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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 15, 1998
Mecklermedia Corporation
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 0-23364 06-1385519
________________________________________________________________________________
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
20 Ketchum Street
Westport, Connecticut 06880
________________________________________________________________________________
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (203) 226-6967
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N/A
______________________________________________________________________________
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On May 15, 1998, the Registrant and its wholly owned subsidiaries,
Mecklermedia Acquisition Corp. I, a Colorado corporation ("Merger Sub I") and
Mecklermedia Acquisition Corp. II, a Colorado corporation ("Merger Sub II"),
consummated the acquisition of all of the outstanding capital stock of
Boardwatch Magazine, Incorporated ("Boardwatch") and One, Inc. ("One"), each a
Colorado corporation. Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated May 15, 1998, by and among the Registrant, Merger Sub I,
Merger Sub II, Marion Jack Rickard, Jr., Boardwatch and One, Merger Sub I was
merged with and into Boardwatch and Merger Sub II was merged with and into One
(the "Merger").
The consideration paid in the Merger (which was determined as a result of
arms'-length negotiations) consisted of cash in the amount of $14,000,000 and
750,000 shares of the Registrant's Common Stock.
Boardwatch is the publisher of the monthly trade magazine Boardwatch which
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has a circulation of 25,000 readers. One is the organizer of the ISPCON trade
shows, the largest tradeshows in the Internet service-provider industry.
Boardwatch's Web site, Boardwatch.com, and One's Web site, Ispcon.com, were
included in the acquisition. The Registrant intends to integrate the businesses
of the acquired companies with the operations of the Registrant's existing
business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial Statements of Business Acquired:
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The financial statements required by this item will be filed by an
amendment to this Current Report on Form 8-K as soon as practicable but
not later than 60 days after the date of this filing.
(b) Pro Forma Financial Information:
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The pro forma financial statements required by this item will be filed
by an amendment to this Current Report on Form 8-K as soon as
practicable but not later than 60 days after the date of this filing.
(c) Exhibits:
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2. Agreement and Plan of Merger, dated May 15, 1998, by and among Marion
Jack Rickard, Jr., Boardwatch Magazine, Incorporated, One, Inc.,
Mecklermedia Corporation, Mecklermedia Acquisition Corp. I and
Mecklermedia Acquisition Corp. II.*
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4.1 Registration Rights Agreement, dated May 15, 1998, between Marion Jack
Rickard, Jr. and Mecklermedia Corporation.
4.2 Stockholders Agreement, dated May 15, 1998, between Marion Jack
Rickard, Jr. and Mecklermedia Corporation.
* The annex and schedules to the Merger Agreement are not being filed
herewith. The exhibits to the Merger Agreement are being filed herewith as
Exhibits 4.1 and 4.2 referenced above. The Merger Agreement filed herewith
contains a list briefly identifying the contents of the annex and all
schedules to the Merger Agreement. The Registrant undertakes to furnish
supplementally a copy of any omitted annex or schedule to the Commission
upon request. Pursuant to Item 601(b)(2) of Regulation S-K, set forth below
is a list of the omitted annex and schedules.
Annex
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Annex A Unaudited Financial Statements of Boardwatch and One for the
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year ended December 31, 1997.
Schedules
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Schedule 2.12 Boardwatch and One Material Litigation
Schedule 2.13 Boardwatch and One Material Contracts
Schedule 2.14 Boardwatch and One Employee Benefit Plans
Schedule 2.15 Boardwatch and One Tax Returns Not Timely Filed;
Outstanding Requests for Extensions to Filing Tax
Returns; Exceptions to Valid Subchapter S
Election.
Schedule 2.16 One Third Party Consent to Use of Intellectual
Property
Schedule 2.17 Finder's Fee
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act, of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MECKLERMEDIA CORPORATION
Date: May 29, 1998 By: /s/ Christopher S. Cardell
--------------------------------
Christopher S. Cardell
President
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2. Agreement and Plan of Merger, dated May 15, 1998, by and among
Marion Jack Rickard, Jr., Boardwatch Magazine, Incorporated, One,
Inc., Mecklermedia Corporation, Mecklermedia Acquisition Corp. I and
Mecklermedia Acquisition Corp. II.
4. 1 Registration Rights Agreement, dated May 15, 1998, between Marion
Jack Rickard, Jr. and Mecklermedia Corporation.
4. 2 Stockholders Agreement, dated May 15, 1998, between Marion Jack
Rickard, Jr. and Mecklermedia Corporation.
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EXECUTION COPY
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=================================
MARION JACK RICKARD, JR.,
BOARDWATCH MAGAZINE, INCORPORATED,
ONE, INC.,
MECKLERMEDIA CORPORATION,
MECKLERMEDIA ACQUISITION CORP. I
and
MECKLERMEDIA ACQUISITION CORP. II
=================================
AGREEMENT AND PLAN OF MERGER
=================================
=================================
Dated as of May 15, 1998
=================================
================================================================================
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TABLE OF CONTENTS
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<TABLE>
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Page
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ARTICLE I.
THE MERGERS
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1.1. The Mergers....................................................... 1
1.2. Effective Time.................................................... 2
1.3. Effect of the Mergers............................................. 2
1.4. Certificate of Incorporation; By-Laws; Directors and Officers..... 3
1.5. Merger Consideration.............................................. 3
1.6. Surrender and Exchange of Shares; Fractional Shares............... 4
1.7. Other Effects of Merger........................................... 4
1.8. Section 338(h)(10) Election....................................... 4
1.9. Additional Actions................................................ 7
1.10. Tax Returns for Periods Through Closing........................... 7
1.11. Cooperation on Tax Matters........................................ 8
1.12. Shareholder Withdrawal............................................ 8
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND THE COMPANIES
2.1. Organization and Good Standing.................................... 8
2.2. Capitalization.................................................... 9
2.3. Ownership; Subsidiaries........................................... 9
2.4. Authorization; Binding Agreement.................................. 9
2.5. Governmental Approvals............................................ 9
2.6. No Violations..................................................... 10
2.7. [RESERVED]........................................................ 10
2.8. Company Financial Statements...................................... 10
2.9. Absence of Certain Changes or Events.............................. 11
2.10. Compliance with Laws.............................................. 11
2.11. Permits........................................................... 11
2.12. Litigation........................................................ 11
2.13. Contracts......................................................... 11
2.14. Employee Benefit Plans............................................ 11
2.15. Taxes and Returns................................................. 12
2.16. Intellectual Property............................................. 13
2.17. Finders and Investment Bankers.................................... 13
2.18. Offering Exemption................................................ 13
2.19. Knowledge of Offer................................................ 13
2.20. Knowledge and Experience; Ability to Bear Economic Risks.......... 13
2.21. Limitations on Disposition........................................ 13
2.22. Investment Purpose................................................ 14
2.23. Capacity.......................................................... 14
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
3.1. Organization and Good Standing.................................. 14
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3.2. Capitalization.................................................. 14
3.3. Authorization; Binding Agreement................................ 15
3.4. Governmental Approvals.......................................... 15
3.5. No Violations................................................... 15
3.6. Securities Filings.............................................. 16
3.7. Parent Financial Statements..................................... 16
3.8. Absence of Certain Changes or Events............................ 17
3.9. Compliance with Laws............................................ 17
3.10. Permits......................................................... 17
3.11. Litigation...................................................... 17
3.12. Contracts....................................................... 17
3.13. Finders and Investment Bankers.................................. 18
3.14. No Prior Activities............................................. 18
3.15. Parent's Investigation; Sophisticated Buyer..................... 18
3.16. Financing....................................................... 18
3.17. Purchase for Own Account........................................ 18
3.18. Nasdaq Listing of Parent Stock.................................. 18
ARTICLE IV.
ADDITIONAL COVENANTS OF SHAREHOLDER AND THE COMPANIES
4.1. Conduct of Business of the Company.............................. 19
4.2. Reasonable Business Efforts..................................... 19
4.3. Public Announcements............................................ 19
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
5.1. Conduct of Business of Parent................................... 20
5.2. Notification of Certain Matters................................. 20
5.3. Access and Information.......................................... 21
5.4. Reasonable Commercial Efforts................................... 21
5.5. Public Announcements............................................ 21
ARTICLE VI.
6.1. Non-Competition................................................. 22
6.2. Non-Solicitation................................................ 22
6.3. Enforcement..................................................... 23
6.4. Remedies........................................................ 23
ARTICLE VII.
MERGER CONDITIONS
7.1. Conditions to Each Party's Obligations.......................... 23
(a) No Injunction or Action................................... 23
(b) Registration Rights Agreement............................. 23
7.2. Conditions to Obligations of Shareholder and the Companies...... 24
(a) No Material Adverse Change................................ 24
(b) Performance by Parent..................................... 24
(c) Certificates and Other Deliveries......................... 24
7.3. Conditions to Obligations of Parent and the Merger Subs......... 24
(a) No Material Adverse Change................................ 24
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<TABLE>
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(b) Performance by Shareholder and the Companies.............. 24
(c) Certificates and Other Deliveries......................... 24
(d) Other Agreements.......................................... 25
ARTICLE VIII.
ARTICLE IX.
INDEMNIFICATION AND REIMBURSEMENT
9.1. Indemnification by Shareholder................................... 25
(a) Misrepresentation or Breach of Warranty.................... 25
(b) Breach of Covenant or Agreement............................ 25
9.2. Indemnification by Parent........................................ 26
(a) Misrepresentation or Breach of Warranty.................... 26
(b) Breach of Covenant or Agreement............................ 26
9.3. Claims for Reimbursement......................................... 27
9.4. Defense of Third-Party Claims.................................... 28
9.5. Resolution of Disputes........................................... 29
ARTICLE X.
MISCELLANEOUS
10.1. Confidentiality................................................ 29
10.2. Amendment and Modification..................................... 29
10.3. Waiver of Compliance; Consents................................. 29
10.4. Survival....................................................... 30
10.5. Notices........................................................ 30
10.6. Binding Effect; Assignment..................................... 31
10.7. Expenses....................................................... 31
10.8. Governing Law.................................................. 31
10.9. Counterparts................................................... 31
10.10. Interpretation................................................. 31
10.11. Entire Agreement............................................... 32
10.12. Specific Performance........................................... 32
10.13. Third Parties.................................................. 32
</TABLE>
Exhibits:
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A - Form of Registration Rights Agreement
B - Form of Stockholders Agreement
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
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entered into as of May 15, 1998 by and among Marion Jack Rickard, Jr., an
individual residing at 14322 W. Bellview Avenue, Morrison, CO 80465
("Shareholder"), Boardwatch Magazine, Incorporated, a Colorado corporation
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("Boardwatch"), One, Inc., a Colorado corporation ("One") (Boardwatch and One
----------- ---
each being referred to herein as a "Company" and together as the "Companies"),
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Mecklermedia Corporation, a Delaware corporation ("Parent"), Mecklermedia
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Acquisition Corp. I, a Colorado corporation and wholly owned subsidiary of
Parent ("Merger Sub I") and Mecklermedia Acquisition Corp. II, a Colorado
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corporation and wholly owned subsidiary of Parent ("Merger Sub II") (Merger Sub
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I and Merger Sub II together referred to as the "Merger Subs").
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W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of the Companies, Parent
and the Merger Subs have approved the mergers (the "Mergers") of the Merger Subs
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with and into the Companies in accordance with the laws of the State of Colorado
and the provisions of this Agreement;
WHEREAS, Shareholder is the record and beneficial owner of all of the
issued and outstanding shares of the capital stock of each of the Companies; and
WHEREAS, the Companies, Parent and the Merger Subs desire to make
certain agreements in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
THE MERGERS
1.1. THE MERGERS. (a) At the Effective Time (as defined in
-----------
Section 1.2) and subject to and upon the terms and conditions of this Agreement
- -----------
and the Colorado Business Corporation Act (the "Colorado Code"), Merger Sub I
-------------
shall be merged with and into Boardwatch (the "Boardwatch Merger"), the separate
-----------------
corporate existence of Merger Sub I shall cease, and Boardwatch shall continue
as the surviving corporation. Boardwatch as the surviving corporation after the
Boardwatch Merger hereinafter sometimes is referred to as the "Boardwatch
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Surviving Corporation." At the election of Parent, any direct or indirect
- ---------------------
subsidiary of Parent may be substituted for Merger Sub I as a constituent
corporation in the Boardwatch Merger. In such
<PAGE>
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
(b) At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the Colorado Code, Merger Sub II shall be
merged with and into One (the "One Merger"), the separate corporate existence of
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Merger Sub II shall cease, and One shall continue as the surviving corporation.
One as the surviving corporation after the One Merger hereinafter sometimes is
referred to as the "One Surviving Corporation." The Boardwatch Surviving
-------------------------
Corporation and the One Surviving Corporation each is referred to herein as a
"Surviving Corporation" and together as the "Surviving Corporation." At the
--------------------- ---------------------
election of Parent, any direct or indirect subsidiary of Parent may be
substituted for Merger Sub II as a constituent corporation in the One Merger. In
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
(c) The parties to the Mergers shall prepare and execute articles of
merger (the "Articles of Merger") in order to comply in all respects with the
------------------
requirements of the Colorado Code and with the provisions of this Agreement.
1.2. EFFECTIVE TIME. The Mergers shall become effective at the time
--------------
of the filing of the Articles of Merger with the Secretary of State of Colorado
in accordance with the applicable provisions of the Colorado Code or at such
later time as may be specified in the Articles of Merger. As soon as practicable
on the date hereof after all of the conditions set forth in Article VII of this
-----------
Agreement have been satisfied or waived by the party or parties entitled to the
benefit of the same, the parties hereto shall cause the Mergers to
simultaneously become effective by making such filings at the closing of the
Mergers to be conducted in New York, New York and Denver, Colorado (the
"Closing"). The time when both Mergers shall become effective is herein
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referred to as the "Effective Time", and the date on which the Effective Time
--------------
occurs is herein referred to as the "Closing Date."
