall have no authority to bind any other
Member without such Member's consent.
Section 4.3. FISCAL YEAR. The fiscal year of the Company (the
"FISCAL YEAR") shall end on September 30.
ARTICLE V.
EMPLOYMENT OF AFFILIATES
Section 5.1. PARTIES EMPLOYED. Subject to the approval of the
Board by unanimous consent, the Company may contract for services to be
performed for the Company by Members or Affiliates of any Member. In the case of
the employment of a Member or of Affiliates of a Member, the compensation to be
paid by the Company to such Member or Affiliates shall be not greater than the
compensation generally paid to third parties for comparable services in
comparable locations. Each of the Services Agreement and the Trademark Licensing
Agreement between Internet World and the Company is by execution of this
Agreement deemed to be approved by the Board.
ARTICLE VI.
DISTRIBUTIONS
Section 6.1. DISTRIBUTIONS. Distributions shall be made at
such time and in such amounts as determined by the Board and shall be made among
the Members in cash and in proportion to the relative number of Units held by
each Member.
Section 6.2. RESTORATION OF FUNDS. Except as otherwise
provided by law, no Member shall be required to restore
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to the Company any funds properly distributed to it pursuant to SECTION 6.1.
Section 6.3. SPECIAL TAX DISTRIBUTIONS. Notwithstanding the
provisions of SECTION 6.1 above, if the Company has net taxable income for
federal income tax purposes for any taxable year of the Company, then the
Company shall first distribute at least an amount of cash (a "Tax Distribution")
to each Member which, when combined with all other distributions to such Member
in the current and all preceding taxable years of the Company, equals the
product of (A) the highest combined federal, state and local marginal income tax
rate hypothetically applicable to any Member and (B) the excess, if any, of (i)
the aggregate net taxable income allocated to such Member under this Agreement
in the current and all preceding taxable years of the Company over (ii) the
aggregate net taxable loss allocated to such Member under this Agreement in all
preceding taxable years of the Company.
ARTICLE VII.
DISSOLUTION AND LIQUIDATION
Section 7.1. DISSOLUTION.
(a) Except as otherwise required by the Act, the Company shall
have perpetual existence unless the Board shall by unanimous written consent
elect to dissolve the Company or there is an entry of a decree of judicial
dissolution of the LLC under Section 18-802 of the Act.
(b) The death, retirement, resignation, expulsion, bankruptcy
or dissolution of any Member or the occurrence of any other event that
terminates the continued membership of any Member in the Company shall not, in
and of itself, cause dissolution of the Company.
Section 7.2. WINDING UP AFFAIRS AND DISTRIBUTION OF ASSETS.
(a) Upon a winding up of the Company, the Managing Member
shall be the liquidating Member (the "Liquidating Member") and shall proceed to
wind up the affairs of the Company, liquidate the remaining property and assets
of the Company and wind-up and terminate the business of the Company. The
Liquidating Member shall cause a full accounting of the assets and liabilities
of the Company to be taken and shall cause the assets to be liquidated and the
business to be wound up as promptly as possible by either or both of the
following methods: (1) selling the Company assets and distributing the net
proceeds therefrom (after the payment of Company liabilities) to each Member in
satisfaction of its Capital Account; or (2) distributing the Company assets to
the Members in kind and
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debiting the Capital Account of each Member with the fair market value of such
assets, each Member accepting an undivided interest in the partnership assets
(subject to their liabilities) in proportion to and to the extent of each
Member's positive Capital Account balance after allocating and crediting to the
Capital Accounts the unrealized gain or loss to the Members as if such gain or
loss had been recognized and allocated pursuant to SECTION 2.4.
(b) If the Company shall employ method (1) as set forth in
SECTION 7.2(A) in whole or part as a means of liquidation, then the proceeds of
such liquidation shall be applied in the following order of priority: (i) first,
to the expenses of such liquidation; (ii) second, to the debts and liabilities
of the Company to third parties, if any, in the order of priority provided by
law; (iii) third, a reasonable reserve shall be set up to provide for any
contingent or unforeseen liabilities or obligations of the Company to third
parties (to be held and disbursed, at the discretion of the Liquidating Member,
by an escrow agent selected by the Liquidating Member) and at the expiration of
such period as the Liquidating Member may deem advisable, the balance remaining
in such reserve shall be distributed as provided herein; (iv) fourth, to debts
of the Company to the Members or their Affiliates and any fees and
reimbursements payable under this Agreement; and (v) fifth, to the Members in
proportion to their respective positive Capital Account balances determined
after all allocations of Net Profit and Net Loss have been made.
(c) In connection with the liquidation of the Company, the
Members severally, jointly, or in any combination upon which they may agree,
shall have the first opportunity to make bids or tenders for all or any portion
of the assets of the Company, and such assets shall not be sold to an outsider
except only for a price higher than the highest and best bid of a single Member,
the Members jointly, or a combination of Members. Any bid made by a Member or
Members for all or any portion of the assets shall be made, if at all, within
thirty (30) days after the Liquidating Member or any other Member shall have
requested such bids. A copy of each bid shall be delivered by the Liquidating
Member to each Member. Unless otherwise agreed by all Members, no Member shall
be entitled to raise its bid after submission thereof, whether in response to a
bid received by the Company from any other Member or third party, or otherwise.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. NOTICES.
(a) All Notices, consents, approvals, reports, designations,
requests, waivers, elections and other
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communications (collectively, "NOTICES") authorized or required to be given
pursuant to this Agreement shall be given in writing and either personally
delivered to the Member to whom it is given or delivered by an established
delivery service by which receipts are given or mailed by registered or
certified mail, postage prepaid, or sent by telex or telegram or electronic
telecopier, addressed to the Member at its address listed on EXHIBIT B hereto.
(b) All Notices shall be deemed given when delivered or, if
mailed as provided in SECTION 8.1(a), on the third (3rd) day after the day of
mailing, and if sent by telex or telegram or telecopier or overnight delivery
service, twenty-four (24) hours after the time of dispatch. Any Member may
change its address for the receipt of Notices at any time by giving Notice
thereof to all of the other Members, in which event EXHIBIT B hereto shall be
amended accordingly. Notwithstanding the requirement in SECTION 8.1(A) as to the
use of registered or certified mail, any routine reports required by this
Agreement to be submitted to Members at specified times may be sent by
first-class mail.
Section 8.2. CERTIFICATE REQUIREMENTS. From time to time the
Members shall sign and acknowledge all such writings as are required to amend
the Certificate or for the carrying out of the terms of this Agreement or, upon
dissolution of the Company, to cancel such Certificate.
Section 8.3. ENTIRE AGREEMENT. This Agreement, together with
the agreements listed in SECTION 5.1, supersedes all prior agreements and
understandings among the Members with respect to the subject matter hereof.
Section 8.4. MODIFICATION. No change or modification of this
Agreement shall be of any force unless such change or modification is in writing
and has been signed by at least 85% of the Members; PROVIDED, that if such
change or modification would not have a material adverse effect on the rights or
obligations of another Member, such change or modification may be made by the
Board without the approval of other Members, and PROVIDED FURTHER, that Members
who became Members as the result of the grant or sale of Option Units pursuant
to SECTION 2.7 shall not be deemed Members for purposes of this SECTION 8.4.
Section 8.5. WAIVERS. No waiver of any breach of any of the
terms of this Agreement shall be effective unless such waiver is in writing and
signed by the Member against whom such waiver is claimed. No waiver of any
breach shall be deemed to be a waiver of any other or subsequent breach.
Section 8.6. SEVERABILITY. If any provision of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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Section 8.7. FURTHER ASSURANCES. Each Member shall execute
such deeds, assignments, endorsements, evidences of Transfer and other
instruments and documents and shall give such further assurances as shall be
necessary to perform its obligations hereunder.
Section 8.8. GOVERNING LAW. This Agreement shall be governed
by and be construed in accordance with the laws of the State of Delaware.
Section 8.9. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
Section 8.10. LIMITATION ON RIGHTS OF OTHERS. No Person other
than a Member shall have any legal or equitable right, remedy or claim under or
in respect of this Agreement.
Section 8.11. BROKERS AND FINDERS. Each Member shall indemnify
and hold all of the other Members and the Company harmless from and against any
commission, fee or other payment due any broker, finder or other Person in
connection with such Member's decision to invest in the Company.
Section 8.12. NUMBER AND GENDER. As used in this Agreement,
all pronouns and any variation thereof shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the Person
or Persons may require.
Section 8.13. FIDUCIARIES. Whenever any trust or estate is
acting as a Member under this Agreement, any obligation or liability created
hereunder shall bind only the assets of such trust or estate. No such obligation
or liability shall be personally binding upon, nor shall resort be had to, nor
recourse or satisfaction sought from, any individual or entity, or the property
of any individual or entity, at any time acting as a fiduciary of any such trust
or estate, whether the claim giving rise to such obligation or liability is
based on contract, tort or otherwise.
Section 8.14. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Members and their respective
successors and permitted assigns.
Section 8.15. SECURITIES LAWS. All offerings and Transfers of
Units shall be made in compliance with applicable federal and state securities
laws. Each Member indemnifies the other Members and the Company for any loss,
cost, liability or damage arising from its breach of the foregoing sentence.
Section 8.16. ATTORNEYS' FEES. In the event of any litigation
or arbitration regarding the rights and obligations under this Agreement, the
prevailing party shall be entitled to
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recover reasonable attorneys' fees and
court costs in addition to any other relief which may be granted. The
"prevailing party" shall mean the party who receives substantially the relief
desired, whether by settlement, dismissal, summary judgment, judgment or
otherwise.
Section 8.17. WAIVER OF PARTITION. Each Member hereby waives
its right to bring an action for partition of any of the property owned by the
Company.
Section 8.18. AUTHORIZED PERSONS. Each Member is hereby
designated as an authorized person to sign the Company's Certificate of
Formation and any other documents that are appropriate and necessary to
effectuate the purpose of this Agreement.
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IN WITNESS HEREOF, the Members have duly executed this
Agreement as of the opening of business on the day and year first above written.
ALAN M. MECKLER
----------------------------------
INTERNET WORLD MEDIA, INC.
By:
------------------------------
Name:
Title:
[MECKLER AFFILIATES]
<PAGE> 83
EXHIBIT A
<TABLE>
<CAPTION>
CAPITAL OWNERSHIP NUMBER OF
MEMBERS CONTRIBUTION PERCENTAGE UNITS
------- ------------ ----------- -----
<S> <C> <C> <C>
Alan M. Meckler $16,000,000.00 71.2% 712
Internet World $4,471,910.11 19.9% 199
[Meckler Affiliate 1] $500,000 2.225% 22.25
[Meckler Affiliate 2] $500,000 2.225% 22.25
[Meckler Affiliate 3] $500,000 2.225% 22.25
[Meckler Affiliate 4] $500,000 2.225% 22.25
</TABLE>
<PAGE> 84
EXHIBIT B
<PAGE> 85
EXHIBIT B
FORM OF SERVICES AGREEMENT
<PAGE> 86
SERVICES AGREEMENT
This SERVICES AGREEMENT (this "Agreement"), dated _________,
1998 (the "Effective Date"), by and among Penton Media, Inc., a Delaware
corporation ("Penton"), Internet World Media, Inc., a Delaware corporation (the
"Company"), and iWorld LLC, a Delaware limited liability company ("iWorld").
