<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ADVANSTAR COMMUNICATIONS INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 7389 59-2757389
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification Number)
of Incorporation or Classification Code
Organization) Number)
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SEE TABLE OF ADDITIONAL REGISTRANTS
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7500 OLD OAK BOULEVARD
CLEVELAND, OHIO 44130-3369
(440) 243-8100
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
---------------
ROBERT L. KRAKOFF
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
7500 OLD OAK BOULEVARD
CLEVELAND, OHIO 44130-3369
(440) 243-8100
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
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Copy to:
F. GEORGE DAVITT
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER NOTE PRICE(1) FEE
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<S> <C> <C> <C> <C>
9-1/4% Senior Subordinated
Notes due 2008.............. $150,000,000 100% $150,000,000 $44,250
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Guarantees................... -- -- -- (2)
</TABLE>
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(1) Pursuant to Rule 457(f) under the Securities Act of 1933, as amended, the
registration fee has been calculated based on the market value of the 9-
1/4% Senior subordinated Notes due 2008 for which the securities
registered hereby will be exchanged, which is estimated to be the face
amount of such notes.
(2) Pursuant to Rule 457(n), no registration fee is payable with respect to
the guarantees.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION OR CLASSIFICATION IDENTIFICATION
REGISTRANT ORGANIZATION NUMBER NUMBER
- ------------------------------- ---------------- -------------- --------------
<S> <C> <C> <C>
Advanstar Holdings, Inc. Delaware 7389 94-3243499
Art Expositions International,
Inc. Delaware 7389 41-1612863
Expocon Management Associates,
Inc. Connecticut 7389 06-0984189
On Demand Marketing, Inc. Connecticut 7389 06-1382851
Men's Apparel Guild in Califor-
nia, Inc. California 7389 95-1588605
Magic Kids, Inc. California 7389 33-0753421
Technology Events Company, LLC Connecticut 7389 06-1432203
Applied Business teleCommunica-
tions California 7389 94-2896012
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
Subject to Completion, [LOGO]
Dated , 1998
ADVANSTAR COMMUNICATIONS INC.
OFFER TO EXCHANGE ITS 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL
OF ITS OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE NOT
BEEN SO REGISTERED
----------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS THEREUNDER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED.
----------
Advanstar Communications Inc., a New York corporation ("Advanstar" or the
"Company"), a wholly-owned subsidiary of Advanstar Holdings, Inc., a Delaware
corporation ("Holdings"), hereby offers (the "Exchange Offer"), upon the terms
and conditions set forth in this Prospectus (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
an aggregate principal amount of up to $150,000,000 of its 9 1/4% Senior
Subordinated Notes due 2008 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to a Registration Statement of which this Prospectus is a part, for a like
principal amount of its outstanding 9 1/4% Senior Subordinated Notes due 2008
(the "Original Notes", and, together with the Exchange Notes, the "Notes"),
which have not been so registered, from the holders thereof. The form and terms
of the Exchange Notes are the same as the form and terms of the Original Notes
(which they replace), except that as of the date hereof the Exchange Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not contain certain provisions included in
the terms of the Original Notes relating to an increase in the interest rate in
certain circumstances relating to the timing of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Original Notes (which they
replace) and will be issued under and be entitled to the benefits of the
Indenture, dated as of April 30, 1998 (the "Indenture"), between the Company
and The Bank of New York, as trustee (the "Trustee"), which also governs the
Original Notes. See "The Exchange Offer" and "Description of Notes."
The Company will accept for exchange any and all Original Notes duly tendered
and not validly withdrawn prior to 5:00 p.m., New York City time, on ,
1998, unless extended by the Company in its sole discretion (the "Expiration
Date"). Tenders of Original Notes may be withdrawn at any time prior to 5:00
p.m., New York City time on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Original Notes being tendered
for exchange pursuant to the Exchange Offer, but is subject to certain
customary conditions.
The Original Notes were sold by the Company on April 30, 1998 to Chase
Securities Inc. and Lehman Brothers Inc. (collectively, the "Initial
Purchasers") in connection with the acquisition (the "MAGIC Acquisition") by
Advanstar of Men's Apparel Guild in California, Inc. ("MAGIC") and certain
refinancing transactions. See "The Acquisitions and Refinancing." The Original
Notes were sold by the Company to the Initial Purchasers in transactions not
registered under the Securities Act in reliance upon an exemption from
registration under the Securities Act (the "Offering"). The Initial Purchasers
subsequently resold the Original Notes in the United States to qualified
institutional buyers in reliance upon Rule 144A under the Securities Act ("Rule
144A") and outside the United States in accordance with Regulation S under the
Securities Act. The Exchange Notes are being offered hereunder in order to
satisfy certain obligations of the Company contained in the Exchange and
Registration Rights Agreement dated April 30, 1998 among the Company and the
other signatories thereto (the "Registration Rights Agreement").
The Company believes that, based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission"), Exchange Notes issued
pursuant to the Exchange Offer in exchange for Original Notes may be offered
for resale, resold and otherwise transferred by each holder thereof (other than
any such holder which is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and such holder has no arrangement with any person to participate in the
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. The Company has
agreed that, for a period of 180 days after the Expiration Date (as defined),
it will make this Prospecuts available to any broker-dealer for use in
connection with certain resales. See "Plan of Distribution." All resales must
be made in compliance with applicable state securities or "blue sky" laws. Such
compliance may require that the Exchange Notes be registered or qualified in a
particular state or that the resales be made by or through a licensed broker-
dealer, unless exemptions from these requirements are available. The Company
assumes no responsibility with regard to compliance with such requirements.
(Cover continued on following page)
SEE "RISK FACTORS" BEGINNING ON PAGE 19 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR ORIGINAL NOTES IN
THE EXCHANGE OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is , 1998.
<PAGE>
(Cover continued from previous page)
Interest on the Notes is payable semi-annually on May 1 and November 1 of
each year, commencing on November 1, 1998. The Notes will mature on May 1,
2008. Except as described below, the Company may not redeem the Notes prior to
May 1, 2003. On or after such date, the Company may redeem the Notes, in whole
or in part, at any time at the redemption prices set forth herein, plus
accrued and unpaid interest thereon, if any, to the date of redemption. In
addition, at any time and from time to time prior to May 1, 2001, the Company
may, subject to certain requirements, redeem up to 35% of the original
aggregate principal amount of the Notes with the net cash proceeds of one or
more Equity Offerings (as defined) at a redemption price equal to 109.250% of
the principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the date of redemption; provided, however, that at least 65% of the
original aggregate principal amount of the Notes remains outstanding
immediately after each such redemption. The Notes will not be subject to any
sinking fund requirements. Upon the occurrence of a Change of Control (as
defined), the Company will have the option, at any time prior to May 1, 2003,
to redeem the Notes, in whole but not in part, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium (as defined),
together with accrued and unpaid interest, if any, to the date of redemption.
Upon the occurrence of a Change of Control, if the Company does not so redeem
such Notes or if a Change of Control occurs after May 1, 2003, the Company
will be required to make an offer to purchase the Notes at a price equal to
101% of the original aggregate principal amount thereof, together with accrued
and unpaid interest, if any, to the date of purchase. See "Description of
Notes."
The Notes will be unsecured and will be subordinated in right of payment to
all existing and future Senior Indebtedness (as defined) of the Company. The
Notes will rank pari passu with all future Senior Subordinated Indebtedness
(as defined) of the Company and will rank senior to all future Subordinated
Obligations (as defined) of the Company. The Notes will be fully and
unconditionally guaranteed (the "Note Guarantees") on an unsecured, senior
subordinated basis by each of the Company's direct and indirect domestic
Restricted Subsidiaries (as defined) and by Holdings (collectively, the
"Guarantors"). The Indenture governing the Notes permits the Company and its
subsidiaries to incur additional indebtedness, including Senior Indebtedness,
subject to certain restrictions.
The Exchange Offer is not being made to, nor will the Company accept
surrenders for exchange from, holders of Original Notes in any jurisdiction in
which such Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction. Holders of Original
Notes not tendered and accepted in the Exchange Offer will continue to hold
such Original Notes and will be entitled to all the rights and benefits and
will be subject to the limitations applicable thereto under the Indenture and
with respect to transfer under the Securities Act. Holders of Original Notes
not tendered in the Exchange Offer will not retain any rights under the
Registration Rights Agreement, except in limited circumstances. The Company
will pay all expenses incurred by it incident to the Exchange Offer. See "The
Exchange Offer."
There has not previously been any public market for the Exchange Notes. The
Company does not intend to list the Exchange Notes on any securities exchange
or to seek approval for quotation through any automated quotation system.
There can be no assurance that an active market for the Exchange Notes will
develop. The Initial Purchasers have informed the Company that they currently
intend to make a market in the Exchange Notes, but are not obligated to do so
and any such market making may be discontinued at any time without notice. The
Initial Purchasers may act as principal or as agent in such transactions. If a
market for the exchange Notes should develop, the Exchange Notes could trade
at a discount from their principal amount. See "Risk Factors -- Absence of
Public Market." Moreover, to the extent that Original Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Original Notes could be adversely affected.
<PAGE>
The names of publications, events and services used in this Prospectus are
trademarks, tradenames and servicemarks of the Company, its subsidiaries or
joint ventures. Names of companies and associations used herein are trademarks
or tradenames of the respective organizations.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
WHEN USED IN THIS PROSPECTUS, THE WORDS "EXPECTS," "ANTICIPATES,"
"ESTIMATES," "BELIEVES," "MAY," "WILL," "SHOULD" AND SIMILAR EXPRESSIONS, AND
THE NEGATIVE THEREOF, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
SUCH STATEMENTS, WHICH INCLUDE STATEMENTS CONTAINED IN "RISK FACTORS,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS" ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. THESE FORWARD-
LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS PROSPECTUS. THE COMPANY
EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY
UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO
REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY
CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS
BASED.
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MARKET AND INDUSTRY DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED
THROUGH COMPANY RESEARCH, SURVEYS OR STUDIES CONDUCTED BY THIRD PARTIES AND
INDUSTRY OR GENERAL PUBLICATIONS. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED
MARKET AND INDUSTRY DATA PROVIDED BY THIRD PARTIES OR INDUSTRY OR GENERAL
PUBLICATIONS. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY
MANAGEMENT OF THE COMPANY TO BE RELIABLE, HAVE NOT BEEN VERIFIED BY ANY
INDEPENDENT SOURCES.
i
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. As used herein, (i) "Advanstar" refers to Advanstar
Communications Inc. and its subsidiaries as of the date hereof; (ii) the
"Predecessor" refers to Advanstar prior to the consummation of the HFCP III
Acquisition (as defined) on May 31, 1996; (iii) "Holdings" refers to Advanstar
Holdings, Inc., the parent company of Advanstar; (iv) "HFCP III" refers
collectively to Hellman & Friedman Capital Partners III, L.P., H&F Orchard
Partners III, L.P. and H&F International Partners III, L.P.; (v) "MAGIC" refers
to Men's Apparel Guild in California, Inc.; (vi) the "MAGIC Acquisition" refers
to the acquisition of MAGIC by Advanstar; (vii) the "Other Acquisitions" refer
collectively to the acquisitions and joint ventures reflected in the Pro Forma
Adjustments (as defined), other than the MAGIC Acquisition; (viii) the
"Company" refers to Advanstar Communications Inc. and its subsidiaries after
the consummation of the MAGIC Acquisition and the Other Acquisitions; and (ix)
the "Refinancing" refers collectively to the Offering, the Credit Facility
Amendment (as defined) and the HFCP III Equity Investment (as defined).
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THE COMPANY
OVERVIEW
The Company is a leading provider of global, multi-product marketing
communications solutions, principally through controlled circulation trade,
business and professional magazines and trade shows, expositions and
conferences. The Company also provides a broad range of other marketing
services products, including direct mail and database products and services.
The Company publishes 73 specialized business magazines and professional
journals and 30 directories and other publications. Of Advanstar's 55 magazines
and journals for which competitive data is available, over 75% rank either #1
or #2 in their respective markets (based on number of advertising pages). The
Company owns and manages 76 expositions and 29 conferences for business,
professional and consumer audiences worldwide, most of which are the leading
events in their respective national or regional markets. After giving effect to
the Pro Forma Adjustments, the Company would have derived 50.1% of its 1997
revenues from publishing, 44.3% from expositions and conferences and 5.6% from
marketing services. After giving effect to the Pro Forma Adjustments, (i) the
Company's 1997 revenue, EBITDA (as defined) and EBITDA margin would have been
$247.3 million, $56.0 million and 22.7%, respectively; and (ii) the Company's
revenue, EBITDA and EBITDA margin for the first quarter ended March 31, 1998
would have been $79.6 million, $23.6 million and 29.6%, respectively. EBITDA is
not a measure of performance defined by generally accepted accounting
principles ("GAAP") and should not be considered in isolation or as a
substitute for net income or the statement of cash flows which have been
prepared in accordance with GAAP.
The Company markets its broad range of products and services primarily
through four industry clusters in which it has developed critical mass and
expertise: (i) Retail, Hospitality & Fashion; (ii) Healthcare & Pharmaceutical;
(iii) Information Technology & Communications; and (iv) Manufacturing &
Processing. The Company believes its industry-focused cluster structure allows
it to cross-sell its products effectively, thereby capturing a larger share of
customer marketing expenditures. These four clusters are further divided into
21 industry sectors. The Company has expanded its product line within its
clusters through new product introductions and strategic acquisitions. These
actions have enhanced the Company's position as a leading provider of
integrated business-to-business marketing communications solutions. In
addition, these actions have increased the Company's EBITDA by leveraging its
existing marketing and customer service infrastructure and industry expertise.
On April 30, 1998, Advanstar acquired MAGIC. MAGIC, organized in 1933,
produces MAGIC, the world's largest and most widely recognized trade show for
the men's apparel industry; WWDMAGIC,
1
<PAGE>
the largest women's apparel show in the United States; and MAGICKids, a
recently introduced children's apparel show. The three shows are held
concurrently in Las Vegas in February and August each year. The February 1998
shows occupied an aggregate of approximately 505,000 net square feet of
permanent floor space and 285,000 net square feet of temporary floor space at
the Las Vegas Convention Center and the Las Vegas Hilton. Commencing with the
August 1998 shows, the MAGIC trade shows will occupy approximately 700,000 net
square feet of permanent floor space at the Las Vegas Convention Center and
approximately 250,000 net square feet of permanent floor space at the Sands
Convention Center. The addition of the Sands Convention Center will eliminate
the need to use more costly temporary space and will allow MAGIC to partially
meet a long-standing backlog demand for exhibit space. The February 1998 MAGIC
trade shows attracted an audience of over 80,000 attendees from over 100
countries, including major retailers, such as Federated Department Stores,
Nieman Marcus, Nordstrom's and Wal-Mart. MAGIC's February 1998 trade shows
included over 3,200 exhibitors (such as Levi Strauss, Calvin Klein, Donna Karan
and the Russell Corporation), representing approximately 5,000 brand names.
MAGIC's February 1996 and August 1996 trade shows ranked, respectively, as the
12th and 11th largest trade shows in the United States. MAGIC's revenue, EBITDA
and EBITDA margin for its fiscal year ended May 31, 1997 were $31.2 million,
$12.2 million and 39.3%, respectively. For the nine months ended February 28,
1998, MAGIC's revenue, EBITDA and EBITDA margin were $38.7 million, $20.7
million and 53.5%, respectively, representing a revenue increase of 24.8% and
an EBITDA increase of 47.4% over the nine months ended February 28, 1997.
COMPETITIVE ADVANTAGES
The Company believes that the following factors contribute to its strong
competitive position:
Market Leadership. The Company has achieved a strong market position within
each of its four industry clusters primarily as a result of its ability to
offer customers in each cluster comprehensive and integrated marketing
communications solutions, consisting of leading publications, expositions and
marketing services. The Company publishes 73 specialized business magazines and
professional journals and 30 directories and other publications. Of Advanstar's
55 magazines and journals for which competitive data is available, over 75%
rank either #1 or #2 in their respective markets (based on number of
advertising pages). The Company's largest magazines include Video Store,
CADALYST, Pharmaceutical Technology and Hotel & Motel management. The Company
also owns and manages 76 trade shows and expositions and 29 conferences, most
of which are the leading events in their respective national or regional
markets. Many of the Company's expositions have commanding market presence: for
example, MAGIC is the #1 men's apparel trade show in the United States; IBS New
York is the #1 beauty show in the world; Telexpo is the #1 telecommunications
trade show in Latin America; Artexpo New York is the #1 mid-market art fair in
the United States; Dealernews International Powersports Dealer Expo is the #1
trade show for the motorcycle industry; Licensing International is the world's
leading event for the international merchandise licensing industry; and TeleCon
is the leading event for the video conference and long distance learning
markets.
Industry--Focused Integrated Marketing. In addition to offering a broad range
of products, the Company has developed a business model focused on industry
clusters to better serve its customers' marketing communications needs. This
model facilitates the development of long-term relationships between customers
and dedicated Advanstar teams. These teams work with customers to design and to
implement all aspects of customized, business-to-business marketing and
communications programs, increasing cross-selling opportunities across product
and service groups. For example, the Company's call center group, which is part
of the Information Technology & Communications cluster, recently concluded
several multi-year marketing contracts involving participation in the Company's
trade shows and advertising in the Company's trade publications.
2
<PAGE>
Diverse Customer Base. The Company's diverse customer base provides it with
stable and diverse sources of revenue and cash flow as well as an established
foundation from which to further penetrate existing markets and to develop new
markets. The Company's customer base is geographically diverse and crosses many
disparate industries, mitigating the Company's exposure to downturns in
particular geographic markets or industries. After giving effect to the Pro
Forma Adjustments, in 1997 the Company had over 14,000 advertisers and
exhibitors operating in over 20 different industry sectors, with no customer or
industry sector representing more than 1.1% or 13.7% of revenue, respectively.
Attractive EBITDA Margins and Modest Ongoing Capital Requirements. Consistent
with other leaders in the controlled circulation publication and trade show
industries, the Company enjoys attractive EBITDA margins and modest ongoing
capital expenditure requirements. The modest ongoing capital requirements
result in part from the Company's outsourcing of the printing of its trade
publications and the physical operation of its expositions. After giving effect
to the Pro Forma Adjustments, in 1997 the Company's operating cash flow
(defined as EBITDA, less capital expenditures) would have been $53.4 million,
or 21.6% of revenue. In 1997, the Company's capital expenditures were $2.6
million. After giving effect to the Pro Forma Adjustments, the Company's
operating cash flow for the first quarter ended March 31, 1998 would have been
$22.1 million, or 27.8% of revenue. The Company's capital expenditures for the
first quarter ended March 31, 1998 were $1.5 million.
Experienced and Incentivized Management Team. The members of Advanstar's
senior management team have an average of over 15 years of industry experience,
with established track records in delivering revenue and profit growth,
developing new products, penetrating new markets and integrating acquisitions.
The Company's management is led by Robert L. Krakoff, Chairman and Chief
Executive Officer, James M. Alic, Vice Chairman and Ira T. Siegel, Vice
Chairman and Chief Operating Officer. Messrs. Krakoff and Alic joined Advanstar
in July 1996 and Mr. Siegel joined the Company in May 1998. Prior to joining
Advanstar, Mr. Krakoff was Chief Executive Officer of Cahners Publishing and a
Director of its parent company, Reed-Elsevier plc. During Mr. Krakoff's 23-year
tenure, Reed-Elsevier's exhibition business became one of the largest worldwide
exhibition management companies. Prior to joining Advanstar, Mr. Alic served as
Vice President and Controller of IBM Corporation, and prior thereto was the
Chairman of Reed Exhibition Companies. Prior to joining the Company, Mr. Siegel
was President and Chief Executive Officer of LEXIS-NEXIS, a unit of Reed
Elsevier, Inc. and prior thereto was President and Chief Executive Officer of
Reed Reference Publishing, another division of Reed Elsevier, Inc. Messrs.
Krakoff and Alic, collectively, have invested $2.0 million in the business.
Messrs. Krakoff and Alic and other members of the Company's management, subject
to vesting, have direct or indirect interests in approximately 15% of Holdings'
common stock (the "Common Stock") on a fully diluted basis.
BUSINESS STRATEGY
The Company's business strategy is to grow profitability by solidifying its
position as a leading provider of comprehensive "one-stop" business-to-business
marketing communications solutions. The Company plans to achieve its strategic
objectives by (i) expanding its product and service offerings within each of
its industry sectors to obtain a larger share of its customers' marketing
expenditures, (ii) selectively entering new industry sectors and (iii)
leveraging the strengths of its centralized administrative and production
operations.
3
<PAGE>
Expand Product Offerings. The Company plans to "fill-in" its product and
service offerings within its existing industry sectors through selective
acquisitions and joint ventures, strategic new product launches and
international expansion.
. Selective Acquisitions and Joint Ventures. The Company intends to
continue to engage in strategic acquisitions and joint ventures within
its existing industry sectors. The Company believes it can improve its
overall competitive position through such acquisitions by (i) applying
its extensive industry experience to enhancing the performance of newly
acquired businesses, (ii) integrating acquisitions and joint ventures
into its cost-efficient infrastructure, (iii) cross-selling new products
and services with existing products and services and (iv) using new
products and services to increase visibility within its markets. Since
the HFCP III Acquisition and excluding the MAGIC Acquisition, Advanstar
has completed or expects to complete 19 acquisitions and joint ventures
for purchase prices aggregating approximately $130.8 million in the
information technology, telecommunications, beauty, travel,
entertainment and call center sectors.
. Strategic New Product Launches. The Company has successfully developed
new products within its existing industry clusters and will continue to
make strategic new product introductions. In 1997, the Company launched
seven magazines and seven expositions and conferences in existing
industry sectors to fill-in its existing product offerings. For example,
in 1997 the Company launched WorldPharm, a pharmaceutical industry
exposition to be held in Philadelphia in 1998, to complement its strong
position in pharmaceutical publishing.
. International Expansion. The Company intends to enhance its position in
international markets by leveraging its widely recognized brands, its
experience in international operations and its current customers' demand
for increased global marketing. The Company currently has operations in
Canada, the United Kingdom, Hong Kong and Brazil and intends to expand
further internationally through the extension of existing products into
new geographic markets, joint ventures with local operating partners and
selective acquisitions. Many of the Company's existing international
products are regional in nature (Pan European, Pan Asian or Pan Latin
American), and future expansion is expected to follow this model. For
example, in mid-1997, building on its existing strength in the U.S. and
Asian telecommunications markets, Advanstar acquired two magazines and
13 conferences serving the Brazilian and Latin American
telecommunications markets and, in early 1998, acquired Telexpo, the
largest Latin American telecommunications trade show.
Selectively Enter New Industry Sectors. The Company will selectively enter
new industry sectors in which it believes it can become a leading participant
and achieve attractive margins. For example, the MAGIC Acquisition presented
Advanstar with an ideal opportunity to enter the U.S. men's apparel market with
critical mass and to increase revenue and reduce expenses by leveraging
Advanstar's extensive trade show experience.
Leverage Cost-Effective Centralized Administrative and Production
Facilities. The Company believes that its organizational structure (i) provides
continuing opportunities to produce attractive margins through centralized
functional cost management, (ii) provides a platform to easily introduce new
titles or expositions based on existing products and (iii) facilitates
integration and cost reductions with respect to acquired titles and
expositions. The Company has a long established and highly efficient
centralized publishing infrastructure in both the U.S. and Europe. The Company
focuses on continually improving its systems and processes to provide
effective, low cost operations in circulation, fulfillment, production and
print and paper vendor management. Similar cost-efficient infrastructures are
being established in Asia and in Latin America. In 1997, a centrally managed
exhibition operations function was established in both the U.S. and Europe to
provide consistency of business process and cost effective delivery of these
services. Centralized support also exists in finance and accounting,
information technology and communications, human resources and strategic
planning.
4
<PAGE>
INDUSTRY OVERVIEW
Trade Publications. Trade publications provide key new product or educational
information to readers and a periodic medium for advertisers to reach highly
targeted and select business audiences throughout the year. Trade publications
are generally supported by advertising and are often circulated free-of-charge.
The most effective and profitable publications are those with readership that
includes a high proportion of the individuals who influence purchasing
decisions in a market niche, while avoiding the expense and inefficiency of
circulating to individuals who are not clearly within the target group.
According to a recent study, the U.S. trade publication industry is expected to
grow at a compound annual growth rate of 5.9% between 1995 and 2000, increasing
from a total market size of approximately $7.7 billion in 1995 (consisting of
approximately $5.9 billion in advertising and approximately $1.8 billion in
subscriptions) to approximately $10.2 billion in 2000 (consisting of
approximately $8.2 billion in advertising and approximately $2.0 billion in
subscriptions).
Expositions and Trade Shows. Expositions and trade shows allow exhibitors a
cost-effective means to showcase and sell products and services and to develop
business relationships with many potential customers in a short time period,
while providing attendees an opportunity to view a broad range of products as
well as to interact with numerous suppliers at once. A 1996 study noted that
the cost of closing a sale with a trade show prospect is less than 50% of the
cost of closing a sale in the field. The number of U.S. expositions grew from
approximately 3,300 events in 1989 to approximately 4,400 events in 1996, a
33.8% increase. The amount of net square feet of U.S. expositions grew 65.9%
between 1989 and 1996, from approximately 270 million net square feet in 1989
to approximately 448 million net square feet in 1996. Attendance at U.S.
expositions has grown from approximately 60 million attendees in 1989 to
approximately 101 million attendees in 1996.
OWNERSHIP
Advanstar was purchased on May 31, 1996 by HFCP III (the "HFCP III
Acquisition"). HFCP III is a private equity investment fund with committed
equity capital of approximately $1.5 billion. HFCP III, with its predecessor
partnerships, is an experienced investor in the media industry, with current or
former investments in companies including Young & Rubicam Inc., Western
Wireless Corporation, Eller Media Company (which has been sold to Clear Channel
Communications, Inc.) and Hoyts Cinemas Limited. To date, HFCP III has invested
$177.0 million of equity in the Company. See "Principal Stockholders."
THE ACQUISITIONS AND REFINANCING
On April 30, 1998, in connection with the Offering, Advanstar acquired MAGIC
for cash consideration of $230.2 million, subject to adjustment based on the
shareholders' equity of MAGIC on the closing date of the MAGIC Acquisition.
MAGIC is a wholly-owned subsidiary of Advanstar, serving as the core asset of
the Company's Retail, Hospitality & Fashion cluster. The Company's fashion
industry sector is managed by Joseph Loggia, MAGIC's former chief executive
officer and current president. Mr. Loggia has entered into a two year
employment agreement with Advanstar and has received options to purchase Common
Stock.
In addition, since June 1, 1997 Advanstar has completed or signed definitive
agreements or letters of intent for 12 other acquisitions or joint ventures
(collectively, the "Other Acquisitions") with purchase prices ranging from
approximately $1.4 million to approximately $17.1 million and aggregating
approximately $77.7 million. The MAGIC Acquisition and the Other Acquisitions
are collectively referred to herein as the "Acquisitions." See "The
Acquisitions and Refinancing."
Additionally, in order to provide greater flexibility in pursuing its growth
strategy, on April 30, 1998 the Company amended (the "Credit Facility
Amendment") its existing senior credit facility (the "Original
5
<PAGE>
Credit Facility" and, as amended, the "Amended Credit Facility") with The Chase
Manhattan Bank, an affiliate of Chase Securities Inc., and a syndicate of
banks, by increasing its borrowing capacity thereunder from $215.0 million
under the Original Credit Facility to $270.0 million under the Amended Credit
Facility. See "Description of Amended Credit Facility." At the same time, HFCP
III also made an additional equity investment (the "HFCP III Equity
Investment") of approximately $70.0 million in the Company.
----------------
The Company was incorporated in New York on January 23, 1987 under the name
HBJ Publications, Inc. The Company's name was changed to Edgell Communications,
Inc. on January 12, 1988 and to Advanstar Communications Inc. on January 27,
1992. The Company's executive offices are located at 7500 Old Oak Boulevard,
Cleveland, Ohio 44130-3369. The Company's telephone number at such address is
(440) 243-8100.
6
<PAGE>
THE OFFERING
Original Notes.................... The Original Notes were sold by the Company
on April 30, 1998 to the Initial Purchasers
pursuant to a Purchase Agreement dated
April 27, 1998 (the "Purchase Agreement").
The Initial Purchasers subsequently resold
the Original Notes in the United States to
qualified institutional buyers in reliance
upon Rule 144A and outside the United
States in accordance with Regulation S
under the Securities Act.
Registration Rights Agreement..... Pursuant to the Purchase Agreement, the
Company and the Initial Purchasers entered
into the Registration Rights Agreement,
which granted the holders of the Original
Notes certain exchange and registration
rights. The Exchange Offer is being made
pursuant to the Registration Rights
Agreement, and such exchange rights
terminate upon the consummation of the
Exchange Offer.
THE EXCHANGE OFFER
The Exchange Offer................ $1,000 principal amount of Exchange Notes
will be issued in exchange for each $1,000
principal amount of Original Notes validly
tendered pursuant to the Exchange Offer. As
of the date hereof, $150 million in
aggregate principal amount of Original
Notes are outstanding. The Company will
issue the Exchange Notes to tendering
holders of Original Notes promptly after
the Expiration Date.
Resales........................... Based on interpretations by the staff of
the Commission set forth in no-action
letters issued to third parties, the
Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange
for Original Notes may be offered for
resale, resold and otherwise transferred by
any person receiving such Exchange Notes,
whether or not such person is the holder
(other than any such holder or other person
which is (i) a broker-dealer that receives
Exchange Notes for its own account in
exchange for Original Notes, where such
Original Notes were acquired by such
broker-dealer as a result of market-making
or other trading activities, or (ii) an
"affiliate" of the Company within the
meaning of Rule 405 under the Securities
Act (collectively, "Restricted Holders"))
without compliance with the registration
and prospectus delivery provisions of the
Securities Act, provided that (a) such
Exchange Notes are acquired in the ordinary
course of business of
7
<PAGE>
such holder or other person (b) neither
such holder nor such other person is
engaged in or intends to engage in a
distribution of such Exchange Notes and (c)
neither such holder nor other person has
any arrangement or understanding with any
person to participate in the distribution
of such Exchange Notes. See Morgan Stanley
& Co. Incorporated, SEC No-Action Letter
(available June 5, 1991) and Exxon Capital
Holdings Corporation, SEC No-Action Letter
(available May 13, 1988). Each broker or
dealer that receives Exchange Notes for its
own account in exchange for Original Notes,
where such Original Notes were acquired by
such broker or dealer as a result of
market-making or other activities, must
acknowledge that it will deliver a
Prospectus in connection with any sale of
such Exchange Notes. See "Plan of
Distribution."
Expiration Date................... 5:00 p.m., New York City time, on , 1998,
unless the Exchange Offer is extended, in
which case the term "Expiration Date" means
the latest date and time to which the
Exchange Offer is extended.
Accrued Interest on the Exchange
Notes and Original Notes......... Interest on each Exchange Note will accrue
from the last date on which interest was
paid on the Original Note surrendered in
exchange therefor or, if no interest has
been paid on the Original Note, from the
date of original issuance of such Original
Note. No interest will be paid on the
Original Notes accepted for exchange, and
holders of Original Notes whose Original
Notes are accepted for exchange will be
deemed to have waived the right to receive
any payment in respect of interest on the
Original Notes accrued up to the date of
the issuance of the Exchange Notes. Holders
of Original Notes that are not exchanged
will receive the accrued interest payable
on November 1, 1998 in accordance with the
Indenture. See "The Exchange Offer -- Terms
of the Exchange Offer."
Conditions to the Exchange The Exchange Offer is subject to certain
Offer............................ customary conditions. The conditions are
limited and relate in general to
proceedings which have been instituted or
laws which have been adopted that might
impair the ability of the Company to
proceed with the Exchange Offer. As of the
date of this Prospectus, none of these
events had occurred, and the Company
believes their occurrence to be unlikely.
If any such conditions exist prior to the
Expiration Date, the Company may (a)
8
<PAGE>
refuse to accept any Original Notes and
return all previously tendered Original
Notes, (b) extend the Exchange Offer or (c)
waive such conditions. See "The Exchange
Offer--Certain Conditions to the Exchange
Offer."
Procedures for Tendering Original Each holder of Original Notes wishing to
Notes............................ accept the Exchange Offer must complete,
sign and date the Letter of Transmittal, or
a facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter
of Transmittal, or such facsimile, together
with the Old Notes to be exchanged and any
other required documentation to the
Exchange Agent (as defined) at the address
set forth herein and therein. Tendered
Original Notes, the Letter of Transmittal
and accompanying documents must be received
by the Exchange Agent by 5:00 p.m. New York
City time, on the Expiration Date. See "The
Exchange Offer-- Procedures for Tendering."
By executing the Letter of Transmittal,
each holder will represent to the Company
that, among other things, the Exchange
Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary
course of business of the person receiving
such Exchange Notes, whether or not such
person is the holder, that neither the
holder nor any such other person is engaged
in or intends to engage in a distribution
of the Exchange Notes or has an arrangement
or understanding with any person to
participate in the distribution of such
Exchange Notes, and that neither the holder
nor any such other person is an
"affiliate," as defined under Rule 405 of
the Securities Act, of the Company.
Special Procedures for Beneficial Any beneficial holder whose Original Notes
Holders.......................... are registered in the name of his broker,
dealer, commercial bank, trust company or
other nominee and who wishes to tender in
the Exchange Offer should contact such
registered holder promptly and instruct
such registered holder to tender on his
behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial
holder must, prior to completing and
executing the Letter of Transmittal and
delivering his Original Notes, either make
appropriate arrangements to register
ownership of the Original Notes in such
holder's name or obtain a properly
completed bond power from the registered
holder. The transfer of record ownership
may take considerable time. See "The
Exchange Offer--Procedures for Tendering."
9
<PAGE>
Guaranteed Delivery Procedures.... Holders of Original Notes who wish to
tender their Old Notes and whose Original
Notes are not immediately available or who
cannot deliver their Original Notes and a
properly completed Letter of Transmittal or
any other documents required by the Letter
of Transmittal to the Exchange Agent prior
to the Expiration Date may tender their
Original Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery
Procedures."