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1.3. EFFECT OF THE MERGERS. At the Effective Time, the effect of the
---------------------
Mergers shall be as provided in the Articles of Merger and the applicable
provisions of the Colorado Code. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (i)(a) all the property,
rights, privileges, powers and franchises of Boardwatch and Merger Sub I shall
vest in the Boardwatch Surviving Corporation, and (b) all debts, liabilities and
duties of Boardwatch and Merger Sub I shall become the debts, liabilities and
duties of the Boardwatch Surviving Corporation and (ii)(a) all the property,
rights, privileges, powers and franchises of One and Merger Sub II shall vest in
the One Surviving Corporation, and (b) all debts, liabilities and duties of One
and Merger Sub II shall become the debts, liabilities and duties of the One
Surviving Corporation.
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1.4. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS.
-------------------------------------------------------------
(a) Unless otherwise determined by Parent before the Effective Time,
at the Effective Time (i) the Articles of Incorporation of Merger Sub I, as in
effect immediately before the Effective Time, shall be the Articles of
Incorporation of the Boardwatch Surviving Corporation until thereafter amended
as provided by law and such Articles of Incorporation and (ii) the Articles of
Incorporation of Merger Sub II, as in effect immediately before the Effective
Time, shall be the Articles of Incorporation of the One Surviving Corporation
until thereafter amended as provided by law and such Articles of Incorporation.
(b) (i) The By-Laws of Merger Sub I, as in effect immediately
before the Effective Time, shall be the By-Laws of the Boardwatch Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Boardwatch Surviving Corporation and such By-Laws and (ii)
the By-Laws of Merger Sub II, as in effect immediately before the Effective
Time, shall be the By-Laws of the One Surviving Corporation until thereafter
amended as provided by law, the Articles of Incorporation of the One Surviving
Corporation and such By-Laws.
(c) (i) The directors of Merger Sub I immediately before the
Effective Time will be the initial directors of the Boardwatch Surviving
Corporation, and the officers of Merger Sub I immediately before the Effective
Time will be the initial officers of the Boardwatch Surviving Corporation, and
(ii) the directors of Merger Sub II immediately before the Effective Time will
be the initial directors of the One Surviving Corporation, and the officers of
Merger Sub II immediately before the Effective Time will be the initial officers
of the One 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 or in any office of either Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
1.5. MERGER CONSIDERATION. At the Closing, by virtue of the Mergers
--------------------
and without any action on the part of the Merger Subs, the Companies or the
holder of any of the following securities:
(a) Parent shall pay and remit to Shareholder an amount in cash
totaling Fourteen Million Dollars $14,000,000 (the "Cash Consideration"). Such
------------------
payment shall be made by wire transfer in immediately available funds to an
account or accounts designed by Shareholder.
(b) (i) Each share of Boardwatch Common Stock issued and outstanding
immediately before the Effective Time shall be canceled and extinguished and be
converted into the right to receive the Stock Consideration (as hereinafter
defined) payable
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to the holder thereof upon surrender of the certificate representing such Share
and (ii) each share of One Common Stock issued and outstanding immediately
before the Effective Time shall be canceled and extinguished and be converted
into the right to receive the Stock Consideration payable to the holder thereof
upon surrender of the certificate representing such Share. The Boardwatch Common
Stock and the One Common Stock are sometimes collectively referred to as the
"Company Common Stock"). Each holder of a certificate representing any such
--------------------
Shares shall cease to have any rights with respect thereto, except the right to
receive the Stock Consideration.
(c) (i) Each share of common stock, $.0l par value, of Merger Sub I
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, $.0l par value, of the Boardwatch Surviving Corporation and (ii) each
share of common stock, $.0l par value, of Merger Sub II issued and outstanding
immediately before the Effective Time shall thereafter represent one validly
issued, fully paid and nonassessable share of common stock, $.0l par value, of
the One Surviving Corporation.
(b) The number of shares of common stock, par value $.01 per share, of
Parent ("Parent Stock") constituting the Stock Consideration shall be 750,000
shares in the aggregate (the "Stock Consideration" which, together with the Cash
-------------------
Consideration, is herein referred to as the "Merger Consideration"). The
--------------------
parties agree that the ratio of Cash Consideration and Stock Consideration
comprising the Merger Consideration in each Merger shall be identical. The
parties further agree that the value per share of Parent Stock comprising the
Stock Consideration shall be $20.625.
1.6. SURRENDER AND EXCHANGE OF SHARES; FRACTIONAL SHARES. (a) At the
---------------------------------------------------
Closing, Parent shall deliver, or cause to be delivered, to Shareholder
certificates evidencing the number of shares of Parent Stock constituting the
Stock Consideration, against surrender by Shareholder of the certificates
representing the Company Common Stock (the "Certificates").
------------
(b) At the Effective Time, the stock transfer books of the Companies
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
Companies.
1.7. OTHER EFFECTS OF MERGER. The Merger shall have all further
-----------------------
effects as specified in the applicable provisions of the Colorado Code.
1.8. SECTION 338(H)(10) ELECTION. Parent and Shareholder each
---------------------------
covenants and agrees as follows: (a) with respect to both of the Mergers,
Shareholder and Parent shall jointly make a Section 338(h)(10) Election (as
hereinafter
4
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defined) in accordance with applicable laws and under any comparable provision
of state, local or foreign law for which a separate election is permissible and
as set forth herein. Parent shall take all necessary steps to properly make a
Section 338(g) Election (as hereinafter defined) in connection with the Section
338(h)(10) Election in accordance with applicable laws and under any comparable
provision of state, local or foreign law for which a separate election is
permissible. Parent and Shareholder agree to cooperate in good faith with each
other in the preparation and timely filing of any Tax Returns required to be
filed in connection with the making of such an election, including the exchange
of information and the joint preparation and filing of Form 8023-A and related
schedules. Parent and Shareholder agree to report each of the Mergers consistent
with such elections and shall take no position contrary thereto unless required
to do so by applicable tax law pursuant to a determination as defined in Section
1313(a) of the Internal Revenue Code of 1986, as amended (the "Code").
(b) Parent shall be responsible for the preparation and filing of all
Section 388 Forms (as hereinafter defined) in accordance with applicable tax
laws and the terms of this Agreement and shall deliver such Section 338 Forms to
Shareholder at least 30 days prior to the date such Section 338 Forms are
required to be filed. Shareholder shall execute and deliver to Parent such
documents or forms (including executed Section 338 Forms) as are requested and
are required by any laws in order to properly complete the Section 338 Forms at
least 20 days prior to the date such Section 338 Forms are required to be filed.
Shareholder shall provide Parent with such information as Parent reasonably
requests in order to prepare the Section 338 Forms by the later of 30 days after
Parent's request for such information or 30 days prior to the date on which
Parent is required to deliver such forms to Shareholder.
(c) The Merger Consideration, liabilities of the Companies and other
relevant items shall be allocated in accordance with Section 338(b)(5) of the
Code and the Treasury Regulations thereunder, provided that no part of the
Merger Consideration shall be allocated to Shareholder's covenants set forth in
Section 6.1. Parent shall, at its option, determine the fair market value of
the assets of either of the Companies (the "Valuation"). The Valuation shall be
binding on Parent and Shareholder unless Shareholder shall, within 10 days of
delivery to Shareholder of the Valuation, conclude in good faith that the
Valuation is unreasonable. Parent shall be under no obligation to have such
Valuation prepared by an independent appraiser. If Shareholder determines that
the valuation is unreasonable, then Shareholder and Parent shall use their best
efforts to resolve such disagreement. If Shareholder and Parent are unable to
resolve such disagreement, then the parties shall jointly select an independent
national firm of certified public accountants. The jointly selected firm shall,
as soon as practical and in any event not later than 30 days of such
appointment, inform Shareholder and Parent of the fair
5
<PAGE>
market value of the assets of the Companies and the calculation of the amount of
Shareholder's Taxes, if any, for which Parent is liable hereunder, which
calculation shall be final and binding with respect to Shareholder's right to
reimbursement under this Section 1.8(e) for Shareholder's taxable year which
includes the Closing Date; provided, however, that Parent shall indemnify
Shareholder for any adjustment to Shareholder's Taxes for such taxable year
imposed by a taxing authority, to the extent that (i) such adjustment varies
from the assumptions made in the definitive calculation of the amount for which
Parent is liable to Shareholder under this Section 1.8, and (ii) Shareholder
would be indemnified under this Section 1.8 had such adjustment been taken into
account in such calculation. Shareholder and Parent shall jointly bear the fees
of the accounting firm retained to perform the calculations contemplated under
this Section 1.8(c). All values contained in the Valuation shall be used by each
party in preparing the forms referred to in Section 1.8(b) above and all other
relevant Tax Returns.
(d) "Section 338 Forms" means all returns, documents, statements, and
other forms that are required to be submitted to any federal, state, county or
other local Tax authority in connection with a Section 338(g) Election or a
Section 338(h)(10) Election. Section 338 Forms shall include, without
limitation, any "statement of section 338 election" and IRS Form 8023-A
(together with any schedules or attachments thereto) that are required pursuant
to Treas. Regs. Section 1.338-1 or Treas. Regs. Section 1.338(h)(10)-1 or any
successor provisions.
(e) Notwithstanding any other provision of this Agreement to the
contrary, Shareholder agrees that any income Taxes attributable to the Section
338(h)(10) Election will be paid by Shareholder, as the sole shareholder of the
Companies, provided, however, that Parent shall indemnify Shareholder for any
Incremental Tax Cost of the Section 338(h)(10) Election. For purposes of this
paragraph, "Incremental Tax Cost" shall mean the net difference, whenever
realized, between (i) the combined federal, state and local income tax liability
of the Shareholder attributable to the deemed asset sale and liquidation that
results from the Section 338(h)(10) Election, including but not limited to any
such tax imposed under Section 1374 of the Code, any such tax imposed under
Treas. Reg. 1.338(b)-3T(h), and any such tax attributable to the receipt of any
payment by Parent under this Section 1.8(e) and (ii) the combined hypothetical
federal, state and local income tax liability of the Shareholder attributable to
the deemed taxable sale of the Shares that results from either of the Mergers,
assuming the absence of a Section 338(h)(10) Election. To the extent that
Shareholder recognizes a federal, state or local income tax benefit attributable
to the deemed asset sale and liquidation that results from the Section
338(h)(10) Election during any taxable period following the receipt of an
indemnity payment under this Section 1.8(e), including, without limitation, a
tax benefit in the form of a capital loss carryforward, Shareholder shall
6
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promptly refund an amount, if any, equal to such tax benefit to Parent;
provided, that such refund shall not exceed such indemnity payment..
(f) "Section 338(g) Election" means an election described in Section
338(g) of the Code in connection with an election under Section 338(h)(10) of
the Code with respect to either or both of the Mergers pursuant to this
Agreement. Section 338(g) Election shall include any corresponding election
under state or local law pursuant to which a separate election is permissible
with respect to Parent's acquisition of Shares pursuant to this Agreement.
(g) "Section 338(h)(10) Election" means an election described in
Section 338(h)(10) of the Code with respect to Parent's acquisition of either of
the Companies pursuant to this Agreement. Section 338(h)(10) Election shall
include any corresponding election under state or local law pursuant to which a
separate election is permissible with respect to Parent's acquisition of either
of the Companies pursuant to this Agreement.
1.9. ADDITIONAL ACTIONS. If, at any time after the Effective Time, a
------------------
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 the Merger Subs or either of the Companies or otherwise
to carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Merger Subs or either of the Companies, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of the Merger Subs or either of the Companies, 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.
1.10. TAX RETURNS FOR PERIODS THROUGH CLOSING.
---------------------------------------
(a) Shareholder shall prepare or cause to be prepared and file or cause
to be filed federal and applicable state income Tax Returns for the Companies
for all periods ending on or prior to the Closing Date which are filed after the
Closing Date. Shareholder shall permit Parent to review and comment on each such
Tax Return prior to filing. Parent agrees to execute or to cause the Companies
to execute any such Tax Return prepared by Shareholder at Shareholder's request.
Shareholder shall include any income, gain, loss, deduction or other items for
such periods on its Tax Return in a manner consistent with the Schedules K-1
prepared by Shareholder for such periods.
7
<PAGE>
(b) Parent agrees that it will not file, and will not cause the
Companies to file, any amended or additional "S Corporation Tax Return" for any
period which includes the Closing Date or any time prior to the Closing Date
without advance consultation with, and the consent of, Shareholder, which
consent shall not be unreasonably withheld. An "S Corporation Tax Return" shall
mean any state, federal or local income Tax Return for the Company which
includes items all or a portion of which will pass through to and be reported on
Shareholder's individual income Tax Return.
1.11. COOPERATION ON TAX MATTERS. Shareholder, Parent and the
--------------------------
Companies shall cooperate fully, if and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include, without limitation, the retention and, upon the other party's request,
the provision of records and information which are reasonably relevant to any
such audit, litigation or other proceedings, and making employees available on a
mutually convenient basis to provide requested information.