WHEREAS, iWorld was formerly a wholly-owned subsidiary of the
Company;
WHEREAS, in connection with the acquisition of the Company by
Penton, Alan M. Meckler, an individual, purchased an 80.1% interest in iWorld
from the Company and the Company retained a 19.9% interest in iWorld;
WHEREAS, iWorld's business consists of a network of Internet
web sites that contains the latest news and resources for the Internet industry,
directories of Internet products and services, back issues of the Company's
print publications and information about the Company's Internet World and ISPCON
trade shows and conferences (the "Business");
WHEREAS, prior to the Effective Date of this Agreement, the
Company provided to iWorld, and iWorld provided to the Company, certain services
on a barter basis;
WHEREAS, Penton and the Company desire to acquire from iWorld,
and iWorld desires to acquire from Penton and the Company, the services set
forth on the Schedules attached to this Agreement, pursuant to the terms and
conditions provided herein and for no other purposes.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
Section 1. SERVICES. Beginning on the Effective Date, (a)
Penton and the Company will provide to iWorld the services set forth on Schedule
A hereto and (b) iWorld will provide to Penton and the Company the services set
forth on Schedule B hereto (in each case, the "Services"). The provision of
Services to each party will be in a manner consistent with the Company's and
iWorld's past practices, except as otherwise provided in the Schedules hereto.
Section 2. CHARGES FOR SERVICES. Except as set forth in the
Schedules hereto, each party will provide the Services without charge and in
consideration for the Services to be provided to such party by the other parties
hereto.
<PAGE> 87
Section 3. TERM OF AGREEMENT. (a) This Agreement will commence
on the Effective Date and will continue in full force and effect for a period of
three (3) years from the Effective Date. This Agreement shall automatically
renew for three-year terms unless terminated by Penton or the Company, on the
one hand, or iWorld, on the other hand, in either case upon at least six months
prior written notice to the other parties.
(b) If majority ownership, or effective control, of iWorld is
transferred to an unrelated third party without Penton's prior written consent,
and iWorld terminates this Agreement pursuant to Section 3(a) hereof, iWorld
will pay Penton a fee of $20 million.
Section 4. LIMITATION OF LIABILITY. Except for willful
misconduct or gross negligence, in no event will any party be liable to any
other party for any damage, cost, claim of any nature whatsoever, including,
without limitation, any lost profits, collateral, consequential, incidental,
special or indirect damages, costs or claims arising out of or relating to the
provision by such party of any Services to the other party.
Section 5. RELATIONSHIP OF PARTIES. Except as specifically
provided herein, none of the parties shall act or represent or hold itself out
as having authority to act as an agent or partner of the other party, or in any
way bind or commit the other party to any obligations. Any such act will create
a separate liability in the party so acting to any and all third parties
affected thereby. The rights, duties, obligations and liabilities of the parties
shall be several and not joint or collective, and nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
Section 6. REMEDIES; EXPENSES OF ENFORCEMENT. Each party will
be entitled to all remedies available at law or in equity for the enforcement of
this Agreement. In any action brought to enforce or contest any provision of
this Agreement, the prevailing party will be entitled to recover all resulting
costs and expenses, including, without limitation, reasonable attorneys' fees.
Section 7. COMPLETE AGREEMENT. This Agreement, the Trademark
License Agreement, dated the date hereof, between the Company and iWorld, and
all Schedules attached hereto and thereto and incorporated herein and therein by
this reference contain the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede any previous understandings
or agreements, whether written or oral, in respect of such subject matter. There
are no understandings, representations or warranties of any kind with respect to
the Services.
Section 8. ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties;
provided, however, that no party may assign, transfer, encumber or grant to any
third party a security interest in this Agreement or in any of its rights,
duties or obligations hereunder, by operation of law or otherwise, without the
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<PAGE> 88
prior written consent of the other parties, such consent not to be unreasonably
withheld. Any assignment which does not comply with this Section 8 shall be
void and of no legal effect.
Section 9. AMENDMENT; WAIVER. No change to this Agreement will
be valid unless in writing signed by an authorized representative of the parties
hereto. The failure of any party to enforce any provision of this Agreement
shall not be construed to be a waiver of such provision or the right of such
party thereafter to enforce such provision or any other provision of this
Agreement.
Section 10. SEVERABILITY. The illegality, invalidity or
unenforceability of any part of this Agreement shall not affect the legality,
validity or enforceability of the remainder of this Agreement. If any part of
this Agreement shall be found to be illegal, invalid or unenforceable, then this
Agreement shall be given such meaning as would make this Agreement legal, valid
and enforceable in order to give effect to the intent of the parties.
Section 11. NOTICES. All notices, requests, demands, claims
and other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if it
is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Penton: Penton Media Inc.
1100 Superior Avenue
Cleveland, Ohio 44114
Attn: Thomas L. Kemp
If to the Company: Internet World Media Inc.
--------------------------
Attn: David Nussbaum
If to iWorld: iWorld LLC
--------------------------
Attn: Alan M. Meckler
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail,
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<PAGE> 89
or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other party notice in the manner herein set
forth.
Section 12. GOVERNING LAW. This Agreement and all disputes
arising under this Agreement shall be governed by, and interpreted in accordance
with, the internal laws (and not the law of conflicts) of the State of New York.
Section 13. HEADINGS. The headings in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
Section 14. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE> 90
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
PENTON MEDIA, INC.
By:
--------------------------------------
Name:
Title:
INTERNET WORLD MEDIA, INC.
By:
--------------------------------------
Name:
Title:
IWORLD LLC
By:
--------------------------------------
Name:
Title:
5
<PAGE> 91
SCHEDULE A
- - The Company will grant iWorld a royalty-free license to use certain
intellectual property of the Company pursuant to the terms and
provisions of the form of the Trademark License Agreement attached
hereto as Annex A (the "License Agreement").
- - iWorld will receive one full-page advertisement at no charge in each
issue of Internet World and Boardwatch.
- - The Company will continue to print the sidebar entitled "Online
Resources" in each issue of Internet World and Boardwatch.
- - iWorld will be listed on all promotional literature as the only
"Sponsoring Web Site" of the Company's trade shows.
- - The Company will provide iWorld at no charge with 400 square feet of
exhibit space at each of the Company's United States and Canadian trade
shows.
- - iWorld may purchase up to 400 square feet of exhibit space at each of
the Company's trade shows outside of the United States and Canada at a
50% discount from the then current prices for repeat exhibitors.
- - The Company will provide iWorld with 200 square feet of sales office
space at each of the Company's trade shows in addition to any exhibit
space iWorld may have at such trade show.
- - The Company will provide iWorld with 10 passes to each of the Company's
conferences and trade shows.
- - The Company will provide iWorld at no charge with prominent hanging
banners at each of the Company's United States and Canadian trade shows
with sizes and quantities to be mutually agreed upon. iWorld will pay
the costs of hanging and removing such banners.
- - iWorld may purchase one prominent hanging banner at each of the
Company's trade shows outside of the United States and Canada at a 50%
discount from the then current prices for repeat exhibitors.
- - iWorld will be listed prominently as a sponsor to appropriate
conference tracks for each of the Company's trade United States and
Canadian shows.
- - iWorld may rent the Company's mailing lists at a run cost plus 20%.
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<PAGE> 92
- - iWorld may purchase (i) additional advertisement space in the Company's
publications on a cost basis and (ii) additional exhibit space at the
Company's other trade shows on a negotiated discount basis.
- - The Company will provide to iWorld the services of at least two
individuals to perform editorial/design work on iWorld's network of
Internet web sites with respect to the Company's content contained on
such site. These individuals may either be employees of the Company or,
at the Company's expense, iWorld.
- - Penton will obtain, or will cause iWorld to obtain, a line of credit
in an amount not to exceed $6 million, which line of credit shall be
guaranteed severally 30% by Penton and 70% by Alan M. Meckler.
A-2
<PAGE> 93
SCHEDULE B
- - iWorld will continue to include on its Internet web site, in accordance
with the License Agreement, back issues of the Company's print
publications and information (including, without limitation,
promotional and registration information) about the Company's Internet
World and ISPCON trade shows and conferences including other potential
new launches directly related to the Internet industry. The form in
which this content is used will be minimally no different than as
currently used in the Business, as pictured on the Annexes hereto.
- - iWorld will provide to the Company advertisement banners on iWorld's
Internet web site that are similar in nature to those currently in use,
as pictured on Annexes hereto. iWorld will provide a minimum of 2.3
million advertisement banners per month.
- - Penton or the Company may purchase additional advertisement impressions
on iWorld's web site for Penton's or the Company's other publications
and trade shows on a negotiated discount basis.
- - iWorld will reimburse the Company for its use of the Company's
facilities, including reasonable rent payments not to exceed the
occupancy cost per square foot actually paid by the Company to any
third party.
- - iWorld will reimburse the Company out of the credit line made available
to iWorld for any amounts paid for the acquisitions of justsmil.com and
isp.com.
- - Earn out payments paid in connection with the acquisitions of
isp-marketing.com and jumbo.com will be obligations of iWorld and not
the Company or any successor to the Company and will not be paid until
after the effective time of the acquisition of the Company by Penton,
and iWorld will indemnify the Company for any earn out payments that
the Company makes in connection with such acquisitions.
- - The payment of $1.05 million 12 months after the acquisition of
jumbo.com will be the obligation of iWorld and not the Company or any
successor to the Company and will not be paid until after the effective
time of the acquisition of the Company by Penton, and iWorld will
indemnify the Company for any amounts paid by the Company with respect
to such $1.05 million payment.
B-1
<PAGE> 94
EXHIBIT C
FORM OF TRADEMARK LICENSING AGREEMENT
<PAGE> 95
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of
________ __, 1998 ("Effective Date") by and between Internet World Media, Inc.,
a Delaware corporation ("Licensor"), and iWorld LLC, a Delaware limited
liability company ("Licensee").
RECITALS
A. Licensor is a wholly-owned subsidiary of Penton Media,
Inc., a Delaware corporation ("Penton").
B. Licensor currently owns a 19.9% interest in Licensee.
Licensee's business consists of a network of Internet web sites that contains
the latest news and resources for the Internet industry, directories of Internet
products and services, back issues of the Licensor's print publications and
information about the Licensor's Internet World and ISPCON trade shows and
conferences (the "Business");
C. Licensee acknowledges that Licensor is the sole and
exclusive owner of the entire right, title and interest in, to and under the
Trademarks (as defined below) and any and all registrations thereof; and
D. Licensee desires to acquire from Licensor, and Licensor
desires to grant to Licensee, a license to use the Trademarks in connection with
the Business, pursuant to the terms and conditions provided herein and for no
other purposes.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
1. DEFINITIONS.
1.1 TRADEMARKS. The term "Trademarks" shall mean the trademarks, trade
names and logos as set forth on Schedule A, attached hereto as amended in
writing from time to time, and all registrations, applications and renewals
therefor.
<PAGE> 96
2. LICENSE.
2.1 GRANT OF LICENSE. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee a non-exclusive, non-transferable,
royalty-free license to use the Trademarks solely in connection with the
Business.