Untendered Original Notes......... Following the consummation of the Exchange
Offer, Holders of Original Notes eligible
to participate but who do not tender their
Original notes will not have any further
registration rights and such Original Notes
will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Original
Notes could be adversely affected.
Consequences of Failure to The Original Notes that are not exchanged
Exchange......................... pursuant to the Exchange Offer will remain
outstanding and continue to accrue interest
and will also remain restricted securities.
Accordingly, such Original Notes may be
resold only (i) to the Company, (ii)
pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to some other
exemption from registration under the
Securities Act, (iii) outside the United
States to a foreign person pursuant to the
requirements of Regulation S under the
Securities Act, or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange Offer --
Consequences of Failure to Exchange."
Shelf Registration Statement...... In the event that any changes in law or the
applicable interpretations of the staff of
the Commission do not permit the Company to
effect the Exchange Offer or if the
Exchange Offer is not consummated within
185 days following the original issue of
the Original Notes, or upon the request of
any of the Initial Purchasers under certain
circumstances or if any holder of the
Original Notes is not permitted by
applicable law to participate in the
Exchange Offer or elects to participate in
the Exchange Offer but does not receive
fully tradable Exchange Notes pursuant to
the Exchange Offer, the Company will file a
shelf registration statement with respect
to the resale of the Original Notes (the
"Shelf Registration Statement") and will
use reasonable best efforts to cause the
Shelf Registration Statement to become
effective as soon as practicable after
being filed and to keep the Shelf
Registration Statement effective for up to
two years
10
<PAGE>
from the date the Shelf Registration
Statement is declared effective by the
Commission.
Withdrawal Rights................. Tenders may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Original Notes and
Delivery of Exchange Notes....... Subject to certain conditions, the Company
will accept for exchange any and all
Original Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m.,
New York City time, on the Expiration Date.
The Exchange Notes issued pursuant to the
Exchange Offer will be delivered promptly
after the Expiration Date. See "The
Exchange Offer--Terms of the Exchange
Offer."
Certain United States Federal Tax
Consequences..................... The exchange of Original Notes for Exchange
Notes pursuant to the Exchange Offer should
not be a taxable event for federal income
tax purposes. A holder's holding period for
Exchange Notes should include the holding
period for Original Notes. See "Certain
United States Federal Tax Consequences."
Exchange Agent.................... The Bank of New York is serving as exchange
agent (the "Exchange Agent") in connection
with the Exchange Offer. The mailing
address of the Exchange Agent is The Bank
of New York, 101 Barclay Street, 7E, New
York, NY 10286 Attention: Reorganization
Section. Deliveries by hand or overnight
courier should be addressed to The Bank of
New York, 101 Barclay Street, Corporate
Trust Services Window, Ground Level, New
York, NY 10286 Attention: Reorganization
Section. The facsimile number (for eligible
institutions only) is (212) 571-3080. For
information with respect to the Exchange
Offer, call the Exchange Agent at (212)
815-6333.
Use of Proceeds................... The Company will not receive any proceeds
from the Exchange Offer. See "Use of
Proceeds." The Company has agreed to bear
the expenses of the Exchange Offer pursuant
to the Registration Rights Agreement. No
underwriter is being used in connection
with the Exchange Offer.
THE EXCHANGE NOTES
General........................... The Exchange Offer constitutes an offer to
exchange $1,000 principal amount of the
Exchange Notes for each $1,000 principal
amount of Original Notes. The Exchange
Notes will be obligations of the Company
11
<PAGE>
evidencing the same indebtedness as the
Original Notes, and will be entitled to the
benefit of the same Indenture. The form and
terms of the Exchange Notes are
substantially the same as the form and
terms of the Original Notes except that (i)
the Exchange Notes have been registered
under the Securities Act and, therefore,
will not bear legends restricting the
transfer thereof, (ii) the Exchange Notes
do not include provisions providing for an
increase in the interest rate in certain
circumstances relating to the timing of the
Exchange Offer and (iii) the holders of
Exchange Notes will not be entitled to
certain rights under the Registration
Rights Agreement, which rights will
terminate when the Exchange Offer is
consummated. See "Description of Notes."
Issuer............................ Advanstar Communications Inc.
Securities Offered................ $150,000,000 principal amount of 9 1/4%
Senior Subordinated Notes due 2008.
Maturity.......................... May 1, 2008
Interest Payment Dates............ May 1 and November 1 of each year,
commencing November 1, 1998.
Freely Transferable............... The Exchange Notes will be freely
transferable under the Securities Act by
holders who are not Restricted Holders.
Restricted Holders are restricted from
transferring the Exchange Notes without
compliance with the registration and
prospectus delivery requirements of the
Securities Act. The Exchange Notes will be
identical in all material respects
(including interest rate, maturity and
restrictive covenants) to the Original
Notes, with the exception that the Exchange
Notes will be registered under the
Securities Act. See "The Exchange Offer--
Terms of the Exchange Offer."
Public Market..................... The Company does not intend to apply for
listing of the Exchange Notes on any
national securities exchange or for their
quotation on an automated dealer quotation
system. The Initial Purchasers have advised
the Company that they currently intend to
make a market for the Notes. However, they
are not obligated to do so, and any market
making with respect to the Notes may be
discontinued without notice.
Registration Rights............... The holders of Original Notes currently are
entitled to certain registration rights
pursuant to the Registration
12
<PAGE>
Rights Agreement, including the right to
cause the Company to register the Original
Notes under the Securities Act if the
Exchange Offer is not consummated prior to
the Exchange Offer Termination Date (as
defined). See "The Exchange Offer--Certain
Conditions to the Exchange Offer." However,
pursuant to the Registration Rights
Agreement, such registration rights will
expire upon consummation of the Exchange
Offer. Accordingly, holders of Original
Notes who do not exchange their Original
Notes for Exchange Notes in the Exchange
Offer will not be able to reoffer, resell
or otherwise dispose of their Original
Notes unless such Original Notes are
subsequently registered under the
Securities Act or unless an exemption from
the registration requirements of the
Securities Act is available.
Sinking Fund...................... None.
Optional Redemption............... Except as described below, the Company may
not redeem the Notes prior to May 1, 2003.
On or after such date, the Company may
redeem the Notes, in whole or in part, at
any time at the redemption prices set forth
herein, together with accrued and unpaid
interest, if any, to the date of
redemption. In addition, at any time and
from time to time prior to May 1, 2001, the
Company may, subject to certain
requirements, redeem up to 35% of the
original aggregate principal amount of the
Notes with the net cash proceeds of one or
more Equity Offerings (as defined), at a
redemption price equal to 109.250% of the
principal amount thereof, together with
accrued and unpaid interest, if any, to the
date of redemption, provided that at least
65% of the original aggregate principal
amount of the Notes remains outstanding
immediately after each such redemption. See
"Description of Notes--Optional
Redemption."
Change of Control................. Upon the occurrence of a Change of Control,
the Company will have the option, at any
time prior to May 1, 2003, to redeem the
Notes, in whole but not in part, at a
redemption price equal to 100% of the
aggregate principal amount thereof plus the
Applicable Premium, together with accrued
and unpaid interest, if any, to the date of
redemption. Upon the occurrence of a Change
of Control, if the Company does not so
redeem the Notes or if a Change of Control
occurs after May 1, 2003, the Company will
be required to make an offer to
13
<PAGE>
purchase the Notes at a price equal to 101%
of the principal amount thereof, together
with accrued and unpaid interest, if any,
to the date of repurchase.
Guarantees........................ The Notes will be fully and unconditionally
guaranteed on an unsecured, senior
subordinated basis by all current and
future domestic Restricted Subsidiaries
(respectively, the "Subsidiary Guarantees"
and the "Subsidiary Guarantors"), and by
Holdings. The Guarantors will also
guarantee the Amended Credit Facility. In
addition, the Amended Credit Facility is
secured by pledges of all of the capital
stock of the Company and the Subsidiary
Guarantors and security interests in
substantially all other tangible and
intangible assets of the Company and the
Subsidiary Guarantors. See "Description of
Notes--Guarantees" and "Description of
Amended Credit Facility."
Ranking........................... The Notes will be unsecured and will be
subordinated in right of payment to all
existing and future Senior Indebtedness of
the Company. The Notes will rank pari passu
with all future Senior Subordinated
Indebtedness of the Company and will rank
senior to all future Subordinated
Obligations of the Company. The Note
Guarantees will be unsecured and will be
subordinated in right of payment to all
existing and future Subordinated
Obligations of the Guarantors. As of
December 31, 1997, after giving effect to
the Pro Forma Adjustments, (i) the
aggregate amount of the Company's
outstanding Senior Indebtedness would have
been approximately $210.0 million
(exclusive of unused commitments),
substantially all of which would have been
secured Indebtedness and would have been
guaranteed by all of the Company's domestic
subsidiaries and by Holdings, (ii) the
Company would have had no Senior
Subordinated Indebtedness (other than the
Notes) and no indebtedness that is
subordinate or junior in right of payment
to the Notes and (iii) the Company's
subsidiaries would have had no outstanding
Indebtedness (excluding guarantees of the
Company's indebtedness). See "Description
of Amended Credit Facility" and
"Description of Notes."
Restrictive Covenants............. The Indenture will limit, among other
things; (i) the incurrence of additional
indebtedness by the Company and its
Restricted Subsidiaries; (ii) the payment
of dividends on, and redemption or
repurchase of, capital stock of the Company
and its Restricted Subsidiaries and the
redemption of certain Subordinated
Obligations of the Company and its
14
<PAGE>
Restricted Securities; (iii) certain other
restricted payments, including investments;
(iv) sales of assets; (v) certain
transactions with affiliates; (vi) the
creation of liens; and (vii)
consolidations, mergers and transfers of
all or substantially all of the Company's
assets. The Indenture will also prohibit
certain restrictions on distributions from
Restricted Subsidiaries. However, all of
these limitations and prohibitions are
subject to a number of important
qualifications and exceptions. See
"Description of Notes--Certain Covenants."
RISK FACTORS
Prospective purchasers of the Notes should carefully consider all the
information set forth in this Prospectus and, in particular, should evaluate
the specific factors under "Risk Factors."
15
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following table sets forth summary unaudited pro forma financial data as
of and for the three month period ended March 31, 1998 for Advanstar, MAGIC and
the other Acquisitions. The summary pro forma financial data has been derived
from, and should be read in conjunction with, the data contained under the
caption "Unaudited Pro Forma Combined Financial Information" and the other
financial information and notes thereto contained herein. The unaudited pro
forma combined information is not designed to represent and does not represent
what the Company's results of operations actually would have been had the
relevant transactions been completed as of the dates indicated, or to project
the Company's results of operations for any future period.
<TABLE>
<CAPTION>
OTHER PRO FORMA
ADVANSTAR(1) MAGIC(2) ACQUISITIONS(3) ADJUSTMENTS PRO FORMA
------------ -------- --------------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $ 55,748 $20,259 $3,364 $ 257 (4) $ 79,628
========= ======= ====== ======== =========
Gross profit............ $ 18,853 $14,004 $1,062 $ 257 $ 34,176
General and administra-
tive expenses......... 7,900 1,756 1,044 (85)(5) 10,615
Depreciation and amor-
tization.............. 6,347 123 -- 2,543 (6) 9,013
--------- ------- ------ -------- ---------
Operating income
(loss)................. 4,606 12,125 (7) 18 (2,201) 14,548
Interest income (ex-
pense), net............ (3,814) 151 -- (4,070)(8) (7,733)
Other, net.............. 14 -- -- 14
--------- ------- ------ -------- ---------
Income (loss) before in-
come taxes............. 778 12,276 18 (6,270) 6,802
Provision for income
taxes.................. 54 4,465 -- (4,419)(9) 100
--------- ------- ------ -------- ---------
Net income (loss)....... $ 724 $ 7,811 $ 18 $ (1,851) $ 6,702
========= ======= ====== ======== =========
Net income per share,
basic and diluted...... $ 0.72 $ -- $ -- $ $ 6.70
========= ======= ====== ======== =========
Weighted average common
stock outstanding,
basic and diluted...... 1,000,000 -- -- 1,000,000
OTHER FINANCIAL DATA:
EBITDA(10).............. $ 10,953 $12,248 $ 18 $ 342 (7) $ 23,561
EBITDA margin........... 19.6% 60.5% 0.5% 29.6%
Depreciation and amorti-
zation................. $ 6,347 $ 123 $ -- $ 2,543 $ 9,013
Capital expenditures.... 1,424 55 -- 1,479
Ratio of EBITDA to in-
terest expense(11)..... -- -- -- 3.0x
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $ 337,864 $22,337 $3,665 $225,747(12) $ 589,613
Long-term debt,
including current
maturities............. 186,999 -- -- 172,614 359,613
Total shareholders' eq-
uity (deficit)......... 90,290 12,610 (264) 53,133(13) 155,769
</TABLE>
- --------
(1) Represents the results of operations for Advanstar for the three month
period ended March 31, 1998.
(2) Represent the results of operations for MAGIC for the three month period
ended March 31, 1998.
(3) Represents the aggregate results of operations for the three month period
ended March 31, 1998 for the Other Acquisitions. See "The Acquisitions and
Refinancing--Other Acquisitions." Also includes the elimination of
operating results of a probable divestiture, for consideration of
approximately $4.0 million, of a trade publication.
(4) Represents the elimination of related party discounts that will not recur
following the MAGIC Acquisition.
(5) Represents the elimination of director fees that will not recur following
the MAGIC Acquisition.
(6) Represents incremental amortization of goodwill arising from the
Acquisitions (based on a preliminary allocation of aggregate purchase
price) and incremental amortization of intangibles resulting from deferred
financing costs. The incremental goodwill is being amortized on a straight
line basis over periods ranging from 20-30 years. The deferred financing
costs are amortized over the lives of the related debt instruments (5.5-10
years).
(7) Excludes a nonrecurring compensation expense of approximately $6.5 million
related to the MAGIC Acquisition.
(8) Represents incremental interest expense arising from the Offering
(including amortization of original issue discount on the Notes) and
incremental interest expense on additional borrowings under the Amended
Credit Facility.
(9) A tax provision has not been reflected for income before income taxes due
to the Company's net operating loss carryforwards. The remaining income tax
provision represents taxes related to certain state taxes and the Company's
U.K. subsidiary.
(10) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(11) Calculated using pro forma interest expense of $7.8 million.
(12) Reflects the aggregate purchase prices for the Acquisitions and is net of
a divestiture, for consideration of approximately $4.0 million, of a trade
publication.
(13) Represents the HFCP III Equity Investment ($70,000), net of the
elimination of the capital in excess of par value of acquired entities
($947), the elimination of historical accumulated earnings of acquired
entities ($11,399) and the write-off of previously capitalized deferred
financing costs ($4,521).
16
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF ADVANSTAR AND THE
PREDECESSOR
The historical consolidated financial and other data for the year ended
December 31, 1995 and the five months ended May 31, 1996 are derived from the
audited consolidated financial statements and notes thereto of the Predecessor
for such periods. The consolidated financial and other data of Advanstar for
the seven months ended December 31, 1996 and the year ended December 31, 1997
are derived from the audited consolidated financial statements and notes
thereto of Advanstar included elsewhere herein. The financial and other data
for the combined year ended December 31, 1996 have been derived from the
audited consolidated financial statements of the Predecessor and Advanstar and
are unaudited. The financial and other data for the three month periods ended
March 31, 1997 and 1998 have been derived from the unaudited condensed
consolidated financial statements of the Company and are unaudited. Results of
operations for the three month periods ended March 31, 1997 and 1998 are not
necessarily indicative of the results that can be expected for future periods
or the entire year. The information presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Conditions
and Results of Operations," "Selected Historical Consolidated Financial and
Other Data of Advanstar and the Predecessor" and the consolidated financial
statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR ADVANSTAR
------------------------- ------------------------------------------------------------
3 MONTHS ENDED
MARCH 31,
---------------------
5 MONTHS 7 MONTHS COMBINED
DECEMBER 31, ENDED ENDED DECEMBER 31, DECEMBER 31,
1995 MAY 31, 1996 DEC 31, 1996 1996(1) 1997 1997 1998
------------ ------------ ------------ ------------ ------------ --------- ----------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue............. $ 145,300 $ 68,286 $ 82,720 $ 151,006 $ 187,656 $ 49,663 $ 55,748
========== ========= ========= ========== ========== ========= ==========
Gross profit............ $ 48,358 $ 24,459 $ 29,227 $ 53,686 $ 61,553 $ 16,841 $ 18,853
General and
administrative
expenses.............. 27,152 11,462 17,395 28,857 30,714 7,808 8,595
Amortization(2)........ 4,801 1,588 13,171 14,759 24,326 5,432 5,652
---------- --------- --------- ---------- ---------- --------- ----------
Operating income
(loss)................. 16,405 11,409 (1,339) 10,070 6,513 3,601 4,606
Interest expense, net.. 19,613 6,963 7,511 14,474 15,117 3,678 3,814
Other, net............. (2,230) (23) 488 465 (292) (58) 14
Provision for income
taxes................. 16 13 1,076 1,089 583 911 54
---------- --------- --------- ---------- ---------- --------- ----------
Net income (loss)....... $ (994) $ 4,456 $ (10,414) $ (5,958) $ (8,895) $ (930) $ 724
========== ========= ========= ========== ========== ========= ==========
Net Income (loss) per
share, basic and dilut-
ed..................... $ (0.99) $ (4.46) $ (10.41) $ (5.96) $ (8.90) $ (0.93) $ 0.72
========== ========= ========= ========== ========== ========= ==========
Weighted average common
stock outstanding, ba-
sic and diluted........ 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
OTHER FINANCIAL DATA:
EBITDA(3)............... $ 24,611 $ 14,428 $ 13,781 $ 28,209 $ 34,039 $ 9,812 $ 10,953
EBITDA margin........... 16.9% 21.1% 16.7% 18.7% 18.1% 19.8% 19.6%
Depreciation and
amortization........... $ 8,206 $ 3,019 $ 15,120 $ 18,139 $ 27,526 $ 6,211 $ 6,347
Capital expenditures.... 1,451 365 780 1,145 2,260 777 1,424
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets............ $ 79,098 $ 277,173 $ 298,497 $ 301,884 $ 337,864
Working capital
(deficit)(4)........... (11,129) (11,572) (12,034) (9,417) (11,656)
Long-term debt,
including current
maturities............. 173,058 151,000 164,223 168,600 186,999
Total shareholder's
equity (deficit)....... (128,303) 86,839 89,734 95,900 90,290
SELECTED STATISTICAL DA-
TA:
Publications:
Number of
publications.......... 95 96 95 93 100
Number of advertising
pages................. 22,939 23,876 25,457 5,290 5,666
Total publishing
revenue............... $ 109,167 $ 114,587 $ 126,048 27,686 29,761
Expositions:
Number of expositions
and conferences....... 56 56 93 64 99
Square feet of
expositions and
conferences........... 1,506,900 1,513,500 1,823,400 752,400 1,027,204
Total exposition reve-
nue................... $ 36,133 $ 36,419 $ 61,608 $ 21,977 $ 25,987
</TABLE>
- -------
(1) Combines the five months ended May 31, 1996 of the Predecessor with the
seven months ended December 31, 1996 of Advanstar. On May 31, 1996, the
HFCP III Acquisition was consummated. Accordingly, certain information
provided herein for the year ended December 31, 1995 and the five months
ended May 31, 1996 is not comparable to the statement of operations data of
Advanstar due to the effects of certain purchase accounting adjustments and
the financing of the HFCP III Acquisition. Operating and other financial
data for the Predecessor for the five months ended May 31, 1996 have been
combined for presentation purposes with the operating and other financial
data of Advanstar for the seven months ended December 31, 1996, without
giving effect to purchase accounting or the impact of the financing of the
HFCP III Acquisition and is not in accordance with GAAP.
17
<PAGE>
(2) Includes identifiable intangibles such as advertiser, exhibitor and
circulation lists, assembled work force and other intangibles as well as
goodwill. Amortization increased for the seven months ended December 31,
1996 and the year ended December 31, 1997 as a result of the HFCP III
Acquisition completed in May 1996. Purchase prices in excess of fair market
value of tangible and intangible assets acquired is allocated to goodwill.
Intangibles are being amortized over lives ranging from 5 to 23 years.
(3) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(4) Working capital is comprised of total current assets, excluding cash and
cash equivalents, less total current liabilities and excluding current
maturities of long-term debt. Working capital for Advanstar is negative due
to the impact of deferred revenue from expositions which are billed and
collected as deposits up to six months in advance of the respective
exposition. Consequently, expositions carry little or no accounts
receivable.
18
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF MAGIC
The following table sets forth summary financial and other data of MAGIC for
the three years ended May 31, 1995, 1996 and 1997 and the nine months ended
February 28, 1998 which have been derived from MAGIC's audited financial
statements and notes thereto for those years and periods. Summary financial and
other data of MAGIC for the nine months ended February 28, 1997 is unaudited
and is provided for comparative purposes only. Results for the nine months
ended February 28, 1998 are not necessarily indicative of results that may be
expected for the entire year. The information presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Selected Historical Consolidated Financial and
Other Data of MAGIC" and the historical financial statements and notes thereto
and the other financial information appearing elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEAR ENDED MAY 31, FEBRUARY 28,
---------------------------- -------------------
1995 1996 1997 1997 1998
-------- -------- -------- ----------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DA-
TA:
Net revenue................ $ 21,734 $ 26,608 $ 31,153 $31,004 $38,695
Direct costs............... 10,067 13,037 14,491 14,180 14,562
-------- -------- -------- ------- -------
Gross profit............... 11,667 13,571 16,662 16,824 24,133
General and administrative
expenses.................. 3,423 3,109 4,304 2,666 3,262
Profit participation....... 289 574 355 378 365
-------- -------- -------- ------- -------
Income from operations..... 7,955 9,888 12,003 13,780 20,506
Interest income............ 677 987 1,195 843 654
Income tax provision....... 3,089 3,965 4,806 5,301 7,697
-------- -------- -------- ------- -------
Net income................. $ 5,543 $ 6,910 $ 8,392 $ 9,322 $13,463
======== ======== ======== ======= =======
OTHER FINANCIAL DATA:
EBITDA(1).................. $ 8,414 $ 10,171 $ 12,247 $14,057 $20,718
EBITDA margin.............. 38.7% 38.2% 39.3% 45.3% 53.5%
Depreciation and amortiza-
tion...................... $ 459 $ 283 $ 244 $ 277 $ 212
Capital expenditures....... 336 120 386 444 93
BALANCE SHEET DATA (AT END
OF PERIOD):
Total assets............... $ 20,691 $25,014 $ 29,983 $28,316 $24,361
Working capital(2)......... (7,792) (5,066) (191) (5,321) (8,117)
Total debt................. -- -- -- -- --
Shareholders' equity....... 7,407 11,425 18,360 19,320 12,873
</TABLE>
- --------
(1) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(2) Working capital is comprised of total current assets, excluding cash and
cash equivalents, less total current liabilities and excluding current
maturities of long-term debt. Working capital for MAGIC is negative due to
the impact of deferred revenue from expositions which are billed and
collected as deposits up to six months in advance of the respective
exposition. Consequently, expositions carry little or no accounts
receivable.
19
<PAGE>
RISK FACTORS
Prior to making an investment decision, prospective investors should
carefully consider, together with the other information included in this
Prospectus, the following risk factors. This Prospectus contains forward
looking statements. These statements are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
As of March 31, 1998, after giving effect to the Pro Forma Adjustments, the
Company would have had approximately $360.0 million of outstanding
Indebtedness, which would have represented 70.0% of total capitalization. For
the year ended December 31, 1997, the Company's pro forma annual interest
payments due on such Indebtedness would have been approximately $31.1 million,
and the Company's pro forma ratio of EBITDA to interest expense would have
been 1.8x. In addition, after giving effect to the Pro Forma Adjustments, the
Company would have had $60.0 million available under the Amended Credit
Facility. Although the Company's cash flow from operations has been sufficient
to meet its debt service obligations in the past, there can be no assurance
that the Company's operating results will continue to be sufficient for the
Company to meet its obligations. See "Unaudited Pro Forma Combined Financial
Information," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing for acquisitions, capital
expenditures, working capital or general corporate purposes may be impaired in
the future; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of principal of and interest on
the Notes and the borrowings under the Amended Credit Facility, thereby
reducing the funds available to the Company for its operations and other
purposes; (iii) certain of the Company's borrowings are and will continue to
be at variable rates of interest, which exposes the Company to the risk of
increased interest rates; (iv) the indebtedness outstanding under the Amended
Credit Facility is secured by the capital stock of the Company and its
subsidiaries and will mature prior to the Notes; and (v) the Company may be
substantially more leveraged than certain of its competitors, which may place
it at a relative competitive disadvantage and make it more vulnerable to
changing market conditions and regulations. See "Description of Amended Credit
Facility" and "Description of Notes."
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness will depend on its financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and to certain financial, business and other factors beyond its
control. If the Company's cash flow and capital resources are insufficient to
fund its debt service obligations, the Company may be forced to sell assets,
obtain additional equity capital or restructure its debt. There can be no
assurance that the Company's cash flow and capital resources will be
sufficient for payment of its indebtedness in the future. In the absence of
such operating results and resources, the Company could face substantial
liquidity problems and might be required to dispose of material assets or
operations to meet its debt service and other obligations, and there can be no
assurance as to the timing of such sales or the adequacy of the proceeds which
the Company could realize therefrom. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of Amended Credit Facility."
RESTRICTIONS IMPOSED BY AMENDED CREDIT FACILITY
The Amended Credit Facility contains a number of covenants that, among other
things, restrict the ability of the Company to incur additional indebtedness,
pay dividends, prepay subordinated
20
<PAGE>
indebtedness such as the Notes, dispose of certain assets, enter into sale and
leaseback transactions, create liens, make capital expenditures and make
certain investments or acquisitions and otherwise restrict corporate
activities. In addition, under the Amended Credit Facility, the Company is
required to satisfy specified financial covenants, including cash flow to
total debt, interest coverage and consolidated tangible net worth tests. The
ability of the Company to comply with such provisions may be affected by
events beyond the Company's control. The breach of any of these covenants
could result in a default under the Amended Credit Facility. In the event of
any such default, depending on the actions taken by the lenders under the
Amended Credit Facility, the Company could be prohibited from making any
payments on the Notes. In addition, such lenders could elect to declare all
amounts borrowed under the Amended Credit Facility, together with accrued
interest, to be due and payable. The Amended Credit Facility is secured by,
among other things, the capital stock of the Company and its subsidiaries, and
if the Company were unable to repay such borrowings, the Banks could proceed
against their collateral. If the lenders or the holders of any other secured
indebtedness were to foreclose on the collateral securing the Company's
obligations to them, it is possible that there would be insufficient assets
remaining after satisfaction in full of all such indebtedness to satisfy in
full the claims of the holders of the Notes. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," "Description of Amended Credit Facility" and "Description
of Notes."
SUBORDINATION; UNSECURED STATUS OF THE NOTES AND THE GUARANTEES
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes will be subordinated to the prior
payment in full of all existing and future Senior Indebtedness of the Company,
including all amounts owing under the Amended Credit Facility. As of March 31,
1998, after giving effect to the Pro Forma Adjustments, the aggregate amount
of Senior Indebtedness of the Company would have been approximately $210.0
million (excluding unused commitments), all of which would have been secured.
Consequently, in the event of a bankruptcy, liquidation, dissolution,
reorganization or similar proceedings with respect to the Company, assets of
the Company will be available to pay obligations on the Notes only after
Senior Indebtedness has been paid in full, and there can be no assurance that
there will be sufficient assets to pay amounts due on all or any of the Notes.
The Notes will be unsecured and will be subordinated in right of payment to
all existing and future Senior Indebtedness of the Company. The Notes will
rank pari passu with any future Senior Subordinated Indebtedness of the
Company and will rank senior to all Subordinated Obligations of the Company.
The Note Guarantees will be unsecured, senior subordinated obligations of the
Guarantors, subordinated in right of payment to all existing and future Senior
Indebtedness of the Guarantors, including the guarantees of Indebtedness under
the Amended Credit Facility. As of March 31, 1998, after giving effect to the
Pro Forma Adjustments: (i) the outstanding Senior Indebtedness of the Company
would have been $210.0 million (exclusive of unused commitments), all of which
would have been secured; (ii) the Company would have had no Senior
Subordinated Indebtedness outstanding other than the Notes and no Subordinated
Obligations; (iii) the outstanding Senior Indebtedness of the Guarantors,
consisting entirely of guarantees of the Amended Credit Facility, would have
been $210.0 million, all of which would have been secured; and (iv) the
Guarantors would have had no outstanding Senior Subordinated Indebtedness
other than the Guarantees and no outstanding Subordinated Obligations. See
"Description of Notes--Ranking" and "--Guarantees."
The Indenture permits the Company and the Subsidiary Guarantors to incur
certain secured indebtedness, including indebtedness under the Amended Credit
Facility, which will be secured by a lien on substantially all of the assets
of the Company and the Guarantors. The Notes and the Guarantees are unsecured
and therefore do not have the benefit of such collateral. Accordingly, if an
event of default occurs under the Amended Credit Facility, the lenders
thereunder may foreclose upon such collateral to the exclusion of the holders
of the Notes, notwithstanding the existence of an event
21
<PAGE>
of default with respect to the Notes. In such event, such assets would first
be used to repay in full amounts outstanding under the Amended Credit
Facility, resulting in all or a portion of the Company's assets being
unavailable to satisfy the claims of the holders of Notes and other unsecured
Indebtedness.
FRAUDULENT TRANSFER CONSIDERATIONS
The incurrence of indebtedness (such as the Notes) is subject to review
under relevant federal and state fraudulent conveyance and similar statutes in
a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors
of the Company. Under these statutes, if a court were to find that obligations
(such as the Notes) were incurred with the intent of hindering, delaying or
defrauding present or future creditors, that the Company received less than a
reasonably equivalent value or fair consideration for those obligations and,
at the time of the incurrence of the obligations the obligor either (i) was
insolvent or rendered insolvent by reason thereof, (ii) was engaged or was
about to engage in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital or (iii) intended
to or believed that it would incur debts beyond its ability to pay such debts
as they matured or became due, such court could void or subordinate the
obligations in question.
The measure of insolvency for purposes of a fraudulent conveyance claim will
vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent a particular time if the sum
of its debts at that time is greater than the then fair saleable value of its
assets or if the fair saleable value of its assets at that time is less than
the amount that would be required to pay its probable liability on its
existing debts as they become absolute and mature. The Company believes that
it is (i) not insolvent, (ii) in possession of sufficient capital to run its
business effectively and (iii) incurring debts within its ability to pay as
the same mature or become due.
In addition, the Subsidiary Guarantees may be subject to review under
relevant federal and state fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
any of the Subsidiary Guarantors. In such a case, the analysis set forth above
would generally apply, except that the Subsidiary Guarantees could also be
subject to the claim that, since the Subsidiary Guarantees were incurred for
the benefit of the Company (and only indirectly for the benefit of the
Subsidiary Guarantors), the obligations of the Subsidiary Guarantors
thereunder were incurred for less than reasonably equivalent value of fair
consideration. A court could void any of the Subsidiary Guarantors'
obligations under the Subsidiary Guarantees, subordinate the Subsidiary
Guarantees to other indebtedness of a Subsidiary Guarantor or take other
action detrimental to the holders of the Notes.
POSSIBLE UNENFORCEABILITY OF SUBSIDIARY GUARANTEES
The Company derives certain of its operating income from its subsidiaries.
The holders of the Notes will have no direct claim against such subsidiaries
other than a claim created by one or more of the Note Guarantees, which may
themselves be subject to legal challenge in a bankruptcy or reorganization
case or a lawsuit by or on behalf of creditors of a Subsidiary Guarantor. See
"--Fraudulent Transfer Considerations." If such a challenge were upheld, such
Note Guarantees would be invalid and unenforceable. To the extent that any of
such Note Guarantees are not enforceable, the rights of the holders of the
Notes to participate in any distribution of assets of any Subsidiary Guarantor
upon liquidation, bankruptcy, reorganization or otherwise will, as is the case
with other unsecured creditors of the Company, be subject to prior claims of
creditors of that Subsidiary Guarantor. The Company must rely in part upon
distributions from its subsidiaries to generate the funds necessary to meet
its obligations, including the payment of principal of and interest on the
Notes. The Indenture contains covenants that restrict the ability of the
Company's subsidiaries to enter into any agreement limiting distributions and
transfers, including dividends. However, the ability of the
22
<PAGE>
Company's subsidiaries to make distributions may be restricted by among other
things, applicable state corporate laws and other laws and regulations or by
terms of agreements to which they are or may become a party. In addition,
there can be no assurance that such distributions will be adequate to fund the
interest and principal payments on the Amended Credit Facility and the Notes
when due. See "Description of Notes."
CHANGE OF CONTROL
Upon a Change of Control, holders of the Notes will have the right to
require the Company to repurchase all or any part of such holders' Notes at a
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. The events that constitute a
Change of Control under the Notes will also constitute a default under the
Amended Credit Facility, which will prohibit the purchase of the Notes by the
Company in the event of certain Change of Control events unless and until such
time as the Company's indebtedness under the Amended Credit Facility is repaid
in full. There can be no assurance that the Company would have sufficient
financial resources available to satisfy all of its obligations under the
Amended Credit Facility and the Notes in the event of a Change of Control. The
Company's failure to purchase the Notes would result in a default under the
Indenture and under the Amended Credit Facility, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Description of Amended Credit Facility" and "Description of
Notes--Change of Control."
DEPENDENCE ON DEMAND FOR ADVERTISING
After giving effect to the Pro Forma Adjustments, 46.4% of the Company's
total revenue in 1997 would have been derived from advertising sales. Should a
general economic downturn or a recession in the United States occur in the
future, the Company's advertisers may reduce their advertising budgets. Any
material decline in the demand for advertising could have an adverse effect on
the Company's business, financial condition and results of operations.