1.12. SHAREHOLDER WITHDRAWAL. Shareholder shall be entitled, on or
----------------------
prior to the Closing Date, to withdraw and retain all cash and cash equivalent
amounts from all bank accounts and similar accounts maintain by or for the
Companies.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER AND THE COMPANIES
Shareholder and the Companies, jointly and severally, represent and
warrant to Parent and the Merger Subs that:
2.1. ORGANIZATION AND GOOD STANDING. Each of the Companies is a
------------------------------
corporation incorporated and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Neither of the Companies is duly qualified or licensed and in good standing to
do business in any jurisdiction other than the State of Colorado, but the
failure so to be duly qualified or licensed and in good standing would not be
reasonably likely to have an adverse effect greater than $175,000 on the
business, assets, condition (financial or other), liabilities, or results of
operations of the Companies taken as a whole other than any and all
distributions, payments, declarations or setting aside of amounts to Shareholder
expressly contemplated under this Agreement, including withdrawals contemplated
by Section 1.12 (a "Company Material Adverse Effect"). Each of the Companies
-------------------------------
has heretofore made available to Parent accurate and complete copies of its
Certificate of Incorporation and Bylaws, as currently in effect.
8
<PAGE>
2.2. CAPITALIZATION. As of the date hereof, the authorized capital
--------------
stock of Boardwatch and One consists of, respectively, 100,000 and 100,000
shares of common stock, of which 1,000 and 1,000 shares, respectively, are
issued and outstanding. No other capital stock of either of the Companies is
authorized or issued, including without limitation any treasury shares. To the
best of Shareholder's knowledge after due investigation, all issued and
outstanding shares of the Company Stock are duly authorized, validly issued,
fully paid and non-assessable. Except as set forth in the Articles of
Incorporation of Boardwatch and One or in the Colorado Code, there are no
outstanding rights, subscriptions, warrants, puts, calls, preemptive rights,
options or other agreements of Shareholder of any similar kind relating to any
of the outstanding, authorized but unissued, unauthorized or treasury shares of
the Company Stock or any other security of either of the Companies, and there is
no authorized or outstanding security of any kind convertible into or
exchangeable for any such stock or other security.
2.3. OWNERSHIP; SUBSIDIARIES. (a) All of the issued and outstanding
-----------------------
Shares of Company Stock is owned, of record and beneficially, by Shareholder,
and no other Person has any right to or interest in any of such Shares.
(b) Neither Company has any Subsidiaries or ownership interests of
any kind in any Person.
2.4. AUTHORIZATION; BINDING AGREEMENT. Each of the Companies has all
--------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, including, but not limited to, the Mergers, have been duly and validly
authorized by the Board of Directors of each of the Companies and have been
approved and adopted by Shareholder, as sole stockholder of each of the
Companies, in accordance with the Colorado Code, and no other corporate
proceedings on the part of either of the Companies are necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of the Companies and constitutes the legal, valid and binding
agreements of each of the Companies, enforceable against such Company in
accordance with its terms, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies ("Enforceability Exceptions").
-------------------------
2.5. GOVERNMENTAL APPROVALS. To the best of Shareholder's knowledge,
----------------------
no consent, approval, waiver or authorization of, or notice to or declaration or
filing with
9
<PAGE>
("Consent"), any government, any political subdivision, any governmental or
-------
regulatory authority, agency, department, board, commission, administration or
instrumentality or any court, tribunal, arbitrator or self-regulatory
organization ("Governmental Authority") on the part of either of the Companies
----------------------
is required in connection with the execution or delivery by either of the
Companies of this Agreement or the consummation by either of the Companies of
the transactions contemplated hereby other than (i) the filing of the Articles
of Merger with the Secretary of State of Colorado in accordance with the
Colorado Code, (ii) such filings as may be required in any jurisdiction where
either of the Companies is qualified or authorized to do business as a foreign
corporation in order to maintain such qualification or authorization and (iii)
those Consents that, if they were not obtained or made, would not be reasonably
likely to have a Company Material Adverse Effect.
2.6. NO VIOLATIONS. The execution and delivery of this Agreement, the
-------------
consummation of the transactions contemplated hereby and compliance by each of
the Companies with any of the provisions hereof will not (i) conflict with or
result in any breach of any provision of the Articles of Incorporation or Bylaws
of either of the Companies, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any Company
Material Contract (as hereinafter defined), (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of
either of the Companies or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 2.5 hereof, contravene any
-----------
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("Law") to which either of the
---
Companies or its assets or properties are subject, except, in the case of
clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which
would not be reasonably likely to have a Company Material Adverse Effect.
2.7. [RESERVED].
--------
2.8. COMPANY FINANCIAL STATEMENTS. To Shareholder's knowledge, the
----------------------------
unaudited financial statements of the Companies as of December 31, 1997 and for
the year then ended (the "Company Financial Statements"), in the form attached
----------------------------
hereto as Annex A, have been prepared in good faith from, and are consistent
-------
with, the books and records of the Companies, have not been prepared in
accordance with generally accepted accounting principles, and present fairly (on
a cash or tax basis), in all material respects, the financial position of the
Companies as at the date thereof and the results of their operations for the
period then ended, subject to the fact that certain information and notes have
been condensed or omitted.
10
<PAGE>
2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997
------------------------------------
through the date of this Agreement, there has not been any event that has had or
would reasonably be expected to have a Company Material Adverse Effect.
2.10. COMPLIANCE WITH LAWS. To Shareholder's knowledge, the businesses
--------------------
of the Companies have been operated in compliance with all Laws applicable
thereto, except for any instances of non-compliance which would not be
reasonably likely to have a Company Material Adverse Effect.
2.11. PERMITS. To Shareholder's knowledge, (i) each of the Companies
-------
has all permits, certificates, licenses, approvals and other authorizations
required in connection with the operation of its businesses as they are
presently being, and have formerly been, operated (collectively "Company
-------
Permits"), (ii) neither of the Companies is in violation of any Company Permit
- -------
and (iii) no proceedings are pending or threatened, to revoke or limit any
Company Permit, except, in each case, those the absence or violation of which
would not be reasonably likely to have a Company Material Adverse Effect.
2.12. LITIGATION. Except as set forth in Schedule 2.12 hereto, there
---------- -------------
is no suit, action or proceeding ("Litigation") pending or, to the knowledge of
----------
Shareholder, threatened against Shareholder or either of the Companies which,
individually or in the aggregate would be reasonably likely to have a Company
Material Adverse Effect, nor is there any judgment, decree or injunction of any
Governmental Authority outstanding against Shareholder or either of the
Companies which, individually or in the aggregate, would be reasonably likely to
have a Company Material Adverse Effect.
2.13. CONTRACTS. Neither of the Companies is a party to or is subject
---------
to any material note, bond, mortgage, indenture, contract, lease, license,
agreement or instrument that is not described in Schedule 2.13 hereto ("Company
------------- -------
Material Contracts"). All Company Material Contracts are valid and binding
- ------------------
against the applicable Company and are in full force and effect and enforceable
against the applicable Company in accordance with their respective terms,
subject to the Enforceability Exceptions. Neither of the Companies is in
violation or breach of or default under any Company Material Contract except
where such violation or breach where such violation or breach or default would
be reasonably likely to have a Company Material Adverse Effect.
2.14. EMPLOYEE BENEFIT PLANS. Except as described in Schedule 2.14
---------------------- -------------
hereto, neither of the Companies maintains or contributes to or has maintained
or contributed to any pension, profit-sharing, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock option
plan or any other compensation, welfare, fringe benefit or retirement plan,
program, policy or arrangement providing for benefits for or the welfare of any
or all of the current or
11
<PAGE>
former employees of either of the Companies or any of their beneficiaries or
dependents.
2.15. TAXES AND RETURNS. (a) Except as set forth in Schedule 2.15
----------------- -------------
hereto, each of the Companies has timely filed, or caused to be timely filed,
all Tax Returns (as hereinafter defined) required to be filed by it, and has
paid, collected or withheld, or caused to be paid, collected or withheld, all
amounts of Taxes (as hereinafter defined) required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the Company
Financial Statements or in the unaudited financial statements of the Companies
as of March 31, 1998 (the "Interim Financial Statements") have been established
----------------------------
or which are being contested in good faith. There are no claims or assessments
pending against either of the Companies for any alleged deficiency in any Tax,
and neither of the Companies has been notified in writing of any proposed Tax
claims or assessments against such Company (other than in each case, claims or
assessments for which adequate reserves in the Company Financial Statements or
the Interim Financial Statements have been established or which are being
contested in good faith). Neither of the Companies has any waivers or extensions
of any applicable statute of limitations to assess any amount of Taxes. Except
as set forth in Schedule 2.15 hereto, there are no outstanding requests by
-------------
either of the Companies for any extension of time within which to file any Tax
Return or within which to pay any amounts of Taxes shown to be due on any
return. To the best knowledge of Shareholder and the Companies, there are no
liens for amounts of Taxes on the assets of either of the Companies except for
statutory liens for current Taxes not yet due and payable. Except as set forth
in Schedule 2.15 hereto, each of the Companies has and has had at all times
-------------
since their respective dates of incorporation a valid election in effect under
Section 1362 of the Code and any comparable provisions of state or local law for
all taxable years through and including the Closing Date (the "S Election") and
----------
such S Election has never been terminated or revoked. The S Election is
respected under the income Tax laws of every state or local jurisdiction in
which either of the Companies does business.
(b) For purposes of this Agreement, the term "Tax" shall mean any
---
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any Governmental
Authority. The term "Tax Return" shall mean a report, return, extension or other
----------
information (including any attached schedules or any amendments to such report,
return, extension or other information) required to be supplied to or filed with
a governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
12
<PAGE>
2.16. INTELLECTUAL PROPERTY. Except as set forth in Schedule 2.16
--------------------- -------------
hereto, the Company has not received any notice of, and Shareholder has no
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any of the patents, trademarks, trade names, service marks,
copyrights and any applications therefor, technology, know-how, trade secrets,
computer software programs or applications, domain names and tangible or
intangible proprietary information or materials that are used in the respective
businesses of the Companies conducted which, alone or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could reasonably be
likely to have a Company Material Adverse Effect.
2.17. FINDERS AND INVESTMENT BANKERS. Except as set forth on Schedule
------------------------------ --------
2.17 hereto, neither Shareholder nor either of the Companies nor any of neither
- ---
respective officers or directors has employed any broker or finder or otherwise
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby. Shareholder acknowledges
that Parent shall have no liability at any time with respect to any brokerage
fees, commissions, finders' fees or any other amounts owing in connection with
the relationship described in Schedule 2.17 hereto.
-------------
2.18. OFFERING EXEMPTION. Shareholder understands that the securities
------------------
of Parent which he is acquiring pursuant to this Agreement have not been
registered under the Securities Act, nor qualified under any state securities
laws, and that they are being offered and sold to Shareholder pursuant to an
exemption from such registration and qualification based in part upon
Shareholder's representations contained herein.
2.19. KNOWLEDGE OF OFFER. Shareholder has been given the opportunity
------------------
to obtain from Parent all information he has requested regarding Parent's
business plans and prospects.
2.20. KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC RISKS.
--------------------------------------------------------
Shareholder has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the investment
contemplated by this Agreement; he is able to bear the economic risk of his
investment in Parent (including a complete loss of such investment).
2.21. LIMITATIONS ON DISPOSITION. Shareholder recognizes that he must
--------------------------
bear the economic risk of his investment in Parent until his shares are
registered pursuant to the Securities Act or an exemption from such registration
is available, and unless the disposition of such securities is qualified under
applicable state securities laws or an exemption from such qualification is
available, and that except as provided in the Registration Rights Agreement
Parent has no obligation of so registering the Parent Stock. Shareholder further
understands that there is no assurance that any exemption from the Securities
Act will be available, or, if available, that such exemption will
13
<PAGE>
allow him to transfer any or all of the Parent Stock in the amounts, or at the
times, he might propose.
2.22. INVESTMENT PURPOSE. Shareholder is acquiring the Parent Stock
------------------
solely for his own account for investment and not with a view toward the resale,
transfer or distribution thereof, nor with any present intention of distributing
the Parent Stock, subject to his rights provided in the Registration Rights
Agreement (as hereinafter defined). No other Person has any right with respect
to or interest in the Parent Stock to be purchased by Shareholder, nor has he
agreed to give any Person any such interest or right in the future.
2.23. CAPACITY. Shareholder has full power and legal right to execute
--------
and deliver this Agreement and the Registration Rights Agreement and to perform
his obligations hereunder and thereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Shareholder that:
3.1. ORGANIZATION AND GOOD STANDING. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Each of the Merger Subs is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Each of Parent and the Merger
Subs is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the character of the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure so to be duly qualified or
licensed and in good standing would not be reasonably likely to have a material
adverse effect on the business, assets, condition (financial or other),
liabilities or results of operations of Parent and its subsidiaries taken as a
whole ("Parent Material Adverse Effect"). Parent has heretofore made available
------------------------------
to Shareholder and the Companies accurate and complete copies of the Certificate
of Incorporation and Bylaws, as currently in effect, of Parent and the Merger
Subs.
3.2. CAPITALIZATION. As of the date hereof, the authorized capital
--------------
stock of Parent consists of 35,000,000 shares of Parent Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Parent Preferred Stock").
----------------------
As of March 31, 1998, (a) 8,344,260 shares of Parent Stock were issued and
outstanding, (b) no shares of Parent Preferred Stock were issued
14
<PAGE>
and outstanding and (c) 260,000 shares of Parent Stock were issued and held in
the treasury of Parent. No other capital stock of Parent is authorized or
issued. All issued and outstanding shares of Parent Stock are duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in the Parent
Securities Filings (as hereinafter defined) or as otherwise contemplated by this
Agreement, as of the date hereof, there are no outstanding rights,
subscriptions, warrants, puts, calls, preemptive rights, options or other
agreements of any kind relating to any of the outstanding, authorized but
unissued, unauthorized or treasury shares of the capital stock or any other
security of Parent or the Merger Subs, and there is no authorized or outstanding
security of any kind convertible into or exchangeable for any such capital stock
or other security.