2.2 NO SUBLICENSE. Licensee shall not sublicense any of its rights
under this Agreement to any other person or entity without the prior written
approval of Licensor, which shall not be unreasonably withheld. Any attempted
sublicense shall be null and void and shall immediately terminate this Agreement
and the licenses granted herein.
2.3 RESERVATION OF RIGHTS. No rights or licenses, express or implied,
other than those granted in Section 2.1, are granted by this Agreement to
Licensee under any intellectual property owned or controlled by Licensor. The
rights granted to Licensee pursuant to this Agreement are subject to all
pre-existing contracts and to all rights of third parties related to the
Trademarks. Licensor expressly reserves the right to use the Trademarks anywhere
in the world in connection with any materials or products developed or sold by
or for Licensor or any services rendered by or for Licensor.
3. TERM AND TERMINATION.
3.1 TERM. Unless terminated in accordance with Section 3.2, this
Agreement shall continue in full force and effect for a period of three (3)
years from the Effective Date. This Agreement shall automatically renew for
three-year terms unless terminated by Licensor upon six months prior written
notice to Licensee.
3.2 TERMINATION FOR BREACH. Licensor shall have the right to terminate
this Agreement immediately: (i) if Licensee breaches any material term or
condition of this Agreement and fails to remedy such breach within thirty (30)
days after receipt from Licensor of notice of such breach; (ii) if proceedings
are instituted by or against Licensee under federal or state bankruptcy laws or
an assignment or receivership is established for the benefit of the creditors of
Licensee; or (iii) if majority ownership, or effective control, of Licensee is
transferred to an unrelated third party.
3.3 EFFECT OF TERMINATION. Upon expiration or termination of this
Agreement for any reason, Licensee shall immediately discontinue all use of the
Trademarks, including use of the Trademarks as part of its corporate, assumed or
trade name, and shall destroy all materials bearing the Trademarks other than a
single copy of any materials bearing the Trademarks, which may be retained for
archival purposes. An officer of Licensee shall certify in writing to Licensor
that Licensee has discontinued such use and has destroyed such materials.
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<PAGE> 97
4. LIMITATIONS ON LICENSE.
4.1 USAGE. Except as provided in Section 2.1, Licensee shall not make
any use of the Trademarks or any term, phrase or design with is confusingly
similar to, or a colorable imitation of, the Trademarks, or any portion of the
Trademarks in any manner whatsoever, including but not limited to: (i) any use
as part of a corporate, assumed or trade name; (ii) as a product name; (iii) as
a service mark; (iv) on stationery, business cards or similar materials; or (v)
directly or indirectly in connection with, or in relation to, any activity or
agreements with third parties.
4.2 OWNERSHIP OF TRADEMARKS. Any and all rights, title or interest in,
to or under the Trademarks which may accrue to the benefit of, or be acquired
by, Licensee as a result of its exercise of the rights and licenses granted
pursuant hereto shall be assigned to and inure to the sole benefit of Licensor;
and Licensee hereby agrees to assign and assigns to Licensor any and all such
right, title and interest as and to the extent reasonably requested by Licensor.
4.3 ADDITIONAL COVENANTS. Licensee shall not assert any claim of
ownership of, or any claim to, any goodwill or reputation associated with the
Trademarks, by reason of Licensee's licensed use thereof or otherwise. Licensee
shall not take and, to the extent reasonably within Licensee's power to control,
shall not permit any action or omission in derogation of any of the rights of
Licensor in the Trademarks, either during the term of this Agreement or
thereafter.
5. QUALITY CONTROL.
5.1 QUALITY STANDARDS. Licensee shall maintain quality standards, for
all of its uses of the Trademarks, which are substantially equivalent to or
stricter than those standards previously used by Licensee in connection with the
Business.
5.2 PROPOSED USES. Licensee shall submit, at Licensee's expense, to
Licensor for Licensor's consent, such consent not to be unreasonably withheld,
examples of any new form of use of the Trademarks proposed by Licensee. Any such
form of use neither approved nor disapproved within ten (10) days of submission
to Licensor shall be deemed approved.
5.3 SAMPLES. At the reasonable request of Licensor and at the expense
of Licensee, Licensee shall provide Licensor with copies, photographs or
representative samples of advertising copy, promotional materials or other
materials of Licensee bearing the Trademarks that are created by Licensee, and
shall permit representatives of Licensor to inspect Licensee's facilities upon
reasonable notice and during normal business hours to determine whether Licensee
is maintaining the quality standards set forth in Section 5.1.
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<PAGE> 98
6. REGISTRATION AND ENFORCEMENT.
6.1 REGISTRATION. Registration and any other form of protection for the
Trademarks shall only be obtained by Licensor in its name and at its expense. In
those jurisdictions where registration of a user of trademarks or registration
of trademark licenses is required by law, Licensor and Licensee shall make a
joint application, at Licensor's request and expense, to the Registrar of
Trademarks, or such other person as is required by the laws of the relevant
jurisdiction, for the registration of Licensee as a registered user of the
Trademarks or for the registration of this Agreement, as required. Licensee
shall furnish Licensor with all reasonably requested information (including
specimens and samples illustrative of the manner of use of the Trademarks) and
documentation (including the execution and delivery of any and all true and
correct affidavits, declarations, oaths and other documentation prepared by
Licensor) to assist Licensor in obtaining and maintaining such trademark
protection and registrations.
6.2 ENFORCEMENT. Licensee shall take all reasonable steps and shall
provide such materials, cooperation and assistance at Licensor's expense as may
be reasonably required to assist Licensor in maintaining and enforcing the
Trademarks with respect to uses made by Licensee of the Trademarks. Licensee
shall promptly notify Licensor of any actual or suspected infringement or misuse
of the Trademarks by third parties. Licensor shall have the sole discretion to
take action against such infringers or misusers or suspected infringers or
misusers, and any and all recoveries resulting from such actions initiated by
Licensor shall be retained by Licensor, except to the extent Licensee suffers
actual damages, in which event Licensee will be entitled to a portion of such
recovery equal to its percentage damage after deducting from the total amount of
such recovery any expenses incurred by Licensor in taking such action. Licensee
shall not take any action with respect to any third party in an attempt to
enforce any rights regarding the Trademarks without the prior written approval
of Licensor.
7. REMEDY.
Licensee acknowledges that its breach of its obligations hereunder
would cause immediate and irreparable harm to Licensor for which money damages
would be inadequate, Therefore, Licensor shall be entitled to injunctive relief
for Licensee's breach of such obligations without proof of actual damages and
without the posting of bond or other security except as required by law. Such
remedy shall not be deemed to be the exclusive remedy for any such breach but
shall be in addition to all other remedies available at law or in equity.
8. REPRESENTATIONS; INDEMNIFICATIONS.
8.1 LICENSOR'S DISCLAIMER. Licensor expressly disclaims all
representations and warranties, express or implied, in connection with this
Agreement and the Trademarks, including but not limited to, the implied
warranties of title, merchantability and fitness for a particular purpose.
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<PAGE> 99
8.2 LIMITATION OF LIABILITY. Licensor shall not be liable to Licensee,
its affiliates or any third party for any direct damages or for any special,
consequential, exemplary or incidental damages (including lost or anticipated
revenues or profits relating to the same), arising from any claim relating to
this Agreement or the Trademarks, whether such claim is based on warranty,
contract, tort (including negligence or strict liability) or otherwise, even if
an authorized representative of Licensor is advised of the possibility or
likelihood of same, unless Licensor is in breach of this Agreement.
8.3 INDEMNIFICATION. Licensee agrees to indemnify and hold harmless
Licensor, its affiliates, and its and their stockholders, directors, officer,
employees, agents and assignees harmless and shall pay all losses, damages,
fees, expenses or costs (including reasonable attorneys' fees) incurred by them
based upon any claim, demand, suit or proceeding alleging that Licensee's
actions except as specifically permitted under this Agreement violate any rights
of any third party or alleging any breach by Licensee of any of its obligations
herein.
Licensor shall promptly notify Licensee of any such claim,
demand, suit or proceeding, and Licensee, upon written request by Licensor,
shall promptly defend and continue the defense of such claim, demand, suit or
proceeding at Licensee's expense. If Licensee fails to undertake and continue
such defense, Licensor shall have the right (but not the obligation) to make and
continue such defense as it considers appropriate, and the expenses and costs
thereof, including but not limited to reasonable attorneys' fees, out-of-pocket
costs and the costs of an appeal and bond thereof, together with the amounts of
any judgment rendered against Licensor shall be paid by Licensee upon demand.
Nothing herein shall prevent Licensor from defending, if it so
desires in its own discretion, any such claim, demand, suit or proceeding at its
own expense through its own counsel, notwithstanding that the defense thereof
may have been undertaken by Licensee.
9. GENERAL.
9.1 SURVIVAL. The obligations of Licensee and the rights of Licensor
under Sections 3.3, 8.2 and 8.3 shall survive the expiration or termination of
this Agreement for any reason.
9.2 ENTIRE AGREEMENT. This Agreement, the Services Agreement, dated the
date hereof, by and among the parties hereto and Penton, and all Schedules
attached hereto and thereto and incorporated herein and therein by this
reference contain the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede any previous understandings or
agreements, whether written or oral, in respect of such subject matter.
9.3 REQUIRED APPROVALS. Licensee shall obtain all necessary licenses,
permits and approvals of this Agreement required by any government or
governmental agency, at Licensee's sole cost and expense. Performance of this
Agreement shall be subject to obtaining all such
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<PAGE> 100
necessary licenses, permits and approvals pursuant to this Section 9.3 and to
the terms of any such licenses, permits and approvals.
9.4 COMPLIANCE WITH LAWS. Each of the parties shall comply with all
applicable laws, rules, regulations and orders of the United States, all other
jurisdictions and any agency or court thereof.
9.5 BINDING AGREEMENT. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the parties; provided, however,
that Licensee may not assign, transfer, encumber or grant to any third party a
security interest in this Agreement or in any of its rights, duties or
obligations hereunder, by operation of law or otherwise, without the prior
written consent of Licensor, such consent not to be unreasonably withheld. Any
assignment which does not comply with this Section 9.5 shall be void and of no
legal effect.
9.6 NO WAIVER. The failure of either party to enforce any provision of
this Agreement shall not be construed to be a waiver of such provision or the
right of such party thereafter to enforce such provision or any other provision
of this Agreement.
9.7 RELATIONSHIP OF PARTIES. Except as specifically provided herein,
none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other party, or in any way bind
or commit the other party to any obligations. Any such act will create a
separate liability in the party so acting to any and all third parties affected
thereby. The rights, duties, obligations and liabilities of the parties shall be
several and not joint or collective, and nothing contained in this Agreement
shall be construed as creating a partnership, joint venture, agency, trust or
other association of any kind, each party being individually responsible only
for its obligations as set forth in this Agreement.
9.8 SEVERABILITY. The illegality, invalidity or unenforceability of any
part of this Agreement shall not affect the legality, validity or enforceability
of the remainder of this Agreement. If any part of this Agreement shall be found
to be illegal, invalid or unenforceable, then this Agreement shall be given such
meaning as would make this Agreement legal, valid and enforceable in order to
give effect to the intent of the parties.