DEPENDENCE ON VENUES AND DATES FOR EXPOSITIONS AND CONFERENCES
The success of an exposition or a conference depends in part upon its date
and location. The market for desirable dates and locations is highly
competitive. The Company generally maintains multi-year reservations for its
exposition and conference venues and dates. However, consistent with industry
practice, the Company does not pay for these reservations and the reservations
are not binding on the facility owners until a contract is signed. Contracts
typically guarantee the right to certain venues or dates for only one year and
there can be no assurance that the Company's reservations will lead to signed,
binding contracts with facility owners. In the event that the Company loses
its rights to exposition/conference dates or locations, the profitability and
future prospects of the expositions or conferences affected, and the Company's
overall business, financial condition and results of operations could be
materially and adversely affected. No assurance can be given that the Company
can maintain the date or location of any of its expositions or conferences. In
addition, the fact that exhibitions and conferences are held on pre-scheduled
dates at specific locations could make them vulnerable to events outside of
the Company's control, such as natural catastrophes, labor strikes or
transportation shutdowns.
IMPORTANCE OF MAGIC
Historically, none of the Company's trade shows has individually represented
a significant portion of the Company's exposition revenue. The MAGIC trade
shows, however, would have represented an aggregate of 29.7% of the Company's
pro forma exposition revenue for the year ended December 31, 1997 and 22.1%
and 13.1% of the Company's pro forma EBITDA and pro forma net revenue,
respectively, for the same period. The Company expects that the MAGIC trade
shows will continue to
23
<PAGE>
represent a significant portion of the Company's overall revenue in the
future. Although the Company believes it has a diversified portfolio of
expositions, a significant decline in the performance of one or both of the
February or August MAGIC trade shows could have a material adverse effect on
the Company's business, financial condition and results of operations.
EFFECT OF INCREASE IN PAPER AND POSTAGE COSTS
The price of paper is a significant expense of the Company relating to its
print products and direct mail solicitations. Although the Company has
implemented measures designed to substantially offset historical price
increases, such increases, despite such offsetting measures, could have a
material adverse effect on the Company's business, financial condition and
results of operations. Postage for product distribution and direct mail
solicitation is also a significant expense of the Company. The Company
generally uses the United States Postal Service. Postage costs increase
periodically and can be expected to increase in the future. No assurance can
be given that the Company can pass such cost increases through to its
customers.
EXPANSION RISKS AND IMPACT ON FUTURE OPERATING RESULTS
The Company's objective is to grow through, among other things, strategic
acquisitions. The Company's acquisition strategy entails risks inherent in
assessing the value, strengths, weaknesses, contingent and other liabilities
and potential profitability of acquisition candidates and in integrating the
operations of acquired businesses. There can be no assurance that acquisition
opportunities will be available, that the Company will have access to the
capital required to finance potential acquisitions or that any business
acquired will be integrated successfully or prove profitable. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Additionally, the integration of acquisitions, in particular the
MAGIC Acquisition, requires and will require substantial attention from
management. The diversion of the attention of management, and any difficulties
encountered in the transition process, could have a material adverse impact on
the Company's revenue and operating results. In addition, the process of
integrating the various businesses could cause the interruption of, or a loss
of momentum in, the activities of some or all of these businesses, which could
have a material adverse effect on the Company's business, financial condition
or results of operations. There can be no assurance that the Company will
realize any of the anticipated benefits from the MAGIC Acquisition or any of
the other acquisitions it consummates.
DEPENDENCE ON KEY PERSONNEL
The Company has benefited substantially from the leadership and experience
of its senior management team, and is dependent on their continued services in
order to successfully implement its business strategy. Although the Company
has entered into employment agreements with Robert Krakoff and James Alic,
there can be no assurance that these and other key personnel will continue to
be employed by the Company or that the Company will be able to attract and
retain qualified personnel in the future. Although the Company believes that
it could replace key employees in an orderly fashion should the need arise,
the loss of such key personnel could have a material adverse affect on the
Company's business, financial condition or results of operations. The Company
does not currently maintain key-man life insurance policies on its executive
officers. See "Management."
COMPETITION
Competition for the Company's products and services is highly fragmented,
both by product and geography, and exists at many levels. On a global level,
there are several much larger international firms--such as Reed Elsevier and
United News and Media--which operate in many geographic markets and have broad
product offerings in publishing, expositions and conferences and marketing
services. Many of these competitors are better capitalized and have
substantially greater financial and other resources than the Company. In a few
cases, these firms operate in the same market as the Company.
24
<PAGE>
In general, these large firms are organized and market their products and
services by product and geographic location, not on an integrated basis.
Within each particular industry sector, the Company generally has a large
number of direct and indirect competitors. In some cases, these competitors
operate in several geographic areas. In other cases, they operate in only one
geographic market. In most cases, these competitors are small to medium-sized
corporations. However, in several industries markets such as information
technology and healthcare, there are large competitors focused on a single
industry. In expositions and conferences in particular, there are many not-
for-profit association competitors and, in several countries, the exposition
hall owner and operator may also be a competitor. In any given publishing
marketplace in a particular country, there are typically two to five direct
competitors for both readers and advertisers. Additionally, there are usually
many indirect competitors who define market segments differently and thus may
be alternatives for either the reader or the advertiser. Exposition and
conference competition in each market and country occurs on many levels. There
is seldom any truly direct competitor for a particular event, given the
uniqueness of venue and date. However, given the availability of alternative
venues and the ability to define events for particular market segments and/or
with different strategic positioning, the range of competition for exposition
dollars, sponsorships and show attendees and conferees is extensive. Because
there are few barriers to entry, the Company anticipates that, as the trade
publications and expositions industries evolve, additional competitors with
greater resources than the Company may enter the markets, or particular
segments of the markets, thereby intensifying competition. See "Business--
Competition."
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
The Company's growth strategy includes international expansion. There are
certain risks inherent in doing business in international markets, such as the
uncertainty of product acceptance by different cultures, the risks of
divergent business expectations or cultural incompatibility in establishing
joint ventures with foreign partners, difficulties in staffing and managing
multinational operations, currency fluctuations, changing economic conditions,
state-imposed restrictions on the repatriation of funds and potentially
adverse tax consequences. There can be no assurance that one or more of such
factors will not have a material adverse effect on the Company's future
international operations and, consequently, on the Company's business,
financial condition and results of operations.
ABSENCE OF PUBLIC MARKET
Prior to the Offering, there was no public market for the Notes and there
can be no assurance that such a market for the Notes or the Exchange Notes
will develop or, if such a market develops, as to the liquidity of such
market. The Company does not intend to apply for listing of the Notes or the
Exchange Notes on any securities exchange; however, the Notes are eligible for
trading in the PORTAL market. If the Notes or the Exchange Notes are traded
after their initial issuance, they may trade at a discount from their initial
offering price, depending upon prevailing interest rates, the market for
similar securities, the performance of the Company and certain other factors.
The Company has been advised by the Initial Purchasers that they intend to
make a market in the Notes and the Exchange Notes as permitted by applicable
laws and regulations; however, the Initial Purchasers are not obligated to do
so and any such market making activities may be discontinued at any time
without notice. In addition, such market making activities may be limited
during the Exchange Offer. Until the Company performs its obligations under
the Registration Rights Agreement, the Notes may only be offered or sold
pursuant to an exemption from the registration requirements of the Securities
Act and applicable state securities laws or pursuant to an effective
registration statement under the Securities Act and applicable state
securities laws. See "Transfer Restrictions," "Exchange and Registration
Rights Agreement" and "Plan of Distribution."
25
<PAGE>
CONTROL BY HFCP III
HFCP III owns, directly or indirectly, substantially all of the outstanding
capital stock of Holdings, the parent company of the Company, and can
effectively control the affairs and policies of the Company. There can be no
assurance that the interests of HFCP III will not conflict with the interests
of the holders of the Notes. See "Principal Stockholders."
PROCEDURES FOR TENDER OF ORIGINAL NOTES
The Exchange Notes will be issued in exchange for Original Notes only after
timely receipt by the Exchange Agent of such Original Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Original Notes desiring to tender such
Original Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor the Company is under
any duty to give notification of defects or irregularities with respect to
tenders of Original Notes for exchange. Any holder of Original Notes who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Original
Notes were acquired by such broker-dealer as a result of market-making
activities or any other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. See
"Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES
The Original Notes have not been registered under the Securities Act and are
subject to substantial restrictions on transfer. Original Notes that are not
tendered in exchange for Exchange Notes or are tendered but not accepted will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. The Company does not currently
anticipate that it will register the Original Notes under the Securities Act.
To the extent that Original Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Original
Notes could be adversely affected. See "The Exchange Offer -- Consequences of
Failure to Exchange."
26
<PAGE>
THE ACQUISITIONS AND REFINANCING
The MAGIC Acquisition. On April 30, 1998, Advanstar acquired MAGIC for cash
consideration of $230.2 million, subject to adjustment based on the
shareholders' equity of MAGIC on the closing date of the MAGIC Acquisition,
and MAGIC became a wholly-owned subsidiary of Advanstar, serving as the core
asset of the Company's Retail, Hospitality & Fashion cluster. The Company's
fashion industry sector is managed by Joseph Loggia, MAGIC's former chief
executive officer and current president. Mr. Loggia has entered into a two
year employment agreement with Advanstar and has received options to purchase
Common Stock.
The Other Acquisitions. In addition, since June 1, 1997 Advanstar has
completed or signed definitive agreements or letters of intent for 12 other
acquisitions or joint ventures (collectively, the "Other Acquisitions") with
purchase prices ranging from approximately $1.4 million to approximately $17.1
million and aggregating approximately $77.7 million. The Other Acquisitions
include: (i) the acquisition in June 1997 of Telepress, a Brazilian trade
publication and conference business focused on the Latin American
telecommunications market; (ii) the buyout in November 1997 of a minority
partner, CCI, in Hong Kong, thus creating a wholly-owned publishing platform
in Asia; (iii) the acquisition in February 1998 of Telexpo, a Brazilian
telecommunications exposition; (iv) the joint venture in February 1998 with
the Video Software Dealers Association (the "VSDA") whereby Advanstar became a
50% owner of the VSDA annual convention and trade show, the world's largest
trade event for the home video industry, and the VSDA became a 50% partner in
the Company's East Coast Video Show; (v) the joint venture in February 1998
with Wideband, Inc., a leading publisher in the consumer electronics market
that recently launched Li(C)ense!, a magazine targeting the same industry as
the Company's leading licensing exposition and conference; (vi) the
acquisition in March 1998 of TelEvolution, a call center exposition and
conference in Canada; (vii) the acquisition in March 1998 of Teleprofessional,
a U.S. trade publisher in the call center market; (viii) the acquisition in
May 1998 of SCANTECH, the leading U.S. exposition in the automatic data
capture market; (ix) the acquisition in May 1998 of Applied Business
teleCommunications, producer of the leading expositions and conferences for
the video conferencing and long distance learning industries; (x) the
acquisition in May 1998 of Post, a magazine servicing the post production
activities of the film and television industries; (xi) the execution of a
definitive agreement (scheduled to close in June 1998) to purchase full
ownership rights in, and execution of a long-term sponsorship agreement with
LIMA (the Licensing International Merchandisers Association) for, the
licensing exposition and conference; and (xii) the execution of a letter of
intent for the acquisition (expected June/July 1998) of a U.K. company that
owns a publication that will become part of the Company's Retail, Hospitality
& Fashion cluster.
The Refinancing. Additionally, in order to provide greater flexibility in
pursuing its growth strategy, the Company entered into the Credit Facility
Amendment on April 30, 1998, thereby increasing its borrowing capacity from
$215.0 million under the Original Credit Facility to $270.0 million under the
Amended Credit Facility. See "Description of Amended Credit Facility." HFCP
III also made the HFCP III Equity Investment of approximately $70.0 million on
April 30, 1998.
27
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer pursuant to the
Registration Rights Agreement. No underwriter is being used in connection with
the Exchange Offer.
CAPITALIZATION
The following table sets forth, as of March 31, 1998, (i) the historical
cash and cash equivalents and capitalization of Advanstar and (ii) the cash
and cash equivalents and capitalization of the Company after giving effect to
the Pro Forma Adjustments. This table should be read in conjunction with the
financial statements and notes thereto and other financial information
appearing elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------
ACTUAL PRO FORMA
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................ $ 8,095 $ 7,451
=========== ===========
Long-term debt (including current portion)
Revolving Credit Facility.......................... $ 28,500 $ --
Term loan facility................................. 158,499 210,000
9 1/4% Senior Subordinated Notes .................. -- 150,000
----------- -----------
Total long-term debt............................. 186,999 360,000
----------- -----------
Shareholder's equity:
Common Stock, $.01 par value; 1,500,000 shares
authorized, 1,000,000 shares issued and outstand-
ing.............................................. 10 10
Translation adjustment............................. (125) (125)
Capital in excess of par value..................... 108,990 178,990
Accumulated deficit................................ (18,585) (23,106)
----------- -----------
Total shareholders' equity....................... 90,290 155,769
----------- -----------
Total capitalization............................. $ 277,289 $ 515,769
=========== ===========
</TABLE>
28
<PAGE>
UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION
The unaudited pro forma combined balance sheet as of March 31, 1998 includes
the historical accounts of Advanstar and gives effect to the Acquisitions and
Refinancing and the divestiture of a trade publication as if they had occurred
as of March 31, 1998. The unaudited pro forma combined statements of
operations for the fiscal year ended December 31, 1997 and the three month
period ended March 31, 1998 include the historical operations of Advanstar and
gives effect to the Acquisitions and Refinancing and the divestiture of a
trade publication as if they had occurred on January 1, 1997 and January 1,
1998, respectively. The pro forma adjustments relating to the Acquisitions and
Refinancing together with the elimination of operating results of a
divestiture, for consideration of approximately $4.0 million, of a trade
publication constitute the "Pro Forma Adjustments."
The unaudited pro forma combined financial information, which has been
prepared by the Company's management, has been derived from the historical
statements of operations and balance sheets of Advanstar, MAGIC and the Other
Acquisitions. The Acquisitions will be accounted for under the purchase method
of accounting using the assumptions and adjustments disclosed in the notes to
the unaudited pro forma combined financial information. A preliminary
allocation of the aggregate purchase price has been made based on available
information.
The unaudited pro forma combined financial information is not designed to
represent and does not represent what the Company's results of operations
actually would have been had the aforementioned transactions been completed as
of the dates indicated, or to project the Company's results of operations for
any future period. Results of operations for the three month period ended
March 31, 1998 are not necessarily indicative of the results that can be
expected for future periods or the entire year, principally due to the timing
of certain exposition events. The Pro Forma Adjustments are based on available
historical financial information and should be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and notes thereto and
other financial information appearing elsewhere herein.
29
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
OTHER PRO FORMA
ADVANSTAR MAGIC ACQUISITIONS ADJUSTMENTS PRO FORMA
--------- ------- ------------ ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equiva-
lents................ $ 8,095 $17,390 $ 984 $(19,018)(1) $ 7,451
Receivables, net...... 20,096 -- 2,051 22,147
Deferred income taxes,
prepaid expenses and
other................ 13,066 3,369 374 16,809
-------- ------- ------ -------- --------
Total current as-
sets............... 41,257 20,759 3,409 (19,018) 46,407
Property and equipment,
net of accumulated
depreciation........... 12,847 289 251 13,387
Goodwill and
identifiable intangible
assets, net of
accumulated
amortization........... 283,760 1,289 -- 244,765 (2) 529,814
Other assets............ -- -- 5 5
-------- ------- ------ -------- --------
Total assets........ $337,864 $22,337 $3,665 $225,747 $589,613
======== ======= ====== ======== ========
LIABILITIES AND SHARE-
HOLDERS' EQUITY:
Current liabilities:
Current portion of
long-term debt....... $ 16,249 $ -- $ -- $(13,249)(3) $ 3,000
Accounts payable...... 11,709 6,934 563 19,206
Unearned revenue...... 25,440 890 2,540 28,870
Other accrued liabili-
ties................. 7,669 1,903 826 10,398
-------- ------- ------ -------- --------
Total current lia-
bilities........... 61,067 9,727 3,929 (13,249) 61,474
Long-term debt, net of
current maturities..... 170,750 -- -- 36,250 (3) 207,000
9 1/4% Senior Subordi-
nated Notes ........... -- -- -- 149,613 (3) 149,613
Other noncurrent liabil-
ities.................. 1,801 -- -- 1,801
Minority Interest....... 13,956 -- -- 13,956
-------- ------- ------ -------- --------
Total liabilities... 247,574 9,727 3,929 172,614 433,844
-------- ------- ------ -------- --------
Shareholders' equity:
Common stock.......... 10 -- -- 10
Capital in excess of
par value............ 108,990 128 819 69,053 (4) 178,990
Translation adjust-
ment................. (125) -- -- (125)
Accumulated earnings
(deficit)............ (18,585) 12,482 (1,083) (15,920)(5) (23,106)
-------- ------- ------ -------- --------
Total shareholders'
equity (deficit)... 90,290 12,610 (264) 53,133 155,769
-------- ------- ------ -------- --------
Total liabilities
and shareholders'
equity............. $337,864 $22,337 $3,665 $225,747 $589,613
======== ======= ====== ======== ========
</TABLE>
30
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) Represents the net cash effect of the Offering and the Acquisitions.
(2) The following table sets forth the preliminary allocation of the
aggregate purchase price of the MAGIC Acquisition and the Other
Acquisitions:
<TABLE>
<S> <C>
Historical net book value of assets acquired
MAGIC Acquisition............................................ $ 8,397
Other Acquisitions........................................... (483)
--------
7,914
--------
Excess purchase prices over net assets acquired (allocated to
goodwill and intangible assets)
MAGIC Acquisition............................................ 214,606
Other Acquisitions........................................... 28,073
--------
242,679
--------
Aggregate purchase price....................................... $250,593
========
</TABLE>
Goodwill and intangible assets will be amortized on a straight line basis
over 20-30 years. Pro forma adjustments include the estimated fees and
expenses relating to the Offering ($6,600), net of the write-off of
previously capitalized deferred financing fees ($4,521), plus the reduction
of goodwill by $4.0 million related to the divestiture of a publication.
(3) Represents proceeds from the Offering and incremental borrowings under the
Amended Credit Facility. The Company estimates that it will have current
maturities of $3,000.
(4) Represents the HFCP III Equity Investment ($70,000), net of the
elimination of the capital in excess of par value of acquired entities
($947).
(5) Reflects the following components:
<TABLE>
<S> <C>
Elimination of historical accumulated deficit of acquired enti-
ties........................................................... $11,399
Write-off of previously capitalized deferred financing costs.... 4,521
-------
$15,920
=======
</TABLE>
31
<PAGE>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OTHER PRO FORMA
ADVANSTAR(1) MAGIC(2) ACQUISITIONS(3) ADJUSTMENTS PRO FORMA
------------ -------- --------------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net revenue............. $ 187,656 $32,542 $26,452 $ 600 (4) $ 247,250
========= ======= ======= ======== =========
Gross profit............ $ 61,553 $17,205 $13,603 $ 600 $ 92,961
General and
administrative
expenses............. 27,514 4,832 (10) 5,071 (500)(5) 36,917
Depreciation and
amortization......... 27,526 292 26 10,755 (6) 38,599
--------- ------- ------- -------- ---------
Operating income
(loss)................. 6,513 12,081 8,506 (9,655) 17,445
Interest income (ex-
pense), net............ (15,117) 1,397 (129) (15,626)(7) (29,475)
Other, net.............. 292 3,179 49 -- 3,520
--------- ------- ------- -------- ---------
Income (loss) before in-
come
taxes.................. (8,312) 16,657 8,426 (25,281) (8,510)
Provision for income
taxes.................. 583 5,638 -- (5,638)(8) 583
--------- ------- ------- -------- ---------
Net income (loss)....... $ (8,895) $11,019 $ 8,426 $(19,643) $ (9,093)
========= ======= ======= ======== =========
Net income (loss) per
share, basic and
diluted................ $ (8.90) $ -- $ -- $ $ (9.09)
========= ======= ======= ======== =========
Weighted average common
stock outstanding, ba-
sic and diluted........ 1,000,000 -- -- 1,000,000
OTHER FINANCIAL DATA:
EBITDA(9)............... $ 34,039 $12,373(10) $ 8,532 $ 1,100(10) $ 56,044
EBITDA margin........... 18.1% 38.0% 32.3% 22.7%
Depreciation and amorti-
zation................. $ 27,526 $ 292 $ 26 $ 10,755 $ 38,599
Capital expenditures.... 2,260 318 -- 2,578
Ratio of EBITDA to in-
terest
expense(11)............ -- -- -- 1.8x
</TABLE>
32
<PAGE>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
OTHER PRO FORMA
ADVANSTAR(1) MAGIC(2) ACQUISITIONS(3) ADJUSTMENTS PRO FORMA
------------ -------- --------------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net revenue............. $ 55,748 $20,259 $3,364 $ 257 (4) $ 79,628
========= ======= ====== ======= =========
Gross profit............ $ 18,853 $14,004 $1,062 $ 257 $ 34,176
General and
administrative
expenses............. 7,900 1,756 1,044 (85)(5) 10,615
Depreciation and
amortization......... 6,347 123 -- 2,543 (6) 9,013
--------- ------- ------ ------- ---------
Operating income
(loss)................. 4,606 12,125 (10) 18 (2,201) 14,548
Interest income (ex-
pense), net............ (3,814) 151 -- (4,070)(7) (7,733)
Other, net.............. 14 -- -- -- 14
--------- ------- ------ ------- ---------
Income (loss) before
income taxes........... 778 12,276 18 (6,270) 6,802
Provision for income
taxes.................. 54 4,465 -- (4,419)(8) 100
--------- ------- ------ ------- ---------
Net income (loss)....... $ 724 $ 7,811 $ 18 $(1,851) $ 6,702
========= ======= ====== ======= =========
Net income per share,
basic and diluted...... $ 0.72 $ -- $ -- $ $ 6.70
========= ======= ====== ======= =========
Weighted average common
stock outstanding, ba-
sic and diluted........ 1,000,000 1,000,000
OTHER FINANCIAL DATA:
EBITDA(9)............... $ 10,953 $12,248 $ 18 $ 342 (10) $ 23,561
EBITDA margin........... 19.6% 60.5% 0.5% 29.6%
Depreciation and amorti-
zation................. $ 6,347 $ 123 $ -- $ 2,543 $ 9,013
Capital expenditures.... 1,424 55 -- 1,479
Ratio of EBITDA to
interest expense(11)... -- -- -- 3.0x
</TABLE>
33
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Represents the results of operations for Advanstar for the year ended
December 31, 1997 and the three month period ended March 31, 1998, as
applicable.
(2) Represent the results of operations for MAGIC for the twelve month period
ended December 31, 1997 and the three month period ended March 31, 1998,
as applicable.
(3) Represents the aggregate results of operations for the twelve month
periods ended December 31, 1997 and the three month periods ended March
31, 1998, as applicable, for the Other Acquisitions. See "The Acquisitions
and Refinancing--Other Acquisitions." Also includes the elimination of
operating results of a divestiture, for consideration of approximately
$4.0 million, of a trade publication.
(4) Represents the elimination of related party discounts that will not recur
following the MAGIC Acquisition.
(5) Represents the elimination of director fees that will not recur following
the MAGIC Acquisition.
(6) Represents incremental amortization of goodwill arising from the
Acquisitions (based on preliminary allocations of aggregate purchase
price) and incremental amortization of intangibles resulting from deferred
financing costs. The incremental goodwill is being amortized on a straight
line basis over periods ranging from 20-30 years. The deferred financing
costs are amortized over the lives of the related debt instruments (5.5-10
years).
(7) Represents incremental interest expense arising from the Offering
(including amortization of original issue discount on the Notes) and
incremental interest expense on additional borrowings under the Amended
Credit Facility. Adjustments to interest expense have been calculated as
follows:
<TABLE>
<S> <C>
Senior Subordinated Notes................................ 9.25%
Amended Credit Facility
Revolving Credit Facility.............................. LIBOR plus 2.25%
Tranche A.............................................. LIBOR plus 2.25%
Tranche B.............................................. LIBOR plus 2.50%
</TABLE>
For the purpose of calculating pro forma interest expense, the Company
used LIBOR as of December 31, 1997.
(8) A tax provision has not been reflected for income before income taxes due
to the Company's net operating loss carryforwards. The remaining income
tax provision represents taxes related to certain state taxes and the
Company's U.K. subsidiary.
(9) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(10) Excludes a nonrecurring compensation expense of $6.5 million related to
the MAGIC Acquisition.
(11) Calculated using pro forma interest expense of $31.1 million for the
twelve month period ended December 31, 1997 and $7.8 million for the
three month period ended March 31, 1998.
34
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
OTHER DATA OF ADVANSTAR AND THE PREDECESSOR
The selected historical consolidated financial and other data for the years
ended December 31, 1993, 1994 and 1995 and the five months ended May 31, 1996
are derived from the audited consolidated financial statements and notes
thereto of the Predecessor for such periods. The consolidated financial and
other data of Advanstar for the seven months ended December 31, 1996 and the
year ended December 31, 1997 are derived from the audited consolidated
financial statements and notes thereto of Advanstar included elsewhere herein.
The financial and other data for the combined year ended December 31, 1996
have been derived from the audited consolidated financial statements and notes
thereto of the Predecessor and Advanstar and are unaudited. The financial and
other data for the three month periods ended March 31, 1997 and 1998 have been
derived from the unaudited condensed consolidated financial statements of the
Company and are unaudited. Results of operations for the three month periods
ended March 31, 1997 and 1998 are not necessarily indicative of the results
that can be expected for future periods or the entire year. The information
presented below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
historical consolidated financial statements and notes thereto and the other
financial information appearing elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR ADVANSTAR
--------------------------------------------------- ----------------------------------------
5 MONTHS 7 MONTHS COMBINED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED ENDED DECEMBER 31, DECEMBER 31,
1993 1994 1995 MAY 31, 1996 DEC 31, 1996 1996(1) 1997
------------ ------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net revenue...... $140,082 $141,721 $145,300 $68,286 $ 82,720 $ 151,006 $ 187,656
Production,
selling and
other direct
expenses....... 96,849 107,906 96,942 43,827 53,493 97,320 126,103
-------- -------- -------- ------- --------- --------- ---------
Gross profit..... 43,233 33,815 48,358 24,459 29,227 53,686 61,553
General and
administrative
expenses....... 26,375 27,511 27,152 11,462 17,395 28,857 30,714
Amortization(2).. 44,005 42,808 4,801 1,588 13,171(3) 14,759 24,326
-------- -------- -------- ------- --------- --------- ---------
Operating income
(loss).......... (27,147) (36,504) 16,405 11,409 (1,339) 10,070 6,513
Interest ex-
pense, net..... 17,080 18,034 19,613 6,963 7,511 14,474 15,117
Other, net...... 532 4,363 (2,230) (23) 488 465 (292)
Provision for
income taxes... 14 21 16 13 1,076 1,089 583
-------- -------- -------- ------- --------- --------- ---------
Net income
(loss).......... $(44,773) $(58,922) $ (994) $ 4,456 $ (10,414) $ (5,958) $ (8,895)
======== ======== ======== ======= ========= ========= =========
Net income (loss)
per share, basic
and diluted..... $ (10.41) $ (5.96) $ (8.90)
========= ========= =========
Weighted average
common stock
outstanding, ba-
sic and dilut-
ed.............. 1,000,000 1,000,000 1,000,000
OTHER FINANCIAL
DATA:
Gross profit mar-
gin............. 30.9% 23.9% 33.3% 35.8% 35.3% 35.6% 32.8%
EBITDA(4)........ $ 19,330 $ 9,573 $ 24,611 $14,428 $ 13,781 $ 28,209 $ 34,039
EBITDA margin.... 13.8% 6.75% 16.9% 21.1% 16.7% 18.7% 18.1%
Depreciation and
amortization.... $ 46,477 $ 46,077 $ 8,206 $ 3,019 $ 15,120 $ 18,139 $ 27,526
Capital expendi-
tures........... 4,610 2,530 1,451 365 780 1,145 2,260
Ratio of EBITDA
to interest
expense......... 2.3x
BALANCE SHEET
DATA (AT END OF
PERIOD):
Total assets..... $142,530 $ 95,593 $ 79,098 $ 277,173 $ 298,497
Working capital
(deficit)(5).... (11,477) (15,783) (11,129) (11,572) (12,034)
Long-term debt,
including
current
maturities...... 177,409 185,099 173,058 151,000 164,223
Total
shareholder's
equity
(deficit)....... (68,642) (127,420) (128,303) 86,839 89,734
<CAPTION>
3 MONTHS ENDED
MARCH 31,
---------------------
1997 1998
---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net revenue...... $ 49,663 $ 55,748
Production,
selling and
other direct
expenses....... 32,822 36,895
---------- ----------
Gross profit..... 16,841 18,853
General and
administrative
expenses....... 7,808 8,595
Amortization(2).. 5,432 5,652
---------- ----------
Operating income
(loss).......... 3,601 4,606
Interest ex-
pense, net..... 3,678 3,814
Other, net...... (58) 14
Provision for
income taxes... 911 54
---------- ----------
Net income
(loss).......... $ (930) $ 724
========== ==========
Net income (loss)
per share, basic
and diluted..... $ (0.93) $ 0.72
========== ==========
Weighted average
common stock
outstanding, ba-
sic and dilut-
ed.............. 1,000,000 1,000,000
OTHER FINANCIAL
DATA:
Gross profit mar-
gin............. 33.9% 33.8%
EBITDA(4)........ $ 9,812 $ 10,953
EBITDA margin.... 19.8% 19.6%
Depreciation and
amortization.... $ 6,211 $ 6,347
Capital expendi-
tures........... 777 1,424
Ratio of EBITDA
to interest
expense......... 2.6x 2.8x
BALANCE SHEET
DATA (AT END OF
PERIOD):
Total assets..... $301,884 $ 337,864
Working capital
(deficit)(5).... (9,417) (11,656)
Long-term debt,
including
current
maturities...... 168,600 186,999
Total
shareholder's
equity
(deficit)....... 95,900 90,290
</TABLE>
- -------
(1) Combines the five months ended May 31, 1996 of the Predecessor with the
seven months ended December 31, 1996 of Advanstar. On May 31, 1996, the
HFCP III Acquisition was consummated. Accordingly, certain information
provided herein for the year ended December 31, 1995 and the five months
ended May 31, 1996 is not comparable to the statement of operations data
of Advanstar due to the effects of certain purchase accounting adjustments
and the financing of the HFCP III Acquisition. Operating and other
financial data for the Predecessor for the five months ended May 31, 1996
have been combined for presentation purposes with the operating and other
financial data of Advanstar for the seven months ended December 31, 1996,
without giving effect to purchase accounting or the impact of the
financing of the HFCP III Acquisition and is not in accordance with GAAP.
(2) Amortized assets include identifiable intangibles such as advertiser,
exhibitor and circulation lists, assembled work force and other
intangibles as well as goodwill. Amortization for 1993 and 1994 reflects
the amortization of reorganization value in excess of identifiable assets
as required as a result of the Predecessor's emergence on January 23, 1992
from its prepackaged Chapter 11 filing. The Predecessor recorded $94.4
million of reorganization value in excess of identifiable tangible and
intangible assets and amortized it over three years.
(3) Includes identifiable intangibles such as advertiser, exhibitor and
circulation lists, assembled work force and other intangibles as well as
goodwill. Amortization increased for the seven months ended December 31,
1996 and the year ended December 31, 1997 as a result of the HFCP III
Acquisition completed in May 1996. Purchase prices in excess of fair
market value of tangible and intangible assets acquired is allocated to
goodwill. Intangibles are being amortized over lives ranging from 5 to 23
years.
(4) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(5) Working capital is comprised of total current assets, excluding cash and
cash equivalents, less total current liabilities and excludes current
maturities of long-term debt. Working capital for Advanstar is negative
due to the impact of deferred revenue from expositions which are billed
and collected as deposits up to six months in advance of the respective
exposition. Consequently, expositions carry little or no accounts
receivable.
35
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF MAGIC
The following table sets forth selected financial and other data of MAGIC
for the three years ended May 31, 1995, 1996 and 1997 and the nine months
ended February 28, 1998, which have been derived from MAGIC's audited
financial statements and notes thereto for those years and periods. Summary
financial and other data of MAGIC for the nine months ended February 28, 1997
is unaudited and is provided for comparative purposes only. Results for the
nine months ended February 28, 1998 are not necessarily indicative of results
that may be expected for the entire year. The information presented below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical financial
statements and notes thereto and the other financial information appearing
elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED MAY 31, FEBRUARY 28,
---------------------------- -------------------
1995 1996 1997 1997 1998
-------- -------- -------- ----------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DA-
TA:
Net revenue................ $ 21,734 $26,608 $ 31,153 $31,004 $38,695
Direct costs............... 10,067 13,037 14,491 14,180 14,562
-------- -------- -------- ------- -------
Gross profit............... 11,667 13,571 16,662 16,824 24,133
General and administrative
expenses.................. 3,423 3,109 4,304 2,666 3,262
Profit participation....... 289 574 355 378 365
-------- -------- -------- ------- -------
Income from operations... 7,955 9,888 12,003 13,780 20,506
Interest income............ 677 987 1,195 843 654
Income tax provision....... 3,089 3,965 4,806 5,301 7,697
-------- -------- -------- ------- -------
Net income............... $ 5,543 $ 6,910 $ 8,392 $ 9,322 $13,463
======== ======== ======== ======= =======
OTHER FINANCIAL DATA:
EBITDA(1).................. $ 8,414 $ 10,171 $ 12,247 $14,057 $20,718
EBITDA margin.............. 38.7% 38.2% 39.3% 45.3% 53.5%
Depreciation and amortiza-
tion...................... $ 459 $ 283 $ 244 $ 277 $ 212
Capital expenditures....... 336 120 386 444 93
BALANCE SHEET DATA (AT END
OF PERIOD):
Total assets............... $ 20,691 $25,014 $ 29,983 $28,316 $24,361
Working capital(2)......... (7,792) (5,066) (191) (5,321) (8,117)
Total debt................. -- -- -- -- --
Shareholders' equity....... 7,407 11,425 18,360 19,320 12,873
</TABLE>
- --------
(1) "EBITDA" is defined as operating income before depreciation and
amortization. EBITDA is not a measure of performance defined by GAAP.
EBITDA should not be considered in isolation or as a substitute for net
income or the statement of cash flows which have been prepared in
accordance with GAAP. EBITDA is provided because management understands
that it is customarily used in evaluating business communications
companies. The EBITDA measures presented herein may not be comparable to
similarly titled measures of other companies.