3.3. AUTHORIZATION; BINDING AGREEMENT. Each of Parent and the Merger
--------------------------------
Subs has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Mergers, have been duly
and validly authorized by each of the respective Boards of Directors of Parent
and the Merger Subs, as appropriate, and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each
of Parent and the Merger Subs and constitutes the legal, valid and binding
agreements of each of Parent and the Merger Subs, enforceable against each of
Parent and the Merger Subs in accordance with its terms, subject to the
Enforceability Exceptions.
3.4. GOVERNMENTAL APPROVALS. To the best of Parent's knowledge, no
----------------------
Consent from or with any Governmental Authority on the part of either Parent or
either of the Merger Subs is required in connection with the execution or
delivery by either Parent or either of the Merger Subs of this Agreement or the
consummation by either Parent or either of the Merger Subs of the transactions
contemplated hereby other than (i) filings with the Securities and Exchange
Commission (the "SEC"), state securities laws administrators and the National
---
Association of Securities Dealers, Inc. (the "NASD"), (ii) the filing of the
----
Articles of Merger with the Secretary of State of the State of Colorado in
accordance with the Colorado Code, (iii) such filings as may be required in any
jurisdiction where Merger Sub is qualified or authorized to do business as a
foreign corporation in order to maintain such qualification or authorization and
(iv) those Consents that, if they were not obtained or made, would not be
reasonably likely to have a Parent Material Adverse Effect.
3.5. NO VIOLATIONS. The execution and delivery of this Agreement, the
-------------
consummation of the transactions contemplated hereby and compliance by Parent
and the Merger Subs with any of
15
<PAGE>
the provisions hereof will not (i) conflict with or result in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws or other
governing instruments of Parent or either of the Merger Subs, (ii) require any
Consent under or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any Parent Material Contract (as hereinafter defined), (iii)
result in the creation or imposition of any lien or encumbrance of any kind upon
any of the assets of Parent or either of the Merger Subs or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in Section 3.4
-----------
hereof, contravene any Law to which Parent or either of the Merger Subs or its
or any of their respective assets or properties are subject, except, in the case
of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing
which would not be reasonably likely to have a Parent Material Adverse Effect.
3.6. SECURITIES FILINGS. Parent has made available to Shareholder
------------------
true and complete copies of (i) its Annual Report on Form 10-K for the year
ended September 30, 1997, as filed with the SEC, (ii) its proxy statement
relating to the meeting of its stockholders held on February 25, 1998, as filed
with the SEC, and (iii) all other reports, statements and registration
statements and amendments thereto (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by
Parent with the SEC since January 1, 1997. The reports and statements specified
in clauses (i) through (iii) above are referred to collectively herein as the
"Parent Securities Filings." As of their respective dates, or as of the date of
-------------------------
the last amendment thereof, if amended after filing, none of the Parent
Securities Filings contained or, as to Parent Securities Filings subsequent to
the date hereof, will contain, any untrue statement of a material fact or
omitted or, as to Parent Securities Filings subsequent to the date hereof, will
omit, to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
3.7. PARENT FINANCIAL STATEMENTS. The audited consolidated financial
---------------------------
statements and unaudited interim financial statements of Parent included in the
Parent Securities Filings (the "Parent Financial Statements") have been prepared
---------------------------
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and present fairly, in all material respects, the financial position of Parent
and its subsidiaries as at the dates thereof and the results of their operations
and cash flows for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted
16
<PAGE>
in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
------------
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
------------------------------------
Parent Securities Filings, since December 31, 1997 through the date of this
Agreement, there has not been: (i) any event that has had or would reasonably be
expected to have a Parent Material Adverse Effect, (ii) any declaration, payment
or setting aside for payment of any dividend or other distribution or any
redemption or other acquisition of any shares of capital stock or securities of
Parent by Parent, (iii) any material damage or loss to any material asset or
property, whether or not covered by insurance, or (iv) any change by Parent in
accounting principles or practices.
3.9. COMPLIANCE WITH LAWS. The business of Parent and its
--------------------
subsidiaries has, to the best of its knowledge, been operated in compliance with
all Laws applicable thereto, except for any instances of non-compliance which
would not be reasonably likely to have a Parent Material Adverse Effect.
3.10. PERMITS. (i) Parent and its subsidiaries have all permits,
-------
certificates, licenses, approvals and other authorizations required in
connection with the operation of their respective businesses (collectively
"Parent Permits"), (ii) neither Parent nor any of its subsidiaries is in
- ---------------
violation of any Parent Permit and (iii) no proceedings are pending or, to the
knowledge of Parent, threatened, to revoke or limit any Parent Permit, except,
in each case, those the absence or violation of which would be reasonably likely
to have a Parent Material Adverse Effect.
3.11. LITIGATION. Except as disclosed in any Parent Securities Filing,
----------
there is no Litigation pending or, to the knowledge of Parent, threatened
against Parent or any of its subsidiaries which, individually or in the
aggregate, would be reasonably likely to have a Parent Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Authority outstanding against Parent or any of its subsidiaries which,
individually or in the aggregate, would be reasonably likely to have a Parent
Material Adverse Effect.
3.12. CONTRACTS. Neither Parent nor any of its subsidiaries is a party
---------
or is subject to any material note, bond, mortgage, indenture, contract, lease,
license, agreement or instrument that is required to be described in or filed as
an exhibit to any Parent Securities Filing ("Parent Material Contract") that is
------------------------
not so described in or filed as required by the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act, as the case may
--------------
be. All such Parent Material Contracts are valid and binding against Parent and
its subsidiaries, as the case may be, and are in full force and effect and
enforceable against Parent or such subsidiary in accordance with their
respective terms, subject to the
17
<PAGE>
Enforceability Exceptions. Neither Parent nor any of its subsidiaries is in
violation or breach of or default under any such Parent Material Contract where
such violation or breach would be reasonably likely to have a Parent Material
Adverse Effect.
3.13. FINDERS AND INVESTMENT BANKERS. None of Parent, either Merger
------------------------------
Sub or any subsidiary of Parent or any of their respective officers or directors
has employed any broker or finder or otherwise incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
3.14. 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 in connection therewith), neither Merger Sub has
incurred any obligations or liabilities, or engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity.
3.15. PARENT'S INVESTIGATION; SOPHISTICATED BUYER. Prior to the
-------------------------------------------
Closing Date, Parent shall have, directly and through its representatives, at
Parent's sole expense, in cooperation with Shareholder and the Companies, made
such investigation of the Companies as Parent deemed necessary or advisable, and
Parent acknowledges that it is and shall be relying solely on its own
investigation and on the representations and warranties contained herein in
deciding to proceed with the Mergers. Further, Parent expressly represents that
(i) it is a sophisticated Parent employing individuals having substantial
experience in the conduct of businesses similar to that conducted by the
Companies, (ii) its representatives, prior to the Closing Date, have had the
opportunity to have exercised due diligence in its examination of the affairs of
the Companies, and (iii) it has not relied on any representation or warranty by
Shareholder, the Companies or their respective agents, officers or employees, in
entering into this Agreement, except as may be expressly state or provided
herein.
3.16. FINANCING. Parent has appropriate resources to have all funds
---------
necessary to consummate the transactions contemplated hereby at the Closing.
3.17. PURCHASE FOR OWN ACCOUNT. Parent is purchasing the Company
------------------------
Common Stock solely for its own account and not as an agent or with the
intention of immediately reselling the Company Common Stock.
3.18. NASDAQ LISTING OF PARENT STOCK. Parent has filed with The Nasdaq
------------------------------
Stock Market, Inc. a notice for listing on the Nasdaq National Market of the
Parent Stock.
18
<PAGE>
ARTICLE IV.
ADDITIONAL COVENANTS OF SHAREHOLDER AND THE COMPANIES
Shareholder and each of the Companies covenant and agree as follows:
4.1. CONDUCT OF BUSINESS OF THE COMPANY. (a) Unless Parent otherwise
----------------------------------
agrees in writing and except as expressly contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, (i) each of
the Companies shall conduct its business in the ordinary course and consistent
with past practice and shall use its reasonable commercial efforts to preserve
intact its business organization, to keep available the services of its officers
and employees and to maintain satisfactory relationships with all persons with
whom it does business and (ii) without limiting the generality of the foregoing,
neither of the Companies will, and Seller shall not cause either of the
Companies to: (A) make, change or revoke any election or method of accounting
with respect to Taxes affecting or relating to either of the Companies, (B)
enter into any closing or other agreement or settlement with respect to Taxes
affecting or relating to either of the Companies or (C) take any action that
will cause a termination of either of the Companies' election to be treated as
an "S Corporation" under Section 1362 of the Code.
(b) Each of the Companies shall use reasonable commercial efforts to
comply in all material respects with all Laws applicable to it or any of its
properties, assets or business and maintain in full force and effect all the
Company Permits necessary for, or otherwise material to, such business.
4.2. REASONABLE COMMERCIAL EFFORTS. Subject to the terms and
-----------------------------
conditions herein provided, Shareholder and each of the Companies agrees to use
reasonable commercial 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
and make effective as promptly as practicable the transactions contemplated by
this Agreement, including, but not limited to, obtaining all Consents from
Governmental Authorities and other third parties required for the consummation
of the Mergers and the transactions contemplated thereby. Upon the terms and
subject to the conditions hereof, Shareholder and each of the Companies agrees
to use reasonable commercial efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary to satisfy the other
conditions of the closing set forth herein.
4.3. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
--------------------
neither Shareholder nor either of the Companies shall issue or cause the
publication of any press release or of any other announcement with respect to
the Mergers or the transactions contemplated in this Agreement without the
consent
19
<PAGE>
of Parent except when such release or announcement is required by applicable
law; provided, however, that after the Closing Date, Shareholder may respond to
inquiries regarding the transactions contemplated in this Agreement; except,
that Shareholder may only respond to inquiries with respect to the Mergers or
the transactions contemplated in this Agreement or the business of Parent from
members of the press or securities analysts, investment bankers or other
securities professionals after prior consultation with Parent.
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
Each of Parent and each Merger Sub covenants and agrees as follows:
5.1. CONDUCT OF BUSINESS OF PARENT. (a) Unless Shareholder otherwise
-----------------------------
agrees in writing and except as expressly contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, Parent and
each Merger Sub shall conduct, and it shall cause its subsidiaries to conduct,
its and their businesses in the ordinary course and consistent with past
practice, and Parent and each Merger Sub shall, and it shall cause its
subsidiaries to, use its or their reasonable commercial efforts to preserve
intact its business organization, to keep available the services of its officers
and employees and to maintain satisfactory relationships with all persons with
whom it does business.
(b) Parent and each Merger Sub shall, and Parent shall cause each of
its subsidiaries to, use its or their reasonable commercial efforts to comply in
all material respects with all Laws applicable to it or any of its properties,
assets or business and maintain in full force and effect all the Parent Permits
necessary for, or otherwise material to, such business.
5.2. NOTIFICATION OF CERTAIN MATTERS. Parent and each Merger Sub shall
-------------------------------
give prompt notice to Shareholder if any of the following occur after the date
of this Agreement: (i) receipt of any notice or other communication in writing
from any third party alleging that the Consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement,
provided that such Consent would have been required to have been disclosed in
this Agreement; (ii) receipt of any material notice or other communication from
any Governmental Authority (including, but not limited to, the NASD) in
connection with the transactions contemplated by this Agreement; (iii) the
occurrence of an event which would be reasonably likely to have a Parent
Material Adverse Effect or (iv) the commencement or threat of any Litigation
involving or affecting Parent or any of its subsidiaries, or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as
20
<PAGE>
such, of Parent or any of its subsidiaries which, if pending on the date hereof,
would have been required to have been disclosed in this Agreement or which
relates to the consummation of the Mergers.
5.3. ACCESS AND INFORMATION. Between the date of this Agreement and
----------------------
the Effective Time, Parent will give, and shall direct its accountants and legal
counsel to give, Shareholder and his authorized representatives (including,
without limitation, financial advisors, accountants and legal counsel), at all
reasonable times, access as reasonably requested to all offices and other
facilities and to all contracts, agreements, commitments, books and records of
or pertaining to Parent and its subsidiaries, will permit the foregoing to make
such reasonable inspections as they may require and will cause its officers
promptly to furnish Shareholder with such financial and operating data and other
information with respect to the business and properties of Parent and its
subsidiaries as Shareholder may from time to time reasonably request.
5.4. REASONABLE COMMERCIAL EFFORTS. Subject to the terms and
-----------------------------
conditions herein provided, Parent agrees to use reasonable commercial 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 and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Mergers
and the transactions contemplated thereby. Upon the terms and subject to the
conditions hereof, Parent agrees to use reasonable commercial efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the closing set forth herein.
5.5. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
--------------------
Parent shall not issue or cause the publication of any press release or any
other announcement with respect to the Mergers or the transactions contemplated
in this Agreement without the consent of Shareholder, except where such release
or announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, the NASD, the Nasdaq
National Market or other applicable securities exchange, in which case Parent,
prior to making such announcement, will provide Shareholder with a draft of such
announcement and will consult with Shareholder regarding the same.
ARTICLE VI.
NON-COMPETITION AND NON-SOLICITATION
21
<PAGE>
6.1. NON-COMPETITION. In return for adequate and sufficient
---------------
consideration from Parent in the form of the Merger Consideration, Shareholder
agrees that:
(a) For a period of three (3) years after the date hereof,
Shareholder shall not within the United States (the "Restricted Area"): directly
or indirectly (whether as principal, agent, independent contractor, partner or
otherwise) engage in, or own, manage or control any person or entity that
engages in, any business (hereinafter, a "Restricted Business") which targets
-------------------
the current customer base of the Company for services provided by the Company
related to Internet Service Providers ("ISPs"), Web hosting, telephony and
----
Internet access; provided, that Shareholder shall otherwise be entitled to
engage without restriction in the publishing and trade show business generally,
including, without limitation, with respect to Internet-related business other
than those listed in this Section 6.1(a).