9.9 FURTHER ASSURANCES. Licensee agrees to execute such other documents
and take all such actions as Licensor may reasonably request to effect the terms
of this Agreement.
9.10 GOVERNING LAW. This Agreement and all disputes arising under this
Agreement shall be governed by, and interpreted in accordance with, the internal
laws (and not the law of conflicts) of the State of New York.
9.11 NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
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<PAGE> 101
hereunder shall be deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to Licensee: iWorld LLC
--------------------------
--------------------------
Attn:
If to Licensor: Internet World Media, Inc.
--------------------------
--------------------------
Attn:
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.
9.12 HEADINGS. The headings in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
9.13 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * *
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<PAGE> 102
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
INTERNET WORLD MEDIA, INC.
By:____________________________
Name:
Title:
IWORLD LLC
By:____________________________
Name:
Title:
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<PAGE> 103
SCHEDULE A
Internet World
Boardwatch
ISPCON
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<PAGE> 104
EXHIBIT D
TERMS OF WARRANT AGREEMENT
<PAGE> 105
TERMS OF WARRANT AGREEMENT
BACKGROUND
- - Alan M. Meckler purchases an 80.1% interest in iWorld LLC for $18
million, implying a $22.5 million value for all of iWorld.
- - Assuming that 1000 units in iWorld are outstanding at the Effective
Time, Mr. Meckler purchases 801 from Internet World Media, Inc., which
retains 199 units.
- - The Warrants are to have a strike price such that they are at the money
when iWorld is worth $30 million.
TERMS
- - Units purchasable upon exercise: 10%.
- - Standard anti-dilution provisions for both the number of units
purchasable and the strike price.
- - Exercisable at any time immediately after the Effective Date until the
earlier of (i) three years from the Effective Date and (ii) the time
iWorld completes an initial public offering; provided, however, that
IWM will not be required to exercise at the time of an IPO if iWorld's
IPO valuation is less than $30 million.
- - Unlimited piggyback regisration rights, except with respect to the
initial public offering, subject to customary cutbacks.
- - Other customary provisions for warrants.
<PAGE> 106
EXHIBIT E
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made as of
_________ ___, 1998 (the "Effective Date") by and between Penton Media, Inc., a
Delaware corporation (the "Company"), and Alan M. Meckler, an individual
("Consultant").
WHEREAS, Consultant was the Chief Executive Officer of
Mecklermedia Corporation, a Delaware corporation ("Meckler").
WHEREAS, the Company has completed the acquisition of all of
the issued and outstanding stock of Meckler, has transferred an 80.1% interest
in iWorld, a Delaware limited liability company ("iWorld"), to Consultant, and
intends to operate on a going-forward basis Meckler's remaining business of
publishing magazines and conducting trade shows (the "Meckler Business"); and
WHEREAS, in connection with such acquisition, Consultant has
resigned as the Chief Executive Officer of Meckler; and
WHEREAS, the Company believes that Consultant's vision and
strategic planning abilities are likely to be important to the Company's ability
to continue the growth and development of the Meckler Business in the future;
and
WHEREAS, the Company therefore wishes to retain Consultant as
its consultant to perform consulting services and to advise the Company with
respect to the Meckler Business under the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS.
(a) AFFILIATES. "Affiliate" means any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the Person specified or, directly or indirectly,
is related to or otherwise associated with any such Person.
(b) COMPANY. "Company" includes the Company's subsidiaries
(excluding iWorld), divisions and Affiliates as they may exist from time to
time.
(c) COMPANY'S BUSINESS. "Company's Business" means the
Company's current business of publishing magazines, publishing electronic media
and conducting trade shows, and such further businesses as the Company may enter
into during the Term.
<PAGE> 107
(d) CONFIDENTIAL INFORMATION. "Confidential Information" means
information, excluding information relating to iWorld, that would constitute a
trade secret under the Uniform Trade Secrets Act or that otherwise is not
generally known to the public and that is developed, owned or obtained and kept
confidential by the Company, including, without limitation, information
developed by Consultant in the course of performing the Consulting Services and
the Company's non-public technical, marketing, financial, customer and sales
information.
(e) INTERNET WORLD. "Internet World" means the newspaper
published by Meckler entitled "Internet World."
(f) PERSON. "Person" means an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including, without limitation, a government or political
subdivision or an agency or instrumentality of a government or political
subdivision.
(g) RESTRICTED TERRITORY. "Restricted Territory" means: (a)
the geographic area within a 100 mile radius of any and all of the Company
locations where the Company maintains an office or other facility at the time of
the termination of this Agreement and at any time during the two year period
prior to such termination; and (b) all of the specific customers, whether within
or outside of the geographic area described in (a) above, with which Consultant
had any responsibility with respect to the Company (whether indirect, direct or
advisory) at the time of the termination of this Agreement and at any time
during the one year period prior to such termination.
(h) iWORLD BUSINESS. "iWorld Business" means the business of
maintaining Internet web sites that contain the latest news and resources for
the Internet industry, directories of Internet products and services, back
issues of print publications of Internet World Media Inc. ("IWM") and
information about IWM's Internet World and ISPCON trade shows and conferences.
(i) WORK PRODUCT. "Work Product" means, other than work
performed for iWorld, (a) any and all discoveries, inventions and know how,
including, without limitation, any and all test data, findings, designs,
machines, devices, apparatus, compositions, methods or processes, or any
improvements of the foregoing, made, conceived, discovered or developed by
Consultant, whether alone or in conjunction with others, which arise solely out
of the performance of the Consulting Services or that are derived from, are
based upon or utilize in any way any proprietary information, data, materials or
products belonging to the Company, whether during or after the termination of
this Agreement; and (b) all documents, reports or materials of any kind prepared
by Consultant in performing the Consulting Services.
2. SERVICES AND COMPENSATION.
(a) CONSULTING SERVICES. The Company retains Consultant to
furnish the Company with Consultant's unique expertise, advice, consulting and
personal services in connection with the Meckler Business pursuant to this
Agreement ("Consulting Services"). The Consultant shall render the Consulting
Services at such times and locations as Consultant and the
2
<PAGE> 108
Company shall mutually agree upon in good faith and Consultant shall devote such
time and attention as is necessary for him to perform the Consulting Services
successfully; provided, however that (i) the Consulting Services shall not
infringe upon Consultant's duties, obligations and responsibilities with respect
to iWorld, and (ii) Consultant shall not be obligated to perform the Consulting
Services for more than 15 hours per week during the first year of the Term, 10
hours per week during the second year of the Term and five hours per week during
the third year of the Term. The determination as to whether the Consulting
Services infringe upon Consultant's duties, obligations and responsibilities
with respect to iWorld shall be made in good faith by mutual agreement between
Consultant and the Company. If Consultant and the Company disagree as to whether
the Consulting Services infringe upon Consultant's duties, obligations and
responsibilities with respect to iWorld, the determination shall be made by an
independent third party chosen by mutual agreement of Consultant and the Company
made in good faith. To the degree that the Consulting Services are found to
infringe upon Consultant's duties, obligations and responsibilities with respect
to iWorld, Consultant may diminish the Consulting Services and the Company may
make a pro rata diminution in Consultant's compensation for the requisite
period. To facilitate the Consulting Services, Consultant will have access to
the Company's intranet and e-mail system. However, Consultant shall perform
Consulting Services only at the request of the Company, and the actual
Consulting Services to be provided by Consultant in connection with the Meckler
Business will be as designated by the Company from time to time. Consultant
shall not be required to travel outside of the continental United States and any
domestic travel (which requires a flight of over 2 hours) required shall be in
first class accommodations. The Consulting Services shall be limited to the
following:
(i) consulting with the Company regarding the
overall strategic direction of the Meckler
Business;
(ii) consulting with the Company to identify
acquisitions which would be synergistic to
Internet World;
(iii) consulting with the Company regarding
programming, speaker assignments and
conference structure;
(iv) consulting with the Company regarding new
Internet arena launches;
(v) consulting with the Company's electronics
group management on trade show and
conference launch issues and web site
initiatives;
(vi) consulting with the Company on cross media
promotion;
(vii) meeting with Internet World's editorial
board (no more than once per month);
(viii) meeting with certain clients and
participating in round tables and focus
groups; and
3
<PAGE> 109
(ix) speaking at Internet World events.
(x) such other services as Consultant and the
Company may mutually agree upon.
Consultant shall perform all Consulting Services on behalf of the Company in a
timely, diligent and professional manner in accordance with the highest
commercial industry standards. Consultant will not be required to travel more
than 15 nights a year during the first year of the Term, more than 12 nights a
year during the second year of the Term or more than 8 nights a year during the
third year of the Term.
(b) COMPENSATION. During the Term (as defined below), the
Company shall (i) pay Consultant $100,000 a year payable monthly on the last day
of each month in cash; and (ii) within ten business days after written request
by Consultant, reimburse Consultant for his reasonable direct expenses incurred
in performing the Consulting Services.
(c) INDEPENDENT CONTRACTOR.
(i) Consultant is and will at all times be and
remain an independent contractor. Consultant
is free to exercise Consultant's own
judgment as to the manner and method of
providing the Consulting Services to the
Company, subject to applicable laws and
requirements reasonably imposed by the
Company.
(ii) Consultant acknowledges and agrees that
Consultant will not be treated as an
employee for purposes of federal, state or
local income tax withholding, and unless
otherwise specifically provided by law, for
purposes of the Federal Insurance
Contributions Act, the Social Security Act,
the Federal Unemployment Tax Act or any
Worker's Compensation law of any State and
for purposes of benefits provided to
employees of the Company under any employee
benefit plan.
(iii) Consultant acknowledges and agrees that as
an independent contractor, Consultant is
required to pay any applicable taxes on the
fees paid to Consultant.
3. NO USE OF OTHERS' RIGHTS. Consultant represents and warrants that
Consultant can perform the Consulting Services, independent of any confidential
and proprietary information owned by a third party, other than iWorld,
including, without limitation, patents, copyrights, trademarks, service marks,
trade names, slogans, logos, copyrights, designs, sketches, ideas, persona,
images (e.g., photographs, computerized graphics, etc.) or publicity rights.
4. DOCUMENTATION. In connection with the provision of Consulting
Services, Consultant shall provide to the Company, upon the Company's request:
(i) all information,
4
<PAGE> 110
documents and other materials relating to the Consulting Services; and (ii) oral
reports regarding the progress of the Consulting Services rendered.
5. CONFIDENTIALITY. Consultant shall keep in strict confidence, and
will not, directly or indirectly, at any time, while a Consultant or after his
association with the Company, disclose, furnish, disseminate, make available or,
except in the course of performing his duties as a Consultant under this
Agreement, use any Confidential Information, acquired by Consultant during the
Term. Consultant specifically acknowledges that: (i) the Confidential
Information, whether reduced to writing, maintained on any form of electronic
media, or maintained in the mind or memory of Consultant and whether compiled by
the Company or Consultant derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from their disclosure or use; (ii) reasonable efforts have been
put forth by the Company to maintain the secrecy of such information; (iii) such
information is and will remain the sole property of the Company; and (iv) any
retention and use of such information during or after the termination of this
Agreement (except in the course of performing his obligations under this
Agreement) will constitute a misappropriation of the Company's trade secrets.
6. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Consultant acknowledges
and agrees that, in the performance of his duties under this Agreement, he will
be brought into frequent contact, either in person, by telephone or through the
mails, with existing and potential customers of the Company. Consultant also
agrees that any Confidential Information gained by Consultant during his
association with the Company has been developed by the Company through
substantial expenditures of time and money and constitutes valuable and unique
property of the Company. Consultant further understands and agrees that the
foregoing makes it necessary for the protection of the Meckler Business and the
Company's Business that Consultant not compete with the Company during the term
of the Agreement, as further provided in the following sections.
7. NONCOMPETITION DURING TERM. For three years from the Effective Date,
Consultant shall not, individually or through any Affiliate of Consultant, in
any of the United States of America, Puerto Rico, the Virgin Islands, Canada or
any other country in the world:
(a) enter into or engage in any business that competes
with the Meckler Business or the Company's Business; or
(b) solicit customers, active prospects, business or patronage
for any business that competes with the Meckler Business or the Company's
Business or sell any products or services for any business that competes with
the Meckler Business or the Company's Business; or
(c) solicit, divert, entice or otherwise take away any
customers, former customers, active prospects, business, patronage or orders of
the Company or attempt to do so; or
(d) promote or assist, financially or otherwise, any Person
engaged in any business that competes with the Meckler Business or the Company's
Business.
5
<PAGE> 111
(e) Notwithstanding anything herein to the contrary, the
parties hereto agree that the iWorld Business is not competitive with the
Meckler Business or the Company's Business and that Consultant is free to carry
out, implement and continue the iWorld Business.
8. NONSOLICITATION. Consultant shall not, and shall not cause any of
his Affiliates to, directly or indirectly, at any time solicit or induce or
attempt to solicit or induce any employee, representative, agent or consultant
of the Company (other than employees, representatives, agents or consultants of
iWorld) to terminate his, her or its employment, representation or other
association with the Company.
9. NONCOMPETITION - DIRECT OR INDIRECT. Consultant will be in violation
of SECTIONS 7, 8 and 10 if he engages in any or all of the activities set forth
in those sections directly as an individual on his own account, or indirectly
for any other Person and whether as partner, joint venturer, employee, agent,
salesperson, consultant, officer or director of any Person or as an equity
holder of any Person in which Consultant or Consultant's spouse, child or parent
owns, directly or indirectly, any of the equity interests; provided, however,
that nothing herein shall prohibit Consultant or Consultant's spouse, child or
parent from acquiring or holding any issue of stock or securities of any
business, individual, partnership, firm or corporation (each an "Entity") which
has any securities listed on a national securities exchange or quoted daily in
the listing of over-the-counter market securities, provided that at any one time
Consultant and his spouse, child or parent do not own more than 5% of the voting
securities of any such Entity.
10. DISCLOSURE OBLIGATION. Consultant shall, upon the Company's
request, disclose fully and promptly to the Company any and all written Work
Product.
11. ASSIGNMENT. All Work Product is deemed a "work for hire" in
accordance with the U.S. Copyright Act and is owned exclusively by the Company.
If, and to the extent, any of the Work Product is not considered a "work for
hire," Consultant shall, without further compensation, assign to the Company and
does hereby assign to the Company, Consultant's entire right, title and interest
in and to all Work Product. At the Company's expense and at the Company's
request, Consultant shall provide reasonable assistance and cooperation,
including, without limitation, the execution of documents in order to obtain,
enforce or maintain the Company's proprietary rights in the Work Product
throughout the world. Consultant appoints the Company as its agent and grants
the Company a power of attorney for the limited purpose of executing all such
documents.
12. PUBLICATION. Consultant shall not publish or submit for
publication, or otherwise disclose to any Person other than the Company, any
data or results from Consultant's work on behalf of the Company without the
prior written consent of the Company.
13. TERM AND TERMINATION.
(a) TERM. Unless earlier terminated pursuant to SECTION 15(b),
the term of this Agreement commences on the Effective Date and continues for
three years (the "Term").
6
<PAGE> 112
(b) BREACH. In the event that Consultant breaches, or fails to
comply with, any of the provisions of this Agreement, the Company, upon 10 days
prior written notice to Consultant specifying the nature of the breach or
failure to comply, has the right to terminate this Agreement (i) if Consultant
fails to cure such breach or fails to comply, if curable, within 10 days after
the giving of such written notice or (ii) within 10 days after the giving of
such written notice to Consultant, if such breach or failure to comply cannot be
cured.
(c) RETURN OR DESTRUCTION. Upon termination of this Agreement,
Consultant shall return, in good condition, all property of the Company,
including, without limitation, all tangible embodiments of the Confidential
Information.
(d) SURVIVAL. The obligations of the Company and Consultant
set forth in this Agreement that by their terms extend beyond or survive the
termination of this Agreement will not be affected or diminished in any way by
the termination of this Agreement.
14. GENERAL.
(a) NO LICENSE. This Agreement may not be construed to grant
and does not grant to Consultant any right or license with respect to any
know-how, Confidential Information, trademarks or other proprietary right of the
Company (apart from the right to make necessary use of the same in rendering
Consulting Services under this Agreement).
(b) REMEDIES. Consultant acknowledges that his failure to
comply with SECTIONS 5 THROUGH 14 of this Agreement will irreparably harm the
Meckler Business and the Company's Business and that the Company will not have
an adequate remedy at law in the event of such non-compliance. Therefore,
Consultant acknowledges that the Company will be entitled to injunctive relief
or specific performance without the posting of bond or other security, except as
required by law, in addition to whatever other remedies it may have, at law or
in equity, in any court of competent jurisdiction against any acts of
non-compliance by Consultant under this Agreement.
(c) LACK OF AGENCY. Neither party will be responsible, either
directly or indirectly, for any liability of the other party. Neither party is
deemed an agent of the other party and no actions of either party will be
inferred to create an agency relationship by third parties. Consultant shall not
have the authority to bind or obligate the Company in any way and Consultant
does not represent that he has such authority.
(d) SEVERABILITY. Should any provisions of this Agreement be
held illegal, invalid or unenforceable by any court or regulatory agency of
competent jurisdiction, such provision is to be modified by such court or
regulatory agency in compliance with the law and, as modified, enforced. All
other terms and conditions of this Agreement will remain in full force and
effect and are to be construed in accordance with the modified provision as if
such illegal, invalid or unenforceable provision had not been contained in this
Agreement.
7
<PAGE> 113
(e) APPLICABLE LAW. This Agreement and all disputes arising
under it are governed by the laws of the State of New York. Each party submits
to the jurisdiction of the federal and state courts located within the State of
New York.
(f) NO WAIVER. None of the terms of this Agreement is deemed
waived or amended by either party unless such a waiver or amendment specifically
references this Agreement and is in writing signed by an authorized
representative of the party to be bound. Any such signed waiver is effective
only in the specific instance and for the specific purpose for which it was made
or given.
(g) ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the heirs, successors, representatives and assigns of each party,
but Consultant may not assign or delegate this Agreement without the prior
written consent of the Company.
(h) HEADINGS. The headings in this Agreement are inserted for
convenience only and do not effect the meaning of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which is an original, and all of which are one and the
same instrument.
(j) THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or may be construed, to confer upon or give any Person
other than the Company and Consultant any rights or remedies under, or by reason
of, this Agreement.
(k) NOTICES. All notices and other communications required or
permitted under this Agreement are to be in writing and are duly given if
delivered by a nationally recognized overnight courier service with delivery
charges prepaid, or mailed by certified or registered mail, postage prepaid,
receipt requested, or sent by telecopy to the appropriate party at the address
specified below:
If to the Company:
Penton Media, Inc.
15th Floor
1100 Superior Avenue
Cleveland, Ohio 44114
Attention: Thomas L. Kemp
Telecopy No: (216) 696-1752
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Daniel C. Hagen
8
<PAGE> 114
Telecopy No: (216) 579-0212
If to Consultant:
Alan M. Meckler
c/o iWorld LLC
20 Ketcham Street
Westport, Connecticut 06880
with a copy to:
Willkie, Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Facsimile: (212) 728-8111
Attention: William J. Grant, Jr.
All notices, requests, demands, waivers and communications are deemed received
on the date of delivery.
(l) AMENDMENT. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Consultant, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
(m) ENTIRE AGREEMENT. This Agreement is the entire
understanding and agreement between the parties relating to this subject matter
and supersedes all prior contracts, agreements, arrangements, communications,
discussions, representations and warranties, whether oral or written, between
the parties relating to this subject matter.
IN WITNESS WHEREOF, the Company and Consultant have executed this
Agreement as of the date and year first above written.
PENTON MEDIA, INC.
By: _______________________________ ______________________________
Name: Alan M. Meckler
Title:
9
<PAGE> 115
EXHIBIT F
LIST OF CONSENTS REQUIRED
1. Denver West Office Park Lease by and between Denver West Office
Building no. 1 Venture LLP and Board Watch Magazine, Inc. dated as of
June 6, 1998.
Section 15.1 of the lease requires written consent from the
landlord prior to any transfer of the lease by Board Watch
Magazine, Inc. The section provides that a merger of a tenant
with another corporation is considered a transfer. Therefore,
consent must be acquired from the landlord prior to the merger
in order to avoid defaulting under the lease.
2. Lease Agreement by and between Fifty East Forty Second Company and
Mecklermedia Corporation dated as of November 5, 1997.
Section 11 of the lease requires written consent from the
landlord prior to any assignment of the lease by Mecklermedia
Corporation. The section provides that the transfer of the
majority of stock of a corporate tenant is considered an
assignment. Therefore, consent must be acquired from the
landlord prior to the merger in order to avoid defaulting
under the lease.
3. Lease Agreement by and between Flying Dutchman Management, Inc. and
Mecklermedia, Corp. dated as of November 25, 1997.
Section 7 of the lease requires written consent from the
landlord prior to any assignment of the lease by Mecklermedia,
Corp. The section provides that the sale, issuance or transfer
of any voting capital stock of the tenant (if tenant is a
non-public corporation), which results in a change in the
voting control of tenant, is considered an assignment.
4. Agreement by and between New York Convention Center Operating
Corporation ("Licensor") and Mecklermedia Corporation ("Licensee")
dated as of July 23, 1998 (not yet executed)
Section 26 of the agreement requires Licensee to obtain
approval from Licensor in order to assign the agreement. The
section provides that a transfer by operation of law or the
transfer of a fifty percent interest in Licensee is considered
an assignment. Therefore, consent must be acquired from
Licensor prior to the merger in order to avoid defaulting
under the agreement.
<PAGE> 116
5. Agreement between Los Angeles Convention Center ("LACC") and
Mecklermedia Corporation (currently out for execution) for Internet
World Spring 1999.
Prior agreements with LACC have included Change of Control Provisions.