(2) Working capital is comprised of total current assets, excluding cash and
cash equivalents, less total current liabilities and excludes current
maturities of long-term debt. Working capital for MAGIC is negative due to
the impact of deferred revenue from expositions which are billed and
collected as deposits up to six months in advance of the respective
exposition. Consequently, expositions carry little or no accounts
receivable.
36
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW--ADVANSTAR
Advanstar is a leading provider of global, multi-product marketing
communications services, principally through controlled circulation trade,
business and professional magazines and trade shows, expositions and
conferences. Advanstar also provides a broad range of other marketing services
products, including direct mail and database products and services.
On May 31, 1996, the HFCP III Acquisition was consummated. See Note 1 to
Advanstar's Consolidated Financial Statements.
During 1996 and 1997, Advanstar embarked on a strategic acquisition program
designed to fill in existing markets served by Advanstar's industry clusters
or to establish dominant positions in new markets with attractive operating
and growth characteristics. Advanstar completed nine acquisitions during 1996
and 1997 for aggregate purchase prices of approximately $58 million. Advanstar
has continued this program in early 1998, completing, in addition to the MAGIC
Acquisition, an additional eight acquisitions or joint ventures for aggregate
purchase prices of approximately $62.2 million.
Advanstar recognizes revenue from its publishing activities throughout the
year based on the issue dates of its publications. With respect to expositions
and trade shows, revenue and related direct event expenses are recognized in
the month a show or conference is held. Consequently, during the year,
Advanstar will reflect on its balance sheet the deferred revenue collected and
prepaid expenses incurred for a given event's next scheduled show. A portion
of booth revenues are collected up to a year in advance for Advanstar's
expositions. These balance sheet deferrals are recognized and released to the
income statement in the month the event is held.
Advanstar's principal sources of revenue are derived from advertising and
subscriptions in its publications, booth rentals, attendee revenue, and
seminar and conference registrations from its expositions and trade shows, and
sales of its marketing services products. For the year ended December 31, 1997
Advanstar derived 59.8% of its revenue from publishing, 32.8% from expositions
and conferences and 7.4% from marketing services products. During 1997,
Advanstar realigned its internal operational structure into four industry or
market focused clusters. These four clusters, Retail, Hospitality & Fashion;
Healthcare & Pharmaceutical; Information Technology & Communications; and
Manufacturing & Processing, each contain all of Advanstar's products and
services directed toward its respective industry or market. For 1997, the
Retail, Hospitality & Fashion cluster represented 31.2% of Advanstar's total
revenue; Healthcare & Pharmaceuticals represented 20.6%; Information
Technology & Communications represented 22.8%; and Manufacturing & Processing
represented 17.3%. Additionally, Advanstar established a Market Development
cluster, accounting for 7.9% of total revenue in 1997, to focus on developing
properties in markets where Advanstar looks to expand its selection of
products and services. See "Business--Products and Services--Market
Development."
The 1996 combined financial data were accumulated from the historical
financial statements of the Predecessor for the period from January 1, 1996 to
May 31, 1996 and of Advanstar for the period from June 1, 1996 to December 31,
1996. See "Selected Historical Consolidated Financial and Other Data of
Advanstar and the Predecessor." The combined financial data is presented for
comparative purposes only and does not purport to reflect the operating
results of Advanstar if Advanstar had been controlled by HFCP III for the full
year.
37
<PAGE>
RESULTS OF OPERATIONS--ADVANSTAR
The following table sets forth certain consolidated financial data as a
percentage of total revenue for the three years ended December 31, 1995, 1996
and 1997 and the three month periods ended March 31, 1997 and 1998.
<TABLE>
<CAPTION>
PERCENT OF REVENUE
---------------------------------------------
YEAR ENDED THREE MONTH PERIOD
DECEMBER 31, ENDED MARCH 31,
--------------------- ---------------------
1995 1996 1997 1997 1998
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.................... 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Production, selling and other
direct
expenses.................... 66.7 64.4 67.2 66.1 66.2
----- ----- ----- --------- ---------
Gross profit................... 33.3 35.6 32.8 33.9 33.8
General and administrative
expenses.................... 18.7 19.1 16.4 15.8 15.4
Amortization................. 3.3 9.8 12.9 10.9 10.1
----- ----- ----- --------- ---------
Operating income (loss)........ 11.3 6.7 3.5 7.2 8.3
Interest expense, net........ 13.5 9.6 8.0 7.4 6.8
Other, net................... (1.5) 0.3 (0.1) 0.1 --
Provision for income taxes... 0.0 0.7 0.3 1.8 (0.1)
----- ----- ----- --------- ---------
Net income (loss).............. (0.7) (3.9) (4.7) (1.9) 1.4
===== ===== ===== ========= =========
EBITDA......................... 16.9 % 18.7 % 18.1 % 19.8 % 19.6%
</TABLE>
FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997
Net revenue. Net revenue for the first quarter of 1998 increased $6.0
million, or 12.1%, to $55.7 million in 1998 from $49.7 million for the first
quarter of 1997. Revenue growth for the quarter was due primarily to growth in
the base business, which increased $6.9 million, or 15.5%, from $44.4 million
in 1997 to $51.3 million in 1998. Base revenue growth was due significantly to
aggregate improved performance in the Retail, Hospitality & Fashion cluster,
the Manufacturing & Processing cluster and the Information Technology &
Communications cluster, partially offset by decreased revenue from certain
properties in the Healthcare & Pharmaceutical cluster. Of the overall growth
in the base business, $1.8 million was attributable to timing differences in
certain exposition events between the first quarters of 1997 and 1998.
Exposition events are often held over different dates from one year to the
next which will occasionally result in reported exposition results moving from
one quarter to another between years. Revenue for the quarter from properties
acquired since the HFCP III Acquisition was $4.4 million, a decrease of $0.9
million from the first quarter of 1997. Of the decrease, $2.8 million was due
to the timing of certain exposition events which were held in the first
quarter of 1997 but not until the second quarter of 1998.
Production, selling and other direct expenses. Production, selling and other
direct expenses for the first quarter of 1998 increased $4.1 million, or
12.5%, to $36.9 million from $32.8 million for the first quarter of 1997.
Selling and promotion expenses increased $1.4 million in the first quarter of
1998, or 13.6%, due to investments made in properties in the Healthcare &
Pharmaceutical cluster, for sales resources across the new market focused
cluster groups, and for exposition promotion in support of newly acquired
events and growth in established shows. Exposition facility costs increased
$0.7 million in the first quarter of 1998, or 14.8%, due primarily to growth
in the size of several events and expansion into new venues for certain shows.
Publication production costs for printing, paper and postage increased $0.5
million in the first quarter of 1998, or 8.8%, due to growth in ad pages and
increases in postage rates and paper costs over the first quarter of 1997. All
other direct expenses
38
<PAGE>
increased $1.5 million in the first quarter of 1998 for editorial,
circulation, exposition show management and department support costs.
General and administrative expenses. General and administrative expenses for
the first quarter of 1998 increased $0.8 million, or 10.3%, to $8.6 million
from $7.8 million for the first quarter of 1997. The increase was largely
caused by incremental expenses relating to the operations of acquired
businesses and expansion of infrastructure to support the new market focused
organization and expected future growth.
Operating income. For the first quarter of 1998, operating income increased
$1.0 million, or 27.8%, to $4.6 million from $3.6 million for the first
quarter of 1997. The increase was due to improved operating performance.
Interest expense. Interest expense for the first quarter of 1998 increased
$0.1 million, or 2.7%, to $3.8 million from $3.7 million for the first quarter
of 1997, due to the incurrence of additional indebtedness necessary to fund
acquisitions completed in 1997 and the first quarter of 1998.
Net income. Net income for the first quarter of 1998 increased $1.6 million
to $0.7 million, from a loss of $0.9 million for the first quarter of 1997.
The increase was due to improved operating performance and a reduction of
income tax expense.
EBITDA. EBITDA for the first quarter of 1998 increased $1.2 million, or
12.2% to $11.0 million from $9.8 million for the first quarter of 1997. The
increase was due primarily to the increase in operating income. EBITDA is not
a measure of performance defined by GAAP and should not be considered in
isolation or as a substitute for net income or the statement of cash flows
which have been prepared in accordance with GAAP.
1997 COMPARED TO COMBINED 1996
Net revenue. Total net revenue for 1997 increased $36.7 million, or 24.3%,
to $187.7 million from $151.0 million in 1996. Net revenue growth from the
base business contributed $6.9 million, or 19.0%, of the increase and
acquisitions contributed $29.8 million, or 81.0%, of new net revenue. The
increase in base business revenue was primarily due to a $5.6 million increase
in publishing revenue due to improved operating performance of TELECOM ASIA
and other telecommunications and information technology publications, a $3.2
million increase in exposition revenue due to growth in U.S. and European call
center events and an increase in direct mail and database marketing product
revenue, partially offset by a $3.1 million decline in revenue resulting from
the absence of three plastic exhibition events in 1997 in the Manufacturing &
Processing cluster and a $0.2 million decline in revenue resulting from the
discontinuance of a small publication in 1996. These events are held on a two
years on and one year off cycle tied to industry event schedules.
Production, selling and other direct expenses. Production, selling and other
direct expenses for 1997 increased $28.8 million, or 29.6%, to $126.1 million
from $97.3 million in 1996, primarily as a result of increased expenses
relating to the operations of businesses acquired during late 1996 and 1997.
Base business, production, selling and other direct expenses for 1997
increased approximately 9% over the prior year due to increased investment in
circulation, sales staffing and promotion and marketing.
General and administrative expenses. General and administrative expenses for
1997 increased $1.8 million, or 6.2% to $30.7 million from $28.9 million in
1996. $0.7 million of such increase was incremental general and administrative
expenses relating to the operations of acquired businesses and related
expansion of infrastructure, primarily in Brazil and Hong Kong.
Operating income. For 1997, operating income decreased $3.6 million, or
35.3%, from 1996, primarily due to the $6.8 million increase in non-cash
amortization resulting from the HFCP III
39
<PAGE>
Acquisition. Operating income before amortization increased $6.0 million, or
24.2%, to $30.8 million in 1997 from $24.8 million in 1996. See Note 1 to
Advanstar's Consolidated Financial Statements.
Interest expense. Interest expense for 1997 increased $0.6 million, or 4.1%,
to $15.1 million from $14.5 million in 1996, due to the incurrence of
additional indebtedness necessary to partially fund acquisitions completed in
late 1996 and early 1997. See Notes 1 and 8 to Advanstar's Consolidated
Financial Statements.
Net loss. Net loss for 1997 increased $2.9 million, or 48.3%, to $8.9
million from $6.0 million in 1996, primarily due to increased amortization
resulting from the HFCP III Acquisition, partially offset by improvements in
operating income before amortization.
EBITDA. EBITDA for 1997 increased $5.8 million, or 20.6%, to $34.0 million
from $28.2 million in 1996. This increase was primarily due to a $6.0 million
increase in operating income before amortization, partially offset by a
decrease of $0.2 million in depreciation.
COMBINED 1996 COMPARED TO 1995
Net revenue. Total net revenue for 1996 increased $5.7 million, or 3.9%, to
$151.0 million from $145.3 million in 1995. The growth in net revenue was
primarily due to growth in advertising revenue, and was impacted by the
discontinuance of the neurology magazine and the sale of Showbiz Expo in
December 1995. Excluding these dispositions, revenue would have increased
$11.4 million, or 8.1%.
Production, selling and other direct expenses. Production, selling and other
direct expenses increased by $0.4 million, or 0.4%, to $97.3 million in 1996
from $96.9 million in 1995, due to the revenue growth in continuing properties
and management's efforts to increase investment in existing properties,
partially offset by the elimination of expenses associated with the
discontinued neurology magazine and Showbiz Expo.
General and administrative expenses. General and administrative expenses for
1996 increased $1.7 million, or 6.3% to $28.9 million from $27.2 million in
1995, primarily as a result of increased investment in acquisition development
staff and other strategic planning and marketing staff following the HFCP III
Acquisition.
Operating income. Operating income in 1996 decreased $6.3 million, or 38.4%,
to $10.1 million from $16.4 million in 1995, primarily due to the $8.4 million
increase in non-cash amortization resulting from the HFCP III Acquisition.
Operating income before amortization increased $3.6 million, or 17.0%, to
$24.8 million in 1996 from $21.2 million in 1995, due to the publishing
related revenue growth, offset by the discontinuance of the neurology magazine
and Showbiz Expo discussed above. See Note 1 to Advanstar's Consolidated
Financial Statements.
Interest expense, net. Interest expense for 1996 decreased $5.1 million, or
26.0%, to $14.5 million from $19.6 million in 1995, due to the changes in
Advanstar's capital structure and the replacement of the existing credit
facility with an amended credit facility in conjunction with the HFCP III
Acquisition.
Amortization. For 1996, amortization expense increased $10.0 million, or
208.3%, to $14.8 million from $4.8 million in 1995 as a result of the HFCP III
Acquisition, which was accounted for using the purchase method of accounting.
See Note 1 to Advanstar's Consolidated Financial Statements.
Net loss. Net loss for 1996 increased $5.0 million to $6.0 million from $1.0
million in 1995, primarily due to increased amortization resulting from the
HFCP III Acquisition, partially offset by improvements in operating income
before amortization and the decrease in interest expense.
40
<PAGE>
EBITDA. EBITDA for 1996 increased $3.6 million, or 14.6%, to $28.2 million
from $24.6 million in 1995. This increase was primarily due to a $6.0 million
increase in operating income before amortization, partially offset by a
decrease in other income.
LIQUIDITY AND CAPITAL RESOURCES--ADVANSTAR
Cash flows from operating activities. Net cash provided by operations in the
first quarter of 1998 increased $2.7 million to $3.2 million from $0.5 million
in the first quarter of 1997. The increase was due to an increase in net
income of $1.6 million, an increase in depreciation and amortization of $0.1
million due to acquisitions and a $1.0 million decrease in working capital in
the first quarter of 1998 over the first quarter of 1997.
Cash flows from investing activities. Net cash used in investing activities
for the first quarter of 1998 decreased $2.4 million, or 8.7%, to $24.9
million from $27.3 million in the first quarter of 1997. The decrease was
primarily due to a decrease in cash used for acquisitions of $3.0 million.
Additionally, investing activities includes an increase in capital
expenditures of $0.6 million to $1.4 million in the first quarter of 1998 from
$0.8 million in the first quarter of 1997 for additional exposition wall and
lighting systems for use in the Artexpo show group required to meet the growth
in exhibitors.
Cash flows from financing activities. Net cash provided by financing
activities for the first quarter of 1998 decreased $4.8 million, or 17.5%, to
$22.8 million from $27.6 million in the first quarter of 1997, due to lower
levels of net borrowings for the reduced level of acquisitions in the first
quarter of 1998. The Company borrowed $26.5 million under the revolving credit
facility for acquisitions in the first quarter of 1998 and repaid revolving
credit loans of $3.7 million.
Distributions from subsidiaries. There are no significant restrictions on
the ability of the Subsidiary Guarantors to make distributions to the Company.
Capital expenditures. Advanstar's operations are not capital intensive.
Capital expenditures were $2.3 million, $1.1 million, $1.5 million and $1.4
million for 1997, 1996, 1995 and the three months ended March 31, 1998,
respectively. Annual capital expenditures include approximately $1.5 million
for replacement or maintenance level requirements, primarily for expenditures
related to management information systems.
OVERVIEW--MAGIC
MAGIC is a leading producer of trade shows for men's, women's and children's
apparel manufacturers, importers and wholesale distributors. MAGIC was
organized in 1933 as a not-for-profit, mutual benefit corporation and held its
first trade show in 1942 with 19 participating manufacturers.
In fiscal 1994, MAGIC became a "for profit" entity and initiated long-term
programs to introduce new events, products and services as well as to improve
customer service. For example, MAGIC introduced WWDMAGIC in February 1995 and
MAGICKids in August 1997. In addition, MAGIC introduced new products including
show directories and guides, on-site advertising and internet services. During
this period, the addition of customer service staff improved customer
responsiveness, while the development of a client sales force supplemented the
customer referral and trade advertising efforts. As a result of these
initiatives, EBITDA for 1997 increased $9.4 million, or 335.7%, to $12.2
million from $2.8 million in fiscal 1994.
Trade shows constitute substantially all of MAGIC's business. Net revenue is
comprised of booth revenue and other show revenue. Booth revenue consists of
trade show booth rentals and other show revenue including on-site advertising,
program sponsorship, hotel and meeting rooms setup and registration fees.
Booth revenue is billed and collected from exhibitors in advance of each show
and deferred on the balance sheet until the period in which the applicable
event is held. Direct show expenses are recognized in the period in which the
services are rendered.
41
<PAGE>
RESULTS OF OPERATIONS--MAGIC
The following table sets forth certain financial data as a percentage of
total revenue for the three years ended May 31, 1995, 1996 and 1997 and for
the nine months ended February 28, 1997 and 1998.
<TABLE>
<CAPTION>
PERCENT OF REVENUE
-----------------------------------
NINE MONTHS
FISCAL YEAR ENDED ENDED
MAY 31, FEBRUARY 28,
------------------- --------------
1995 1996 1997 1997 1998
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Direct costs............................. 46.3 49.0 46.5 45.7 37.6
----- ----- ----- ------ ------
Gross profit............................... 53.7 51.0 53.5 54.3 62.4
General & administrative expenses........ 17.1 13.8 15.0 9.9 9.4
----- ----- ----- ------ ------
Operating income........................... 36.6 37.2 38.5 44.4 53.0
Interest income.......................... 3.1 3.7 3.8 2.8 1.7
Provision for income taxes............... 14.2 14.9 15.4 17.1 19.9
----- ----- ----- ------ ------
Net income................................. 25.5% 26.0% 26.9% 30.1% 34.8%
===== ===== ===== ====== ======
EBITDA..................................... 38.7% 38.2% 39.3% 45.3% 53.5%
</TABLE>
NINE MONTHS ENDED FEBRUARY 28, 1998 COMPARED TO NINE MONTHS ENDED FEBRUARY 28,
1997
Total revenue. MAGIC's revenue for the nine months ended February 28, 1998
increased $7.7 million, or 24.8%, to $38.7 million from $31.0 million for the
nine months ended February 28, 1997. This increase was due primarily to an
increase in the net square footage of exposition show space, consisting
principally of temporary floor space sold to fill a portion of MAGIC's
exhibitor backlog and an increase in the price per square foot charged to
exhibitors and revenue of $2.5 million from the introduction of MAGICKids.
Direct costs. Direct costs for the nine months ended February 28, 1998
increased $0.4 million, or 2.8%, to $14.6 million from $14.2 million for the
nine months ended February 28, 1997. The increase was due to costs associated
with the increased revenue from MAGICKids.
General and administrative expenses. General and administrative expenses for
the nine months ended February 28, 1998 increased $0.6 million, or 22.2%, to
$3.3 million from $2.7 million for the nine months ended February 28, 1997,
primarily due to increased salary and benefit costs related to an increase in
customer service and sales staff.
Operating income. MAGIC's operating income for the nine months ended
February 28, 1998 increased $6.7 million, or 48.6%, to $20.5 million from
$13.8 million for the nine months ended February 28, 1997, due to growth in
revenue exceeding growth in expenses.
Interest income. Interest income for the nine months ended February 28, 1998
decreased $0.1 million, or 12.5%, to $0.7 million from $0.8 million for the
nine months ended February 28, 1997, due to the reallocation of investments
from long-term investments to short-term liquid investments.
Net income. Net income for the nine months ended February 28, 1998 increased
$4.2 million, or 45.2%, to $13.5 million from $9.3 million for the nine months
ended February 28, 1997, due to the increase in operating income, partially
offset by the related increase in income tax expense.
EBITDA. EBITDA for the nine months ended February 28, 1998 increased $6.7
million, or 47.5%, to $20.7 million from $14.1 million for the nine months
ended February 28, 1997. This increase
42
<PAGE>
was primarily due to increases in operating income as a result of increases in
the net square footage of exposition space sold and to the introduction of
MAGICKids.
FISCAL 1997 COMPARED TO FISCAL 1996
Total revenue. MAGIC's revenue for fiscal 1997 increased $4.6 million, or
17.3%, to $31.2 million from $26.6 million in fiscal 1996. This increase was
due primarily to an increase in the net square footage of exposition floor
space, consisting principally of temporary floor space sold to fill a portion
of MAGIC's exhibitor backlog and an increase in the price per square foot
charged to exhibitors, a $0.4 million increase in revenue pursuant to the
acquisition of the Children's Trade Expo, and the introduction of new
advertising and promotional services.
Direct costs. Direct costs for fiscal 1997 increased $1.5 million, or 11.5%,
to $14.5 million from $13.0 million for fiscal 1996. The increase was due to
higher rental and other expenses associated with temporary floor space (which
is substantially more expensive than permanent floor space) utilized by MAGIC
for its February 1997 events, partially offset by a reduction in certain other
facilities costs, including third party production costs.
General and administrative expenses. General and administrative expenses for
fiscal 1997 increased $1.2 million, or 38.7%, to $4.3 million from $3.1
million for fiscal 1996. The increase was primarily due to increased general
and administrative expenses necessary to support MAGIC's increased revenue.
Operating income. MAGIC's operating income for fiscal 1997 increased $2.1
million, or 21.2%, to $12.0 million from $9.9 million in fiscal 1996, due to
growth in revenue exceeding growth in expenses.
Interest income. Interest income for fiscal 1997 increased $0.2 million, or
20.0%, to $1.2 million from $1.0 million in fiscal 1996, due to higher average
cash balances.
Net income. Net income for fiscal 1997 increased $1.5 million, or 21.7%, to
$8.4 million from $6.9 million in fiscal 1996, due to the increase in
operating income partially offset by the related increase in income tax
expense.
EBITDA. EBITDA for fiscal 1997 increased $2.0 million, or 19.6%, to $12.2
million from $10.2 million in fiscal 1996. This increase was primarily due to
increases in operating income.
FISCAL 1996 COMPARED TO FISCAL 1995
Total revenue. Total revenue for fiscal 1996 increased $4.9 million, or
22.6%, to $26.6 million from $21.7 million in fiscal 1995. This increase was
due primarily to an increase in the net square footage of exhibition show
space, consisting principally of temporary floor space sold to fill a portion
of MAGIC's exhibitor backlog, an increase in the price per square foot paid by
exhibitors and increased revenue from exhibitor services and to fees related
to the Women's Wear Daily arrangement.
Direct costs. Direct costs for fiscal 1996 increased $2.9 million, or 28.7%,
to $13.0 million from $10.1 million for fiscal 1995. The increase in direct
costs was primarily due to MAGIC's utilization of more expensive temporary
floor space to fill a portion of MAGIC's exhibitor backlog.
General and administrative expenses. General and administrative expenses for
fiscal 1996 decreased $0.3 million, or 8.8%, to $3.1 million from $3.4 million
in fiscal 1995, primarily as the result of increased operating efficiencies.
Operating income. MAGIC's operating income for fiscal 1996 increased $1.9
million, or 23.8%, to $9.9 million from $8.0 million in fiscal 1995, primarily
as a result of growth in revenue exceeding growth in expenses.
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<PAGE>
Interest income. Interest income for fiscal 1996 increased $0.3 million, or
42.9%, to $1.0 million from $0.7 million in fiscal 1995.
Net income. Net income for fiscal 1996 increased $1.4 million, or 25.5%, to
$6.9 million from $5.5 million in fiscal 1995, primarily due to the increase
in operating income, partially offset by an increase of $0.9 million in
MAGIC's income tax provision and a charge of $0.3 million for a loss on a
leasehold termination arising from MAGIC's administrative office relocation.
EBITDA. EBITDA for fiscal 1996 increased $1.8 million, or 21.4%, to
$10.2 million from $8.4 million in fiscal 1995. The increase was primarily due
to a $1.9 million increase in operating income.
LIQUIDITY AND CAPITAL RESOURCES--MAGIC
Cash flows from operating activities. Net cash provided by operations for
fiscal 1997 increased $2.4 million, or 33.8%, to $9.5 million from $7.1
million in fiscal 1996, primarily as a result of an increase in net income of
$1.5 million and an increase in accounts payable and accrued expenses of $0.9
million.
Cash flows from investing activities. Net cash used in investing activities
in fiscal 1997 increased $1.2 million, or 35.3%, to $4.6 million from $3.4
million in fiscal 1996, primarily due to the acquisition of Children's Trade
Expo for $0.9 million and a $0.3 million increase in capital expenditures.
Cash flows from financing activities. Net cash used in financing activities
for fiscal 1997 increased $1.5 million, or 53.6%, to $4.3 million from $2.8
million in fiscal 1996, primarily due to the repurchase of MAGIC's common
stock under a stock repurchase plan.
Capital expenditures. Capital expenditures in fiscal 1997, fiscal 1996 and
fiscal 1995 totaled $0.4 million, $0.1 million and $0.3 million, respectively.
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES--THE COMPANY
After giving effect to the Pro Forma Adjustments, the Company's capital
structure will consist of (i) $210.0 million in senior term debt under the
Amended Credit Facility with $60.0 million available under the Revolving
Credit Facility, (ii) $150.0 million in aggregate principal amount of the
Notes and (iii) $179.0 million in common equity (including $70.0 million from
the HFCP III Equity Investment).
Interest payments on the Notes and interest and principal payments under the
Amended Credit Facility will represent significant liquidity requirements for
the Company. The senior term debt consists of two tranches, (i) $85.0 million
of Tranche A Senior Term loans amortizing over 5.5 years and maturing
September 30, 2003, and (ii) $125.0 million Tranche B Senior Term loans with
modest amortization over the initial 5.5 years of its term maturing with
balloon payments in 2004 and 2005. Payment of the Revolving Credit Facility is
due September 30, 2003. Interest under the Amended Credit Facility is at 30,
60, 90 or 180-day LIBOR plus applicable margins ranging from 2.25% to 2.50%.
The Company's other liquidity needs will be primarily for capital
expenditures and working capital. The Company's operations are not capital
intensive. Management anticipates that capital expenditures for 1998 and 1999
will be approximately $3.0 million and $3.5 million, respectively. The Company
currently operates with negative working capital.
The Company's primary source of liquidity following the MAGIC Acquisition
and Refinancing is expected to be cash flow from operations. Additionally,
upon closing of the Amended Credit Facility, $60.0 million will be available
under the Revolving Credit Facility.
44
<PAGE>
The ability of the Company to fund its operations, make planned capital
expenditures and make scheduled payments on its indebtedness depends on its
future operating performance subject to future economic conditions and to
financial, business and other factors, many of which are beyond the Company's
control. See "Risk Factors." The Company believes that cash flow from
operations and available borrowings under the Revolving Credit Facility will
provide adequate funds for its working capital needs, planned capital
expenditures, debt services obligations (including the Notes) and other needs.
There can be no assurance that the Company's business will generate sufficient
cash flow from operations, or generate sufficient revenue growth, or that
future borrowings will be available to enable the Company to service its
indebtedness, including the Notes, or to fund its other liquidity needs.
TAXES
As of December 31, 1997, Advanstar had net operating loss carryforwards for
federal income tax purposes of approximately $12.0 million due primarily to
the increase in amortization of goodwill and other intangibles arising out of
the HFCP III Acquisition. The Acquisitions will not give rise to significant
additional amortization of intangibles for tax purposes. Consequently,
Advanstar expects the net operating loss carryforwards will begin to be
utilized in 1998 and fully utilized in 1999 or 2000 and its effective tax rate
will rise in 1999 and thereafter.
YEAR 2000 ISSUES
The Company has conducted a review of its computer systems and software
infrastructure to identify those areas that are not Year 2000 compliant and
has begun implementing its plan to correct any shortcomings. Management
believes that with modifications or upgrades to existing software, Year 2000
compliance will not pose significant operational issues. The Company is also
conducting a review of its vendors' and suppliers' Year 2000 compliance.
Advanstar does not believe that any Year 2000 issues will have a material
adverse effect on its business, financial condition or results of operations.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." The statement requires an enterprise
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of the statement of financial position. Advanstar adopted this
standard in first quarter 1998. Adoption of this standard did not have a
material effect on Advanstar in the first quarter of 1998.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information." The
statement requires that a public business enterprise report financial and
descriptive information about its reportable operating segments such as a
measure of segment profit or loss, certain specific revenue and expense items,
and segment assets. Advanstar will adopt this standard during 1998 and is
currently analyzing the impact it will have on the disclosures in its
financial statements.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
This Prospectus contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including statements
regarding, among other items, (i) the Company's growth strategies and (ii)
anticipated trends in the Company's business. These forward-looking statements
are based largely on the Company's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the Company's control.
Actual results could differ materially from these forward-looking statements
as a result of the factors described in "Risk Factors". In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained in this Prospectus will in fact transpire.
45
<PAGE>
BUSINESS
THE COMPANY
The Company is a leading provider of global, multi-product marketing
communications solutions, principally through controlled circulation trade,
business and professional magazines and trade shows, expositions and
conferences. The Company also provides a broad range of other marketing
services products, including direct mail and database products and services.
The Company publishes 73 specialized business magazines and professional
journals and 30 directories and other publications. Of Advanstar's 55
magazines and journals for which competitive data is available, over 75% rank
either #1 or #2 in their respective markets (based on number of advertising
pages). The Company owns and manages 76 expositions and 29 conferences for
business, professional and consumer audiences worldwide, most of which are the
leading events in their respective national or regional markets. After giving
effect to the Pro Forma Adjustments, the Company would have derived 50.1% of
its 1997 revenues from publishing, 44.3% from expositions and conferences and
5.6% from marketing services. After giving effect to the Pro Forma
Adjustments, (i) the Company's 1997 revenue, EBITDA and EBITDA margin would
have been $247.3 million, $56.0 million and 22.7%, respectively; and (ii) the
Company's revenue, EBITDA and EBITDA margin for the first quarter ended March
31, 1998 would have been $79.6 million, $23.6 million and 29.6%, respectively.
EBITDA is not a measure of performance defined by GAAP and should not be
considered in isolation or as a substitute for net income or the statement of
cash flows which have been prepared in accordance with GAAP.
The Company markets its broad range of products and services primarily
through four industry clusters in which it has developed critical mass and
expertise: (i) Retail, Hospitality & Fashion; (ii) Healthcare &
Pharmaceutical; (iii) Information Technology & Communications; and (iv)
Manufacturing & Processing. The Company believes its industry-focused cluster
structure allows it to cross-sell its products effectively, thereby capturing
a larger share of customer marketing expenditures. These four clusters are
further divided into 21 industry sectors. The Company has expanded its product
line within its clusters through new product introductions and strategic
acquisitions. These actions have enhanced the Company's position as a leading
provider of integrated business-to-business marketing communications
solutions. In addition, these actions have increased the Company's EBITDA by
leveraging its existing marketing and customer service infrastructure and
industry expertise.
On April 30, 1998, Advanstar acquired MAGIC. MAGIC, organized in 1933,
produces MAGIC, the world's largest and most widely recognized trade show for
the men's apparel industry; WWDMAGIC, the largest women's apparel show in the
United States; and MAGICKids, a recently introduced children's apparel show.
The three shows are held concurrently in Las Vegas in February and August each
year. The February 1998 shows occupied an aggregate of approximately 505,000
net square feet of permanent floor space and 285,000 net square feet of
temporary floor space at the Las Vegas Convention Center and the Las Vegas
Hilton. Commencing with the August 1998 shows, the MAGIC trade shows will
occupy approximately 700,000 net square feet of permanent floor space at the
Las Vegas Convention Center and approximately 250,000 net square feet of
permanent floor space at the Sands Convention Center. The addition of the
Sands Convention Center will eliminate the need to use more costly temporary
space and will allow MAGIC to partially meet a long-standing backlog demand
for exhibit space. The February 1998 MAGIC trade shows attracted an audience
of over 80,000 attendees from over 100 countries, including major retailers,
such as Federated Department Stores, Nieman Marcus, Nordstrom's and Wal-Mart.
MAGIC's February 1998 trade shows included over 3,200 exhibitors (such as Levi
Strauss, Calvin Klein, Donna Karan and the Russell Corporation), representing
approximately 5,000 brand names. MAGIC's February 1996 and August 1996 trade
shows rank, respectively, as the 12th and 11th largest trade shows in the
United States. MAGIC's revenue, EBITDA and EBITDA margin for its fiscal year
ended May 31, 1997 were $31.2 million, $12.2 million and 39.3%, respectively.
For the nine months ended February 28, 1998, MAGIC's revenue, EBITDA and
EBITDA margin were $38.7 million, $20.7 million and 53.5%, respectively,
representing a revenue increase of 24.8% and an EBITDA increase of 47.4% over
the nine months ended February 28, 1997.
46
<PAGE>
COMPETITIVE ADVANTAGES
The Company believes that the following factors contribute to its strong
competitive position:
Market Leadership. The Company has achieved a strong market position within
each of its four industry clusters primarily as a result of its ability to
offer customers in each cluster comprehensive and integrated marketing
communications solutions, consisting of leading publications, expositions and
marketing services. The Company publishes 73 specialized business magazines
and professional journals and 30 directories and other publications. Of
Advanstar's 55 magazines and journals for which competitive data is available,
over 75% rank either #1 or #2 in their respective markets (based on number of
advertising pages). The Company's largest magazines include Video Store,
CADALYST, Pharmaceutical Technology and Hotel & Motel Management. The Company
also owns and manages 76 trade shows and expositions and 29 conferences, most
of which are the leading events in their respective national or regional
markets. Many of the Company's expositions have commanding market presence:
for example, MAGIC is the #1 men's apparel trade show in the United States;
IBS New York is the #1 beauty show in the world; Telexpo is the #1
telecommunications trade show in Latin America; Artexpo New York is the #1
mid-market art fair in the United States; Dealernews International Powersports
Dealer Expo is the #1 trade show for the motorcycle industry; Licensing
International is the world's leading event for the international merchandise
licensing industry; and TeleCon is the leading event for the video
conferencing and long distance learning markets.
Industry--Focused Integrated Marketing. In addition to offering a broad
range of products, the Company has developed a business model focused on
industry clusters to better serve its customers marketing communications
needs. This model facilitates the development of long-term relationships
between customers and dedicated Advanstar teams. These teams work with
customers to design and to implement all aspects of customized, business-to-
business marketing and communications programs, increasing cross-selling
opportunities across product and service groups. For example, the Company's
call center group, which is part of the Information Technology &
Communications cluster, recently concluded several multi-year marketing
contracts involving participation in the Company's trade shows and advertising
in the Company's trade publications.