(b) Nothing in this Section 6.1 shall prohibit Shareholder from (i)
being an owner of not more than 5% of the outstanding stock of any class of a
publicly traded corporation that is a Competitor so long as Shareholder,
directly and indirectly, has no active participation in the business of such
Competitor of a kind that would then be prohibited by subsection (a) above or
(ii) acquiring stock, stock options or other stock-related interests of any
entity of which Shareholder is an officer, an employee, a director or a
consultant provided that Shareholder acquired such stock, options or other
interests solely in connection with his services as such officer, employee,
director or consultant and that such services are not prohibited by subsection
(a) above.
(c) Shareholder covenants and agrees that he will not divulge or
make use of any trade secrets or other confidential information of the Company
other than (i) to disclose such secrets and information to Parent or its
affiliates or (ii) as required by order or direction of any court or
governmental authority or (iii) such secrets or information that becomes
publicly available other than as a result of disclosure by Shareholder.
(d) Shareholder acknowledges that this Agreement is a contract for
the purchase and sale of a business under Section 8-2-113(2)(a) of the Colorado
Revised Statutes and has had the opportunity to obtain legal advice with respect
thereto.
6.2. NON-SOLICITATION. For a period of three (3) years after the
-----------------
date hereof, Shareholder shall not without Parent's prior written consent,
directly or indirectly, induce, solicit or attempt to persuade any employee,
agent or customer of the Company to terminate such employment, agency or
business relationship in order to enter into any such relationship on
22
<PAGE>
behalf of any person or entity that engages in a Restricted Business in the
Restricted Area or in Canada.
6.3. ENFORCEMENT. If, at the time of enforcement of this Agreement,
-----------
a court holds that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances (but not more restrictive than as stated herein) shall be
substituted for the stated duration, scope, area or other restrictions.
6.4. REMEDIES. Shareholder recognizes and affirms that in the event
--------
of breach by him of any of the provisions of this Article VI, money damages
would be inadequate and Parent would have no adequate remedy at law.
Accordingly, Shareholder agrees that Parent shall have the right, in addition to
any other rights and remedies existing in its favor, to enforce its rights and
the obligation of Shareholder under this Article VI not only by an action or
actions for damages, but also by an action or actions for specific performance,
injunction and/or other equitable relief in order to enforce or prevent any
violations of the provisions of this Article VI.
ARTICLE VII.
MERGER CONDITIONS
The respective obligations of each party to effect the Mergers, or to
cause the Mergers to be effected, shall be subject to the fulfillment or waiver
at or prior to the Effective Time of the following conditions:
7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
--------------------------------------
obligations of each party to effect the Mergers, or to cause the Mergers to be
effected, shall be subject to the fulfillment or waiver at or prior to the
Effective Time of the following conditions:
(a) NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
-----------------------
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Authority which
prohibits or prevents the consummation of one or both of the Mergers which has
not been vacated, dismissed or withdrawn prior to the Effective Time. Parent and
Shareholder shall use their reasonable best efforts to have any of the foregoing
vacated, dismissed or withdrawn by the Effective Time.
(b) REGISTRATION RIGHTS AGREEMENT. Parent and Shareholder shall
-----------------------------
have entered into a Registration Rights Agreement in the form attached hereto as
Exhibit A.
23
<PAGE>
7.2. CONDITIONS TO OBLIGATIONS OF SHAREHOLDER AND THE COMPANIES. The
----------------------------------------------------------
obligations of the Companies to effect the Mergers, and the obligation of
Shareholder to cause the Mergers to be effected, shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions, any one or more of which may be waived by Shareholder:
(a) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
--------------------------
the date hereof any event that would be reasonably likely to have a Parent
Material Adverse Effect.
(b) PERFORMANCE BY PARENT. Parent and the Merger Subs shall have
---------------------
performed and complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the conditions required by
this Agreement to be performed or complied with or satisfied by Parent and the
Merger Subs at or prior to the Effective Time.
(c) CERTIFICATES AND OTHER DELIVERIES. Parent shall have delivered,
---------------------------------
or caused to be delivered, to Shareholder (i) a certificate executed on its
behalf by its Chairman of the Board and Chief Executive Officer and its
President and Chief Operating Officer, respectively, to the effect that the
conditions set forth in Sections 7.2(a) and (b) hereof have been satisfied and
--------------- ---
that such officers do not have actual knowledge of any breach by Shareholder or
the Companies of Article II hereof; (ii) duly adopted resolutions of the Board
of Directors of Parent and the Board of Directors and the stockholder of each of
the Merger Subs approving the execution, delivery and performance of this
Agreement and the instruments contemplated hereby, each certified by its
respective Secretary; and (iii) such other documents and instruments as
Shareholder reasonably may request.
7.3. CONDITIONS TO OBLIGATIONS OF PARENT AND THE MERGER SUBS. The
-------------------------------------------------------
obligations of Parent and the Merger Subs to effect the Mergers shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions, any one or more of which may be waived by Parent:
(a) NO MATERIAL ADVERSE CHANGE. There shall not have occurred after
--------------------------
the date hereof any event that would be reasonably likely to have a Company
Material Adverse Effect.
(b) PERFORMANCE BY SHAREHOLDER AND THE COMPANIES. Shareholder and
--------------------------------------------
each of the Companies shall have performed and complied with all the covenants
and agreements in all material respects and satisfied in all material respects
all the conditions required by this Agreement to be performed or complied with
or satisfied by them at or prior to the Effective Time.
(c) CERTIFICATES AND OTHER DELIVERIES. Shareholder and each of the
---------------------------------
Companies shall have delivered to Parent (i) certificates executed by
Shareholder, and by the Companies by a duly authorized officer, to the effect
that the conditions set
24
<PAGE>
forth in Sections 7.3(a) and (b) hereof have been satisfied and that Shareholder
--------------- ---
and such officer do not have actual knowledge of any breach by Parent of Article
III hereof; (ii) duly adopted resolutions of the Board of Directors of each of
the Companies approving the execution, delivery and performance of this
Agreement and the instruments contemplated hereby and (iii) such other documents
and instruments as Parent reasonably may request.
(d) OTHER AGREEMENTS. Shareholder shall have entered into a
----------------
Stockholders Agreement in the form attached hereto as Exhibit B.
ARTICLE VIII.
[RESERVED]
ARTICLE IX.
INDEMNIFICATION AND REIMBURSEMENT
9.1. INDEMNIFICATION BY SHAREHOLDER. In order to induce Parent to
------------------------------
enter into this Agreement and to consummate the transactions contemplated
hereby, Shareholder covenants and agrees, if the Effective Time occurs, to and
shall indemnify Parent and its shareholders, directors, officers and employees
(collectively, the "Buying Interests") and shall hold the Buying Interests
harmless against and with respect to any "Loss" which for purposes of this
Agreement shall include any and all liabilities, costs, losses, damages and
expenses (whether or not arising out of third party claims), including without
limitation reasonable attorneys' fees, incurred by the Buying Interests and
arising out of or resulting from:
(a) MISREPRESENTATION OR BREACH OF WARRANTY. Any misrepresentation
---------------------------------------
or breach of warranty by any of Shareholder or the Companies of any of their
representations or warranties set forth in this Agreement or any Schedule or
Exhibit hereto;
(b) BREACH OF COVENANT OR AGREEMENT. Any breach or nonfulfillment
-------------------------------
by any of Shareholder or the Companies of any of their covenants, agreements or
other obligations set forth in this Agreement or any Schedule or Exhibit hereto;
provided, however, that entitlement to indemnification pursuant to paragraphs
- -------- -------
(a) and (b) of this Section 9.1 (other than with respect to a breach of warranty
by Shareholder of the representation set forth in Section 2.15 or a breach by
Shareholder of any of the covenants set forth in Sections 1.8, 1.10 and 1.11 (a
"Tax Breach")) shall be conditioned upon claims in respect thereof being
submitted in writing with detailed specification showing the basis of such
claim, including the provision of this Agreement breached, and a reasonably
detailed calculation of the amount of such claim, if at all, by Parent to
25
<PAGE>
Shareholder no later than nine months after the Effective Time; and
provided, further, that the right to indemnity in respect of matters provided
- -------- -------
for in paragraphs (a) and (b) of this Section 9.1 shall not be barred on the
basis that the amount of the claim has not been ascertained, liquidated or
reduced to final judgment on or before the expiration of the aforesaid period,
provided that such claim is identified in writing with detailed specification
showing the basis of such claim, including the provision of this Agreement
breached, and a reasonable estimate of the amount of such claim; and
provided, further, that Shareholder shall not be obligated to indemnify Parent
- -------- -------
in respect of the matters provided for in this Section 9.1 (other than with
respect to a Tax Breach) until the aggregate of all such claims (determined on a
pretax basis) exceeds $175,000. Indemnification with respect to a Tax Breach
shall be made on a first-dollar basis, and shall terminate upon the expiration
of the applicable statute of limitations; and
provided, further, that notwithstanding the foregoing, Shareholder shall not be
- -------- -------
liable for payments under this Article IX in a total aggregate amount which
exceeds $19,645,000; provided, that any indemnification obligation of
Shareholder shall be satisfied at Shareholder's election in cash or by delivery
of shares of Parent Common Stock valued at the higher of the average trading
price of such stock over the 20 trading days prior to the Closing Date or the
date the claim is asserted; and
provided, further, that, except in the case of fraud, in no event shall
- -------- -------
Shareholder be liable for consequential damages pursuant to this Section 9.1.
9.2. INDEMNIFICATION BY PARENT. In order to induce Shareholder to
-------------------------
enter into this Agreement and to consummate the transactions contemplated
hereby, Parent covenants and agrees to and shall indemnify Shareholder and shall
hold Shareholder harmless against and with respect to any "Loss" which for
purposes of this Agreement shall include any and all liabilities, costs, losses,
damages and expenses (whether or not arising out of third party claims),
including without limitation reasonable attorneys' fees, incurred by Shareholder
and arising out of or resulting from:
(a) MISREPRESENTATION OR BREACH OF WARRANTY. Any misrepresentation
---------------------------------------
or breach of warranty by any of Parent or the Merger Subs of any of its
respective representations or warranties set forth in this Agreement or any
Schedule or Exhibit hereto;
(b) BREACH OF COVENANT OR AGREEMENT. Any breach or nonfulfillment
-------------------------------
by Parent of any of its covenants, agreements or
26
<PAGE>
other obligations set forth in this Agreement or any Schedule or Exhibit hereto;
provided, however, that entitlement to indemnification pursuant to this Section
- -------- -------
9.2 (other than with respect to a breach by Parent of any of the covenants set
forth in Sections 1.8, 1.10 and 1.11 (a "Parent Tax Breach")) shall be
conditioned upon claims in respect thereof being submitted in writing with
detailed specification showing the basis of such claim, including the provision
of this Agreement breached, and a reasonably detailed calculation of the amount
of such claim, if at all, by Shareholder to Parent no later than nine months
after the Effective Time; and
provided, further, that the right to indemnity in respect of matters provided
- -------- -------
for in this Section 9.2 shall not be barred on the basis that the amount of the
claim has not been ascertained, liquidated or reduced to final judgment on or
before the expiration of the aforesaid period so long as the claim has been
identified and asserted on or before such expiration, provided that such claim
is identified in writing with detailed specification showing the basis of such
claim, including the provision of this Agreement breached, and a reasonable
estimate of the amount of such claim; and
provided, further, that Parent shall not be obligated to indemnify Shareholder
- -------- -------
in respect of the matters provided for in this Section 9.2 (other than with
respect to a Parent Tax Breach) until the aggregate of all such claims
(determined on a pretax basis) exceeds $175,000. Indemnification with respect
to a Parent Tax Breach shall be made on a first-dollar basis, and shall
terminate upon the expiration of the applicable statute of limitations; and
provided, further, that notwithstanding the foregoing, Parent shall not be
- -------- -------
liable for payments under this Article IX in a total aggregate amount which
exceeds $19,645,000; and
provided, further, that, except in the case of fraud, in no event shall Parent
- -------- -------
be liable for consequential damages pursuant to this Section 9.2.
9.3. CLAIMS FOR REIMBURSEMENT. In the event that Parent or
------------------------
Shareholder suffers any Loss (as hereinabove defined) with respect to any
liability or claim to which the foregoing indemnities relate, Parent or
Shareholder, as the case may be (the "Indemnified Party"), shall give
Shareholder or Parent, as the case may be (the "Indemnifying Party"), prompt
written notice of the nature and amount of such Loss and the Indemnified Party's
claim for reimbursement therefor and if such Loss is with respect to a third
party claim, accompanied by a copy of the written notice from the third party
claimant. The Indemnifying Party shall have 30 days from the date of said notice
to investigate and dispute the nature, validity or amount of any such claim.
27
<PAGE>
During said 30-day period, the Indemnifying Party shall have reasonable access,
during normal business hours, to the books and records of the Indemnified Party
for the purpose of such investigation. In the event that the Indemnifying Party
disputes the nature, validity or amount of said claim, the Indemnifying Party
shall give the Indemnified Party written notice of such dispute within said 30-
day period, and the parties shall attempt in good faith to resolve such dispute.
If such dispute is not resolved within 10 days following receipt of said notice
of dispute by the Indemnified Party, the provisions of Section 9.5 hereof shall
apply to such dispute.