<PAGE> 1
Exhibit C-4
===============================================================================
TENDER, VOTING AND OPTION AGREEMENT
by and among
ALAN M. MECKLER
MECKLERMEDIA CORPORATION
PENTON MEDIA, INC.
and
INTERNET WORLD MEDIA, INC.
dated as of
October 7, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
ARTICLE I
Section 1. Certain Definitions....................................................................1
Section 2. Representations and Warranties of the Stockholder......................................1
Section 3. Representations and Warranties of the Company..........................................3
Section 4. Representations and Warranties of Parent and Purchaser.................................4
ARTICLE II
Section 5. Transfer of the Shares.................................................................5
Section 6. Adjustments............................................................................6
Section 7. Tender of Shares.......................................................................6
Section 8. Voting Agreement.......................................................................6
Section 9. No Solicitation........................................................................7
ARTICLE IV
Section 10. Grant of Option........................................................................7
Section 11. Exercise of Option.....................................................................7
Section 12. Termination of Option..................................................................8
Section 13. Conditions to Closing..................................................................9
Section 14. Closing................................................................................9
Section 15. Registration Rights....................................................................9
ARTICLE V
Section 16. Profit Sharing with Parent............................................................11
Section 17. Profit Sharing with Stockholder.......................................................12
ARTICLE VI
Section 18. Termination...........................................................................13
Section 19. Expenses..............................................................................13
Section 20. Further Assurances....................................................................13
Section 21. Publicity.............................................................................13
Section 22. Enforcement of the Agreement..........................................................13
Section 23. Miscellaneous.........................................................................14
</TABLE>
i
<PAGE> 3
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Agreement.........................................................................................................1
Business Combination.............................................................................................12
Closing...........................................................................................................8
Common Stock......................................................................................................1
Company...........................................................................................................1
Company Option Price.............................................................................................10
Exchange Act......................................................................................................1
Exercise Notice...................................................................................................8
Exercise Price....................................................................................................7
Fair Market Value ...............................................................................................10
HSR Act...........................................................................................................3
Lien..............................................................................................................2
Manager...........................................................................................................9
Merger............................................................................................................1
Merger Agreement..................................................................................................1
Option Price.....................................................................................................10
Options...........................................................................................................1
Parent............................................................................................................1
Parent Option.....................................................................................................7
Parent Owned Shares...............................................................................................9
Parent Subsequent Price..........................................................................................13
Permitted Offering................................................................................................9
Purchaser.........................................................................................................1
Registrable Securities............................................................................................9
Registration Notice...............................................................................................9
Securities Act....................................................................................................5
Shares............................................................................................................1
Stockholder.......................................................................................................1
Stockholder Option Price.........................................................................................10
Subsequent Price.................................................................................................12
Subsequent Transaction...........................................................................................12
Third Party Subsequent Price.....................................................................................12
Third Party Subsequent Transaction...............................................................................12
Threshold Price..................................................................................................12
Trigger Event.....................................................................................................8
</TABLE>
ii
<PAGE> 4
TENDER, VOTING AND OPTION AGREEMENT, dated as of October 7,
1998 (this "Agreement"), by and among Penton Media, Inc., a Delaware corporation
("Parent"), Internet World Media, Inc., a Delaware corporation ("Purchaser"),
Alan M. Meckler (the "Stockholder") and Mecklermedia Corporation, a Delaware
corporation (the "Company").
WHEREAS, the Stockholder is the beneficial owner of 2,381,120
shares (the "Shares") of Common Stock, $.01 par value per share (the "Common
Stock"), of the Company, and holds stock options (the "Options") to acquire an
aggregate of 271,000 shares of Common Stock granted pursuant to the Company's
1993 Stock Option Plan and the Company's 1995 Stock Option Plan; and
WHEREAS, Parent, Purchaser and the Company have entered into
an Agreement and Plan of Merger, dated as of the date hereof (as amended from
time to time, the "Merger Agreement"), which provides, among other things, that,
upon the terms and subject to the conditions therein, Purchaser will merge (the
"Merger") with and into the Company and each issued and outstanding share of
Common Stock will be converted into the right to receive $29.00 in cash; and
WHEREAS, as a condition to the willingness of Parent and
Purchaser to enter into the Merger Agreement, Parent and Purchaser have
requested that the Stockholder agree, and in order to induce Parent and
Purchaser to enter into the Merger Agreement, the Stockholder has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
ARTICLE I
Section 1. CERTAIN DEFINITIONS. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to such terms in the Merger
Agreement.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
The Stockholder represents and warrants to Parent and Purchaser, as of the date
hereof and as of the Closing Date, as follows:
(a) The Stockholder is the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which meaning will apply for all purposes of this
Agreement) of, and has good title to, all of the Shares, free and clear of any
mortgage, pledge, hypothecation, rights of others, claim, security interest,
charge, encumbrance, title defect, title retention agreement, voting trust
agreement, interest, option, lien,
<PAGE> 5
charge or similar restriction or limitation (each, a "Lien") (including any
restriction on the right to vote, sell or otherwise dispose of the Shares),
except as set forth in this Agreement.
(b) Other than the Options and the Warrant, the Shares
constitute all of the securities (as defined in Section 3(10) of the Exchange
Act, which definition will apply for all purposes of this Agreement) of the
Company beneficially owned, directly or indirectly, by the Stockholder
(excluding any securities beneficially owned by any of his affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act,
which definition will apply for all purposes of this Agreement) as to which he
does not have voting or investment power).
(c) Except for the Shares, the Options and the Warrant, the
Stockholder does not, directly or indirectly, beneficially own or have any
option, warrant or other right to acquire any securities of the Company that are
or may by their terms become entitled to vote or any securities that are
convertible or exchangeable into or exercisable for any securities of the
Company that are or may by their terms become entitled to vote, nor is the
Stockholder subject to any contract, commitment, arrangement, understanding or
relationship (whether or not legally enforceable), other than this Agreement,
that allows or obligates him to vote or acquire any securities of the Company.
The Stockholder holds exclusive power to vote the Shares and has not granted a
proxy to any other Person to vote the Shares, subject to the limitations set
forth in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Stockholder and, assuming due authorization, execution and delivery of this
Agreement by Parent and Purchaser, is a valid and binding obligation of the
Stockholder enforceable against the Stockholder in accordance with its terms,
except that (i) the enforceability hereof may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereinafter in effect,
affecting creditors' rights generally, and (ii) the availability of the remedy
of specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
(e) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of his obligations hereunder will conflict
with, result in a violation or breach of, or constitute a default (or an event
that, with notice or lapse of time or both, would result in a default) or give
rise to any right of termination, amendment, cancellation, or acceleration or
result in the creation of any Lien on any Shares under, (i) any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Stockholder is a party or by which the Stockholder is bound or (ii) any
injunction, judgment, writ, decree, order or ruling applicable to the
Stockholder; except for conflicts, violations, breaches or defaults that would
not individually or in the aggregate be reasonably expected to prevent or
materially impair or delay the consummation by Stockholder of the transactions
contemplated hereby.
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(f) To the knowledge of the Stockholder, neither the execution
and delivery of this Agreement nor the performance by the Stockholder of his
obligations hereunder will violate any law, decree, statute, rule or regulation
applicable to the Stockholder or require any order, consent, authorization or
approval of, filing or registration with, or declaration or notice to, any
court, administrative agency or other governmental body or authority, other than
any required notices or filings pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") or the federal securities laws.
(g) All agreements, contracts, transfers of assets or
liabilities or other commitments or transactions, whether or not entered into in
the ordinary course of business, to or by which the Company or any of its
Subsidiaries, on the one hand, and the Stockholder or any of its affiliates
(other than the Company or any of its Subsidiaries), on the other hand, are or
have been a party or otherwise bound or affected, that (i) are currently pending
or in effect or (ii) involve continuing liabilities and obligations that,
individually or in the aggregate, have been, are or will be material to the
Company or any of its Subsidiaries taken as a whole, have either been disclosed
in the Company SEC Reports or are set forth in Schedule 4.18 of the Disclosure
Schedule referred to in the Merger Agreement.
(h) Except as set forth in Section 4.10 of the Merger
Agreement, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement or the Merger Agreement based upon arrangements
made by or on behalf of the Stockholder that is or will be payable by the
Company or any of its Subsidiaries.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Purchaser, as of the date hereof
and as of the Closing Date, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement.
(b) This Agreement has been duly executed and delivered by the
Company and, and assuming due authorization, in the case of Parent and
Purchaser, execution and delivery of this Agreement by the Stockholder, Parent
and Purchaser, is a valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except that (i) the enforceability
hereof may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereinafter in effect, affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to
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equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will conflict with,
result in a violation or breach of, or constitute a default (or an event that,
with notice or lapse of time or both, would result in a default) or give rise to
any right of termination, amendment, cancellation, or acceleration under, (i)
its certificate of incorporation or bylaws, (ii) any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which the
Company is a party or by which the Company is bound or (iii) any judgment, writ,
decree, order or ruling applicable to the Company; except in the case of clauses
(ii) and (iii) for conflicts, violations, breaches or defaults that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by the Company of the transactions contemplated
hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will violate any
law, decree, statute, rule or regulation applicable to the Company or require
any order, consent, authorization or approval of, filing or registration with,
or declaration or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the HSR Act or the federal securities laws.
(e) The Company has taken all necessary corporate or other
action (including approval by the Board of Directors of the Company) to render
inapplicable to this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby Section 203 of Delaware Law.
Section 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER. Parent and Purchaser represent and warrant to the Stockholder, as of
the date hereof and as of the Closing Date, as follows:
(a) Each of Parent and Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
(b) This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming the due execution and delivery of this
Agreement by the Stockholder, is a valid and binding obligation of each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms, except that (i) the enforceability hereof may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereinafter in effect,
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affecting creditors' rights generally, and (ii) the availability of the remedy
of specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will conflict with, result in a violation or breach of, or constitute
a default (or an event that, with notice or lapse of time or both, would result
in a default) or give rise to any right of termination, amendment, cancellation,
or acceleration under, (i) their respective certificates of incorporation or
bylaws, (ii) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser is bound or (iii) any judgment, writ, decree, order or
ruling applicable to Parent or Purchaser; except in the case of clauses (ii) and
(iii) for conflicts, violations, breaches or defaults that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by Parent or Purchaser of the transactions
contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will violate any law, decree, statute, rule or regulation applicable
to Parent or Purchaser or require any order, consent, authorization or approval
of, filing or registration with, or declaration or notice to, any court,
administrative agency or other governmental body or authority, other than any
required notices or filings pursuant to the HSR Act or the federal securities
laws.
(e) Any Shares acquired upon exercise of the Parent Option
will be acquired for Parent's own account, for investment purposes only and will
not be, and the Parent Option is not being, acquired by Parent with a view to
public distribution thereof in violation of any applicable provisions of the
Securities Act of 1933, as amended (the "Securities Act").
ARTICLE II
Section 5. TRANSFER OF THE SHARES. During the term of this
Agreement, except as otherwise provided herein, the Stockholder will not (a)
tender into any tender or exchange offer or otherwise sell, transfer, pledge,
assign, hypothecate or otherwise dispose of, or encumber with any Lien, any of
the Shares, (b) acquire any shares of Common Stock or other securities of the
Company (otherwise than in connection with a transaction of the type described
in Section 6), including, without limitation, by exercising any of the Options,
(c) deposit the Shares into a voting trust, enter into a voting agreement or
arrangement with respect to the Shares or grant any proxy or power of attorney
with respect to the Shares, or (d) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition or
sale, transfer, pledge, assignment, hypothecation or other disposition of any
interest in or the voting of any shares of Common Stock or any other securities
of the Company.