Diverse Customer Base. The Company's diverse customer base provides it with
stable and diverse sources of revenue and cash flow as well as an established
foundation from which to further penetrate existing markets and to develop new
markets. The Company's customer base is geographically diverse and crosses
many disparate industries, mitigating the Company's exposure to downturns in
particular geographic markets or industries. After giving effect to the Pro
Forma Adjustments, in 1997 the Company had over 14,000 advertisers and
exhibitors operating in over 20 different industry sectors, with no customer
or industry sector representing more than 1.1% or 13.7% of revenue,
respectively.
Attractive EBITDA Margins and Modest Ongoing Capital Requirements. Consistent
with other leaders in the controlled circulation publication and trade show
industries, the Company enjoys attractive EBITDA margins and modest ongoing
capital expenditure requirements. The modest ongoing capital requirements result
in part from the Company's outsourcing of the printing of its trade publications
and the physical operation of its expositions. After giving effect to the Pro
Forma Adjustments, in 1997 the Company's operating cash flow (defined as EBITDA,
less capital expenditures) would have been $53.4 million or 21.6% of revenue. In
1997, the Company's capital expenditures were $2.6 million. After giving effect
to the Pro Forma Adjustments, the Company's operating cash flow for the first
quarter ended March 31, 1998 would have been $22.1 million, or 27.8% of revenue.
The Company's capital expenditures for the first quarter ended March 31, 1998
were $1.5 million.
Experienced and Incentivized Management Team. The members of Advanstar's
senior management team have an average of over 15 years of industry
experience, with established track records in delivering revenue and profit
growth, developing new products, penetrating new markets
47
<PAGE>
and integrating acquisitions. The Company's management is led by Robert L.
Krakoff, Chairman and Chief Executive Officer, James M. Alic, Vice Chairman
and Ira T. Siegel, Vice Chairman and Chief Operating Officer. Messrs. Krakoff
and Alic joined Advanstar in July 1996 and Mr. Siegel joined the Company in
May 1998. Prior to joining Advanstar, Mr. Krakoff was Chief Executive Officer
of Cahners Publishing and a Director of its parent company, Reed-Elsevier plc.
During Mr. Krakoff's 23-year tenure, Reed-Elsevier's exhibition business
became one of the largest worldwide exhibition management companies. Prior to
joining Advanstar, Mr. Alic served as Vice President and Controller of IBM
Corporation, and prior thereto was the Chairman of Reed Exhibition Companies.
Prior to joining the Company, Mr. Siegel was President and Chief Executive
Officer of LEXIS-NEXIS, a unit of Reed Elsevier, Inc. and prior thereto was
President and Chief Executive Officer of Reed Reference Publishing, another
division of Reed Elsevier, Inc. Messrs. Krakoff and Alic, collectively, have
invested $2.0 million in the business. Messrs. Krakoff and Alic and other
members of the Company's management, subject to vesting, have direct or
indirect interests in approximately 15% of the Common Stock on a fully diluted
basis.
BUSINESS STRATEGY
The Company's business strategy is to grow profitability by solidifying its
position as a leading provider of comprehensive "one-stop" business-to-
business marketing communications solutions. The Company plans to achieve its
strategic objectives by (i) expanding its product and service offerings within
each of its industry sectors obtain a larger share of its customers' marketing
expenditures, (ii) selectively entering new industry sectors and (iii)
leveraging the strengths of its centralized administrative and production
operations.
Expand Product Offerings. The Company plans to "fill-in" its product and
service offerings within its existing industry sectors through selective
acquisitions and joint ventures, strategic new product launches and
international expansion.
. Selective Acquisitions and Joint Ventures. The Company intends to
continue to engage in strategic acquisitions and joint ventures within
its existing industry sectors. The Company believes it can improve its
competitive position through such acquisitions by (i) applying its
extensive industry experience to enhancing the performance of newly
acquired businesses, (ii) integrating acquisitions and joint ventures
into its cost-efficient infrastructure, (iii) cross-selling new products
and services with existing products and services and (iv) using new
products and services to increase visibility within its markets. Since
the HFCP III Acquisition and excluding the MAGIC Acquisition, Advanstar
has completed or expects to complete 19 acquisitions and joint ventures
for purchase prices aggregating approximately $130.8 million in the
information technology, telecommunications, beauty, travel, entertainment
and call center sectors.
. Strategic New Product Launches. The Company has successfully developed
new products within its existing industry clusters and will continue to
make strategic new product introductions. In 1997, the Company launched
seven magazines and seven expositions and conferences in existing
industry sectors to fill-in its existing product offerings. For example,
in 1997 the Company launched WorldPharm, a pharmaceutical industry
exposition to be held in Philadelphia in 1998, to complement its strong
position in pharmaceutical publishing.
. International Expansion. The Company intends to enhance its position in
international markets by leveraging its widely recognized brands, its
experience in international operations and its current customers' demand
for increased global marketing. The Company currently has operations in
Canada, the United Kingdom, Hong Kong and Brazil and intends to expand
further internationally through the extension of existing products into
new geographic markets, joint ventures with local operating partners and
selective acquisitions. Many of the Company's existing international
products are regional in nature (Pan European, Pan Asian or Pan Latin
American), and future expansion is expected to follow this model. For
example, in mid-1997,
48
<PAGE>
building on its existing strength in the U.S. and Asian telecommunications
markets, Advanstar acquired two magazines and 13 conferences serving the
Brazilian and Latin American telecommunications markets and, in early
1998, acquired Telexpo, the largest Latin American telecommunications
trade show.
Selectively Enter New Industry Sectors. The Company will selectively enter
new industry sectors in which it believes it can become a leading participant
and achieve attractive margins. For example, the MAGIC Acquisition presented
Advanstar with an ideal opportunity to enter the U.S. men's apparel market
with critical mass and to increase revenue and reduce expenses by leveraging
Advanstar's extensive trade show experience.
Leverage Cost-Effective Centralized Administrative and Production
Facilities. The Company believes that its organizational structure (i)
provides continuing opportunities to produce attractive margins through
centralized functional cost management, (ii) provides a platform to easily
introduce new titles or expositions based on existing products, and (iii)
facilitates integration and cost reductions with respect to acquired titles
and expositions. The Company has a long established and highly efficient
centralized publishing infrastructure in both the U.S. and Europe. The Company
focuses on continually improving its systems and processes to provide
effective, low cost operations in circulation, fulfillment, production and
print and paper vendor management. Similar cost-efficient infrastructures are
being established in Asia and in Latin America. In 1997, a centrally managed
exhibition operations function was established in both the U.S. and Europe to
provide consistency of business process and cost effective delivery of these
services. Centralized support also exists in finance and accounting,
information technology and communications, human resources and strategic
planning.
INDUSTRY OVERVIEW
Trade Publications. Trade publications provide key new product or
educational information to readers and a periodic medium for advertisers to
reach highly targeted and select business audiences throughout the year. Trade
publications are generally supported by advertising and are often circulated
free-of-charge. The most effective and profitable publications are those with
readership that includes a high proportion of the individuals who influence
purchasing decisions in a market niche, while avoiding the expense and
inefficiency of circulating to individuals who are not clearly within the
target groups. The U.S. trade publication industry is expected to grow at a
compound annual growth rate of 5.9% between 1995 and 2000, increasing from a
total market size of approximately $7.7 billion in 1995 (consisting of
approximately $5.9 billion in advertising and approximately $1.8 billion in
subscriptions) to approximately $10.2 billion in 2000 (consisting of
approximately $8.2 billion in advertising and approximately $2.0 billion in
subscriptions).
Expositions and Trade Shows. Expositions and trade shows allow exhibitors a
cost-effective means to showcase and sell products and services and to develop
business relationships with many potential customers in a short time period,
while providing attendees an opportunity to view a broad range of products as
well as to interact with numerous suppliers at once. A 1996 study noted that
the cost of closing a sale with a trade show prospect is less than 50% of the
cost of closing a sale in the field. The number of U.S. expositions grew from
approximately 3,300 events in 1989 to approximately 4,400 events in 1996, a
33.8% increase. The amount of net square feet of U.S. expositions grew 65.9%
between 1989 and 1996, from approximately 270 million net square feet in 1989
to approximately 448 million net square feet in 1996. Attendance at U.S.
expositions has grown from approximately 60 million attendees in 1989 to
approximately 101 million attendees in 1996.
PRODUCTS AND SERVICES
The Company provides its products and services to selected industries, which
are grouped into broader industry-related clusters. The clusters are supported
by one centralized administrative support and production facility within each
region of the world.
49
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Within each cluster, Advanstar provides a comprehensive set of marketing
communications products, services and support geared to the particular
industry's marketing and customer needs. The Company provides advertising,
expositions, conferences, direct mail services, custom publishing and
research, database marketing programs, focus groups, market research,
reference books, internet services and other services to facilitate its
clients' business-to-business marketing and communications programs.
The Company's publications generally are controlled circulation, business-
to-business trade publications which are distributed free-of-charge to
qualified company-related recipients and generate revenues predominantly from
the sale of advertising space. Because Advanstar offers its advertisers access
to a highly targeted and industry-specific subscriber base, it is able to sell
advertising space in its publications at rates that are higher than the
average rates charged by publications aimed at more general audiences. The
Company seeks to increase advertising revenues by introducing current
advertisers to new titles, by attracting new advertisers targeted at the
Company's readership and by developing new reader and advertising categories
in both print and electronic editions.
Another central aspect of the Company's overall product offerings is its
leading expositions and conferences. In 1997, the Company held over 90
expositions and conferences. Events usually include an extensive conference
program, which provides a forum for the exchange and dissemination of
information relevant to the particular event's focus. In addition, each event
typically has one or more keynote speakers drawn from industry leaders.
50
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Advanstar's four industry clusters, Retail, Hospitality & Fashion;
Healthcare & Pharmaceutical; Information Technology & Communications; and
Manufacturing & Processing, and its Market Development cluster, as well as
publications and expositions provided for each, are set forth in the following
table:
RETAIL, HOSPITALITY & FASHION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FASHION BFiA MAGIC (2x)
BFiA Annual Directory (a) WWDMAGIC (2x)
HOSIERY & bodywear (b) MAGICKids (2x)
- ------------------------------------------------------------------------------------------------------------
ART Art Business News Artexpo New York
Art Business News Buyer's Guide
(a) Artexpo Los Angeles
Artexpo Preview (b) art International New York
- ------------------------------------------------------------------------------------------------------------
BEAUTY American Salon Long Beach International Beauty Expo
American spa IBS New York
The Green Book (a) IBS MIAMI - VIVA la BELLEZA!!
IBS SEATTLE
IBS BOSTON
IBS SAN DIEGO
IBS ATLANTA
IBS DALLAS
haircolor USA (c)
Serious Business (c)
- ------------------------------------------------------------------------------------------------------------
TRAVEL/HOSPITALITY Hotel & Motel Management International Hotel & Motel Management
HOSPITALITY PRODUCT NEWS Conference (c)
PREMIER HOTELS & RESORTS
PREMIER'S LUXURY DIGEST (b)
- ------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/MARKETING Video Store DIRECT RESPONSE TELEVISION EXPO
Response TV & CONFERENCE (2x)
Response TV Buyer's Guide (a) VSDA (d)
Li(C)ense! (d) East Coast Video Show (d)
wideband (d) Licensing International '98
Sight + Sound (d) Advertising Research Foundation and Research
Infoplex (e)
- ------------------------------------------------------------------------------------------------------------
MOTOR VEHICLE AFTERMARKET BUSINESS Dealernews International Powersports Dealer Expo
Dealernews Buyer's Guide (a) Dealernews International Powersports Distributor
Dealernews Expo
International Motorcycle Shows (9x)
- ------------------------------------------------------------------------------------------------------------
HEALTHCARE & PHARMACEUTICAL
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE Cosmetic Surgery TIMES Abilities Expo (5x)
Dermatology Times Wild West Veterinary Conference (c) (e)
dvm THE NEWSMAGAZINE OF
VETERINARY MEDICINE
Formulary
Geriatrics
Managed Healthcare
Modern Medicine
Ophthalmology Times
Ophthalmology Times
International
physician's management
Urology Times
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS PHARMACEUTICAL EXECUTIVE Applied Clinical Trials Conference (c)
Pharmaceutical Technology BioPharm Conference (c)
Pharmaceutical Technology
Europe PHARMACEUTICAL EXECUTIVE
Applied Clinical Trials CONFERENCE (c)
BioPharm PHARM TECH CONFERENCE (c)
Pharmaceutical Technology Asia Pharm Tech Europe Conference (c)
Pharmaceutical Technology Buyer's Guide (a) WORLDPHARM
- ---------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY & COMMUNICATIONS
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INFORMATION TECHNOLOGY CADALYST Internet & Electronic Commerce
PC GRAPHICS & VIDEO Conferences & Expositions (iEC) (2x) (d)
New Tekniques On Demand Digital Printing & Publishing
Digital Studio Conferences and Expos (2x)
POST Digital Content Creation (DCC)
Healthcare Information Technology (d)
- ---------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS America's Network Telexpo
TELECOM ASIA rnt eventos (13x) (c)
Telecom China
rnt Revista Nacional de
Telecomunicacoes
TelePress LATINOAMERICA
wireless Comunicaciones
THE TELECOM SOURCE BOOK (a)
TIA Directory (a)
TeleConference Magazine
Education at a Distance (ED)
- ---------------------------------------------------------------------------------------------------------------------
CALL CENTERS Voice+ ASAT Advance Speech Application
Voice+Asia Pacific & Technology
Teleprofessional Call Center Conference & Exposition
TPI Call Centre Solutions Australia
Call Center Products News TelEvolution
International Call Center Summit (c)(d)
TeleCon EAST
TeleCon XVIII
TeleCon Europe
The Summit (c)
ETTCon (c)
Call Center Solutions
ICCM
CALL CENTER CANADA (c)
Voice Europe (UK)
Voice Germany
Voice Asia
- ---------------------------------------------------------------------------------------------------------------------
MANUFACTURING & PROCESSING
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
APPLICATION TECHNOLOGY Automatic I.D. NEWS ID EXPO
Automatic I.D. NEWS Asia SCANTECH EXPO Europe
Automatic I.D. NEWS Europe SCANTECH
Automatic I.D. NEWS America Latina
Automatic I.D. NEWS Buyer's Guide (a)
Geo Info Systems
GPS World
gps world SHOWCASE (a)
GPS World Newsletter (b)
ITS World
GEO Convergencia
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ------------------------------------------------------------------------------------------
<C> <S> <C>
SCIENCE LC.GC ChemAnalysis Europe (c)
LC.GC International Spectroscopy Conference (c)
LC.GC Asia Pacific
LC.GC Buyer's Guides (a)
Spectroscopy
scientific data management
- ------------------------------------------------------------------------------------------
OEM/PROCESSING DCI Medical Device Conference &
DCI Buyer's Guide (a) Trade Show (2x)
Medical Device TECHNOLOGY European IVD Conference (c)
Medical Device TECHNOLOGY Motion Control Expo (2x)
Buyer's Guide (a) Parcel Shipping & Distribution
Expo
MET Plastics Fairs/WPE (3x)
PIT & QUARRY Sensors (2x)
PIT & QUARRY Handbook (a) Tech Med/MDT (d)
PLASTICS & COMPOUNDING
REDBOOK (a)
COSMETIC Insider's Report (b)
- ------------------------------------------------------------------------------------------
MARKET DEVELOPMENT
- ------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY SECTORS PUBLICATIONS EXPOSITIONS AND CONFERENCES
- ------------------------------------------------------------------------------------------
<C> <S> <C>
ENERGY LP/Gas
LP/Gas BUYER'S GUIDE (a)
Brown's Directory of North
American & International Gas
Companies (a)
- ------------------------------------------------------------------------------------------
ENVIRONMENTAL MANAGEMENT EMAT
EMAT West
- ------------------------------------------------------------------------------------------
LANDSCAPE Landscape management
Landscape management
Handbook (b)
TurfGrass TRENDS
Landscape management
GREENBOOK (a)
- ------------------------------------------------------------------------------------------
PAPER Official Board Markets (b)
PAPERBOARD PACKAGING WORLDWIDE
INTERNATIONAL CONTAINER
DIRECTORY (a)
Official Container
Directory (a)
- ------------------------------------------------------------------------------------------
PEST CONTROL Pest Control
Pest Control REDbook (a)
The Sanitarian (b)
- ------------------------------------------------------------------------------------------
PRINTING Graphic Communication 3 (GC3)
- ------------------------------------------------------------------------------------------
ROOFING RSI
RSI Buyer's Guide (a)
The Roofing Specifier
- ------------------------------------------------------------------------------------------
</TABLE>
ADDITIONAL PRODUCTS & SERVICES
- --------------------------------------------------------------------------------
Article and Ad Reprints . Business Networking Forums . Card Decks . Custom
Publishing . Custom Research . Custom Seminars . Custom Videotapes .
Database Marketing Programs . Decision-Maker Print and Electronic Databases
. Direct Mail Services . Directories on CD-ROM . Editorial/Subject Databases
. Electronic Publishing and Product Information . Mailing Lists . Market
Demographic Editions and Information . Reader Service .
Recruitment/Classified Advertising . Reference Books . Tutorials .
Videotapes . Internet "banners", links and sponsorships"
- ---------------------
(a) Directory
(b) Supplement, newsletter or other publication
(c) Stand-alone conference
(d) Joint venture
(e) Managed event
53
<PAGE>
Retail, Hospitality & Fashion
Advanstar's Retail, Hospitality & Fashion industry cluster serves the
fashion, art, beauty, travel and hospitality, entertainment, marketing and
motor vehicle industry sectors with a full range of publications, expositions
and conferences and marketing services.
On April 30, 1998, Advanstar acquired MAGIC. MAGIC, organized in 1933,
produces MAGIC, the world's largest and most widely recognized trade shows for
the men's apparel industry; WWDMAGIC, the largest women's apparel show in the
United States; and MAGICKids, a recently introduced children's apparel show.
The three shows are held concurrently in Las Vegas in February and August each
year. The February 1998 shows occupied an aggregate of approximately 505,000
net square feet of permanent floor space and 285,000 net square feet of
temporary floor space at the Las Vegas Convention Center and the Las Vegas
Hilton. Commencing with the August 1998 shows, the MAGIC trade shows will
occupy approximately 700,000 net square feet of permanent floor space at the
Las Vegas Convention Center and approximately 250,000 net square feet of
permanent floor space at the Sands Convention Center. The addition of the
Sands Convention Center will eliminate the need to use more costly temporary
space and will allow MAGIC to partially meet a long-standing backlog demand of
800 exhibitors. The February 1998 MAGIC trade shows attracted an audience of
over 80,000 attendees from over 100 countries, including major retailers, such
as Federated Department Stores, Nieman Marcus, Nordstrom's and Wal-Mart.
MAGIC's February 1998 trade shows included over 3,200 exhibitors (such as Levi
Strauss, Calvin Klein, Donna Karan and the Russell Corporation), representing
approximately 5,000 brand names. MAGIC's February 1996 and August 1996 trade
shows rank, respectively, as the 12th and 11th largest trade shows in the
United States. MAGIC's revenue, EBITDA and EBITDA margin for its fiscal year
ended May 31, 1997 were $31.2 million, $12.2 million and 39.3%, respectively.
For the nine months ended February 28, 1998, MAGIC's revenue, EBITDA and
EBITDA margin were $38.7 million, $20.7 million and 53.5%, respectively,
representing a revenue increase of 24.8% and an EBITDA increase of 47.4% over
the nine months ended February 28, 1997.
In the art sector, the Company serves buyers and sellers of mid-market
original art and high quality prints and posters. Advertising revenue of Art
Business News is a publication written for the gallery owner and art dealer
with a circulation of approximately 31,000. The Company's Artexpo New York is
the largest mid-market art show in the world, with approximately 133,000 net
square feet utilized at the Javits Convention Center in New York for the 1998
show. Total revenue from this event grew 49.3% in 1998 compared with 1997. The
Company intends to grow by introducing regional Artexpo shows in new cities
(Artexpo Los Angeles already exists), covering additional art market segments
in both magazines and shows (a trade only print and poster segment was added
to Artexpo in 1998), cross-selling between the art shows and the magazine, and
attracting additional international advertisers and exhibitors to the U.S.
market.
In the professional beauty and hair care sector, the Company is a leading
provider of marketing communications services to those vendors (e.g.,
Sebastian, Clairol and Nexxus) wishing to reach the salon owner, beautician
and hair care professional. The Company's magazine in this market is American
Salon, the #2 publication in the field as measured by number of advertising
pages. American Salon reaches a circulation of approximately 125,000. The
Company's IBS New York Show is the market leading exhibition and educational
event for the salon audience, with over 41,000 attendees and over 400
exhibiting companies occupying in excess of 100,000 net square feet of exhibit
space at the Javits Convention Center, New York each year in March. The
Company has seven additional IBS shows which, together with IBS New York,
occupy approximately 250,000 net square feet of exhibit space and attract
approximately 61,000 attendees. The IBS brand has a strong international
reputation and, in addition to continued strong international attendance at
U.S. shows, the Company believes there is opportunity to extend this brand
into international markets.
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<PAGE>
In the travel and hospitality sector, the Company has two main products--
Hotel & Motel management ("HMM"), and PREMIER HOTELS AND RESORTS, a twice-a-
year directory for the high-end travel agent market. HMM is the third largest
magazine in the Company's portfolio and has established a #2 position in both
readership and number of advertising pages in the hospitality management
market. It is generally published semi-monthly and is distributed to a
circulation of approximately 55,000 hotel managers, owners and developers.
PREMIER HOTELS AND RESORTS was launched in 1996 to provide the high-end travel
agent market in the U.S. with a high quality directory of worldwide four and
five star hotels and resorts. In 1997, PREMIER HOTELS AND RESORTS generated
628 advertising pages.
The major products in the entertainment and marketing sector are in the home
video market and the merchandise licensing market. The Company's largest
revenue magazine is Video Store, a weekly publication circulated to home video
retailers. Video Store is the #2 magazine in the field and generated
approximately 1,300 advertising pages in 1997. While the video retailing
sector may be mature, the competition for retail shelf space and the emergence
of new formats (such as digital video disks) are expected to sustain the
advertising market for many years. In February 1998, the Company contributed
its East Coast Video Show, a 40,000 square foot regional show for home video
retailers, to a 50/50 joint venture, called Home Video Entertainment Events,
with the Video Software Dealers Association, the operators of a 100,000 net
square foot annual event in Las Vegas. The venture intends to expand to other
home video events in North America and overseas.
In the merchandise licensing sector, the Company produces Licensing
International, the leading exhibition bringing together the owners and
developers of intellectual property and brands with the product developers and
merchandisers of licensed products. Sources of licensing include film and TV,
sports leagues and teams, major consumer product brands, and art and image
licenses. The total licensing market has been estimated at $120 billion in
licensed merchandise by the Licensing Industry Merchandisers Association, the
sponsor of the exhibition. Leveraging this show's strength, the Company
recently entered into a joint venture with Wideband, Inc. which publishes
Li(C)ense! to serve this large and rapidly growing worldwide market.
In the motor vehicle sector, the Company's strength is in the powersports
segment (motorcycles, snowmobiles, and personal watercraft). The Company's
exhibition portfolio includes events for each level of trade in the market--
nine consumer motorcycle shows in major metropolitan U.S. cities, the largest
aftermarket accessories show for motorcycle dealers, and a distributor event
for introduction of new product to the distribution channel. The Company's
position in this market is supported by its market leading controlled
circulation magazine, Dealernews, which is targeted at the powersports
retailer and supported by aftermarket product suppliers.
Healthcare & Pharmaceutical
The Company's portfolio in healthcare publishing includes ten high quality,
professionally respected magazines. Within the group, selected titles include
Geriatrics, Formulary, Dermatology Times, Ophthalmology Times and the leading
magazine for veterinarians, dvm THE NEWSMAGAZINE OF VETERINARY MEDICINE. In
contrast to the Company's business-to-business publishing, where circulation
is a competitive measure, all healthcare publications use circulation lists
supplied by the American Medical Association, thereby making readership the
primary competitive yardstick used by advertisers in this market. Among the
relevant segment competitors, Formulary, dvm THE NEWSMAGAZINE OF VETERINARY
MEDICINE and Geriatrics are each #1 or #2 in terms of readership and number of
advertising pages.
The Company serves the pharmaceutical sector in areas such as research and
development, manufacturing, packaging and marketing through a series of market
leading publications and
55
<PAGE>
conferences. Each of the Company's five publications in this market are #1 or
#2 in their respective market segments, based on number of advertising pages.
The Company's leading magazine in this market is Pharmaceutical Technology,
the Company's second largest magazine and the #1 publication in its field.
Published monthly and circulated to approximately 32,000 pharmaceutical
scientists, engineers and operations managers, Pharmaceutical Technology
generated 1,250 advertising pages in 1997. The Company built on this success
by launching Pharmaceutical Technology Europe, Pharmaceutical Technology Asia,
a related pharmaceutical technology buyer's guide, and a series of U.S. and
European conferences. Based upon this market strength, the Company launched a
major exhibition, WorldPharm, to be held for the first time in Philadelphia
during September 1998. Research is underway to extend the WorldPharm concept
to international markets. The Company also publishes PHARMACEUTICAL EXECUTIVE,
the leading magazine for product managers and marketing professionals within
pharmaceutical companies. As government regulation of this area becomes more
permissive, these professionals are increasingly targeting advertising and
promotion directly to consumers. Although approximately $1 billion was spent
in 1997 by pharmaceutical companies on direct to consumer marketing efforts,
product managers and marketing professionals have little training or
experience in consumer advertising and marketing, as their efforts have
historically been targeted at the doctor. PHARMACEUTICAL EXECUTIVE intends to
fill this need for education, research and information through a special
edition, starting initially as a supplement to PHARMACEUTICAL EXECUTIVE but
expanding to a stand-alone publication if market response is positive. The
first DTC Times supplement will be published in May, 1998.
Information Technology & Communications
Advanstar's Information Technology & Communications industry cluster serves
the global telecommunications, information technology and call center/computer
telephony industries with a wide range of publications, exhibits and
conferences and marketing services.
In the information technology sector, the Company is a highly targeted niche
publisher and exhibition organizer. The Company's largest information
technology publication, CADALYST, serves end users, managers and executives in
the Autodesk design and visualization industry, which includes AutoCAD and
related technologies. In 1997, CADALYST held the #1 market position in its
sector, based on number of advertising pages. Circulation totals slightly over
80,000, 30% of which is paid subscription. Another significant publication in
this group is PC Graphics & Video, a monthly magazine covering PC "platform"
applications involving digital graphics creation and digital video capture and
manipulation. Developers and users involved with graphics creation and
manipulation are shifting to the PC platform for future investments in
hardware and software, and PC Graphics & Video is their information and
marketing vehicle. Advertising pages grew by 21.0% in 1997 to approximately
570 pages. A directly related trade show and conference, Digital Content
Creation, has been launched by the Company and is planned for late 1998 in Los
Angeles. The largest existing trade exhibition in this group is the On Demand
Digital Printing and Publishing Conference and Expo. This exhibition was built
on the transition of traditional printing to a digital environment and
comprises approximately 80,000 net square feet. Major exhibitors include Xerox
Danka, Moure and IBM. The event is four years old and continues to expand
rapidly, growing approximately 30% from 1996 to 1997. The other events in the
group, including: iEC (internet & electronic commerce) and Healthcare
Information Technology, which is planned for launch in Boston in late 1998,
are 50/50 partnerships with the Gartner Group, the leading information
technology research and consulting group.
The rapidly evolving, newly competitive telecommunications sector is one of
the Company's most important and fastest growing targeted markets. The largest
and oldest publication in the Company's telecommunications portfolio is
America's Network, serving the telephone, cable TV and wireless
telecommunications industries. With a qualified circulation of approximately
50,000, America's Network is the #2 publication in its niche and generated
approximately 730 advertising pages in 1997. As most of the major vendors
operate globally (Ericcson, Lucent and GTE), the Company's growth strategy has
56
<PAGE>
been focused on increasing coverage of international markets. Advanstar
purchased the remaining interest of its minority partner in TELECOM ASIA and
Telecom China in late 1997, providing a wholly-owned platform to accelerate
growth in this region. In mid-1997, the Company acquired Telepress, a
Brazilian based publisher and conference organizer. In February 1998, the
Company acquired Telexpo, the largest telecom exhibition in Latin America. In
May 1998, the Company acquired the leading expositions and conferences for the
video conferencing and long distance learning industries,TeleCon.
Through its global reach and rapid growth, the Company's call center and
computer telephony sector serves as a primary example of the Company's
successful market-focused expansion strategy. The market is driven by the
integration of computers and traditional telephony into products such as
interactive voice response, automated phone answering and intelligent call
distribution. Principal applications are in customer service centers, help
desk operations and telemarketing, generally grouped under the term "call
centers." The Company has two market leading publishing properties, Voice+, a
pan-European magazine, and Voice+ Asia Pacific to provide a more comprehensive
product offering. In March 1998, the Company acquired Teleprofessional, the #3
U.S. publication in this market, which the Company believes is the fastest
growing publication in this field. The group also includes a series of market
leading exhibitions and conferences in the U.S., Canada, Europe, Asia and
Australia. Incoming Call Center Management Conference & Exhibition, the
largest U.S. event in this market, attracted approximately 1,400 conferees at
the most recent event. The other U.S. event, Call Center Conference &
Exhibition is held annually in February and grew 26.6% from 1997 to 1998. The
largest event in the group, Voice Europe (UK), grew 39.6% in 1997 compared to
1996. The Company also has Voice shows in Germany and Singapore and call
center events in Amsterdam, Sydney and Toronto.
Manufacturing & Processing
Within the application technology sector, the Company's strongest and
largest position is in the field of automatic data capture, identification and
tracking systems (bar coding, magnetic stripe, smart cards, biometrics and the
associated systems). Automatic ID NEWS is the #2 publication in the U.S. and
"sister" publications of the same name are market leaders in Europe, Asia and
Latin America. The Company expects that growth in this market will come from
new technologies (radio frequency applications for mobile applications),
deeper penetration into medium-sized and small firms and from the increasing
integration of the data capture and identification functions into enterprise-
wide systems and supply chain management. The Company also operates the #1
trade show and conference in the U.S., SCANTECH, and the market leading trade
show in Europe, SCANTECH EXPO Europe.
The Company serves the scientific instrumentation sector through four market
leading publications LC.GC (liquid and gas chromatography), LC.GC
International (a pan-European magazine), LC.GC Asia Pacific and Spectroscopy.
In total, the science group generated 1,262 advertising pages in 1997, up 9.7%
from 1996. The Company believes that exhibitions and conferences are a growth
opportunity and, as a result, is broadening Pharm Analysis Europe to cover a
wider range of applications and renaming the broadened event ChemAnalysis
Europe.
The OEM and processing sector is a grouping of publications, exhibitions and
conferences that focus on equipment, materials and intermediate products used
in the manufacturing and processing of a wide range of products. Magazines in
this market include DCI (cosmetic, toiletry, OTC drugs and personal care
product manufacturing), Medical Device TECHNOLOGY (pan-European) and PIT &
QUARRY (aggregates extraction and processing). Exhibitions and conferences
include three regional plastics exhibitions, each running on a two year on and
one year off cycle, market leading Medical Device Technology Trade Show &
Conference events in Europe and two Sensors Expos.
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Market Development
The Company has grouped the balance of its products and services into a
Market Development cluster to provide focus on growth through internal
development or acquisition. This group addresses large and attractive markets
(i.e., energy, landscape management, printing, roofing and construction) in
which the Company does not yet have critical mass. For example, in the fashion
and apparel market, the Company's only participation prior to the MAGIC
Acquisition, was in the intimate apparel segment through the market leading
magazine BFiA (body fashion/intimate apparel). This magazine and its related
products will join the MAGIC trade shows in the Retail, Hospitality & Fashion
cluster and, management believes, will grow significantly through its
relationship with MAGIC.
COMPANY OPERATIONS
Publications. The Company has an established and efficient publishing
infrastructure in the U.S. and Europe. The Company's publications generally
follow the controlled circulation model. Recipients are targeted through
market research to determine the market coverage and purchasing authority
desired by prospective advertisers. Based on existing and acquired mail lists,
the targeted recipient is then solicited through promotions offering free
subscriptions to the relevant publications. High quality circulation is
achieved when a high percentage of the circulation list is recently qualified
(within one or two years) and the publication is delivered at the direct
request of the recipient. Recipients are qualified and re-qualified on a
regular basis through both direct mail and through qualification cards
included in the publication. The Company maintains highly experienced and
efficient circulation management teams in Duluth, Minnesota, Eugene, Oregon
and Chester, United Kingdom. The Company believes that its circulation lists
for its U.S. and European publications provide the market coverage and buying
power desired by the Company's advertising customers.
Advertising sales and editorial functions are dispersed throughout the U.S.,
Asia, Brazil, Europe and the U.K. Advertising sales are predominantly executed
by the Company's employees. Editorial content for the Company's publications
is primarily staff-written, with some editorial contribution by freelance
writers and industry or professional participants in selected markets.
The Company believes it is highly efficient in all functions related to the
production of its publications. Advertising materials and editorial content
are integrated in the Company's Duluth and Chester production facilities,
where layout, ad insertion and output to film is completed. All printing is
outsourced to vendors in various regions, but printing contracts are
negotiated and managed centrally. The Company purchases paper centrally
through a relationship with one of the industry's largest paper brokers. This
broker ships paper directly from the mills to the printers at the Company's
request. The Company maintains its own central U.S. fulfillment operations in
Duluth to generate mailing labels and mailing instructions for the printers.
The Company's workforce is highly experienced and is based in relatively low-
cost locations in Duluth and Chester. The Company is establishing the same
back-office infrastructure in both Latin America and Asia.
Expositions and Conferences. The operational model for exhibitions and
conferences is quite different from publishing, due to the physical nature of
the product and the time cycle for event planning and execution. Basic
positioning and sales and marketing strategy is decided before each event--as
much as 18 months in the case of new launches and typically more than one year
for recurring events. In many cases, venue and hotel plans must be made
several years in advance, particularly for primary markets such as New York,
Chicago, Las Vegas, Los Angeles and San Francisco.