In the absence of a dispute, the Indemnifying Party shall promptly
(but not later than the expiration of said 30-day period) reimburse the
Indemnified Party in full for any such Loss, as set forth in the Indemnified
Party's notice. In the event that the Indemnifying Party disputes only the
amount of the claim, the Indemnifying Party shall, concurrently with the
delivery of its notice of dispute, pay to the Indemnified Party the undisputed
portion of such claim, and the provisions of Section 9.5 hereof shall apply to
the disputed portion of such claim.
9.4. DEFENSE OF THIRD-PARTY CLAIMS. If any lawsuit or enforcement
-----------------------------
action is filed against an Indemnified Party by a third party and the
Indemnified Party is entitled to indemnification pursuant to this Agreement,
written notice thereof shall be given to the Indemnifying Party as promptly as
practicable (and in any event no later than 30 days after the service of the
citation or summons); the failure of any Indemnified Party to give timely notice
shall limit the rights to indemnification hereunder if (i) such failure to give
timely notice materially affects the ability or right of the Indemnifying Party
to participate in the defense of such lawsuit or enforcement action, (ii) actual
notice is not given to the Indemnifying Party within a reasonable time, or (iii)
to the extent that such failure to give timely notice causes the Indemnifying
Party to incur additional expense with respect to such lawsuit or enforcement
action, the Indemnified Party fails to promptly reimburse the Indemnifying Party
for such additional expense.
The Indemnifying Party shall be entitled, if it so elects, to take
control of the defense and investigation of such lawsuit or action, and to
employ and engage attorneys of its own choice to handle and defend the same, at
the Indemnifying Party's cost, risk and expense; and such Indemnified Party
shall cooperate in all reasonable respects, at its cost, risk and expense, with
the Indemnifying Party and such attorneys in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom; provided,
--------
however, that the Indemnified Party may, at its own cost, participate in (but
- -------
not control) such investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom.
28
<PAGE>
If the Indemnifying Party does not elect to take control of the
defense and investigation of said lawsuit or action, then the Indemnified Party
shall remain in control thereof in such manner as it deems appropriate.
Neither party shall enter into any settlement, adjustment or
compromise of any lawsuit or action without the prior written consent of the
other party which consent will not be unreasonably withheld.
9.5. RESOLUTION OF DISPUTES. In the event of any dispute between
----------------------
the parties hereto over any claim for reimbursement with respect to any matter
to which the foregoing indemnities relate, each party shall have the right to
have its accountants (whether internal accountants or independent accountants,
at the discretion of such party) review the claims made by the other party,
which review shall be completed within a reasonable time, not to exceed 30 days
from the date the Indemnifying Party gave the Indemnified Party written notice
of such dispute. In the event that such dispute is not resolved among such
accountants within five days after completion of such review, Shareholders'
accountants and Parents' accountants shall jointly select a national firm of
certified public accountants and such firm shall consider and decide such
dispute, which decision shall be final and binding. Shareholder shall bear all
costs and expenses of its accountants and one-half of the costs and expenses of
such jointly selected accountants; and Parent shall bear all costs and expenses
of its accountants and one-half of the costs and expenses of such jointly
selected accountants.
ARTICLE X.
MISCELLANEOUS
10.1. CONFIDENTIALITY. In the event the transactions contemplated by
---------------
this Agreement are not consummated, each party shall return to the other any
documents furnished by the other and all copies thereof any of them may have
made and will hold in absolute confidence any information obtained from the
other party except to the extent (i) such party is required to disclose such
information by Law or such disclosure is necessary or desirable in connection
with the pursuit or defense of a claim, (ii) such information was known by such
party prior to such disclosure or was thereafter developed or obtained by such
party independent of such disclosure or (iii) such information becomes generally
available to the public other than by breach of this Section 10.1.
------------
10.2. AMENDMENT AND MODIFICATION. This Agreement may be amended,
--------------------------
modified or supplemented only by a written agreement among each of the parties
hereto.
10.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of Shareholder or
------------------------------
either of the Companies on the one hand, or Parent
29
<PAGE>
or the Merger Subs on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by Parent, on the one hand, or
Shareholder, on the other hand, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
-------
10.3.
- ----
10.4. SURVIVAL. No representations, warranties, covenants and
--------
agreements of the parties hereto contained herein or in any schedule or exhibit
hereto shall survive the execution and delivery of this Agreement and the
consummation of the transactions provided for herein except to the extent
provided in Article IX hereof.
10.5. NOTICES. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to the Parent or either Merger Sub, to:
Mecklermedia Corporation
20 Ketchum Street
Westport, Connecticut 06880
Attention: Christopher S. Cardell
Telecopy: 203-226-8023
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Cornelius T. Finnegan, III, Esq.
Telecopy: (212)821-8111
and
(ii) if to Shareholder or either of the Companies, to:
Mr. Marion Jack Rickard, Jr.
14322 W. Bellview Avenue
30
<PAGE>
Morrison, CO 80465
Telecopy: (303) 697-2092
with copies to:
Davis, Graham & Stubbs LLP
370 17th Street, Suite 4700
Denver, Colorado 80202
Attention: Paul Hilton, Esq.
Telecopy: (303) 893-1379
10.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
--------------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other parties hereto.
10.7. EXPENSES. All costs and expenses incurred in connection with
--------
this Agreement, the Mergers, and all of the transactions contemplated hereby
shall be paid by the party incurring such costs or expenses, except as otherwise
provided herein, provided that all stamp, documentary, registration or other
similar taxes incurred specifically in connection with the issuance of the
Parent Common Stock and any sales or use tax resulting from the Section
338(h)(10) Election shall be paid by Parent when due, and Parent or the Company
shall, at its own expense, file all necessary tax returns and other
documentation with respect to all such taxes and fees.
10.8. GOVERNING LAW. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
10.9. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.10. INTERPRETATION. The article and section headings contained in
--------------
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "affiliate," with respect to any
---------
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "subsidiary" of any specified
----------
person shall mean any corporation 50 percent or
31
<PAGE>
more of the outstanding voting power of which, or any partnership, joint
venture, limited liability company or other entity 50 percent or more of the
total equity interest of which, is directly or indirectly owned by such
specified person.
10.11. ENTIRE AGREEMENT. This Agreement and the documents or
----------------
instruments referred to herein including, but not limited to, the Annex(es),
Schedules and Exhibits attached hereto, which Annex(es) are incorporated herein
by reference, embody the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein, provided that the
forms of agreements attached hereto as Exhibits shall be superseded by the
agreements executed and delivered by the respective parties thereto, the
execution and delivery of such documents by the parties thereto to be conclusive
evidence of such parties' approval of any change or modification therein. There
are no restrictions, promises, representations, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and the understandings between the
parties with respect to such subject matter.
10.12. SPECIFIC PERFORMANCE. The parties hereto agree 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
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order 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 right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
10.13. THIRD PARTIES. Nothing contained in this Agreement or in any
-------------
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person that is not a party hereto or thereto or
a successor or permitted assign of such a party.
32
<PAGE>
IN WITNESS WHEREOF, Parent, the Merger Subs and the Companies have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
MECKLERMEDIA CORPORATION
By:____________________________________
Name:
Title:
MECKLERMEDIA ACQUISITION CORP. I
By:____________________________________
Name:
Title:
MECKLERMEDIA ACQUISITION CORP. II
By:____________________________________
Name:
Title:
BOARDWATCH MAGAZINE, INCORPORATED
By:____________________________________
Name:
Title:
ONE, INC.
By:____________________________________
Name:
Title:
_______________________________________
Marion Jack Rickard, Jr.
33
<PAGE>
Exhibit A
Form of Registration Rights Agreement
34
<PAGE>
Exhibit B
Form of Stockholders Agreement
35
<PAGE>
Annex A
Company Financial Statements
36
<PAGE>
EXECUTION COPY
MECKLERMEDIA CORPORATION
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT, dated this 15th day of May, 1998,
between Marion Jack Rickard, Jr., an individual (the "Stockholder"), and
Mecklermedia Corporation, a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
WHEREAS, the Company, the Stockholder, Boardwatch Magazine,
Incorporated ("Boardwatch"), One, Inc. ("One"), Mecklermedia Acquisition Corp.
I, a wholly owned subsidiary of the Company ("Merger Sub I"), and Mecklermedia
Acquisition Corp. II, a wholly owned subsidiary of the Company ("Merger Sub
II"), are parties to that certain Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), pursuant to which Merger Sub I will merge
with and into Boardwatch and Merger Sub II will merge with and into One (the
"Mergers");
WHEREAS, pursuant to the Merger Agreement, the Stockholder will
receive 750,000 shares of common stock, par value $.01 per share, of the Company
(the "Common Stock") representing the stock consideration payable in connection
with the Mergers;
WHEREAS, to induce the Stockholder to enter into the Merger Agreement,
the Company is willing to grant the rights herein provided; and
WHEREAS, the obligation of the Stockholder under the Merger Agreement
is conditioned upon, among other things, the execution and delivery of this
Agreement by the parties hereto;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties hereto hereby agree as
follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms have the respective
meanings set forth below:
Commission: shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act;
Exchange Act: shall mean the Securities Exchange Act of 1934, as
------------
amended;
<PAGE>
GAAP: shall mean U.S. generally accepted accounting principles;
----
Person: shall mean and include an individual, a partnership, a joint
------
venture, a corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority (as defined in the Merger
Agreement) and any other entity;
register, registered and registration: shall mean a registration
-------- ---------- ------------
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) shares of Common Stock
----------------------
acquired pursuant to the Merger Agreement and (B) any shares of Common Stock
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Common Stock referred to in clause (A);
Registration Expenses: shall mean all expenses incurred by the
---------------------
Company in compliance with Sections 2(a), (b) and (c) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel, accountants and other advisors of the Company, fees
and expenses of counsel for the Stockholder in an aggregate amount not to exceed
$20,000, blue sky fees and expenses and the expense of any special audits or
reviews incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);
Security, Securities: shall have the meaning set forth in Section
--------------------
2(1) of the Securities Act;
Securities Act: shall mean the Securities Act of 1933, as amended, or
--------------
any successor thereto; and
Selling Expenses: shall mean all underwriting discounts and selling
----------------
commissions, and any transfer taxes, applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for the Stockholder in
excess of $20,000.
Target Date: shall mean 75 days after the Effective Time.
-----------
Termination Date: shall mean the earlier to occur of (i) the first
----------------
date as of which all of the Registrable Securities could be sold in any 90-day
period pursuant to Rule 144 or otherwise without any obligation of the
Stockholder to deliver a
-2-
<PAGE>
prospectus meeting the requirements of the Securities Act and all restrictive
legends and stop transfer instructions relating to securities laws and
contractual restrictions have been removed and (ii) the date as of which all of
the Registrable Securities have been sold.
2. REGISTRATION RIGHTS
-------------------
(a) Filing of Registration Statement. (i) As soon as practicable,
--------------------------------
but in any event no later than 30 days after the Effective Time, the Company
shall file a "shelf" registration statement pursuant to Rule 415 under the
Securities Act (the "Registration Statement") with respect to the Registrable
Securities. The Company agrees that the Registration Statement will cover all
Registrable Securities. The Company shall use its best efforts to (A) have the
Registration Statement declared effective on or before the Target Date, and (B)
keep the Registration Statement continuously effective from the date such
Registration Statement is declared effective until the Termination Date, so long
as Rule 415 or a successor rule permitting continuous offerings of the type
contemplated herein remains in effect.
(ii) Subject to Section 2(a)(iv) hereof, the Company shall promptly
supplement or amend, if necessary, the Registration Statement as required by the
registration form utilized by the Company or by the instructions applicable to
such registration form or by the Securities Act and, in each case, the Company
shall furnish to the Stockholder copies of any such supplement or amendment
prior to its being used and/or filed with the Commission. The Company shall pay
all Registration Expenses incurred in connection with the Registration Statement
and any supplements or amendments thereto, whether or not it becomes effective,
and whether all, none or some of the Registrable Securities are sold pursuant to
the Registration Statement.
(iii) In connection with any Registration Statement filed pursuant to
Section 2(a), the Company will, as expeditiously as possible, subject to Section
2(a)(iv) hereof, prepare and file with the Commission such Registration
Statement and such amendments and supplements to such Registration Statement and
the prospectus used in connection therewith continuously as may be necessary to
keep such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
until the Termination Date;
(iv) Notwithstanding anything in this Agreement to the contrary, if
(a)(i) the Company is in possession of material non-public information,
including, without limitation, facts surrounding any proposed or pending
transaction involving the Company, (ii) the Board of Directors of the Company
determines by duly adopted resolutions that disclosure of such material non-
public information would not be in the best interests of the
-3-
<PAGE>
Company and its stockholders and (iii) the Board of Directors or Chief Executive
Officer of the Company determines, with the advice of counsel, that suspension
of the rights of the Stockholder to make sales pursuant to the Registration
Statement is necessary in order to avoid a requirement to disclose such
material, non-public information or (b) the Company has made a public
announcement relating to a material acquisition or business combination
including the Company or a subsidiary of the Company, then the Company may
notify the Stockholder that it elects to suspend the rights of the Stockholder
to make sales pursuant to the Registration Statement for a period of time not to
exceed 45 days from the date of such notice, provided that, the Company may
-------- ----
exercise its rights under this subsection (iv) no more than one time during any
period of 180 consecutive days.
(b) Requested Registration.