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Section 6. ADJUSTMENTS.
(a) In the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of the Company on, of or affecting the Shares or the
like or any other action that would have the effect of changing the
Stockholder's ownership of the Company's capital stock or other securities or
(ii) the Stockholder becomes the beneficial owner of any additional shares of
Common Stock or other securities of the Company, then the terms of this
Agreement will apply to the shares of capital stock held by the Stockholder
immediately following the effectiveness of the events described in clause (i) or
the Stockholder becoming the beneficial owner thereof, as described in clause
(ii), as though they were Shares hereunder.
(b) The Stockholder hereby agrees, while this Agreement is in
effect, to promptly notify Parent of the number of any new shares of the Common
Stock acquired by the Stockholder, if any, after the date hereof.
ARTICLE III
Section 7. TENDER OF SHARES. The Stockholder will validly
tender (or cause the record owner of such shares to validly tender) and sell
(and not withdraw) pursuant to and in accordance with the terms of the Offer not
later than the fifteenth business day after commencement of the Offer all of the
Shares. Upon the purchase of all the Shares by Purchaser pursuant to the Offer
in accordance with this Section 7, this Agreement will terminate. In the event,
notwithstanding the provisions of the first sentence of this Section 7, any
Shares are for any reason withdrawn from the Offer or are not purchased pursuant
to the Offer, such Shares will remain subject to the terms of this Agreement.
The Stockholder acknowledges that Purchaser's obligation to accept for payment
and pay for the Shares in the Offer is subject to all the terms and conditions
of the Offer.
Section 8. VOTING AGREEMENT. The Stockholder, by this Agreement,
does hereby constitute and appoint Parent and Purchaser, or any nominee thereof,
with full power of substitution, during and for the term of this Agreement, as
his true and lawful attorney and proxy for and in his name, place and stead, to
vote all the Shares Stockholder beneficially owns at the time of such vote, at
any annual, special or adjourned meeting of the stockholders of the Company (and
this appointment will include the right to sign his name (as stockholder) to any
consent, certificate or other document relating to the Company that laws of the
State of Delaware may require or permit) (x) in favor of approval and adoption
of the Merger Agreement and approval of the Merger and the other transactions
contemplated thereby and (y) against (a) any Acquisition Transaction, (b) any
action or agreement that would result in a breach in any respect of any
covenant, agreement, representation or warranty of the Company under the Merger
Agreement and (c) the following actions (other than the Merger and the other
transactions contemplated by the Merger Agreement): (i) any extraordinary
corporate transaction, such as a
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merger, consolidation or other business combination involving the Company or its
Subsidiaries; (ii) a sale, lease or transfer of a material amount of assets of
the Company or one of its Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its Subsidiaries; (iii) (A) any
change in a majority of the persons who constitute the board of directors of the
Company as of the date hereof; (B) any change in the present capitalization of
the Company or any amendment of the Company's certificate of incorporation or
bylaws, as amended to date; (C) any other material change in the Company's
corporate structure or business; or (D) any other action that, in the case of
each of the matters referred to in clauses (iii)(A), (B) and (C) is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the Merger and the other transactions contemplated by this
Agreement and the Merger Agreement. This proxy and power of attorney is a proxy
and power coupled with an interest, and the Stockholder declares that it is
irrevocable. The Stockholder hereby revokes all and any other proxies with
respect to the Shares that he may have heretofore made or granted. For Shares as
to which the Stockholder is the beneficial but not the record owner, the
Stockholder shall use his best efforts to cause any record owner of such Shares
to grant to Parent a proxy to the same effect as that contained herein.
Section 9. NO SOLICITATION. The Stockholder will not, directly
or indirectly, through any agent, financial advisor, attorney, accountant or
other representative or otherwise, (i) solicit, initiate or encourage submission
of proposals or offers from any Person relating to, or that could reasonably be
expected to lead to, an Acquisition Transaction or (ii) participate in any
negotiations or discussions regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek an Acquisition Transaction. The Stockholder shall
immediately advise Parent in writing of the receipt of request for information
or any inquiries or proposals relating to an Acquisition Transaction.
ARTICLE IV
Section 10. GRANT OF OPTION. The Stockholder hereby grants
Parent an irrevocable option (the "Parent Option") to purchase for cash, in a
manner set forth below, any or all of the Shares beneficially owned by the
Stockholder at a price (the "Exercise Price") per Share equal to the Per Share
Amount. In the event of any stock dividends, stock splits, recapitalizations,
combinations, exchanges of shares or the like, the Per Share Amount will be
appropriately adjusted for the purpose of this Section 10.
Section 11. EXERCISE OF OPTION.
(a) Subject to the conditions set forth in Section 13 hereof,
the Parent Option may be exercised by Parent, in whole or in part, at any time
or from time to time after the occurrence of any Trigger Event (as defined
below). The Company and the Stockholder shall notify Parent promptly in writing
of the occurrence of any Trigger Event, it being understood that
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the giving of such notice by the Company or the Stockholder is not a condition
to the right of Parent to exercise the Option. In the event Parent wishes to
exercise the Option, Parent shall deliver to the Stockholder a written notice
(an "Exercise Notice") specifying the total number of Shares it wishes to
purchase. Each closing of a purchase of Shares (a "Closing") will occur at a
place, on a date and at a time designated by Parent in an Exercise Notice
delivered at least two business days prior to the date of the Closing.
(b) A "Trigger Event" means any one of the following: (a) the
Merger Agreement becomes terminable under circumstances that could entitle
Parent to termination fees under Section 8.2(b)(i)(B) or Section 8.2(b)(ii) of
the Merger Agreement (regardless of whether the Merger Agreement is actually
terminated and whether such fees are then actually payable), (b) the Offer is
consummated but, due to the failure of the Stockholder to validly tender and not
withdraw, the Purchaser has not accepted for payment or paid for all of the
Shares, (c) a tender or exchange offer for some or all of the shares of Company
Common Stock shall have been publicly proposed to be made or shall have been
made by another person, or (d) it shall have been publicly disclosed or Parent
or Purchaser shall have otherwise learned that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or
Purchaser) shall have acquired or proposed to acquire beneficial ownership of
more than 25% of any class or series of capital stock of the Company (including
the Common Stock), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 25% of any class or
series of capital stock of the Company other than acquisitions for bona fide
arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on
file with the SEC on September 1, 1998, (ii) any such person or group which,
prior to September 1, 1998, had filed such a Schedule with the SEC shall have
acquired or proposed to acquire beneficial ownership of additional shares of any
class or series of capital stock of the Company, through the acquisition of
stock, the formation of a group or otherwise, constituting 5% or more of any
such class or series, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of additional shares
of any class or series of capital stock of the Company (including the Common
Stock) constituting 5% or more of any such class or series, (iii) any person
(other than Parent or Purchaser) shall have filed a Notification and Report Form
under the HSR Act, or made a public announcement reflecting an intent to acquire
the Company or any assets or securities of the Company; or (iv) any person or
group (other than Parent and Purchaser) shall have entered into or offered to
enter into a definitive agreement or an agreement in principle with respect to a
merger, consolidation or other business combination with the Company.
Section 12. TERMINATION OF OPTION. The Parent Option will
terminate (a) if this Agreement terminates pursuant to Section 7 or (b) upon the
earliest of: (i) the Effective Time; (ii) termination of the Merger Agreement
other than upon or during the continuance of a Trigger Event; or (iii) 180 days
following any termination of the Merger Agreement upon or during the continuance
of a Trigger Event (or if, at the expiration of such 180 day period the Parent
Option cannot be exercised by reason of any applicable judgment, decree, order,
law or regulation, 10
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business days after such impediment to exercise has been removed or has become
final and not subject to appeal). Upon the giving by Parent to the Stockholder
of the Exercise Notice and the tender of the aggregate Exercise Price, Parent
will be deemed to be the holder of record of the Shares transferrable upon such
exercise, notwithstanding that the stock transfer books of the Company are then
closed or that certificates representing such Shares have not been actually
delivered to Parent.
Section 13. CONDITIONS TO CLOSING. The obligation of the
Stockholder to sell the Shares to Parent hereunder is subject to the conditions
that (i) all waiting periods, if any, under the HSR Act, applicable to the sale
of the Shares or the acquisition of the Shares by Parent hereunder have expired
or have been terminated; (ii) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any court, administrative
agency or other governmental body or authority, if any, required in connection
with sale of the Shares or the acquisition of the Shares by Parent hereunder
have been obtained or made; and (iii) no preliminary or permanent injunction or
other order by any court of competent jurisdiction prohibiting or otherwise
restraining such sale or acquisition is in effect.
Section 14. CLOSING. At any Closing, (a) the Stockholder will
deliver to Parent or its designee a certificate or certificates in definitive
form representing the number of the Shares designated by Parent in its Exercise
Notice, such certificate to be registered in the name of Parent or its designee
and (b) Parent will deliver to the Stockholder the aggregate Exercise Price for
the Shares so designated and being purchased by wire transfer of immediately
available funds. The Stockholder will pay all expenses, and any and all United
States federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 14 in the name of Parent or its designee.
Section 15. REGISTRATION RIGHTS.
(a) (i) Following termination of the Merger Agreement, Parent
may by written notice (the "Registration Notice") to the Company, which
Registration Notice the Parent shall concurrently send to the Stockholder,
request the Company to register under the Securities Act all or any part of
the shares of Common Stock acquired under the Parent Option (the "Parent
Owned Shares" and such Parent Owned Shares requested to be registered for
sale, the "Registrable Securities") pursuant to a bona fide firm commitment
underwritten public offering in which Parent and the underwriters shall
effect as wide a distribution of such Registrable Securities as is
reasonably practicable and shall use their best efforts to prevent any
person (including any Group (as used in Rule l3d-5 under the Exchange Act))
and its affiliates from purchasing through such offering shares
representing more than 1% of the outstanding shares of Common Stock on a
fully diluted basis (a "Permitted Offering"). The Registration Notice will
include a certificate executed by Parent and its proposed managing
underwriter, which underwriter will be an investment banking firm of
nationally recognized standing (the "Manager"), stating that
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(A) they have a good faith intention to commence promptly a
Permitted Offering and (B) the Manager in good faith believes that, based
on the then prevailing market conditions, it will be able to sell the
Registrable Securities at a per share price equal to at least 80% of the
then Fair Market Value of such shares.
(ii) Upon receipt of the Registration Notice, the Stockholder
will have the option exercisable by written notice delivered to Parent and
the Company within nine business days after receipt of the Registration
Notice, irrevocably to agree to purchase for cash at a price (the
"Stockholder Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Stockholder and (ii) the
then Fair Market Value of such shares all or any part of the Registrable
Securities proposed to be so sold .
(iii) Upon receipt of the Registration Notice, the Company
(and/or any person designated by the Company) will have the option
exercisable by written notice delivered to Parent within ten business days
after the receipt of the Registration Notice, irrevocably to agree to
purchase for cash at a price (the "Company Option Price" and, together with
the Stockholder Option Price, the "Option Price") equal to the product of
(i) the number of Registrable Securities to be so purchased by the Company
and (ii) the then Fair Market Value of such shares all or any part of the
Registrable Securities proposed to be so sold and not purchased by the
Stockholder pursuant to clause (ii) above.