The sales cycle for any recurring show typically begins shortly before the
preceding show, with pricing, preliminary floor plans, and exhibitor promotion
mailed in advance so that active selling can begin in person at the
exposition. Typically, this active selling includes taking booth reservations
and/or contracts and small deposits for the future show. The space selection
process is generally handled on
58
<PAGE>
a priority point system, combining exhibiting history and booth size. Certain
of the Company's shows (Dealernews or Call Center, for example) sell over 80%
of their exhibit space before the preceding event is over. The sales cycle
continues with selling to new exhibitors, resolving customer service requests
and collecting progress payments. Typically, customer payments are received in
full before the show begins.
In addition to the sale of exhibit space, exhibitors are offered a wide
range of promotional opportunities to raise their visibility at an event.
These can include directory and preview advertising, banners, sponsorships of
various functions, and a wide variety of other products or services.
Conferences linked to exhibitions play a crucial strategic role in
exhibition development. A conference represents the "editorial" for an event,
which can be used to build new segments, raise the profile of particular
segments or technologies and drive attendance. Conference development is led
by Company personnel with the support of editorial staff and industry experts.
Operationally, the Company functions in a capacity similar to a general
contractor. Venues, hotels, and vendors for decorating, registration, travel
and housing, audio-visual services and other services are selected and managed
by Company personnel in central exposition operations. While the production of
a show may ultimately involve hundreds of workers on site, very few of these
are Company employees, thus minimizing overhead and permanent staffing costs.
Attendee and conference promotion is the largest single expense in producing
trade shows, expositions and conferences. Promotion is primarily undertaken
through direct mail, using both in-house and rented lists of pre-qualified
industry participants and the cooperative efforts of exhibitors. Where the
Company also has publications in the field, the magazines play a key role by
providing lists from circulation files and providing editorial coverage for
the upcoming show. Other industry magazines are also involved as the event
goal is to represent the entire industry. Relationships with publications are
normally based on an exchange of show ads and lists for booth space and on-
site visibility. The "show issue" of an industry magazine for a related event
is often the biggest issue of the year, as the advertisers want to reinforce
their show presence by making sure attendees know they will be prominent at
the show. Show attendance is typically free for pre-registered attendees, with
modest fees for on-site registrants. Conference attendance can be a
significant revenue source, with courses or full session pricing ranging from
less than $100 to over $1,000, depending on the content being delivered and
competitive pricing.
COMPETITION
Competition for Advanstar's products and services is highly fragmented, both
by product and geography, and exists at many levels. On a global level, there
are several much larger international firms--such as Reed Elsevier and United
News and Media--which operate in many geographic markets and have broad
product offerings in publishing, expositions and conferences and marketing
services. Many of these competitors are better capitalized and have
substantially greater financial and other resources than the Company. In a few
cases, these firms operate in the same market as the Company. In general,
these large firms are organized and market their products and services by
product and geographic location, not on an integrated basis.
Within each particular industry sector, the Company generally has a large
number of direct and indirect competitors. In some cases, these competitors
operate in several geographic areas. In other cases, they operate in only one
geographic market. In most cases, these competitors are small to medium-sized
corporations. However, in several industries markets such as information
technology and healthcare, there are large competitors focused on a single
industry. In expositions and conferences in particular, there are many not-
for-profit association competitors and, in several countries, the exposition
hall owner and operator may also be a competitor.
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In any given publishing marketplace in a particular country, there are
typically two to five direct competitors for both readers and advertisers.
Additionally, there are usually many indirect competitors who define market
segments differently and thus may be alternatives for either the reader or the
advertiser.
Exposition and conference competition in each market and country occurs on
many levels. There is seldom any truly direct competitor for a particular
event, given the uniqueness of venue and date. However, given the availability
of alternative venues and the ability to define events for particular market
segments and/or with different strategic positioning, the range of competition
for exposition dollars, sponsorships and show attendees and conferees is
extensive. Because there are few barriers to entry, the Company anticipates
that, as the trade publications and expositions industries evolve, additional
competitors with greater resources than the Company may enter the markets, or
particular segments of the markets, thereby intensifying competition.
INTELLECTUAL PROPERTY
The Company has developed strong brand awareness for its principal products
and services. Accordingly, the Company considers its trademarks, servicemarks,
copyrights, trade secrets and similar intellectual property as important to
its success and relies on trademark, servicemark, copyright and trade secret
laws, as well as licensing and confidentiality agreements, to protect its
intellectual property rights. The Company generally registers its material
trademarks and servicemarks in the United States and in certain other key
countries in which these marks are used. Effective trademark, servicemark and
trade secret protection may not be available in every country in which the
Company's products and services are available.
EMPLOYEES
As of May 31, 1998, the Company had approximately 1,200 full-time employees.
None of the Company's U.S. employees is represented by a labor union. The
Company considers its relationships with its employees to be good.
FACILITIES
The Company's finance and administration, circulation, fulfillment,
production and other necessary operational support facilities are located in
Duluth, MN. The Company has executive marketing, sales and editorial offices
in other cities in the United States, including Boston (MA), Cleveland (OH),
New York (NY), Edison (NJ), Eugene (OR), Fairfield (CT), Chicago (IL), Santa
Ana (CA), Waterloo (IA), Woodland Hills (CA) and Brentwood (CA). In addition,
the Company has offices in Sao Paulo and Rio de Janiero, Brazil; Hong Kong,
China; and Chester, United Kingdom.
The Company generally leases its offices from third parties. In addition,
the Company owns its operations offices in Duluth, Minnesota and Cleveland,
Ohio. The Company believes that its properties are in good operating condition
and that suitable additional or alternative space will be available on
commercially reasonable terms for future expansion.
LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings other than ordinary
course, routine litigation which is not material to the business, financial
condition, or results of operations of the Company.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding the directors,
executive officers and key employees of Advanstar.
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Robert L. Krakoff....... 62 Chairman of the Board and Chief Executive Officer
James M. Alic........... 55 Vice Chairman and Director
Ira T. Siegel........... 53 Vice Chairman and Chief Operating Officer
Martin C. ("Skip")
Farber................. 45 Vice President--Business Development
David W. Montgomery..... 40 Vice President--Finance, Chief Financial Officer and
Secretary
William J. Cooke........ 46 Executive Vice President
Alexander S. DeBarr..... 38 Executive Vice President
Glenn A. Rogers......... 46 Executive Vice President
Joseph Loggia........... 39 President--MAGIC
Kenneth T. Berliner..... 38 Director
Mitchell R. Cohen....... 34 Director
John M. Pasquesi........ 38 Director
</TABLE>
Messrs. Krakoff, Alic, Siegel and Farber are employees of Holdings. Mr.
Montgomery is an employee of the Company. All key employees are employees of
the Company. The directors of the Company are also the directors of Holdings.
Executive Officers
Robert L. Krakoff has served as the Company's Chairman and Chief Executive
Officer since he joined the Company in July 1996. From January 1993 to June
1996, he was Chairman and Chief Executive Officer of Reed Publishing USA, a
division of Reed Elsevier Inc. which included Cahners Publishing Company, a
trade publications business, and Reed Exhibition Companies, an exposition and
conference business. From January 1993 to June 1996, he was also a member of
the board of directors of Reed Elsevier PLC.
James M. Alic has served as the Company's Vice Chairman since he joined the
Company in July 1996. From June 1995 to June 1996, he was Vice President and
Controller of IBM Corporation, a computer hardware and software manufacturer.
From September 1994 to May 1995, he was Chairman of Reed Exhibition Companies.
From August 1991 to August 1994, he was President of Reed Exhibitions North
America.
Ira T. Siegel joined the Company as a Vice Chairman and its Chief Operating
Officer in May 1998. From 1995 through 1997, Mr. Siegel served as President
and Chief Executive Officer of LEXIS-NEXIS, a unit of Reed Elsevier, Inc. and
a global online information delivery service. From 1986 to 1995, Mr. Siegel
served as President and Chief Executive Officer of Reed Reference Publishing,
a division of Reed Elsevier, Inc.
Martin C. ("Skip") Farber has served as the Company's Vice President--
Business Development since he joined the Company in October 1996. From
February 1993 to September 1996, he was Vice President for Business
Development of Reed Publishing USA., which included Cahners Publishing Company
and Reed Exhibition Companies. From July 1995 to September 1996, Mr. Farber
also had responsibility for Cahners Direct Marketing Services, a division of
Reed Elsevier Inc.
David W. Montgomery has served as the Company's Vice President--Finance and
Chief Financial Officer since January 1994. From July 1989 to December 1993,
he was the Company's Director of Corporate Finance. In July 1992, he became
the Company's Secretary. From January 1981 to June 1989, he was a practicing
CPA with McGladrey Pullen in Minneapolis, St. Paul, Minnesota.
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<PAGE>
Key Employees
William J. Cooke has served as the Company's Executive Vice President with
responsibility for the pharmaceutical and OEM industry sectors, the Market
Development cluster and the market services group since June 1997. In
addition, Mr. Cooke is responsible for corporate marketing and corporate
training. From July 1995 to May 1997, he was Group Vice President of the
Company. From July 1993 to June 1995, he was President of the marketing
services division of the Company. From 1988 until June 1993, Mr. Cooke was
Vice President of Strategic Planning and Marketing for Dun & Bradstreet
Corporation.
Alexander S. DeBarr has served as the Company's Executive Vice President
with responsibility for the beauty, art, hotel/travel, motor vehicle and
applied technology industry sectors since June 1997. From February 1995 to May
1997, he was Group Vice President of the Company. Mr. DeBarr also served as a
Group Publisher of the Company from February 1993 until January 1995.
Glenn A. Rogers has served as the Company's Executive Vice President with
responsibility for the information technology and communications industry
sectors and for the entertainment industry sector since June 1997. From April
1995 to May 1997, he was Group Vice President of the Company. From June 1991
to March 1995, he was President of Island Publishers, a private Canadian
publisher of community newspapers.
Joseph Loggia has served as MAGIC's President and Chief Executive Officer
since May 1997, President from August 1996 and Chief Operating Officer
beginning in 1995. From January 1993 to August 1996, he was Chief Financial
Officer of MAGIC. Prior to joining MAGIC, Mr. Loggia, who is a certified
public accountant, was a manager at the accounting firm of Coopers & Lybrand
responsible for Fraud & Financial Investigations.
Directors
Kenneth T. Berliner has served as a director of the Company since the HFCP
III Acquisition. Since 1992, Mr. Berliner has been employed by Peter J.
Solomon Company Limited ("PJSC"), an investment banking firm. He is currently
a managing director at PJSC.
Mitchell R. Cohen has served as a director of the Company since the HFCP III
Acquisition. Since January 1998, Mr. Cohen has been a Managing Director of
Hellman & Friedman LLC, a private equity investment firm. From January 1993 to
December 1997, Mr. Cohen was a General Partner of Hellman & Friedman. Mr.
Cohen is also a director of Western Wireless Corporation and MobileMedia
Corporation.
John M. Pasquesi has served as a director of the Company since the HFCP III
Acquisition. Since January 1998, Mr. Pasquesi has been a Managing Director of
Hellman & Friedman LLC, a private equity investment firm. From January 1989 to
December 1997, Mr. Pasquesi was a General Partner of Hellman & Friedman. Mr.
Pasquesi is also a director of The Covenant Group Inc.
DIRECTOR COMPENSATION
Directors are reimbursed by the Company for out-of-pocket expenses incurred
in attending meetings of the Board of Directors. Directors are not compensated
for serving on the Board of Directors of Holdings or the Company.
Directors of the Company are entitled to indemnification by the Company in
accordance with the Company's Restated Certificate of Incorporation and by-
laws to the fullest extent permitted under New York law. Directors of Holdings
are entitled to indemnification by Holdings in accordance with Holdings'
Certificate of Incorporation and by-laws to the fullest extent permitted under
Delaware law.
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EXECUTIVE COMPENSATION
The compensation of executive officers determined by the Company's Board of
Directors, except for the salary and bonus of Mr. Krakoff and Mr. Alic, each
of whom has an employment agreement with Holdings. See "--Certain Plans and
Employment Agreements". The following table sets forth certain information
concerning compensation received by the Chief Executive Officer of the Company
and the other executive officers of the Company (the "Named Executive
Officers") for services rendered to Advanstar for the year ended December 31,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION
--------------------------- ---- --------- ----------- ------------
<S> <C> <C> <C> <C>
Robert L. Krakoff...................... 1997 400,000 150,000 12,449(2)
Chairman of the Board and Chief
Executive Officer
James M. Alic.......................... 1997 300,000 112,500 7,260(3)
Vice Chairman
Martin C. ("Skip") Farber.............. 1997 250,000 87,000 2,713(3)
Vice President--Business Development
David W. Montgomery.................... 1997 170,000 60,000 5,860(3)
Vice President--Finance, Chief
Financial Officer and Secretary
</TABLE>
- --------
(1) Bonuses for 1997 are reported in the year earned, even though they were
actually paid in 1998.
(2) Constitutes value of group term life insurance benefits paid for by the
Company.
(3) Constitutes value of group term life insurance benefits paid for by the
Company and contributions made by the Company to a defined contribution
plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made by Holdings
during the year ended December 31, 1997 pursuant to the 1996 Plan (as defined
below) to each of the Named Executive Officers. Advanstar has not granted any
stock options. Neither Holdings nor Advanstar has granted any stock
appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
------------------------------------------------ ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE(1) EXPIRATION
NAME GRANTED (#) FISCAL YEAR (%) ($/SHARE) DATE 5% ($) 10% ($)
---- ----------- --------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Krakoff....... -- -- -- -- -- --
James M. Alic........... -- -- -- -- -- --
Martin C. ("Skip")
Farber(3).............. 16,700 15.0 11.00 2007 $ 313,081 $ 793,408
David W. Montgomery(4).. 10,000 9.0 11.00 2007 187,473 475,095
</TABLE>
- --------
(1) The options granted are subject to a five-year vesting schedule pursuant
to which the options vest in 20% increments on each anniversary of the
date of grant. On May 31 of each year, the exercise price per option
increases by 10% over the previous year's exercise price. The exercise
price per option increases by a pro rated amount of such 10% increase in
the case of exercises which do not occur on May 31.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the Common
Stock over the term of the options. The exercise prices of the options
increases 10% per year over the life of the option. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission (the "Commission") and do not reflect the Company's estimate of
future stock price growth. Actual gains, if any, on stock option exercises
and Common Stock holders are dependent on the timing of such exercises and
the future performance of the Common Stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that
the amounts reflected will be received by the individuals.
(3) As of December 31, 1997, Mr. Farber had been granted options to purchase
an aggregate of 132,900 shares of Common Stock, 23,300 of which are
exercisable within 60 days of May 31, 1998.
(4) As of December 31, 1997, Mr. Montgomery had been granted options to
purchase an aggregate of 90,000 shares of Common Stock, 16,000 of which
are exercisable within 60 days of May 31, 1998.
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<PAGE>
CERTAIN PLANS AND EMPLOYMENT AGREEMENTS
Stock Option Plan. Holdings' 1996 Stock Option Plan (the "1996 Plan")
provides for the issuance of a maximum of 745,200 shares of Common Stock
pursuant to the grant of non-qualified stock options to employees and other
individuals who render services to Holdings or the Company.
The 1996 Plan is administered by the Board of Directors. Subject to the
provisions of the 1996 Plan, the Board of Directors has the authority to
determine the terms of options granted, including the authority to: (i)
determine to whom options may be granted; (ii) determine the time or times at
which options shall be granted; (iii) determine the exercise price of shares
subject to each option; (iv) determine the time or times when each option
shall become vested and exercisable and the duration of the exercise period;
(v) extend the period during which outstanding options may be exercised; (vi)
determine whether restrictions such as repurchase options are to be imposed on
shares subject to options and the nature of such restrictions, if any; and
(vii) interpret the 1996 Plan and prescribe and rescind rules and regulations
relating to it. The 1996 Plan provides that the Board of Directors will take
whatever actions it deems necessary, under Section 422 of the Internal Revenue
Code of 1986, as amended, and the regulations promulgated thereunder, to
ensure that options granted under the 1996 Stock Plan are not treated as
"incentive stock options".
With the exception of the options granted to Mr. Loggia, each option granted
as of May 31, 1998 is subject to a five-year vesting schedule pursuant to
which the options vest in increments of approximately 20% on each of the first
five anniversaries of the date of grant. Prior to an initial public offering
of Holdings, each outstanding option shall become fully exercisable in the
event of a "change of control." A "change of control" means the acquisition by
any person or group of persons (other than an affiliate or affiliates of HFCP
III) of more than 50% of the outstanding shares of Common Stock or shares of
capital stock constituting more than 50% of Holdings' voting capital stock, or
of all or substantially all of Holdings' assets. The Board of Directors may,
in its discretion and in accordance with the provisions of the 1996 Plan,
accelerate the vesting of any option.
In addition, each share to be acquired upon exercise of an option is subject
to Holdings' right to repurchase all but not less than all of such shares.
Holdings may exercise its right of repurchase upon the occurrence of any of
the following: (i) the termination of the optionee's relationship with
Holdings for any reason; (ii) the receivership, bankruptcy or other creditor's
proceeding regarding the optionee or the taking of shares acquired upon
exercise of an option by legal process; (iii) distribution of shares acquired
upon exercise of an option to the optionee's spouse pursuant to a decree of
dissolution, operation of law, divorce or any other reason, except as may be
permitted by the Holdings; or (iv) a breach of the optionee's duty not to
compete or solicit any employee of Holdings or its affiliates within one year
of the termination of the optionee's relationship with Holdings. Upon the
occurrence of a repurchase event, Holdings may exercise its repurchase right
within sixty days following the later of the date of the exercise of options
or the date Holdings receives actual knowledge of a repurchase event. Subject
to certain exceptions, the repurchase price of the shares (if terminated other
than for cause), is fair market value as determined pursuant to the 1996 Plan.
As of May 31, 1998, options to purchase 710,400 shares of Common Stock at an
average exercise price of $12.10 were outstanding under the 1996 Plan, and no
options had been exercised.
401(k) Plan. Holdings has an Employees' 401(k) Plan and Trust (the "401(k)
Plan"). All current and future employees who have completed one year of
service with Holdings, the Company or any other domestic subsidiary of
Holdings and are at least 21 years of age are eligible to participate in the
Plan. Participants in the 401(k) Plan may not contribute more than the lesser
of a specified statutory amount ($9,500 in 1997) or 15% of his or her pre-tax
total compensation. Holdings is required to cause to be made a matching
contribution to the 401(k) Plan in accordance with the following schedule: (1)
with respect to the employee's elective contribution in an amount up to two
percent (2%) of the
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<PAGE>
employee's gross compensation, the matching contribution is required to be
equal to 100% of the employee's contribution; (2) with respect to the
employee's elective contribution in excess of 2% and not in excess of 6% of
gross compensation, the matching contribution is required to be equal to 25%
of such employee's contribution; and (3) with respect to the employee's
elective contribution in excess of six percent (6%) of gross compensation,
there shall be no matching contribution. The 401(k) Plan permits, but does not
require, discretionary contributions to the 401(k) Plan by Holdings' Eligible
employees are vested 100% in their own contributions. Contributions made by
Holdings vest in equal installments over five years.
Employment Agreements. Mr. Krakoff and Mr. Alic entered into employment
agreements with Holdings dated as of July 1, 1996. Each agreement provides for
a four year term. Pursuant to the agreements, Mr. Krakoff and Mr. Alic are
entitled to annual base salaries of not less than $400,000 and $300,000,
respectively. Mr. Krakoff and Mr. Alic are entitled to annual bonuses based on
the Company's EBITDA for any year, up to a maximum bonus in any one year of
100% of base salary. The agreements provide for indemnification of the
executives to the extent permissible under Delaware law. Pursuant to Mr.
Krakoff's agreement, Holdings agreed to establish a stock option plan for
employees of the Company and to make additional options available for grant in
the event of additional equity capital contributions to Holdings (subject to a
maximum of $200 million of contributed equity capital). The agreements provide
for severance benefits equal to one year's base salary and benefits (and a pro
rated bonus) upon termination of employment by Holdings without "cause" or by
the executive for "good reason" (which includes a change of control). Mr.
Krakoff and Mr. Alic also entered into noncompetition and confidentiality
agreements with Holdings. The noncompete period is one year after termination
of employment unless employment is terminated by Holdings without cause or by
the executive for good reason, in which case the noncompetition period is six
months. During the noncompetition period, the executives may not hire any
Company employee or solicit any trade show or publishing business from a third
party which has a relationship or contract with the Company.
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<PAGE>
PRINCIPAL STOCKHOLDERS
All of the Company's issued and outstanding capital stock is indirectly
owned by Holdings. As of May 31, 1998, the outstanding equity securities of
Holdings consisted of 16,733,333 shares of Common Stock. The following table
sets forth certain information as of May 31, 1998 regarding the beneficial
ownership of (i) each person who is known to Holdings to beneficially own more
than 5% of the outstanding shares of the Common Stock; (ii) each director of
Holdings; (iii) each Named Executive Officer; and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) OWNED (1)
- ------------------------------------ ------------ -------------
<S> <C> <C>
AHI Advanstar LLC (2)............................... 16,733,333 100%
One Maritime Plaza
San Francisco, CA 94111
Robert L. Krakoff** (2)............................. -- --
James M. Alic** (2)................................. -- --
Ira T. Siegel** .................................... -- --
Martin C. ("Skip") Farber** (3)..................... 23,300 *
David W. Montgomery** (4)........................... 16,000 *
Kenneth T. Berliner** (2)(5)........................ -- --
Mitchell R. Cohen** (2)............................. -- --
John M. Pasquesi** (2).............................. -- --
All directors and executive officers as a group
(7 persons) (6).................................... 39,300 *
</TABLE>
- --------
* Represents less than 1% of the outstanding Common Stock.
** c/o Advanstar Communications Inc., 7500 Old Oak Boulevard, Cleveland, Ohio
44130-3369.
(1) Applicable percentage of ownership as of the May 31, 1998 is based upon
16,733,333 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Commission, and includes
voting and investment power with respect to shares. Unless otherwise
indicated below, to the knowledge of Holdings, all persons listed below
have sole voting and investment power with respect to their shares of
Common Stock, except to the extent authority is shared by spouses under
applicable law. Pursuant to the rules of the Commission, the number of
shares of Common Stock deemed outstanding includes shares issuable
pursuant to options held by the respective person or group which may be
exercised within 60 days of May 31, 1998 ("presently exercisable stock
options").
(2) AHI Advanstar LLC ("AHI Advanstar") is the sole owner of all of the
outstanding shares of Common Stock of Holdings. Hellman & Friedman Capital
Partners III, LP, a California limited partnership ("HFCP"), H&F Orchard
Partners III, L.P., a California limited partnership ("HFOP III"), H&F
International Partners III, L.P., a California limited partnership ("HFIP
III", and, together with HFCP and HFOP III, "HFCP III"), Mr. Krakoff and
Mr. Alic own all of the membership interests of AHI Advanstar. HFCP III
owns approximately 98% of the membership interest of AHI Advanstar. H&F
Investors III, a California general partnership ("HFI III"), is the
general partner of each of HFCP, HFOP III and HFIP III. The managing
general partner of HFI III is Hellman & Friedman Associates III, L.P., a
California limited partnership whose managing general partner is H&F
Investors III, Inc., a California corporation ("HFI III, Inc.") which is
wholly owned by the Hellman Family Revocable Trust. The investment
decisions of HFI III, Inc. are made by an executive committee, of which
Mr. Pasquesi is a member. The executive committee indirectly exercises
sole voting and investment power with respect to the shares of Holdings
owned by AHI
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<PAGE>
Advanstar. Mr. Pasquesi and Mr. Cohen disclaim beneficial ownership of such
shares. Mr. Krakoff has made a $1.5 million investment in AHI Advanstar and
Mr. Alic has made a $0.5 million investment in AHI Advanstar. Each of PJSC,
Mr. Krakoff and Mr. Alic has a carried interest in AHI Advanstar.
(3) Consists of 23,300 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(4) Consists of 16,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(5) Mr. Berliner is a managing director of PJSC.
(6) Consists of 39,300 shares of Common Stock issuable pursuant to presently
exercisable stock options.
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<PAGE>
THE EXCHANGE OFFER
PURPOSES AND EFFECTS OF THE EXCHANGE OFFER
The Original Notes were sold by the Company on April 30, 1998 (the "Issue
Date") to the Initial Purchasers pursuant to a Purchase Agreement dated as of
April 27, 1998 (the "Purchase Agreement"). As a condition to the sale of the
Original Notes, the Company and the Initial Purchasers entered into the
Registration Rights Agreement on the Issue Date. Pursuant to the Registration
Rights Agreement, the Company agreed that, unless the Exchange Offer is not
permitted by applicable law or Commission policy, it would (i) file with the
Commission a Registration Statement under the Securities Act with respect to
the Exchange Notes within 60 days after the Issue Date, (ii) use its
reasonable best efforts to cause such Registration Statement to become
effective under the Securities Act within 150 days after the Issue Date and
(iii) upon effectiveness of the Registration Statement, commence the Exchange
Offer, keep the Exchange Offer open for at least 30 days (or a longer period
if required by law) and deliver to the Exchange Agent Exchange Notes in the
same aggregate principal amount at maturity as the Original Notes that were
tendered by holders thereof pursuant to the Exchange Offer.
Under existing Commission interpretations, the Exchange Notes would in
general be freely transferable after the Exchange Offer without further
registration under the Securities Act; provided, that in the case of broker-
dealers, a prospectus meeting the requirements of the Securities Act will be
delivered as required. The Company has agreed to make available a prospectus
meeting the requirements of the Securities Act to any broker-dealer for use in
connection with any resale of any such Exchange Notes acquired as described
below for such period of 90 days after the Expiration Date. A broker-dealer
that delivers such a prospectus to purchasers in connection with such resales
will be subject to certain of the civil liability provisions under the
Securities Act, and will be bound by the Registration Rights Agreement
(including certain indemnification rights and obligations). A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Registration Statement of
which this Prospectus is a part is intended to satisfy certain of the
Company's obligations under the Registration Rights Agreement and the Purchase
Agreement.
The Company is generally not required to file any registration statement to
register any outstanding Original Notes. Holders of Original Notes who do not
tender their Original Notes or whose Original Notes are tendered but not
accepted will have to rely on exemptions to registration requirements under
the securities laws, including the Securities Act, if they wish to sell their
Original Notes.
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer
who purchases such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii)
any such holder which is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) who exchanges Original Notes for Exchange
Notes in the ordinary course of business and who is not participating, does
not intend to participate, and has no arrangement with any person to
participate, in the distribution of the Exchange Notes, will be allowed to
resell the Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes
a prospectus that satisfies the requirements of Section 10 of the Securities
Act. However, if any holder acquires the Exchange Notes in the Exchange Offer
for the purpose of distributing or participating in the distribution of the
Exchange Notes or is a broker-dealer, such holder cannot rely on the position
of the staff of the Commission enumerated in certain no-action letters issued
to third parties and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction,
unless an exemption from registration is
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<PAGE>
otherwise available. Each broker-dealer that receives Exchange Notes for its
own account in exchange for Original Notes, where such Original Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, may be a statutory underwriter and must acknowledge
that it will deliver a prospectus in connection with any resale of such
Exchange Notes. The prospectus may be the Prospectus for the Exchange Offer,
so long as it contains a plan of distribution with respect to such resale
transaction. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Original Notes where such Original Notes were
acquired by such broker-dealer as a result of market-making or other trading
activities. Pursuant to the Registration Rights Agreement, the Company has
agreed to make this Prospectus, as it may be amended or supplemented from time
to time, available to broker-dealers for use in connection with any resale for
a period of 180 days after the Expiration Date. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept any and
all Original Notes validly tendered and not withdrawn prior to the Expiration
Date. The Company will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of outstanding Original Notes
surrendered pursuant to the Exchange Offer. Holders may tender some or all of
their Original Notes pursuant to the Exchange Offer; provided, however, that
Original Notes may be tendered only in integral multiples of $1,000. The
Exchange Offer is not conditioned upon any minimum aggregate principal amount
of Original Notes being tendered for exchange.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes except that (i) the Exchange Notes will be registered
under the Securities Act and, therefore, will not bear legends restricting
their transfer and (ii) holders of the Exchange Notes will not be entitled to
the certain rights of holders of Original Notes under the Registration Rights
Agreement, which rights will terminate upon the consummation of the Exchange
Offer. The Exchange Notes will evidence the same debt as the Original Notes
(which they replace) and will be issued under, and be entitled to the benefits
of, the Indenture, which also authorized the issuance of the Original Notes,
such that all outstanding Notes will be treated as a single class of debt
securities under the Indenture.
Interest on the Exchange Notes will accrue from the most recent date to
which interest has been paid on the Original Notes or, if no interest has been
paid, from November 1, 1998. Accordingly, registered holders of Exchange Notes
on the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from November 1, 1998. Original Notes accepted for exchange will cease
to accrue interest from and after the date of the consummation of the Exchange
Offer. Holders whose Original Notes are accepted for exchange will not receive
any payment in respect of interest on such Original Notes otherwise payable on
any interest payment date, the record date for which occurs on or after
consummation of the Exchange Offer.
As of the date of this Prospectus, $150 million aggregate principal amount
of the Original Notes are outstanding. Only a registered holder of the
Original Notes (or such holder's legal representative or attorney-in-fact) as
reflected on the records of the Trustee under the Indenture may participate in
the Exchange Offer. There will be no fixed record date for determining
registered holders of the Original Notes entitled to participate in the
Exchange Offer.
Holders of the Original Notes do not have any appraisal or dissenters'
rights under the Indenture in connection with the Exchange Offer. The Company
intends to conduct the Exchange Offer in
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<PAGE>
accordance with the provisions of the Registration Rights Agreement and the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the Commission thereunder. The Company shall be deemed to
have accepted validly tendered Original Notes when, as and if the Company has
given oral or written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering holders of Original Notes for the purposes
of receiving the Exchange Notes from the Company.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Notes will
be returned without expense to the tendering holders thereof (or in the case
of Original Notes tendered by book-entry transfer, such Original Notes will be
credited to the account of such holder maintained at the Depository), as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Holders who tender Original Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "The Exchange Offer--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; TERMINATION
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended. In order to extend the Exchange
Offer the Company will notify the Exchange Agent of any extension by oral
(promptly confirmed in writing) or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date of the Exchange
Offer. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Original Notes, (ii) to extend the Exchange Offer, (iii) if any
conditions set forth below under "--Certain Conditions to the Exchange Offer"
shall not have been satisfied, to terminate the Exchange Offer by giving oral
or written notice of such delay, extension or termination to the Exchange
Agent or (iv) to amend the terms of the Exchange Offer in any manner. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof to the registered
holders. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered holders of Original Notes, and the Company will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to such registered
holders, if the Exchange Offer would otherwise expire during such five to ten
business day period. The rights reserved by the Company in this paragraph are
in addition to the Company's rights set forth below under the caption "--
Certain Conditions of the Exchange Offer."
If the Company extends the period of time during which the Exchange Offer is
open, or if it is delayed in accepting for exchange of, or in issuing and
exchanging the Exchange Notes for, any Original Notes, or is unable to accept
for exchange of, or issue Exchange Notes for, any Original Notes pursuant to
the Exchange Offer for any reason, then, without prejudice to the Company's
rights under the Exchange Offer, the Exchange Agent may, on behalf of the
Company, retain all Original Notes
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<PAGE>
tendered, and such Original Notes may not be withdrawn except as otherwise
provided below in "--Withdrawal of Tenders." The adoption by the Company of
the right to delay acceptance for exchange of, or the issuance and the
exchange of the Exchange Notes, for any Original Notes is subject to
applicable law, including Rule 14e-1(c) under the Exchange Act, which requires
that the Company pay the consideration offered or return the Original Notes
deposited by or on behalf of the holders thereof promptly after the
termination or withdrawal of the Exchange Offer.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal and any other documents referenced
therein, or facsimile thereof, have the signature thereon guaranteed if
required by the Letter of Transmittal and mail or otherwise deliver such
Letter of Transmittal or such facsimile to the Exchange Agent at the address
set forth below under "-- Exchange Agent" for receipt prior to the Expiration
Date. In addition, either (i) certificates for such Notes must be received by
the Exchange Agent along with the Letter of Transmittal, or (ii) a timely
confirmation of a book-entry transfer of such Notes, if such procedure is
available, into the Exchange Agent's account at the Depository Trust Company
("DTC" or the "Depository") pursuant to the procedure for book-entry transfer
described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below.
Any financial institution that is a participant in the Depository's Book-
Entry Transfer Facility system may make book-entry delivery of the Original
Notes by causing the Depository to transfer such Original Notes into the
Exchange Agent's account in accordance with the Depository's procedure for
such transfer. Although delivery of Original Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Depository, the
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received or confirmed by the Exchange Agent at its addresses set forth
under "--Exchange Agent" below prior to 5:00 p.m., New York City time, on the
Expiration Date. DELIVERY OF DOCUMENTS TO THE DEPOSITORY IN ACCORDANCE WITH
ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The tender
by a holder which is not withdrawn prior to the Expiration Date will
constitute a binding agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth herein and
in the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner of the Original Notes whose Original Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Original
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Notes, either make appropriate arrangements to register ownership of the Notes
in such owner's name (to the extent permitted by the Indenture) or obtain a
properly completed assignment from the registered holder. The transfer of
registered ownership may take considerable time.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Original Notes (which term includes any participants in DTC
whose name appears on a security position listing as the owner of the Original
Notes) or if delivery of the Exchange Notes is to be made to a person other
than the registered holder, such Original Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder as such registered holder's name appears on such Original
Notes with the signature on the Original Notes or the bond power guaranteed by
an Eligible Institution (as defined below).
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution unless the Original Notes tendered pursuant thereto
are tendered (i) by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter
of Transmittal or a notice of withdrawal, as the case may be, are required to
be guaranteed, such guarantee must be made by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or another "Eligible Guarantor
Institution" within the meaning of Rule 17Ad-15 under the Exchange Act (any of
the foregoing, an "Eligible Institution").