----------------------
(i) If the Company receives from the Stockholder, at any time at
which the Registration Statement filed pursuant to Section 2(a) is no longer
effective for any reason, or is no longer effective to permit the disposition
thereunder of the Registrable Securities in the manner intended thereby, a
written request that the Company effect any registration with respect to at
least 70,000 shares of the Registrable Securities, the Company will:
(A) as soon as practicable, use its best efforts to effect such
registration as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of the Registrable Securities as are
specified in such request; provided that the Company shall not be obligated to
--------
effect, or take any additional action to effect, any such registration pursuant
to this Section 2(b):
(V) during the period starting with the date of filing of,
and ending on the date forty five (45) days following the effectiveness of, any
registration statement filed by the Company on Form S-4 (or any successor form)
in connection with an acquisition by the Company or any of its subsidiaries of,
or merger or other combination of the Company or any of its subsidiaries with,
any other Person or Persons;
(W) if within thirty (30) days following receipt of a written
request from the Stockholder pursuant to this Section 2(b)(i), the Company gives
written notice to the Stockholder of the Company's intention to make a
registered offering involving an underwriting within ninety (90) days, in which
event the Company shall use its best efforts to include all or such part of the
Registrable Securities that the Stockholder has requested that the Company
register in such public offering or in such underwriting pursuant to Section
2(c)(ii);
(X) if the Company, upon the happening of any event of the
kind described in Section 2(a)(iv), furnishes to the
-4-
<PAGE>
Stockholder a certificate of any officer stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration to be effected at such
time, in which event the Company shall have the right to defer such filing for a
period of not more than forty five (45) days after receipt of the request of the
Stockholder; provided, that such right to delay a request shall be exercised by
--------
the Company not more than once in any period of 180 consecutive days;
(Y) after the Company has effected three (3) such
registrations pursuant to this Section 2(b) and such registrations have been
declared or ordered effective and the sales of such Registrable Securities have
closed; or
(Z) if the Registrable Securities requested by the
Stockholder to be registered pursuant to such request do not exceed 70,000
shares.
The registration rights set forth in this Section 2 may not be
assigned, in whole or in part, by the Stockholder without the Company's written
consent; provided, that the Stockholder may assign such registration rights (1)
to any family member, trust for the benefit of a family member or donee without
the Company's consent, provided that such assignee agrees to be bound by the
terms of this Agreement and the Shareholder Agreement, or (2) to any other
Person, if such Person agrees to be bound by the terms of this Agreement and the
Stockholder obtains the Company's prior written consent which shall not be
unreasonably withheld.
(ii) Underwriting. If the Stockholder intends to distribute the
------------
Registrable Securities covered by its request by means of an underwriting, it
shall so advise the Company as a part of its request made pursuant to Section
2(b).
In such event, the Stockholder and the Company shall enter into an
underwriting agreement in customary form with the managing underwriter of the
underwriter or underwriters selected for such underwriting by the Company and
reasonably acceptable to the Stockholder. The Company or any of its affiliates
may include its securities for its own account in such registration if the
managing underwriter so agrees and if the number of Registrable Securities and
other securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
(c) Company Registration.
--------------------
(i) If the Company shall determine to register any of its equity
securities, other than a registration relating solely to employee benefit plans,
or a registration relating solely to a transaction effected on Form S-4 (or any
successor form) pursuant to Rule 145 of the Securities Act, or a registration on
any registration form which does not permit
-5-
<PAGE>
secondary sales, the Company will (for so long as any registration statement
relating to Registrable Securities registered pursuant to Section 2(a) has not
been declared or ordered effective or is no longer effective or is not available
for the disposition of the Registrable Securities or the sales of such
Registrable Securities have not closed):
(A) promptly give the Stockholder a written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws); and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified
in a written request made by the Stockholder within fifteen (15) days
after receipt of the written notice from the Company described in clause
(i)(A) above, except as set forth in Section 2(c)(ii) below.
(ii) Underwriting. If the registration of which the Company
------------
gives notice is for a registered offering involving an underwriting (an
"Underwritten Company Registration"), the Company shall so advise the
Stockholder as a part of the written notice given pursuant to Section
2(c)(i)(A). In such event, the right of the Stockholder to registration pursuant
to this Section 2(c) shall be conditioned upon such Stockholder's participation
in such underwriting and the inclusion of such Stockholder's Registrable
Securities in the underwriting to the extent provided herein. The Stockholder
shall (together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter of the underwriter or underwriters
selected for underwriting by the Company. In the event the Company gives the
Stockholder notice of such Underwritten Company Registration prior to such time
as the Stockholder shall have sold or otherwise transferred beneficial ownership
of at least 300,000 shares of Registrable Securities, the Company shall use its
best efforts to include, and cause the managing underwriter to include, 300,000
shares of the Stockholder's Registrable Securities in such Underwritten Company
Registration; in which event the Stockholder agrees not to sell any additional
shares of Registrable Securities or make any requests for registration pursuant
to Section 2(b) or 2(c) hereof for a period of 90 days following the completion
of the sale of such 300,000 shares in such Underwritten Company Registration.
Notwithstanding any other provision of this Section 2(c), if the managing
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the managing underwriter may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to not less than ten percent
(10%) of the shares included therein. In such event, the number of shares that
are entitled to be included by the Company in the registration and underwriting
or of any other participant therein shall be reduced by such minimum number of
-6-
<PAGE>
shares as is necessary to comply with such limitation. If the Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration and shall continue to be Registrable
Securities.
(d) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration or qualification pursuant to this Section 2
shall be borne by the Company, and all Selling Expenses shall be borne by the
Stockholder.
(e) Registration Procedures. In the case of each registration
-----------------------
effected by the Company pursuant to Section 2, the Company will keep the
Stockholder advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company will:
(i) in the case of a registration pursuant to Section 2(b) or
2(c) hereof, keep such registration effective for a period of one hundred eighty
(180) days or until the Stockholder has completed the distribution described in
the registration statement relating thereto, whichever first occurs; provided,
however, that such 180-day period shall be extended for a period of time equal
to the period during which the Stockholder refrains from selling any securities
included in such registration in accordance with provisions in Section 2(i)
hereof;
(ii) if requested by the managing underwriter or underwriters or
the Stockholder in connection with an underwritten offering, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or such Stockholder reasonably requests
should be included therein relating to the plan of distribution with respect to
such Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
receiving notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(iii) furnish to the Stockholder and the managing underwriter, if
any, without charge, one original and as many conformed copies of such
registration statement and of each such amendment thereto as reasonably
requested by the Stockholder or underwriter (including, in the case of the
original copy, all
-7-
<PAGE>
exhibits) and such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as the Stockholder
or such underwriter may reasonably request;
(iv) use its commercially reasonable efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement and the managing underwriter, if any, under such other
securities or blue sky laws of such States of the United States of America where
an exemption is not available and as the Stockholder and the managing
underwriter, if any, shall reasonably request, (y) to keep such registrations
and qualifications, in effect for so long as such registration statement remains
in effect, and (z) to take any other action which may be necessary to enable the
Stockholder or such managing underwriter to consummate the disposition in such
jurisdictions of the securities to be sold by the Stockholder or managing
underwriter, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or as a dealer in securities or to
file a general consent to service of process or to subject itself to taxation in
any jurisdiction;
(v) promptly notify the Stockholder and the managing
underwriter, if any, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and, subject to Section 2(a)(iv) or
2(b)(i)(A)(X) hereof, at the request of the Stockholder, and the managing
underwriter, if any, promptly prepare and furnish to the Stockholder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made;
(vi) in connection with any underwritten offering of Registrable
Securities, enter into an underwriting agreement in form, scope and substance as
is customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriter in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith (a) make such representations and warranties (to the extent able to do
so) to the underwriters in form, substance and scope as are customarily made by
issuers to
-8-
<PAGE>
underwriters in primary underwritten offerings with respect to the business of
the Company and the Registration Statement; (b) obtain opinions of counsel to
the Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriter, shall
be addressed to the underwriters and shall cover the matters customarily covered
in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters); (c) obtain "cold comfort" letters and
updates thereof from the Company's independent certified public accountants
addressed to the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten offerings; (d) if any
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures contained in this Agreement with
respect to all parties to be indemnified pursuant to said Section; and (e)
deliver such documents and certificates as may be requested by the managing
underwriter to evidence compliance with clause (iv) above and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company. The above shall be done at each closing under such
underwriting or similar agreement as and to the extent required thereunder, and
if at any time the representations and warranties of the Company contemplated in
clause (vi)(a) above cease to be true and correct in any material respect, the
Company shall so advise the underwriter(s), if any, and the Stockholder promptly
and, if requested by the Stockholder, shall confirm such advice in writing;
(vii) As a condition to including shares in any registration
statement, the Company may require the Stockholder to agree that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in (i) Section 2(e)(v) or (ii) Section 2(a)(iv), the Stockholder will
forthwith discontinue his disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until (x) in the
case of a notice under clause (i) above, the Stockholder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 2(e)(v), or
until it is advised in writing by the Company that the use of the applicable
prospectus may be resumed, and, if so directed by the Company, such holder will
promptly deliver to the Company (at the Company's expense) all copies, other
than permanent file copies, then in the Stockholder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice or (y) in the case of a notice under clause (ii) above,
until expiration of the 30th day following the date of such notice or of any
subsequent notice given in accordance with Section 4 hereof, or such shorter
period as the restriction under Section 2(a)(iv) remains in effect.
(viii) If the Company suspends a registration statement or
requires the Stockholder to cease sales of
-9-
<PAGE>
Registrable Securities pursuant to this section, the Company shall, as promptly
as practicable following the termination of the circumstances which led the
Company to do so, take such actions as may be necessary to reinstate the
effectiveness of such registration statement and/or give written notice to the
Stockholder authorizing him to resume sales pursuant to such registration
statement.
(f) Indemnification.
---------------
(i) The Company will indemnify the Stockholder with respect to
each registration which has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls any underwriter and each of
its directors and officers, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus or
preliminary prospectus (and the related registration statement and any related
blue sky notification) incident to any such registration or qualification, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Stockholder, each such underwriter and each
person who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided, that the Company will not be
liable to the Stockholder or the underwriter, as the case may be, in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by the Stockholder or underwriter, as the
case may be, and stated to be specifically for use therein.
(ii) The Stockholder will, if Registrable Securities held by it
are included in the securities as to which such registration or qualification or
other compliance is being effected, indemnify the Company, each of its directors
and officers and each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the Company or such
underwriter and each of their officers and directors against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement or prospectus, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements by the Stockholder therein not misleading,
and will reimburse the Company and its directors and officers, such underwriters
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in every case only to the extent that such
-10-
<PAGE>
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Company by the Stockholder
and stated by the Stockholder to be specifically for use therein; provided,
however, that the obligations of the Stockholder hereunder shall be limited to
an amount equal to the net proceeds to the Stockholder of securities sold
pursuant to such registration.
(iii) Each party entitled to indemnification under this Section
2(f) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of counsel shall be at the expense of the
Indemnifying Party), and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 2 unless the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(f) is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other
-11-
<PAGE>
relevant equitable considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue (or alleged untrue) statement of a material fact or
the omission (or alleged omission) to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing provisions,
the provisions in such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of the Company and the
Stockholder is subject to the condition that, insofar as they relate to any
loss, claim, liability or damage made in a preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the Commission at the time
the registration statement in question becomes effective or the amended
prospectus filed with the Commission pursuant to Commission Rule 424(b) (the
"Final Prospectus"), such indemnity or contribution agreement shall not inure to
the benefit of any underwriter if a copy of the Final Prospectus was furnished
to the underwriter and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
(g) Information by the Stockholder. It shall be a condition to the
------------------------------
Company's obligations hereunder that the Stockholder shall have furnished to the
Company such information regarding the Stockholder and the distribution proposed
by the Stockholder as the Company may reasonably request in writing (by
facsimile or otherwise) in connection with any registration or qualification
referred to in this Section 2.
(h) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may permit the sale of
restricted securities to the public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act ("Rule 144");
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act at any time at which it is subject to such reporting requirements;
and
-12-
<PAGE>
(iii) so long as the Stockholder owns any Registrable
Securities, furnish to the Stockholder upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, and of
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as the Stockholder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Stockholder to sell any such securities without
registration.
(i) "Market Stand-off" Agreement. The Stockholder agrees, if
----------------------------
requested by the Company and an underwriter of equity securities of the Company
pursuant to Section 2(b)(ii) or 2(c)(ii), not to sell or otherwise transfer or
dispose of any Registrable Securities held by the Stockholder during the 180-day
period following the effective date of a registration statement of the Company
filed under the Securities Act, provided that all officers and directors of the
Company enter into similar agreements.
If requested by the underwriters, the Stockholder shall execute a
separate agreement to the foregoing effect. The Company may impose stop-
transfer instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said 180-day period. The provisions of
this Section 2(i) shall be binding upon any transferee who acquires Registrable
Securities.
3. MISCELLANEOUS
-------------
(a) Directly or Indirectly. Where any provision in this Agreement
----------------------
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections
----------------
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(d) Notices.
-------
(i) All communications under this Agreement shall be in
writing and shall be delivered by hand or facsimile or mailed by overnight
courier or by registered or certified mail, postage prepaid:
(A) if the Stockholder, at the address or facsimile number
of the Stockholder shown on Schedule I,
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<PAGE>
or at such other address as the Stockholder may have furnished the
Company in writing; and
(B) if to the Company, at: 20 Ketchum Street, Westport, CT
06880 (facsimile: (203) 454-5840), marked for the attention of
Christopher S. Cardell, or at such other address as it may have
furnished the Stockholder in writing, with a copy to Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, NY
10022 (Facsimile: (212) 821-8111), marked for the attention of
Cornelius T. Finnegan III, Esq.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
(e) Reproduction of Documents. This Agreement and all documents
-------------------------
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the
Stockholder by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and the Stockholder may destroy any
original document so reproduced. The parties hereto agree and stipulate that
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Stockholder in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement
--------------------------------------
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company and the Stockholder.