(iv) Any such purchase of Registrable Securities by the
Stockholder or the Company (or its designee) hereunder will take place at a
closing to be held at the principal executive offices of the Company or at
the offices of its counsel at any reasonable date and time designated by
the Stockholder, the Company and/or such designee in such notice within 20
business days after delivery of such notice. Any payment for the shares to
be purchased will be made by delivery at the time of such closing of the
Option Price in immediately available funds. As used herein, "Fair Market
Value" means the average of the daily closing sales price for such share
during the ten trading days prior to the fifth trading day preceding the
date such Fair Market Value is to be determined.
(b) If the Stockholder and the Company, collectively, do not
elect to exercise their respective options pursuant to Section 15(a) with
respect to all Registrable Securities, the Company shall use commercially
reasonable efforts to effect, as promptly as practicable, the registration under
the Securities Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that (i) Parent will be entitled to no more than an
aggregate of two effective registration statements hereunder and (ii) the
Company will not be required to file any such registration statement during any
period of time (not to exceed 40 days after such request in the case of clause
(A) below or 90 days in the case of clauses (B) and (C) below) when (A) the
Company is in possession of material non-public information that it reasonably
believes would be detrimental to be disclosed at such time and, in the opinion
of
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outside counsel to the Company, such information would have to be disclosed if a
registration statement were filed at that time; (B) the Company is required
under the Securities Act to include audited financial statements for any period
in such registration statement and such financial statements are not yet
available for inclusion in such registration statement; or (C) the Company
determines, in its reasonable judgment, that such registration would interfere
with any proposed financing, acquisition or other material transaction involving
the Company or any of its affiliates. The Company shall use its reasonable best
efforts to cause any Registrable Securities registered pursuant to this Section
15 to be qualified for sale under the securities or Blue-Sky laws of such
jurisdictions and Parent may reasonably request and shall continue such
registration or qualification in effect in such jurisdiction; provided, however,
that the Company will not be required to qualify to do business in, or to
consent to general service of process in, any jurisdiction by reason of this
provision.
(c) The registration rights set forth in this Section 15 are
subject to the condition that Parent shall provide the Company with such
information with respect to Parent's Registrable Securities, the plans for the
distribution thereof, and such other information with respect to such holder as,
in the reasonable judgment of counsel for the Company, is necessary to enable
the Company to include in such registration statement all material facts
required to be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 15 will be
effected at the Company 's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to Parent (which will be
paid by Parent), and the Company shall provide to the underwriters such
documentation (including certificates, opinions of counsel and "comfort" letters
from auditors) as are customary in connection with unwritten public offerings as
such underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the underwriters
in the customary manner, (ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the Manager and the
other underwriters participating in such offering and (iii) to take all further
actions that will be reasonably necessary to effect such registration and sale
(including, if the Manager deems it necessary, participating in road-show
presentations).
(e) The Company will be entitled to include (at its expense)
additional shares of Common Stock in a registration effected pursuant to this
Section 15 only if and to the extent the Manager determines that such inclusion
will not adversely affect the prospects for success of such offering.
ARTICLE V
Section 16. PROFIT SHARING WITH PARENT. If (a) the Parent
Option becomes exercisable pursuant to Section 11 hereof, (b) Parent has not
exercised the Parent Option for all the Shares, and (c) not later than thirteen
months from the date of termination of the Merger
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Agreement, (i) the Company consummates a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or a substantial portion of the assets or equity securities
of, the Company (a "Business Combination"), (ii) Stockholder disposes of any or
all of his Shares to any person not an affiliate or an associate of Parent or
Purchaser or to the Company or any affiliate thereof in connection with a
Business Combination or (iii) Stockholder realizes cash proceeds in respect of
such Shares as a result of a distribution to the Stockholder by the Company
following the sale of a material amount of the Company's assets in connection
with a Business Combination (each, a "Subsequent Transaction"), in each case at
a per share price or with equivalent per share proceeds (including, in the case
of clause (iii), the remaining value of the Shares), as the case may be (the
"Subsequent Price"), with a value in excess of the Per Share Amount, then the
Stockholder will promptly pay to Parent an amount equal to one-half of the
product of (x) the excess of the Subsequent Price over the Per Share Amount and
(y) the greatest number of Shares beneficially owned by the Stockholder between
the date hereof and the time a Business Combination is consummated (assuming for
this purpose that the Parent Option has not been exercised for any Shares) less
the number of Shares, if any, acquired by Parent upon exercise of the Parent
Option. In the event of any stock dividends, stock splits, recapitalizations,
combinations, exchanges of shares or the like or any other action that would
have the effect of changing the Stockholder's ownership of the Company's capital
stock or other securities, the Per Share Amount will be appropriately adjusted
for the purpose of this Section 16.
Section 17. PROFIT SHARING WITH STOCKHOLDER.
(a) If (x) Parent exercises the Parent Option and (y) on or
after the earliest date of such exercise and not later than thirteen months from
the date of termination of the Merger Agreement, (i) the Company consummates a
Business Combination, (ii) Parent disposes of any or all of the Parent Owned
Shares to any person not an affiliate or an associate of Parent or Purchaser or
to the Company or any affiliate thereof in connection with a Business
Combination or (iii) Parent realizes cash proceeds in respect of the Parent
Owned Shares as a result of a distribution to Parent by the Company following
the sale of a material amount of the Company's assets in connection with a
Business Combination (each, a "Third Party Subsequent Transaction"), in each
case at a per share price or with equivalent per share proceeds (including, in
the case of clause (iii), the remaining value of the Parent Owned Shares), as
the case may be (the "Third Party Subsequent Price"), with a value in excess of
$31.00 (the "Threshold Price"), then Parent will promptly pay to the Stockholder
an amount equal to one-half of the product of (x) the excess of the Third Party
Subsequent Price over the Threshold Price and (y) the number of Parent Owned
Shares held by Parent at the time a Business Combination is consummated less
one-half of any amounts subject to recovery by the Company pursuant to Section
16(b) of the Exchange Act. In the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing Parent's ownership of the
Company's capital stock or other securities, the Threshold Price will be
appropriately adjusted for the purpose of this Section 17(a).
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(b) If (x) Parent exercises the Parent Option granted in
Section 10 and (y) on or after the earliest date of such exercise and not later
than thirteen months from the date of termination of the Merger Agreement,
Parent, Purchaser or any affiliate or associate of Parent or Purchaser
consummates a Business Combination involving the Company at a per share price or
with equivalent per share proceeds (the "Parent Subsequent Price") with a value
in excess of the Per Share Amount, then Parent will promptly pay to the
Stockholder an amount equal to the product of (x) the excess of the Parent
Subsequent Price over the Per Share Amount and (y) the number of Parent Owned
Shares. In the event of any stock dividends, stock splits, recapitalizations,
combinations, exchanges of shares or the like or any other action that would
have the effect of changing Parent's ownership of the Company's capital stock or
other securities, the Per Share Amount will be appropriately adjusted for the
purpose of this Section 17(b).
ARTICLE VI
Section 18. TERMINATION. This Agreement will terminate (a)
upon the purchase of all the Shares pursuant to the Offer in accordance with
Section 7, (b) except for Article IV and Article V hereof, which will only
terminate as and when provided therein, (i) on the earlier to occur of (A) the
Effective Time or (B) the date the Merger Agreement is terminated in accordance
with its terms, or (c) by the mutual consent of the Stockholder, the Board of
Directors of the Company and the Board of Directors of Parent.
Section 19. EXPENSES. Except as otherwise expressly provided
herein or in the Merger Agreement, all costs and expenses incurred by any of the
parties hereto will be borne by the party incurring such costs and expenses.
Parent and Purchaser, on the one hand, and the Company and the Stockholder, on
the other hand, will indemnify and hold harmless the other from and against any
and all claims or liabilities for finder's fees or brokerage commissions or
other like payments incurred by reason of action taken by him, it or any of
them, as the case may be.
Section 20. FURTHER ASSURANCES. Each party hereto will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 21. PUBLICITY. Parent, the Company and the Stockholder
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger
Agreement or the other transactions contemplated hereby or thereby and shall not
issue any such press release or make any such public statement before such
consultation, except as may be required by law or applicable stock exchange
rules..
Section 22. ENFORCEMENT OF THE AGREEMENT. The Stockholder and
the Company acknowledge that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were
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otherwise breached. It is accordingly agreed that Parent and Purchaser will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which it is entitled at law or in equity.
Section 23. MISCELLANEOUS.
(a) All representations and warranties contained herein will
survive for thirteen months after the termination hereof. The covenants and
agreements made herein will survive in accordance with their respective terms.
(b) Any provision of this Agreement may be waived at any time
by the party that is entitled to the benefits thereof. No such waiver, amendment
or supplement will be effective unless in writing and signed by the party or
parties sought to be bound thereby. Any waiver by any party of a breach of any
provision of this Agreement will not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement or one or more sections hereof will not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(c) This Agreement, the Merger Agreement, the iWorld
Agreement, the Services Agreement, the Warrant Agreement, the Licensing
Agreement, the Consulting Agreement and the Confidentiality Agreement constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements among the parties with respect to
such matters. This Agreement may not be amended, changed, supplemented, waived
or otherwise modified, except upon the delivery of a written agreement executed
by the parties hereto.
(d) This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of laws principles thereof.
(e) The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
(f) All notices and other communications hereunder will be in
writing and will be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by telecopy, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
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If to the Company or the Stockholder to:
Mecklermedia Corporation
20 Ketchum Street
Westport, Connecticut 06880
Attention: Alan M. Meckler
Telecopier: 203-226-8023
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: William J. Grant, Jr., Esq.
Telecopier: (212) 728-8111
If to Parent or Purchaser to:
Penton Media, Inc.
100 Superior Avenue
Cleveland, Ohio 44114
Attention: Chief Executive Officer
Telecopier: 216-931-9891
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Christopher M. Kelly, Esq.
Telecopier: (216) 579-0212
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(g) This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one agreement.
(h) This Agreement is binding upon and is solely for the
benefit of the parties hereto and their respective successors, legal
representatives and assigns. Neither this
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Agreement nor any of the rights, interests or obligations under this Agreement
will be assigned by any of the parties hereto without the prior written consent
of the other parties, except that Parent and Purchaser will have the right to
assign to any direct or indirect wholly owned subsidiary of Parent or Purchaser
any and all rights and obligations of Parent or Purchaser under this Agreement,
provided that any such assignment will not relieve either Parent or Purchaser
from any of its obligations hereunder.
(i) If any term or provision of this Agreement is determined
to be invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.
(j) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity will be
cumulative and not alternative, and the exercise of any thereof by either party
will not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
PENTON MEDIA, INC.
By: /S/ THOMAS L. KEMP
--------------------------------------
Name: Thomas L. Kemp
Title:Chief Executive Officer
INTERNET WORLD MEDIA, INC.
By: /S/ THOMAS L. KEMP
--------------------------------------
Name: Thomas L. Kemp
Title: President
MECKLERMEDIA CORPORATION
By: /S/ ALAN M. MECKLER
--------------------------------------
Name: Alan M. Meckler
Title: Chief Executive Officer
STOCKHOLDER
/S/ ALAN M. MECKLER
--------------------------------------
Alan M. Meckler