If the Letter of Transmittal or any Original Notes or assignments are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Original Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Original Notes not properly tendered or any Original Notes, the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
the instructions in the Letter of Transmittal) will be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Original Notes must be cured within such time as the Company shall
determine. Although the Company intends to request the Exchange Agent to
notify holders of defects or irregularities with respect to tenders of
Original Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Original Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While the Company has no present plan to acquire any Original Notes which
are not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Original Notes which are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Original Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "--Certain
Conditions to the Exchange Offer," to terminate the
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Exchange Offer and, to the extent permitted by applicable law, purchase
Original Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the Exchange Notes to be acquired by the holder of the Original
Notes in connection with the Exchange Offer are being acquired by the holder
in the ordinary course of business of the holder, (ii) the holder has no
arrangement or understanding with any person to participate in the
distribution of Exchange Notes, (iii) the holder acknowledges and agrees that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in certain no-action
letters, (iv) the holder understands that a secondary resale transaction
described in clause (iii) above and any resales of Exchange Notes obtained by
such holder in exchange for Original Notes acquired by such holder directly
from the Company should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Commission, and (v) the holder is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the
Company. If the holder is a broker-dealer that will receive Exchange Notes for
its own account in exchange for Original Notes that were acquired as a result
of market-making activities or other trading activities, the holder is
required to acknowledge in the Letter of Transmittal that it will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by
so acknowledging and by delivering a prospectus, the holder will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
See "Plan of Distribution."
RETURN OF NOTES
If any tendered Original Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Original Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Original Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Original Notes tendered by book-entry transfer into the Exchange
Agent's account at the Depository pursuant to the book-entry transfer
procedures described below, such Original Notes will be credited to an account
maintained with the Depository) as promptly as practicable upon termination of
the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Notes at the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's system may make book-
entry delivery of Original Notes by causing the Depository to transfer such
Original Notes into the Exchange Agent's account at the Depository in
accordance with the Depository's procedures for transfer. However, although
delivery of Original Notes may be effected through book-entry transfer at the
Depository, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "--Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original Notes
are not immediately available or (ii) who cannot deliver their Original Notes
(or complete the procedures for book-entry
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transfer), the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date, may effect a tender if: (a) the
tender is made through an Eligible Institution; (b) prior to the Expiration
Date, the Exchange Agent receives from such Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by the Company (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the holder, the certificate
number(s) of such Original Notes (if available) and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or a facsimile thereof) together
with the certificate(s) representing the Original Notes in proper form for
transfer (or a confirmation of a book-entry transfer into the Exchange Agent's
account at the Depository of Original Notes delivered electronically), and any
other documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and (c) such properly executed
Letter of Transmittal (or facsimile thereof), as well as the certificate(s)
representing all tendered Original Notes in proper form for transfer (or a
confirmation of a book-entry transfer into the Exchange Agent's account at the
Depository of Original Notes delivered electronically), and all other
documents required by the Letter of Transmittal are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to the Expiration Date. To withdraw a tender of
Original Notes in the Exchange Offer, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth herein prior to the Expiration Date. Any such notice of withdrawal must
(i) specify the name of the person having deposited the Original Notes to be
withdrawn (the "Depositor") and the name of the record holder of the Original
Notes to be withdrawn, if different than the Depositor, (ii) identify the
Original Notes to be withdrawn (including the certificate number or numbers
(if applicable) and principal amount of such Original Notes), and (iii) be
signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Original Notes were tendered (including
any required signature guarantees). If Original Notes have been tendered
pursuant to the procedures for book-entry transfer, the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of the Original Notes. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company in its sole discretion, whose determination shall be final and
binding on all parties. Any Original Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Original Notes so
withdrawn are validly retendered. Properly withdrawn Notes may be retendered
by following one of the procedures described above under "--Procedures for
Tendering" at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Original Notes not theretofore accepted for exchange, and may terminate or
amend the Exchange Offer as provided herein before the acceptance of such
Original Notes, if any of the following conditions exist: (a) any action or
proceeding is instituted or threatened in any court or by or before any
governmental agency with respect to the Exchange Offer which, in the
reasonable judgment of the Company, might impair the ability of the Company to
proceed with the Exchange Offer or have a material adverse effect on the
contemplated benefits of the Exchange Offer to the Company or there shall have
occurred any material adverse development in any existing action or proceeding
with respect to the Company or any of its
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subsidiaries; or (b) there shall have been any material change, or development
involving a prospective change, in the business or financial affairs of the
Company or any of its subsidiaries which, in the reasonable judgment of the
Company, could reasonably be expected to materially impair the ability of the
Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company; or (c) there shall
have been proposed, adopted or enacted any law, statute, rule or regulation
which, in the judgment of the Company, could reasonably be expected to
materially impair the ability of the Company to proceed with the Exchange
Offer or materially impair the contemplated benefits of the Exchange Offer to
the Company; or (d) any governmental approval which the Company shall, in its
reasonable discretion, deem necessary for the consummation of the Exchange
Offer as contemplated hereby shall have not been obtained. If the Company
determines in its reasonable discretion that any of these conditions are not
satisfied, the Company may (i) refuse to accept any Original Notes and return
all tendered Original Notes to the tendering holders, (ii) extend the Exchange
Offer and retain all Original Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such
Original Notes (see "The Exchange Offer--Withdrawal of Tenders") or (iii)
waive such unsatisfied conditions with respect to the Exchange Offer and
accept all properly tendered Original Notes which have not been withdrawn. If
such waiver constitutes a material change to the Exchange Offer, the Company
will promptly disclose such waiver by means of a prospectus supplement that
will be distributed to the registered holders of the Original Notes, and the
Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
Holders may have certain rights and remedies against the Company under the
Registration Rights Agreement should the Company fail to consummate the
Exchange Offer, notwithstanding a failure of the conditions stated above. Such
conditions are not intended to modify those rights or remedies in any respect.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
condition or may be waived by the Company in whole or in part at any time and
from time to time in the Company's reasonable discretion. The failure by the
Company at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All rights under Registration Rights Agreement (including registration
rights) of holders of the Original Notes eligible to participate in this
Exchange Offer will terminate upon consummation of the Exchange Offer except
with respect to the Company's continuing obligations (i) to indemnify the
holders (including any broker-dealers) and certain parties related to the
holders against certain liabilities (including liabilities under the
Securities Act), (ii) to provide, upon the request of any holder of a
transfer-restricted Original Note, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Original Notes
pursuant to Rule 144A, (iii) to use its best efforts to keep the Registration
Statement effective to the extent necessary to ensure that it is available for
resales of transfer-restricted Notes by broker-dealers for a period of 180
days from the date on which the Registration Statement is declared effective
and (iv) to provide copies of the latest version of the Prospectus to broker-
dealers upon their request for a period of 180 days from the date on which the
Registration Statement is declared effective. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. All questions and requests for assistance as well as
all correspondence in connection
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with the Exchange Offer and the Letter of Transmittal should be addressed to
the Exchange Agent, as follows:
By Facsimile (eligible institutions only):
(212) 571-3080
By Overnight Courier or by Hand:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, NY 10286
Attn: Reorganization Section
By Mail:
The Bank of New York
101 Barclay Street, 7E
New York, NY 10286
Attention: Reorganization Section
To confirm by telephone, or for information, call the Exchange Agent at
(212) 805-6333. Requests for additional copies of this Prospectus, the Letter
of Transmittal or the Notice of Guaranteed Delivery should be directed to the
Exchange Agent.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates. The Company has not retained any
dealer-manager or other soliciting agent in connection with the Exchange Offer
and will not make any payments to brokers, dealers or others soliciting
acceptance of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith. The cash
expenses to be incurred in connection with the Exchange Offer will be paid by
the Company and are estimated in the aggregate to be approximately $250,000.
Such expenses include fees and expenses of the Exchange Agent and Trustee,
accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes, or Original Notes for principal amounts not
tendered or acceptable for exchange, are to be delivered to, or are to be
issued in the name of, any person other than the registered holders of the
Original Notes tendered, or if tendered Original Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of
Original Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder of Original Notes.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Original Notes as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the Exchange Notes.
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CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Original
Notes are urged to consult their financial and tax advisors in making their
own decisions on what action to take. The Original Notes which are not
exchanged for the Exchange Notes pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such Original Notes may be resold only (i)
to a person whom the seller reasonably believes is a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) in a transaction
meeting the requirements of Rule 144A, (ii) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (iii) outside the United
States to a foreign person in a transaction meeting the requirements of Rule
904 under the Securities Act, (iv) in accordance with another exemption from
the registration requirements of the Securities Act (and based upon an opinion
of counsel if the Company so requests), (v) to the Company or (vi) pursuant to
an effective registration statement and, in each case, in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.
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DESCRIPTION OF AMENDED CREDIT FACILITY
The summary of the Amended Credit Facility set forth below does not purport
to be complete and is qualified in its entirety by reference to all the
provisions of the credit agreement and related documents governing the Amended
Credit Facility, copies of which are filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Amended Credit Facility will consist of three components: a 5 1/2-year
term loan facility in an aggregate principal amount equal to $85 million (the
"Tranche A Term Loan Facility"), a 7-year term loan facility in an aggregate
principal amount equal to $125 million (the "Tranche B Term Loan Facility");
and a 5 1/2-year revolving credit facility in the maximum amount of $60
million (the "Revolving Credit Facility"). Loans made under the Tranche A Term
Loan Facility ("Tranche A Term Loans") and the Tranche B Term Loan Facility
("Tranche B Term Loans") are sometimes collectively referred to herein as
"Term Loans." Advances under the Revolving Credit Facility are sometimes
referred to herein as "Revolving Loans."
The obligations of the Company under the Amended Credit Facility and any
related interest rate protection agreements will be guaranteed by Holdings and
by substantially all of the domestic subsidiaries of the Company (including,
without limitation, MAGIC). The Company's obligations in connection with the
Amended Credit Facility and the obligations of the guarantors will be secured
by liens on substantially all of their respective tangible and intangible
assets, including, but not limited to, mortgages on unencumbered real
property, blanket security interests in personal property and pledges of the
capital stock of the Company and substantially all of the Company's
subsidiaries (including, without limitation, MAGIC).
The Term Loans were drawn in full on the closing date of the MAGIC
Acquisition to finance a portion of the MAGIC Acquisition, to replace or
refinance indebtedness under the Original Credit Facility, to pay related fees
and expenses and for general corporate purposes. Subject to compliance with
customary conditions precedent, the Revolving Credit Facility (which will
include sublimits for the issuances of letters of credit) will be available to
be drawn from time to time by the Company for working capital and general
corporate purposes (including permitted acquisitions).
The Term Loans will be amortized in quarterly installments totalling
approximately $1.5 million in 1998, $7.0 million in 1999, $13.5 million in
2000, $17.0 million in 2001, $19.5 million in 2002, $31.5 million in 2003,
$60.25 million in 2004 and $59.75 in 2005. Principal amounts outstanding under
the Revolving Credit Facility will be due and payable in full at maturity,
approximately 5 1/2 years after the closing date of the Amended Credit
Facility.
Interest on outstanding borrowings will accrue, at the option of the
Company, at the customary Alternate Base Rate (the "ABR") of The Chase
Manhattan Bank ("Chase") or at a reserve adjusted Eurodollar Rate (the
"Eurodollar Rate") plus, in each case, the Applicable Margin (as hereinafter
defined). The term "Applicable Margin" means a percentage that will vary in
accordance with a pricing matrix based upon operating performance targets and
step-downs to be agreed upon. The maximum Applicable Margin for Revolving
Loans and Tranche A Term Loans will equal 1.25% for loans based on ABR ("ABR
Loans") and 2.25% for loans based on the Eurodollar Rate ("Eurodollar Loans");
and for Tranche B Term Loans, 1.50% in the case of ABR Loans and 2.50% in the
case of Eurodollar Loans.
In addition to paying interest on outstanding principal under the Amended
Credit Facility, the Company will be required to pay a commitment fee to the
lenders under the Revolving Credit Facility in respect of the unutilized
commitments thereunder at a rate equal to a percentage that will vary in
accordance with a pricing matrix based upon operating performance targets and
step-downs set forth
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in the pricing matrix. The maximum commitment fee rate will be 0.50% per
annum. The Company will also pay letter of credit commissions on the
outstanding stated amount of all letters of credit issued
under the Revolving Credit Facility at a rate equal to the Applicable Margin
for Eurodollar Loans under the Revolving Credit Facility (subject to
adjustments based on the pricing matrix), plus a fronting fee to the bank
issuing such letters of credit at 0.25% per annum, and the customary
administrative, issuance, drawing, payment, negotiation and amendment charges
of the issuing bank.
Subject in each case to certain exceptions, the following amounts are
required to be applied, as mandatory prepayments, to prepay the Term Loans:
(i) 50% of the net cash proceeds of certain issuances of equity by Holdings or
its subsidiaries; (ii) 100% of the net cash proceeds of the incurrence of
certain indebtedness by Holdings (or any successor corporation) or any of its
subsidiaries; (iii) 100% of the net cash proceeds of any sale or other
disposition by the Company or any of its subsidiaries of any assets (excluding
sales in the ordinary course of business, and subject to a limited exception
for reinvestment of such proceeds within 270 days); and (iv) 50% of excess
cash flow for each fiscal year. Mandatory prepayments will be applied pro rata
to the unpaid installments of the Tranche A Term Loans and the Tranche B Term
Loans, provided, that as long as any Tranche A Term Loans remain outstanding,
each holder of a Tranche B Term Loan will have the right to refuse any such
mandatory prepayment otherwise allocable to it, in which case the amount so
refused will be applied as an additional prepayment of the Tranche A Term
Loans. The Company will also have the right to optionally prepay the loans
under the Amended Credit Facility, without premium, in whole or in part.
Amounts applied as prepayments of the Revolving Credit Facility may be
reborrowed; amounts prepaid in respect of the Term Loans may not.
Subject to customary exceptions, covenants include (but will not necessarily
be limited to) restrictions on fundamental changes; liens; indebtedness;
investments; dividend payments; lines of business; transactions with
affiliates; use of proceeds; certain matters respecting ownership of
subsidiaries; negative pledge clauses and clauses restricting subsidiary
distributions; modifications of certain documents (including the Indenture);
prepayments of the Notes; and activities of holding companies. Financial
covenants include a minimum fixed charge coverage ratio and a maximum leverage
ratio.
Events of default include nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a three-day grace period; material
inaccuracy of representations and warranties; violation of covenants (subject,
in the case of certain covenants, to a 30-day grace period after notice);
cross-default; bankruptcy events; certain ERISA events; material judgments;
material environmental claims; actual or asserted invalidity of any guarantee,
security interest or subordination provisions; and a change of control.
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DESCRIPTION OF NOTES
GENERAL
The Exchange Notes are to be issued under an Indenture, to be dated as of
April 30, 1998 (the "Indenture"), among the Company, the Guarantors and The
Bank of New York, as Trustee (the "Trustee"), a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
Indenture also governs the Original Notes. For purposes of the following
description, the Exchange Notes and Original Notes are at times collectively
referred to as the "Notes." The Exchange Notes and any Original Notes that
remain outstanding after consummation of the Exchange Offer will be treated as
a single class of securities under the Indenture.
The Indenture is limited in aggregate principal amount to $250.0 million, of
which $150.0 million aggregate principal amount was issued in the Offering.
Additional notes may be issued in one or more series from time to time,
subject to the limitations set forth under "Certain Covenants--Limitation on
Indebtedness," which may vote as a class with the Notes. The following summary
of certain provisions of the Indenture and the Notes does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture (including the definitions of certain
terms therein and those terms made a part thereof by the Trust Indenture Act
of 1939, as amended) and the Notes.
The Notes will be unsecured, senior subordinated obligations of the Company,
limited to $150.0 million aggregate principal amount, and will mature on May
1, 2008. Each Note will bear interest at the rate per annum shown on the front
cover of this Prospectus from the date of issuance, or from the most recent
date to which interest has been paid or provided for, payable semi-annually on
May 1 and November 1 of each year commencing on November 1, 1998 to holders of
record at the close of business on the April 15 or October 15 immediately
preceding the interest payment date.
Interest will be computed on the basis of a 360 day year comprised of twelve
30 day months. Principal of, premium, if any, and interest on the Notes will
be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially will be the corporate trust office of the Trustee in New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the holders as such address appears in
the Note Register. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.
The Notes will be issued in fully registered form without interest coupons,
in denominations of $1,000 and any integral multiple of $1,000. The Notes will
be represented by one or more registered notes in global form and in certain
circumstances may be represented by Notes in definitive form. See "Book-Entry;
Delivery and Form."
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OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the option of
the Company prior to May 1, 2003. On and after such date, the Notes will be
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each holder's registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid
interest to the redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest
payment date):
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2003........................................ 104.625%
2004........................................ 103.083%
2005........................................ 101.542%
2006 and thereafter......................... 100.000%
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Equity Offerings received by, or
invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 65% of the original principal amount of the
Notes must remain outstanding after each such redemption; provided further,
that each such redemption occurs within 90 days of the date of closing of such
Equity Offering.
At any time on or prior to May 1, 2003, the Notes may also be redeemed as a
whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 30 days after the occurrence of such Change of Control) mailed by first-
class mail to each holder's registered address, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of
such Note at May 1, 2003 (such redemption price being described under
"Optional Redemption") plus (2) all required interest payments due on such
Note through May 1, 2003, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the period from the Redemption Date to May 1, 2003 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
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In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion will deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note will state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Note.
RANKING AND SUBORDINATION
The payment of the principal of, premium, if any, and interest on the Notes
is subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full in cash or Cash Equivalents when due of all Senior
Indebtedness of the Company. However, payment from the money or the proceeds
of U.S. Government Obligations held in any defeasance trust described under
"Defeasance" below is not subordinate to any Senior Indebtedness or subject to
the restrictions described herein. As of December 31, 1997, after giving
effect to the Pro Forma Adjustments, the outstanding Senior Indebtedness of
the Company would have been $210.0 million (exclusive of unused commitments).
Although the Indenture contains limitations on the amount of additional
Indebtedness that the Company may Incur, under certain circumstances the
amount of such Indebtedness could be substantial and, in any case, such
Indebtedness may be Senior Indebtedness. See "Certain Covenants--Limitation on
Indebtedness" below.
"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, created, Incurred or assumed, as the Bank Indebtedness and
all other Indebtedness of the Company, including accrued and unpaid interest
thereon (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
in the documentation with respect thereto whether or not a claim for post
filing interest is allowed in such proceeding) and fees relating thereto,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that the obligations in respect of
such Indebtedness are not superior in right of, or are subordinate to, payment
to the Notes; provided, however, that Senior Indebtedness will not include (i)
any obligation of the Company to any Subsidiary, (ii) any liability for
Federal, state, foreign, local or other taxes owed or owing by the Company,
(iii) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (iv) any Indebtedness, Guarantee or obligation
of the Company that is expressly subordinate or junior in right of payment to
any other Indebtedness, Guarantee or obligation of the Company, including any
Senior Subordinated Indebtedness and any Subordinated Obligations or (v) any
Capital Stock.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not Incur, directly or indirectly, any Indebtedness that is subordinate
or junior in ranking in any respect to Senior Indebtedness unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated
in right of payment to Senior Subordinated Indebtedness. In addition, a
Subsidiary Guarantor may not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Guarantor Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness is
Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor or is
expressly subordinated in right of payment to Guarantor Senior Subordinated
Indebtedness of such Subsidiary Guarantor. Unsecured Indebtedness is not
deemed to be subordinate or junior to secured indebtedness merely because it
is unsecured.
The Company may not pay principal of, premium, if any, or interest on, the
Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not otherwise
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purchase, redeem or retire any Notes (collectively, "pay the Notes") if (i)
any Senior Indebtedness is not paid when due in cash or Cash Equivalents or
(ii) any other default on Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration
has been rescinded or such Senior Indebtedness has been paid in full in cash
or Cash Equivalents. However, the Company may pay the Notes without regard to
the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the Senior Indebtedness with respect
to which either of the events set forth in clause (i) or (ii) of the
immediately preceding sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or
(ii) of the second preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
the Company may not pay the Notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representative
of the holders of such Designated Senior Indebtedness specifying an election
to effect a Payment Blockage Period and ending 179 days thereafter (or earlier
if such Payment Blockage Period is terminated (i) by written notice to the
Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has
been repaid in full). Notwithstanding the provisions described in the
immediately preceding sentence, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume
payments on the Notes after the end of such Payment Blockage Period. Not more
than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period.
Upon any payment or distribution of the assets or securities of the Company
upon a total or partial liquidation, dissolution, reorganization or bankruptcy
of or similar proceeding relating to the Company or its property, the holders
of Senior Indebtedness will be entitled to receive payment in full in cash or
Cash Equivalents of the Senior Indebtedness (including interest accruing
after, or which would accrue but for, the commencement of any proceeding at
the rate specified in the applicable Senior Indebtedness, whether or not a
claim for such interest would be allowed) before the holders of the Notes are
entitled to receive any payment or distribution, and until the Senior
Indebtedness is paid in full in cash or Cash Equivalents, any payment or
distribution to which holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the
Senior Indebtedness as their interests may appear. If a payment or
distribution is made to holders of the Notes that, due to the subordination
provisions, should not have been made to them, such holders are required to
hold it in trust for the holders of Senior Indebtedness and pay it over to
them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee will promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders
or the Representative of the Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.
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GUARANTEES
Holdings and each Subsidiary Guarantor will unconditionally guarantee,
jointly and severally, to each holder and the Trustee, on a senior
subordinated basis, the full and prompt payment of principal of, premium, if
any, and interest on the Notes, and of all other obligations under the
Indenture.
The Indebtedness evidenced by each Note Guarantee (including the payment of
principal of, premium, if any, and interest on the Notes) will be subordinated
to all Guarantor Senior Indebtedness of such Guarantor on the same basis as
the Notes are subordinated to Senior Indebtedness of the Company. As of
December 31, 1997, after giving effect to the Pro Forma Adjustments, there
would have been approximately $210.0 million of Guarantor Senior Indebtedness
(all of which would have represented Guarantees of borrowings under the Senior
Credit Agreement). Although the Indenture contains limitations on the amount
of additional Indebtedness that the Company's Restricted Subsidiaries may
Incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Guarantor Senior
Indebtedness. See "Certain Covenants--Limitation on Indebtedness" below. See
"--Ranking and Subordination" above.
The obligations of each Guarantor will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of
such Guarantor (including, without limitation, any Guarantees under the Senior
Credit Agreement) and after giving effect to any collections from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under its Note Guarantee or pursuant to its contribution
obligations under the Indenture, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Wholly-Owned Subsidiary Guarantor without
limitation. Each Subsidiary Guarantor may consolidate with or merge into or
sell all or substantially all its assets to a corporation, partnership, trust,
limited partnership, limited liability company or other similar entity other
than the Company or a Wholly-Owned Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor) except that if the surviving
corporation of any such merger or consolidation is a Subsidiary of the
Company, such Subsidiary shall not be a Foreign Subsidiary. Upon the sale or
disposition of a Subsidiary Guarantor (by merger, consolidation, the sale of
its Capital Stock or the sale of all or substantially all of its assets) to a
Person (whether or not an Affiliate of the Subsidiary Guarantor) which is not
a Subsidiary of the Company, which sale or disposition is otherwise in
compliance with the Indenture (including the covenant described under "Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock"), such
Subsidiary Guarantor will be deemed released from all its obligations under
the Indenture and its Subsidiary Guarantee and such Subsidiary Guarantee will
terminate; provided, however, that any such termination will occur only to the
extent that all obligations of such Subsidiary Guarantor under the Senior
Credit Agreement and all of its Guarantees of, and under all of its pledges of
assets or other security interests which secure, any other Indebtedness of the
Company will also terminate upon such release, sale or transfer.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), unless the Company shall have exercised its right to redeem the
Notes as described under "--Optional Redemption", each holder will have the
right to require the Company to repurchase all or any part of such holder's
Notes at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date):
(i) (A) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in Rules
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13d-3 and 13d-5 under the Exchange Act, except that such person shall be
deemed to have "beneficial ownership" of all shares that any such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 35%
(or, if there is a Public Market at the time such person is or is deemed to
have beneficial ownership, more than 50%) of the total voting power of the
Voting Stock of the Company or Holdings (or its successor by merger,
consolidation or other business combination) (for the purposes of this
clause, such person shall be deemed to beneficially own any Voting Stock of
the Company or Holdings held by a parent corporation, if such person
"beneficially owns" (as defined above), directly or indirectly, more than
35% of the voting power of the Voting Stock of such parent corporation);
and (B) if there is no Public Market, the Permitted Holders "beneficially
own" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company or Holdings (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of the Company or such successor (for
the purposes of this clause, such other person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such other person "beneficially owns" (as defined in
clause (A) above), directly or indirectly, more than 35% of the voting
power of the Voting Stock of such parent corporation and the Permitted
Holders "beneficially own" (as defined in this clause (B)), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent corporation);
or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
or Holdings (together with any new directors whose election by such Board
of Directors or whose nomination for election by the shareholders of the
Company or Holdings, as the case may be, was approved by a vote of at least
a majority of the directors of the Company or Holdings then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved or is a designee of
the Permitted Holders or was nominated or elected by such Permitted Holders
or any of their designees) cease for any reason to constitute a majority of
the Board of Directors of the Company or Holdings then in office; or
(iii) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole to any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act) other than a
Permitted Holder; or
(iv) the adoption by the stockholders of a plan for the liquidation or
dissolution of the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control as described under "--Optional
Redemption", the Company will mail a notice to each holder with a copy to the
Trustee stating: (i) that a Change of Control has occurred and that such
holder has the right to require the Company to purchase such holder's Notes at
a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on a record date to receive interest on the
relevant interest payment date); (ii) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed); and (iii) the procedures determined by the Company, consistent with
the Indenture, that a holder must follow in order to have its Notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes
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pursuant to this covenant. To the extent that the provisions of any securities
laws or regulations conflict with provisions of the Indenture, the Company
will comply with the applicable securities laws and regulations and will not
be deemed to have breached its obligations described in the Indenture by
virtue thereof.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Senior Credit Agreement. Future
Senior Indebtedness of Holdings, the Company and its Subsidiaries may also
contain prohibitions of certain events that would constitute a Change of
Control or require such Senior Indebtedness to be repurchased upon a Change of
Control. Moreover, the exercise by the holders of their right to require the
Company to repurchase the Notes could cause a default under such Senior
Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of
the Senior Credit Agreement will (and other Senior Indebtedness may) prohibit
the Company's prepayment of Notes prior to their scheduled maturity.
Consequently, if the Company is not able to prepay the Bank Indebtedness and
any other Senior Indebtedness containing similar restrictions or obtain
requisite consents, as described above, the Company will be unable to fulfill
its repurchase obligations if holders of Notes exercise their repurchase
rights following a Change of Control, thereby resulting in a default under the
Indenture.
The Change of Control provisions described above may deter certain mergers,
tender offers and other takeover attempts involving the Company by increasing
the capital required to effectuate such transactions. The definition of
"Change of Control" includes a disposition of all or substantially all of the
property and assets of the Company and its Restricted Subsidiaries. With
respect to the disposition of property or assets, the phrase "all or
substantially all" as used in the Indenture varies according to the facts and
circumstances of the subject transaction, has no clearly established meaning
under New York law (which is the choice of law under the Indenture) and is
subject to judicial interpretation. Accordingly, in certain circumstances
there may be a degree of uncertainty in ascertaining whether a particular
transaction would involve a disposition of "all or substantially all" of the
property or assets of a Person, and therefore it may be unclear as to whether
a Change of Control has occurred and whether the Company is required to make
an offer to repurchase the Notes as described above.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, Incur any Indebtedness; provided,
however, that the Company and its Restricted Subsidiaries which are Subsidiary
Guarantors may Incur Indebtedness if on the date thereof, after giving pro
forma effect to the incurrence of such Indebtedness, the Leverage Ratio for
the Company and its Restricted Subsidiaries is less than (i) 6.50 to 1.00, if
such Indebtedness is Incurred on or prior to the second anniversary of the
Issue Date, and (ii) 6.00 to 1.00, if such Indebtedness is Incurred
thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to the Senior Credit Agreement of (x) up to $210.0 million
in term loan borrowings outstanding at any time and (y) up to $60.0 million in
revolving credit borrowings outstanding at any time; (ii) the Subsidiary
Guarantees and Guarantees of Indebtedness Incurred pursuant to paragraph (a)
or clause (i) of this paragraph (b); (iii) Indebtedness of the Company owing
to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary;
provided,
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however, that any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly-Owned Subsidiary) will be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness represented by (x) $150.0 million aggregate principal amount
of the Notes, (y) any Indebtedness (other than the Indebtedness described in
clauses (i), (ii) and (iii)) outstanding on the Issue Date and (z) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in
this clause (iv) or clause (v) or Incurred pursuant to paragraph (a) above;
(v) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the
date on which such Restricted Subsidiary was acquired by the Company;
provided, however, that at the time such Restricted Subsidiary is acquired by
the Company, the Company would have been able to Incur $1.00 of additional
Indebtedness pursuant to paragraph (a) above after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (v); (vi) Indebtedness
under Currency Agreements and Interest Rate Agreements; provided, however,
that in the case of Currency Agreements and Interest Rate Agreements, such
Currency Agreements and Interest Rate Agreements are entered into for bona
fide hedging purposes of the Company or its Restricted Subsidiaries (as
determined in good faith by the Board of Directors or senior management of the
Company) and correspond in terms of notional amount, duration, currencies and
interest rates, as applicable, to Indebtedness of the Company or its
Restricted Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Restricted Subsidiaries on
customary terms entered into in the ordinary course of business; and (vii)
Indebtedness (other than Indebtedness described in clauses (i)-(vi)) in a
principal amount which, when taken together with the principal amount of all
other Indebtedness Incurred pursuant to this clause (vii) and then
outstanding, will not exceed $20.0 million.
(c) Neither the Company nor any Restricted Subsidiary will Incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to refinance any Subordinated Obligations of the
Company unless such Indebtedness will be subordinated to the Notes to at least
the same extent as such Subordinated Obligations. No Subsidiary Guarantor will
Incur any Indebtedness under paragraph (b) above if the proceeds thereof are
used, directly or indirectly, to refinance any Guarantor Subordinated
Obligations of such Subsidiary Guarantor unless such Indebtedness will be
subordinated to the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee to at least the same extent as such Guarantor
Subordinated Obligations.
(d) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant, in the event that Indebtedness meets the
criteria of more than one of the types of Indebtedness described in paragraph
(b) above, the Company, in its sole discretion, will classify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
(e) The Company will not permit any Unrestricted Subsidiary to Incur any
Indebtedness other than Non-Recourse Debt.
Limitation on Layering. The Company will not Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or
is contractually subordinated in right of payment to Senior Subordinated
Indebtedness. No Subsidiary Guarantor will Incur any Indebtedness if such
Indebtedness is contractually subordinate or junior in ranking in any respect
to any Guarantor Senior Indebtedness of such Subsidiary Guarantor unless such
Indebtedness is Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor or is contractually subordinated in right of payment to Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries, directly or indirectly, to (i)
declare or pay any dividend or make any distribution
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on or in respect of its Capital Stock (including any payment in connection
with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and (B) dividends or distributions
payable to the Company or a Restricted Subsidiary of the Company (and if such
Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders
of Capital Stock on a pro rata basis), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company held by Persons
other than a Restricted Subsidiary of the Company or any Capital Stock of a
Restricted Subsidiary of the Company held by any Affiliate of the Company,
other than another Restricted Subsidiary (in either case, other than in
exchange for its Capital Stock (other than Disqualified Stock)), (iii)
purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of purchase,
repurchase or acquisition) or (iv) make any Investment (other than a Permitted
Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or
Investment being herein referred to in clauses (i) through (iv) as a
"Restricted Payment"), if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment: (1) a Default shall have occurred
and be continuing (or would result therefrom); or (2) the Company is not able
to Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) under
"Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made subsequent to the
Issue Date would exceed the sum of: (A) (i) Consolidated EBITDA accrued during
the period (treated as one accounting period) from the Issue Date to the end
of the most recent fiscal quarter ending prior to the date of such Restricted
Payment as to which financial results are available (or, in case such
Consolidated EBITDA is a deficit, minus 100% of such deficit) less (ii) 150%
of Consolidated Interest Expense for such period; (B) the aggregate Net Cash
Proceeds received by the Company from the issue or sale of its Capital Stock
(other than Disqualified Stock) or other capital contributions subsequent to
the Issue Date (other than net proceeds to the extent (x) used to redeem Notes
or (y) received from an issuance or sale of such Capital Stock to a Subsidiary
of the Company or an employee stock ownership plan or similar trust to the
extent such sale to an employee stock ownership plan or similar trust is
financed by loans from or guaranteed by the Company or any Restricted
Subsidiary unless such loans have been repaid with cash on or prior to the
date of determination); (C) the amount by which Indebtedness of the Company is
reduced on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company convertible or exchangeable for Capital Stock of
the Company (less the amount of any cash, or other property, distributed by
the Company upon such conversion or exchange); and (D) the amount equal to the
net reduction in Investments (other than Permitted Investments) made by the
Company or any of its Restricted Subsidiaries in any Person resulting from (i)
repurchases or redemptions of such Investments by such Person, proceeds
realized upon the sale of such Investment to an unaffiliated purchaser,
repayments of loans or advances or other transfers of assets as a return of
capital or similar payment (excluding by way of dividend or distribution) by
such Person to the Company or any Restricted Subsidiary of the Company or (ii)
the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment") not to
exceed, in the case of any Unrestricted Subsidiary, the amount of Investments
(excluding Permitted Investments) previously made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments; provided,
however, that no amount will be included under this clause (D) to the extent
it is already included in Consolidated Net Income.