(h) Severability. In the event that any part or parts of this
------------
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(i) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
-14-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
MECKLERMEDIA CORPORATION
By:__________________________
Name:
Title:
_____________________________
Marion Jack Rickard, Jr.
-15-
<PAGE>
SCHEDULE I
Name and Address
of Stockholder
- --------------
Marion Jack Rickard, Jr.
14322 W. Bellview Avenue
Morrison, CO 80465
Facsimile: (303) 697-2092
with a copy to:
Davis, Graham & Stubbs LLP
370 17th Street, Suite 4700
Denver, CO 80202
Attn: Paul Hilton, Esq.
Facsimile: (303) 893-1379
<PAGE>
EXECUTION COPY
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of this 15th day of May, 1998,
between Marion Jack Rickard, Jr. ("Rickard") and Mecklermedia Corporation, a
Delaware corporation (the "Company").
R E C I T A L S:
---------------
WHEREAS, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 15, 1998, by and among Rickard ("Seller"),
Boardwatch Magazine, Incorporated ("Boardwatch"), One, Inc. ("One"), the
Company, Mecklermedia Acquisition Corp. I ("Merger Sub I") and Mecklermedia
Acquisition Corp. II ("Merger Sub II"), Merger Sub I will be merged with and
into Boardwatch and Merger Sub II will be merged with and into One in exchange
for the Merger Consideration to be paid to Seller. The execution and delivery
of this Agreement is a condition to the closing under the Merger Agreement. All
capitalized terms used herein and not defined herein shall have the meanings
assigned to them in the Merger Agreement; and
WHEREAS, Rickard and the Company desire to promote their mutual
interests by agreeing to certain matters relating to the disposition of shares
of capital stock in the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. TRANSFER OF STOCK
-----------------
(a) Legends. The certificates evidencing the shares of common stock
-------
of the Company, par value $.01 per share (the "Common Stock"), acquired by
Rickard as Stock Consideration will bear the following legends, until such
shares have been (i) Transferred in a transaction which, in the opinion of
counsel reasonably satisfactory to the Company, qualifies as an exempt
transaction under the Act and the rules and regulations promulgated
thereunder or (ii) registered pursuant to the terms of the Registration
Rights Agreement, dated the date hereof, between the Company and Rickard
(the "Registration Rights Agreement") or otherwise at which time the
Company shall remove or cause to be removed such legends:
"THIS SECURITY (THE "SECURITY") HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
<PAGE>
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION."
"The securities evidenced hereby are subject to the terms of that
certain Stockholders Agreement, dated as of May 15, 1998, between the
Company and Marion Jack Rickard, Jr., including certain rights of
first offer. A copy of this Agreement has been filed with the
Secretary of the Company and is available upon request."
(b) Transfer of Securities. Subject to Section 1(c) hereof, Rickard
----------------------
shall be entitled to Transfer any shares of capital stock of the Company by
means of, without limitation, pledges, block trades, brokers' transactions,
negotiated sales or otherwise; provided, that any such Transfer shall be
made in accordance with all applicable federal and state securities laws;
and provided, further, that any Transfer or purported Transfer made in
violation of Section 1(c) shall be null and void and of no effect; and
provided, further, that any Transfer of shares representing in the
aggregate in excess of three percent (3%) of the Company's Total
Outstanding Shares of Common Stock to members of Rickard's immediate family
or trusts for the benefit of Rickard or his immediate family shall only be
permitted in the event that such transferee agrees to be bound by the
provisions of this Agreement as if such transferee were an original
signatory hereto.
(c) Right of First Offer. Notwithstanding anything in Section 1(b)
--------------------
to the contrary, Rickard shall not Transfer an amount of the shares of
capital stock of the Company owned by him representing in the aggregate in
excess of three percent (3%) of the Company's Total Outstanding Shares of
Common Stock in one or more transactions in any 90-day period to any single
(i) Person or (ii) "group" (as defined in Section 13 of the Exchange Act)
of Persons, in either case engaged in the Company's line of business as
presently conducted (which shall include for these purposes Boardwatch's
and One's respective lines of business as presently conducted) and which
shall include, without limitation, International Data Group, CMP Media Inc.
and Ziff-Davis Inc. (a "Third Party Competitor"), unless Rickard shall have
first made the offer to sell such shares to the Company as contemplated by
this Section 1(c) (an "Offer"), and such offer shall not have been accepted
and paid for by the Company or a subsidiary or Affiliate of the Company.
(i) Offer by Transferor. (i) Rickard shall offer in writing to
-------------------
the Company to sell to the Company all of the shares then proposed to
be transferred by Rickard
-2-
<PAGE>
(the "Subject Shares") pursuant to a bona fide offer of a Third Party
Competitor, including a statement of intention to Transfer to such
third party, the name and address of such prospective Third Party
Competitor, the number of shares of Common Stock involved in the
proposed Transfer, and the proposed material terms of such Transfer
(including, without limitation, the price per share to be paid by such
Third Party Competitor).
(ii) Acceptance of Offer. Within 7 business days after the
-------------------
receipt of the Offer described in Section 1(c)(i), the Company may, at
its option, elect to purchase all of the Subject Shares. The Company
shall exercise such option by giving written notice of its irrevocable
election to purchase such shares to Rickard within such 7-business-day
period. The Company shall be entitled to assign its rights under this
paragraph to any third party, including any subsidiary or Affiliate of
the Company, upon written notice to Rickard within such 7-business-day
period.
(iii) Notice. The notice required to be given by the Company
------
upon acceptance shall specify a date for the closing of the purchase
which shall not be more than 20 calendar days after the date of the
giving of such notice unless the appraisal procedure has been
initiated in which case closing shall occur 30 calendar days after the
date of the giving of such notice.
(iv) Purchase Price. The purchase price per share for the
--------------
Subject Shares shall be the price per share offered to be paid by the
prospective Third Party Competitor described in the Offer, which price
shall be paid in cash or, if so provided in the Offer, cash plus
deferred payments of cash or deferred payments of cash in the same
proportions, and with the same terms of deferred payment, as therein
set forth.
(v) Consideration Other Than Cash. If the Offer for Subject
-----------------------------
Shares under this Section 1 is for consideration other than cash or
cash plus deferred payments of cash or deferred payments of cash, the
Company shall pay the cash equivalent of the fair market value of such
other consideration. If the Offer states the fair market value of
such other consideration or a method by which such value shall be
determined, then the Company shall pay the cash equivalent of such
value. If the Offer does not state the fair market value of such
other consideration or a method by which it shall be determined and
(i) such other consideration consists of securities that are then
quoted on The Nasdaq Stock Market or listed on any national securities
exchange, the fair market value of such consideration shall be deemed
to be the closing
-3-
<PAGE>
price of such securities on the day prior to the date of the Offer and
(ii) if such other consideration does not consist of securities
described in (i) above, Rickard shall state in his offer to the
Company under Section 1(c)(i) the amount of the cash equivalent which
he believes to represent the fair market value of such other
consideration, provided that such fair market value shall be
determined in accordance with the applicable generally accepted
accounting principles relating to computation of non-monetary
consideration. If the Company does not agree with Rickard's statement
as to the amount of such cash equivalent the Company may in its
written notice to Rickard pursuant to Section 1(c)(ii) initiate
appraisal proceedings under Section 1(c)(vi) for determination of the
cash equivalent of the fair market value of such other consideration.
(vi) Appraisal Procedure. If the Company initiates an appraisal
-------------------
procedure to determine the amount of the cash equivalent of any
consideration for Subject Shares under Section 1(c)(v), then Rickard,
on the one hand, and the Company, on the other hand, shall each
promptly (but no later than three business days after the date of the
written notice initiating an appraisal proceeding) 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 Shares 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 Rickard 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 value of the
consideration for the Subject Shares (without regard to the income tax
consequences to Rickard 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
-4-
<PAGE>
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 paid as follows: (i) in the event the final appraised value
of the Subject Shares is less than 95% of the value set forth in the
Offer, then Rickard shall pay the entire cost of such appraisals and
(ii) in the event the final appraised value of the Subject Shares is
95% or greater of the value set forth in the Offer, then the Company
shall pay the entire cost of such appraisals.
(vii) Closing of Purchase. The closing of the purchase shall
-------------------
take place at such location within the continental United States as
Rickard may specify in writing to the Company or such other location
as shall be mutually agreeable and the purchase price, to the extent
comprised of cash, shall be paid by wire transfer or check in
immediately available funds at the closing, and documents evidencing
any deferred payments of cash permitted pursuant to Section 1(c)(v)
above shall be delivered at the closing. Deferred payments of cash
shall be made by wire transfer of immediately available funds on the
due dates specified in the Offer. At each closing, Rickard shall
deliver to the Company the certificates evidencing the Subject Shares
to be purchased with cash at such closing, duly endorsed and in
negotiable form with all the requisite documentary stamps affixed
thereto.
(viii) Release from Restriction; Termination of Rights. If the
-----------------------------------------------
Offer is not accepted by the Company within the 7-business-day period
referenced in Section 1(c)(ii), Rickard may make a bona fide Transfer
to the prospective Third Party Competitor named in the statement
attached to the Offer in accordance with the agreed upon terms of such
Transfer, provided, that such Transfer shall be made only in strict
--------
accordance with the terms therein stated and in compliance with all
applicable securities laws. The Subject Shares shall again become
subject to all of the restrictions of this Section 1 in the event (i)
Rickard fails to make such Transfer no later than 90 days after the
expiration of the 7-business-day period specified in Section 1(c)(ii),
or (ii) Seller notifies the Company in writing that it intends to
Transfer the Subject Shares to the Third Party Competitor for a lower
price per share or upon other less favorable terms than those included
in the offer delivered to the Company by
-5-
<PAGE>
Rickard pursuant to Section 1(c)(i). Notwithstanding anything herein
to the contrary, if Rickard does not receive a deferred payment of
cash on or before the due date of such payment, in addition to any
other remedies Rickard may have, the Company (and any permitted
assignee) shall forfeit its right to purchase pursuant to this
Agreement the Subject Shares that would have been purchased by such
payment.
(d) Injunctive Relief. The Company and Rickard hereby declare that
-----------------
it is impossible to measure in money the damages which will accrue to the
Company or Rickard by reason of the failure of the Company or Rickard to
perform any of his or its obligations set forth in this Section 1.
Therefore, the Company and Rickard shall both have the right to specific
performance of such obligations.
SECTION 2. INTERPRETATION OF THIS AGREEMENT
--------------------------------
(a) Terms Defined. As used in this Agreement, the following terms
-------------
have the respective meaning set forth below:
Act: means the Securities Act of 1933, as amended.
---
Affiliate: means any person or entity, directly or indirectly,
---------
controlling, controlled by or under common control with such person or
entity.
Exchange Act: the Securities Exchange Act of 1934, as amended.
------------
Person: shall mean and include an individual, a partnership, a joint
------
venture, a corporation, a limited liability company, a trust, an
association, an unincorporated organization, a Governmental Authority (as
defined in the Merger Agreement) and any other entity.
Total Outstanding Shares of Common Stock: the Company's total
----------------------------------------
outstanding number of shares of Common Stock (i) based on the reported
total outstanding number of shares of Common Stock in the Company's most
recent filing made under the Exchange Act setting forth such information
including, without limitation, the most recently filed Form 10-Q or, if
more recently filed, Form 10-K or (ii) at Rickard's option, as of a date
within three (3) business days of Rickard's request to the Company for such
information.
Transfer: any sale, assignment, pledge, hypothecation, or other
--------
disposition or encumbrance.
(b) Directly or Indirectly. Where any provision in this Agreement
----------------------
refers to action to be taken by any Person, or which such Person is
prohibited from taking, such
-6-
<PAGE>
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
(c) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(d) Section Headings. The headings of the sections and subsections
----------------
of this Agreement are inserted for convenience only and shall not be deemed
to constitute a part thereof.
SECTION 3. MISCELLANEOUS
-------------
(a) Termination. This Agreement shall terminate on the earlier to
-----------
occur of (i) the date on which each of the Company or Rickard agrees or
(ii) the date as of which Rickard shall no longer beneficially own greater
than three percent (3%) of the Company's Total Outstanding Shares of Common
Stock.
(b) Notices.
-------
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand, or sent by facsimile, or mailed by
overnight courier or by registered or certified mail, postage prepaid:
(A) if to Rickard, at 14322 W. Bellview Avenue, Morrison,
Colorado 80465, (telecopy: (303) 697-2092) marked for attention
of Marion Jack Rickard, Jr., or at such other address as Rickard
may have furnished the Company in writing,
(B) if to the Company, at 20 Ketchum Street, Westport, CT
06880, (telecopy: (203) 226-8023) marked for the attention of
Christopher S. Cardell, or at such other address as it may have
furnished in writing to Rickard;
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if sent by facsimile,
upon confirmation of receipt; if mailed by courier, on the first
business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date
of such mailing.
(c) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of each
of the parties.
-7-
<PAGE>
(d) Entire Agreement; Amendment and Waiver. This Agreement
--------------------------------------
constitutes the entire understanding of the parties hereto relating to the
subject matter hereof and supersede all prior agreements or understandings
with respect to the subject matter hereof among such parties. This
Agreement may be amended, and the observance of any term of this Agreement
may be waived, with (and only with) the written consent of each of the
Company and Rickard.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(f) Severability. In the event that any part or parts of this
------------
Agreement shall be held illegal or unenforceable by any court or
administrative body of competent jurisdiction, such determination shall not
effect the remaining provisions of this Agreement which shall remain in
full force and effect.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
MECKLERMEDIA CORPORATION
By:___________________________
Name:
Title:
MARION JACK RICKARD, JR.
_____________________________
-9-