(b) The provisions of paragraph (a) will not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of
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the substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan or similar trust to the extent such sale
to an employee stock ownership plan or similar trust is financed by loans from
or guaranteed by the Company or any Restricted Subsidiary unless such loans
have been repaid with cash on or prior to the date of determination);
provided, however, that (A) such purchase or redemption will be excluded in
subsequent calculations of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale will be excluded from clause (3) (B) of paragraph
(a); (ii) any purchase or redemption of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations of the Company; provided,
however, that such purchase or redemption will be excluded in subsequent
calculations of the amount of Restricted Payments; (iii) any purchase or
redemption of Subordinated Obligations from Net Available Cash to the extent
permitted under "Limitation on Sales of Assets and Subsidiary Stock" below;
provided, however, that such purchase or redemption will be excluded in
subsequent calculations of the amount of Restricted Payments; (iv) dividends
paid within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision; provided,
however, that such dividends will be included in subsequent calculations of
the amount of Restricted Payments; (v) cash dividends to Holdings for the
purpose of, and in amounts equal to, amounts required to permit Holdings (A)
to redeem or repurchase Capital Stock of Holdings (or pay dividends to AHI
Advanstar for the purpose of redeeming or repurchasing membership interests in
AHI Advanstar pursuant to the operating agreement of AHI Advanstar) from
existing or former employees or management of Holdings, the Company or any
Subsidiary or their assigns, estates or heirs, in each case in connection with
the repurchase provisions under employee stock option or stock purchase
agreements or other agreements to compensate management employees provided,
however, that such dividends will be included in subsequent calculations of
the amount of Restricted Payments; (B) to make loans or advances to employees
or directors of the Company or any Subsidiary the proceeds of which are used
to purchase Capital Stock of Holdings or membership interests in AHI Advanstar
LLC; provided, however, that such dividends will be included in subsequent
calculations of the amount of Restricted Payments; (C) to pay any Federal,
state or local income taxes to the extent that such income taxes are
attributable to the income of the Company and its Subsidiaries, pay franchise
taxes and other fees required to maintain its legal existence, corporate
overhead expenses Incurred in the ordinary course of business, and salaries or
other compensation of employees who perform services for both Holdings and the
Company; provided, however, that such dividends will be excluded in subsequent
calculations of the amount of Restricted Payments and (D) so long as no
Default or Event of Default shall have occurred and be continuing, in an
amount not to exceed $100,000 in any fiscal year to enable Holdings to make
payments to holders of its Capital Stock in lieu of the issuance of fractional
shares of its Capital Stock; provided, however, that such dividends will be
excluded in subsequent calculations of the amount of Restricted Payments;
provided further, however, that the aggregate amount of dividends paid to
Holdings pursuant to this clause (v) shall not exceed $3.0 million in any
fiscal year; and (vi) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock represents a portion of the
exercise price hereof; provided, however, that such repurchases will be
excluded from subsequent calculations of the amount of Restricted Payments.
Limitation on Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to
exist any Lien (other than Permitted Liens and Liens securing Senior
Indebtedness and Guarantor Senior Indebtedness) upon any of its property or
assets (including Capital Stock), whether owned on the date of the Indenture
or thereafter acquired, securing any Indebtedness, unless contemporaneously
therewith effective provision is made to secure the Indebtedness due under the
Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary's
property or assets, any Subsidiary Guarantee of such Restricted Subsidiary,
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Obligations) the Indebtedness secured by such Lien for so long as
such Indebtedness is so secured.
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Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability
of any Restricted Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other
obligations owed to the Company, (ii) make any loans or advances to the
Company or (iii) transfer any of its property or assets to the Company, except
(a) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the date of the Indenture (including, without limitation, the
Senior Credit Agreement); (b) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by a Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the funds
utilized to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date; (c) any encumbrance
or restriction with respect to a Restricted Subsidiary pursuant to an
agreement effecting a refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (a) or (b) of this covenant or this clause (c)
or contained in any amendment to an agreement referred to in clause (a) or (b)
of this covenant or this clause (c); provided, however, that the encumbrances
and restrictions with respect to such Restricted Subsidiary contained in any
such agreement or amendment are no less favorable to the Holders of the Notes
than encumbrances and restrictions contained in such agreements; (d) in the
case of clause (iii) above, any encumbrance or restriction (A) that restricts
in a customary manner the subletting, assignment or transfer of any property
or asset that is subject to a lease, license or similar contract, or the
assignment or transfer of any such lease, license or other contract, (B) by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by the Indenture, (C) contained in
mortgages, pledges or other security agreements securing Indebtedness of a
Restricted Subsidiary to the extent such encumbrance or restrictions restrict
the transfer of the property subject to such mortgages, pledges or other
security agreements or (D) pursuant to customary provisions restricting
dispositions of real property interests set forth in any reciprocal easement
agreements of the Company or any Restricted Subsidiary; (e) any restriction
with respect to a Restricted Subsidiary (or any of its property or assets)
imposed pursuant to an agreement entered into for the direct or indirect sale
or disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; and (f)
encumbrances or restrictions arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition and (ii) at least 85% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form
of cash or Cash Equivalents.
With respect to any Asset Disposition occurring on or after the Issue Date
from which the Company or any Restricted Subsidiary receives Net Available
Cash, the Company or such Restricted Subsidiary shall apply an amount equal to
100% of the Net Available Cash from such Asset Disposition at its election, to
either (i) prepay, repay or purchase Senior Indebtedness or Indebtedness
(other than any Preferred Stock) of a Wholly Owned Subsidiary (in each case
other than Indebtedness owed to the Company or an Affiliate of the Company)
within 365 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (ii) invest in Additional Assets within
365 days from the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; or (iii) make an offer pursuant to paragraph (b)
to purchase the Notes and other Senior Subordinated
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Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Indebtedness with the proceeds from any Asset
Disposition ("Pari Passu Notes") at 100% of the principal amount thereof (or
100% of the accreted value of such Pari Passu Notes so tendered if such Pari
Passu Notes were issued at a discount) plus accrued and unpaid interest, if
any, to the date of purchase; provided, however, that, in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (i)
above, the Company or such Restricted Subsidiary will retire such Indebtedness
and will cause the related loan commitment (if any), unless such commitment is
for the provision of a revolving credit facility, to be permanently reduced in
an amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions, the Company and its Restricted
Subsidiaries will not be required to apply any Net Available Cash in
accordance herewith except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
covenant exceed $1.0 million. Any Net Available Cash from an Asset Disposition
that is not invested or applied as provided and within the time period set
forth in clauses (i) and (ii) of the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds."
For the purposes of this covenant and for no other purpose, the following
will be deemed to be cash: (x) the assumption by the transferee of Senior
Indebtedness of the Company or Indebtedness of any Restricted Subsidiary of
the Company and the release of the Company or such Restricted Subsidiary from
all liability on such Senior Indebtedness or Indebtedness in connection with
such Asset Disposition (in which case the Company will, without further
action, be deemed to have applied such assumed Indebtedness in accordance with
clause (i) of the preceding paragraph); (y) securities received by the Company
or any Restricted Subsidiary of the Company from the transferee that are
promptly converted by the Company or such Restricted Subsidiary into cash; and
(z) the fair market value, as determined by the Board of Directors of the
Company in good faith, of any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in any Asset Disposition, taken
together with the fair market value, as determined by the Board of Directors
of the Company in good faith, of all other Designated Noncash Consideration
received pursuant to this clause (z) that is at that time outstanding, not to
exceed $25.0 million at the time of the receipt of such Designated Noncash
Consideration (with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value), in which case such Designated Noncash
Consideration shall not constitute Net Available Cash.
(b) When the aggregate amount of Excess Proceeds exceeds $5.0 million (with
lesser amounts to be carried forward for purposes of determining whether an
Offer (as defined) is required with respect to the Excess Proceeds from any
subsequent Asset Disposition), the Company will be required to apply such
Excess Proceeds to the repayment of the Notes and any Pari Passu Notes as
follows: (A) the Company will make an offer to purchase (an "Offer") within
ten days of such time from all holders of the Notes in accordance with the
procedures set forth in the Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and the outstanding principal amount (or
accreted value, as the case may be) of the Pari Passu Notes at a purchase
price of 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase and (B) the Company will make an
offer to purchase any Pari Passu Notes (a "Pari Passu Offer") in an amount
equal to the excess of the Excess Proceeds over the Note Amount at a purchase
price of 100% of the principal amount (or accreted value, as the case may be)
thereof plus accrued and unpaid interest, if any, to the date of purchase in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in the documentation governing such Pari Passu
Notes with respect to the Pari Passu Offer. If the aggregate purchase price of
the Notes and Pari Passu Notes tendered pursuant to the Offer and the Pari
Passu Offer is less than the Excess Proceeds, the remaining Excess Proceeds
will be available to the Company to fund other corporate purposes not
otherwise prohibited by the Indenture.
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(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
Limitation on Asset Swaps. The Company will not, and will not permit any
Restricted Subsidiary to, engage in any Asset Swaps, unless: (i) at the time
of entering into such Asset Swap and immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (ii) in the event such
Asset Swap involves the transfer by the Company or any Restricted Subsidiary
of assets having an aggregate fair market value, as determined by the Board of
Directors of the Company in good faith, in excess of $1.0 million, the terms
of such Asset Swap have been approved by a majority of the members of the
Board of Directors of the Company and (iii) in the event such Asset Swap
involves an aggregate amount in excess of $10.0 million, the Company has
received a written opinion from an independent investment banking firm of
nationally recognized standing that such Asset Swap is fair to the Company or
such Restricted Subsidiary, as the case may be, from a financial point of
view.
Limitation on Affiliate Transactions. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate
of the Company (an "Affiliate Transaction") unless: (i) the terms of such
Affiliate Transaction are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time
of such transaction in arm's-length dealings with a Person who is not such an
Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate
amount in excess of $1.0 million, the terms of such transaction have been
approved by a majority of the members of the Board of Directors of the Company
and by a majority of the members of such Board having no personal stake in
such transaction, if any (and such majority or majorities, as the case may be,
determines that such Affiliate Transaction satisfies the criteria in (i)
above); and (iii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $5.0 million, the Company has received a written
opinion from an independent investment banking firm of nationally recognized
standing that such Affiliate Transaction is not materially less favorable than
those that might reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate;
provided, however, that this clause (iii) will not apply to any Affiliate
Transaction with any joint venture or similar entity in which the Permitted
Holders do not have any direct or indirect interests other than the interests
of the Company and its Restricted Subsidiaries in such joint venture or
similar entity.
(b) The foregoing paragraph (a) will not apply to (i) any Restricted Payment
permitted to be made pursuant to the covenant described under "Limitation on
Restricted Payments," (ii) any issuance of (A) securities to any of the
Permitted Holders or (B) securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors of the Company, (iii) loans or advances to employees in the ordinary
course of business of the Company or any of its Restricted Subsidiaries or
(iv) any transaction between the Company and a Wholly-Owned Subsidiary or
between Wholly-Owned Subsidiaries.
Limitation on Dispositions of Capital Stock of Restricted Subsidiaries. The
Company (i) will not, and will not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Restricted Subsidiary to any Person (other than the Company or a
Wholly Owned Subsidiary), unless (A) such transfer, conveyance, sale, lease or
other disposition is a sale of the common stock of such Restricted Subsidiary
and, after giving effect to the consummation thereof, the Company owns (x)
more than 50% of the outstanding common stock of
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such Restricted Subsidiary or (y) none of the outstanding common stock of such
Restricted Subsidiary and (B) the cash net proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
the covenant described above under "Limitation on Sales of Assets and
Subsidiary Stock"; and (ii) will not permit any Restricted Subsidiary to issue
any of its Capital Stock (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than to
the Company or a Wholly-Owned Subsidiary, unless such issuance is an issuance
of the common stock of such Restricted Subsidiary and, after giving effect to
the consummation thereof, the Company owns (x) more than 50% of the
outstanding common stock of such Restricted Subsidiary or (y) none of the
outstanding common stock of such Restricted Subsidiary.
SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, to the
extent permitted by the Exchange Act, the Company will file with the
Commission, and provide, within 15 days after the Company is required to file
the same with the Commission, the Trustee and the holders of the Notes with
the annual reports and the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that are specified in Sections 13 and 15(d) of the
Exchange Act. In the event that the Company is not permitted to file such
reports, documents and information with the Commission pursuant to the
Exchange Act, the Company will nevertheless deliver such Exchange Act
information to the Trustee and the holders of the Notes as if the Company were
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act.
Merger and Consolidation. The Company will not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") will be a corporation, partnership, trust, limited
liability company or other similar entity organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) will expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Notes and the Indenture; (ii) immediately after giving effect to such
transaction (and treating any Indebtedness that becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a result of
such transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing; (iii) immediately after giving effect
to such transaction, the Successor Company would be able to Incur at least an
additional $1.00 of Indebtedness pursuant to paragraph (a) of "Limitation on
Indebtedness"; and (iv) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in
the case of a lease of all or substantially all its assets, the Company will
not be released from the obligation to pay the principal of and interest on
the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (i) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (ii) the Company may
merge with an Affiliate incorporated solely for the purpose of reincorporating
the Company in another jurisdiction to realize tax or other benefits.
Future Subsidiary Guarantors. After the Issue Date, the Company will cause
each Restricted Subsidiary (other than a Foreign Subsidiary) created or
acquired by the Company to execute and deliver to the Trustee a Subsidiary
Guarantee pursuant to which such Subsidiary Guarantor will unconditionally
Guarantee, on a joint and several basis, the full and prompt payment of the
principal of, premium, if any and interest on the Notes on a senior
subordinated basis.
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Limitation on Lines of Business. The Company will not, nor will it permit
any of its Subsidiaries to, engage in any line of business, other than a
Related Business.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the Indenture:
(i) a default in any payment of interest on any Note when due, continued for
30 days, whether or not such payment is prohibited by the provisions described
under "Ranking and Subordination" above, (ii) a default in the payment of
principal of any Note when due at its Stated Maturity, upon optional
redemption, upon required repurchase, upon declaration or otherwise, whether
or not such payment is prohibited by the provisions described under "Ranking
and Subordination" above, (iii) the failure by the Company to comply with its
obligations under "Certain Covenants--Merger and Consolidation" above, (iv)
failure by the Company to comply for 30 days after notice with any of its
obligations under the covenants described under "Change of Control" above or
under covenants described under "Certain Covenants" above (in each case, other
than a failure to purchase Notes which will constitute an Event of Default
under clause (ii) above), (v) the failure by the Company to comply for 60 days
after notice with its other agreements contained in the Indenture, (vi)
Indebtedness of the Company or any Restricted Subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by the
holders thereof because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds $5.0 million (the "cross acceleration
provision"), (vii) certain events of bankruptcy, insolvency or reorganization
of the Company or a Significant Subsidiary (the "bankruptcy provisions"),
(viii) any judgment or decree for the payment of money in excess of $5.0
million is rendered against the Company or a Significant Subsidiary and such
judgment or decree remains undischarged or unstayed for a period of 60 days
after such judgment becomes final and non-appealable (the "judgment default
provision") or (ix) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Guarantor denies
or disaffirms its obligations under the Indenture or its Note Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof
after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Notes to be due and payable. Upon such a
declaration, such principal and accrued and unpaid interest will be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and accrued and unpaid interest on all the Notes
will become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holders. Under certain
circumstances, the holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders unless such
holders have offered to the Trustee reasonable indemnity or security against
any loss, liability or expense. Except to enforce the right to receive payment
of principal, premium, if any, or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing,
(ii) holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered
the Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt of the
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request and the offer of security or indemnity and (v) the holders of a
majority in principal amount of the outstanding Notes have not given the
Trustee a direction that, in the opinion of the Trustee, is inconsistent with
such request within such 60-day period. Subject to certain restrictions, the
holders of a majority in principal amount of the outstanding Notes are given
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that
would involve the Trustee in personal liability. Prior to taking any action
under the Indenture, the Trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of, premium, if any, or interest on any Note, the Trustee
may withhold notice if and so long as a committee of its Trust officers in
good faith determines that withholding notice is in the interests of the
Noteholders. In addition, the Company is required to deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. The Company also is required to deliver to the Trustee, within
30 days after the occurrence thereof, written notice of any events which would
constitute certain Defaults, their status and what action the Company is
taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the holders of a majority in principal amount of the Notes then outstanding
and any past default or compliance with any provisions may be waived with the
consent of the holders of a majority in principal amount of the Notes then
outstanding. However, without the consent of each holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose holders must consent to an amendment, (ii) reduce the stated rate
of or extend the stated time for payment of interest on any Note, (iii) reduce
the principal of or extend the Stated Maturity of any Note, (iv) reduce the
premium payable upon the redemption or repurchase of any Note or change the
time at which any Note may be redeemed as described under "Optional
Redemption" above, (v) make any Note payable in money other than that stated
in the Note, (vi) impair the right of any holder to receive payment of
principal of and interest on such holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such holder's Notes or (vii) make any change in the amendment
provisions which require each holder's consent or in the waiver provisions.
Without the consent of any holder, the Company, the Guarantors and the
Trustee may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation,
partnership, trust or limited liability company of the obligations of the
Company under the Indenture, to provide for uncertificated Notes in addition
to or in place of certificated Notes (provided that the uncertificated Notes
are issued in registered form for purposes of Section 163(f) of the Code, or
in a manner such that the uncertificated Notes are described in Section 163(f)
(2) (B) of the Code), to add Guarantees with respect to the Notes, to secure
the Notes, to add to the covenants of the Company for the benefit of the
holders or to surrender any right or power conferred upon the Company, to make
any change that does not adversely affect the rights of any holder or to
comply with any requirement of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act. However, no
amendment may be made to the subordination provisions of the Indenture that
adversely affects the rights of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
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The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment. After an amendment
under the Indenture becomes effective, the Company is required to mail to the
holders a notice briefly describing such amendment. However, the failure to
give such notice to all the holders, or any defect therein, will not impair or
affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain a registrar and paying agent in respect of the
Notes, and after giving effect to such legal defeasance, any omission to
comply with such obligations shall no longer constitute a Default or Event of
Default with respect to the Notes. If the Company exercises its legal
defeasance option, the Note Guarantees in effect at such time will terminate.
The Company at any time may terminate its obligations under covenants
described under "Certain Covenants" (other than "Merger and Consolidation"),
the operation of the cross acceleration provision, the bankruptcy provisions
with respect to Significant Subsidiaries, the judgment default provision and
the Note Guarantee provision described under "Events of Default" above and the
limitations contained in clauses (iii) and (iv) under "Certain Covenants--
Merger and Consolidation" above ("covenant defeasance") and thereafter any
omission to comply with such obligations shall no longer constitute a Default
or Event of Default with respect to the Notes.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because
of any event that, in the absence of such legal defeasance, would have
constituted an Event of Default with respect thereto. If the Company exercises
its covenant defeasance option, the events specified in clause (iv), (vi),
(vii) (with respect only to Significant Subsidiaries), (viii) or (ix) under
"Events of Default" above will no longer constitute an Event of Default, and
payment of the Notes may not be accelerated because of the occurrence of any
such event or because of the failure of the Company to comply with clause
(iii) or (iv) under "Certain Covenants--Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred (and, in the case of
legal defeasance only, such Opinion of Counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable Federal income tax
law).
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the
Notes.
GOVERNING LAW
The Indenture provides that it, the Notes and the Note Guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be
required thereby.
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CERTAIN DEFINITIONS
"Acquisitions" has the meaning set forth in this Offering Memorandum.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the Company; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary of the Company; provided, however, that, in the
case of clauses (ii) and (iii), such Restricted Subsidiary is primarily
engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary Guarantor,
(ii) the sale of Cash Equivalents in the ordinary course of business, (iii) a
disposition of inventory in the ordinary course of business, (iv) a
disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of
business, (v) transactions permitted under "Certain Covenants--Merger and
Consolidation" above, (vi) an Asset Swap effected in compliance with the
"Limitation on Asset Swaps" covenant and (vii) for purposes of "Limitation on
Sales of Assets and Subsidiary Stock" only, a disposition subject to
"Limitation on Restricted Payments."
"Asset Swap" means the execution of a definitive agreement, subject only to
customary closing conditions that the Company in good faith believes will be
satisfied, for a concurrent purchase and sale or exchange of Related Business
Assets, between the Company or any of its Restricted Subsidiaries and another
Person, and the consummation of such purchase and sale or exchange; provided
that any amendment to or waiver of any closing condition which individually or
in the aggregate is material to any Asset Swap shall be deemed to be a new
Asset Swap that must comply with the "Limitation on Asset Swaps" covenant.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter Incurred, payable by the Company under or in respect
of the Senior Credit Agreement and any related notes, collateral documents,
letters of credit and guarantees and any Interest Rate Agreement entered into
with a Lender (as defined in the Senior Credit Agreement) in connection with
the Senior Credit Agreement, including principal, premium, if any, interest
(including interest accruing
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on or after the filing of any petition in bankruptcy or for reorganization
relating to the Company at the rate specified therein whether or not a claim
for post filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented
by such obligation will be the capitalized amount of such obligation
determined in accordance with GAAP, and the Stated Maturity thereof will be
the date of the last payment of rent or any other amount due under such lease
prior to the first date such lease may be terminated without penalty.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition thereof, having a
credit rating of "A" or better from either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances
having maturities of not more than one year from the date of acquisition
thereof issued by any commercial bank the long-term debt of which is rated at
the time of acquisition thereof at least "A" or the equivalent thereof by
Standard & Poor's Rating Group, or "A" or the equivalent thereof by Moody's
Investors Service, Inc., and having capital and surplus in excess of $500
million; (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (i), (ii) and
(iii) entered into with any bank meeting the qualifications specified in
clause (iii) above; (v) commercial paper rated at the time of acquisition
thereof at least "A-2" or the equivalent thereof by Standard & Poor's Rating
Group or "P-2" or the equivalent thereof by Moody's Investors Service, Inc.,
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of investments,
and in either case maturing within 270 days after the date of acquisition
thereof; and (vi) interests in any investment company which invests solely in
instruments of the type specified in clauses (i) through (v) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated EBITDA" for any period means the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, plus (ii) Consolidated
Interest Expense, plus (iii) depreciation expense, plus (iv) amortization of
intangibles, plus (v) other non-cash charges, including without limitation,
any non-cash charge reflecting compensation expense relating to employee stock
option or similar plans, reducing Consolidated Net Income (excluding any such
non-cash charge to the extent it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that
was paid in a prior period not included in the calculation), less (vi) non-
cash items increasing Consolidated Net Income (excluding any non-cash item to
the extent it represents the reversal of an accrual of, or a cash reserve for,
anticipated cash charges in any prior period). Notwithstanding the foregoing,
the provision for taxes based on the income or profits of, and the interest,
depreciation and amortization
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of, a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and
in the same proportion) that the net income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries, plus, to the extent
not included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations and the interest portion of rent expense
associated with Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a capitalized lease in
accordance with GAAP, (ii) amortization of debt discount and debt issuance
cost, (iii) capitalized interest and accrued interest, (iv) non-cash interest
expense, (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (vi) interest
actually paid by the Company or any such Subsidiary under any Guarantee of
Indebtedness or other obligation of any other Person, (vii) net costs
associated with Hedging Obligations (including amortization of fees), (viii)
dividends in respect of all Disqualified Stock of the Company and all
Preferred Stock of Subsidiaries, in each case, held by Persons other than the
Company or a Wholly Owned Subsidiary and (ix) the cash contributions to any
employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Indebtedness Incurred by
such plan or trust; provided, however, that there will be excluded therefrom
any such interest expense of any Unrestricted Subsidiary to the extent the
related Indebtedness is not Guaranteed or paid by the Company or any
Restricted Subsidiary. For purposes of the foregoing, total interest expense
will be determined after giving effect to any net payments made or received by
the Company and its Subsidiaries with respect to Interest Rate Agreements.
Notwithstanding the foregoing, the Consolidated Interest Expense with respect
to any Restricted Subsidiary of the Company that was not a Wholly-Owned
Subsidiary will be included only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries; provided, however, that there
will be excluded for purposes of calculating Consolidated Net Income: (i) any
net income (loss) of any Person if such Person is not a Restricted Subsidiary,
except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Person for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person (other than an Unrestricted Subsidiary) for such
period will be included in determining such Consolidated Net Income to the
extent such loss has been funded with cash from the Company or a Restricted
Subsidiary; (ii) any net income (loss) of any Person acquired by the Company
or a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition; (iii) any net income of any Restricted
Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below the Company's equity in the
net income of any such Restricted Subsidiary for such period will be included
in such Consolidated Net Income up to the aggregate amount of cash that could
have been distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in the case
of a dividend to another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period will be included in determining such Consolidated
Net Income; (iv) any gain (loss) realized upon the sale or other disposition
of any property, plant or equipment of the Company or its consolidated
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is
not sold or otherwise disposed of in the ordinary course of business and any
gain (loss) realized upon the sale or other disposition of any
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Capital Stock of any Person; (v) any extraordinary gain or loss and (vi) the
cumulative effect of a change in accounting principles.
"Consolidated Tangible Assets" means, as of any date of determination, the
total assets, less goodwill, deferred financing costs and other intangibles
(in each case net of accumulated amortization) shown on the balance sheet of
the Company and its Restricted Subsidiaries as of the most recent date for
which such balance sheet is available, determined on a consolidated basis in
accordance with GAAP.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Noncash Consideration" means noncash consideration received by
the Company or a Restricted Subsidiary in connection with an Asset Disposition
that is so designated as Designated Noncash Consideration pursuant to an
Officers' Certificate, setting forth the basis of determining the fair market
value thereof, executed by the principal executive officer and the principal
financial officer of the Company; provided, that in determining the aggregate
fair market value of Designated Noncash Consideration that is outstanding from
time to time, there shall be subtracted the aggregate amount of cash or Cash
Equivalents received in connection with a sale of any Designated Noncash
Consideration (which sale shall be deemed an Asset Disposition, and which cash
or Cash Equivalents must be applied in accordance with the "Limitation on
Sales of Assets and Subsidiary Stock" covenant).
"Designated Senior Indebtedness" means (i) the Bank Indebtedness in the case
of the Company and (ii) any other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to lend
up to, at least $25.0 million and is specifically designated in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock of
such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness
or Disqualified Stock (excluding capital stock which is convertible or
exchangeable solely at the option of the Company or a Restricted Subsidiary)
or (iii) is redeemable at the option of the holder thereof, in whole or in
part, in each case on or prior to the Stated Maturity of the Notes, provided,
that only the portion of Capital Stock which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the
option of the holder thereof prior to such Stated Maturity will be deemed to
be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company, Holdings or AHI
of its respective common stock, or options, warrants or rights with respect to
its common stock.
"Foreign Subsidiary" means any Restricted Subsidiary that is not organized
under the laws of the United States of America or any state thereof or the
District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
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statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture will be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole
or in part); provided, however, that the term "Guarantee" will not include
endorsements for collection or deposit and indemnities given by the Company or
any of its Subsidiaries in connection with exhibitions, in each case, in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means Holdings and each Subsidiary Guarantor.
"Guarantor Senior Indebtedness" means, with respect to a Guarantor, the
following obligations, whether outstanding on the date of the Indenture or
thereafter issued, without duplication: (i) any Guarantee of the Bank
Indebtedness by such Guarantor and all other Guarantees by such Guarantor of
Senior Indebtedness of the Company or Guarantor Senior Indebtedness for any
other Guarantor; and (ii) all obligations consisting of the principal of and
premium, if any, and accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to the Guarantor regardless of whether postfiling interest is allowed
in such proceeding) on, and fees and other amounts owing in respect of, all
other Indebtedness of the Guarantor, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that the obligations in respect of such Indebtedness are
not senior in right of payment to the obligations of such Guarantor under the
Note Guarantee; provided, however, that Guarantor Senior Indebtedness will not
include (1) any obligations of a Subsidiary Guarantor to another Subsidiary
Guarantor, (2) any liability for Federal, state, local, foreign or other taxes
owed or owing by a Guarantor, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness of a Subsidiary Guarantor that is expressly subordinate in right
of payment to any of the Indebtedness of such Guarantor, including any
Guarantor Senior Subordinated Indebtedness and Guarantor Subordinated
Obligations of such Guarantor or (5) any Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means with respect to a
Guarantor, the obligations of such Guarantor under the Note Guarantee and any
other Indebtedness of such Guarantor that specifically provides that such
Indebtedness is to rank pari passu in right of payment with the obligations of
such Guarantor under the Note Guarantee and is not expressly subordinated by
its terms in right of payment to any Indebtedness of such Guarantor which is
not Guarantor Senior Indebtedness of such Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a Guarantor, any
Indebtedness of such Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) which is expressly subordinate in right of payment to the
obligations of such Guarantor under its Note Guarantee pursuant to a written
agreement.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
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"Holdings" means Advanstar Holdings, Inc., a Delaware corporation.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) will be deemed to be incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto), other
than (except for purposes of the cross-acceleration provisions described under
"Events of Default") obligations in respect of the undrawn face amount of
letters of credit that are the functional equivalents of surety or performance
bonds or that support self-insurance programs to the extent that the aggregate
amount of all such obligations does not exceed $3.0 million; (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services other than trade payables arising and accrued expenses
Incurred in the ordinary course of business, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services (if and to the
extent any such obligation would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP); (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person; (vi) the amount
of all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock or, with respect to any Subsidiary,
any Preferred Stock (but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided,
however, that the amount of such Indebtedness will be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness of such other Persons; (viii) all Indebtedness of
other Persons to the extent Guaranteed by such Person; and (ix) to the extent
not otherwise included in this definition, net obligations of such Person
under Currency Agreements and Interest Rate Agreements (the amount of any such
obligations to be equal at any time to the termination value of such agreement
or arrangement giving rise to such obligation that would be payable by such
Person at such time). The amount of Indebtedness of any Person at any date
will be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date; provided that the amount outstanding at any one time of any
Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP. Notwithstanding the foregoing, Indebtedness shall exclude (i)
obligations created, issued or incurred by any Person with respect to customer
subscription payments or customer deposits for trade shows and exhibitions and
(ii) any indemnification obligation of the Company to third parties in respect
of customary representations and warranties contained in stock purchase, asset
purchase or similar acquisition agreements to which the Company is a party, if
such indemnification obligation would not appear as a liability upon a balance
sheet of the Company prepared in accordance with GAAP.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar
agreement or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business) or other
extension of credit (including by way of
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Guarantee or similar arrangement, but excluding any debt or extension of
credit represented by a bank deposit other than a time deposit) or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person. For purposes of the "Limitation on
Restricted Payments" covenant, (i) "Investment" will include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to
be designated as an Unrestricted Subsidiary) of the fair market value of the
net assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company will be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time that such Subsidiary is so re-designated a
Restricted Subsidiary; and (ii) any property transferred to or from an
Unrestricted Subsidiary will be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors of the Company.
"Issue Date" means the date on which the Notes are originally issued.
"Leverage Ratio": as of any date of determination means, with respect to any
Person, the ratio of (i) the sum of the aggregate outstanding Indebtedness of
such Person and its Subsidiaries as of the date of calculation on a
consolidated basis in accordance with GAAP to (ii) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination;
provided, however, that (1) if since the beginning of such period the Company
or any Restricted Subsidiary will have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Leverage Ratio is an
Asset Disposition, the Consolidated EBITDA for such period will be reduced by
an amount equal to the Consolidated EBITDA (if positive) directly attributable
to the assets which are the subject of such Asset Disposition for such period
or increased by an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such period, (2) if since the beginning of
such period the Company or any Restricted Subsidiary (by merger or otherwise)
will have made an Investment in any Restricted Subsidiary (or any Person which
becomes a Restricted Subsidiary or is merged with or into the Company) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
Consolidated EBITDA for such period will be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness and including the
pro forma expenses and cost reductions calculated in accordance with
Regulation S-X promulgated by the SEC) as if such Investment or acquisition
occurred on the first day of such period and (3) if since the beginning of
such period any Person (that subsequently became a Restricted Subsidiary or
was merged with or into the Company or any Restricted Subsidiary since the
beginning of such period) will have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (1) or (2) above if made by the Company or a Restricted
Subsidiary during such period, Consolidated EBITDA for such period will be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness and including the pro forma expenses and cost reductions
calculated in accordance with Regulation S-X promulgated by the SEC) as if
such Asset Disposition or Investment occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
an acquisition of assets, the amount of income or earnings relating thereto,
the pro forma calculations will be determined in good faith by a responsible
financial or accounting officer of the Company. Notwithstanding anything
herein to the contrary, if at the time the calculation of the Leverage Ratio
is to be made, the Company does not have available consolidated financial
statements reflecting the consummation of the Acquisitions for a period of at
least four full fiscal quarters, all calculations required by the Leverage
Ratio shall be prepared on a pro forma basis in accordance with
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Regulation S-X promulgated by the SEC, as though each of the Acquisitions (to
the extent not otherwise reflected in the consolidated financial statements of
the Company) had occurred on the first day of the period of four fiscal
quarters for which such calculation is being made.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and
when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other noncash form, whether or not constituting
Designated Noncash Consideration) therefrom, in each case net of (i) all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Restricted
Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually Incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any Restricted Subsidiary (a) provides any guarantee or credit support of
any kind (including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity.
"Note Guarantee" means, individually, any Subsidiary Guarantee and the
Guarantee of payment of the Notes by Holdings and AHI (or, if they are merged,
the surviving entity of such merger) pursuant to the terms of the Indenture,
and, collectively, all such Guarantees. Each such Note Guarantee will be in
the form prescribed in the Indenture.
"Officer" means the Chairman of the Board, the President, Chief Financial
Officer, any Vice President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Holders" means (i) AHI Advanstar LLC, a Delaware limited
liability company, and partnerships in which the ultimate managing general
partner is controlled by, or (ii) other entities
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controlled by, members of Hellman & Friedman LLC, a Delaware limited liability
company, or any successor entity, and shall in any event include Hellman and
Friedman Capital Partners III, L.P., H&F International Partners III, L.P., and
H&F Orchard Partners III, L.P.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary; provided, however,
that the primary business of such Restricted Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) cash and Cash Equivalents; (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (v) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans or advances to employees made in the ordinary course of
business not exceeding in the aggregate, at any time, $1.0 million; (vii)
stock, obligations or securities received in settlement of debts created in
the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; (viii) any Asset Swap made in
accordance with the "Limitation on Asset Swaps" covenant or any Investment in
securities or other assets received in connection with an Asset Disposition
made in accordance with the provisions of the "Limitation on Sales of Assets
and Subsidiary Stock" covenant; (ix) Investments made after the Issue Date in
a Related Business in the form of joint ventures, operating agreements,
partnership agreements or other similar or customary agreements, interests or
arrangements with unaffiliated third parties, the aggregate outstanding amount
of which does not exceed $25.0 million (which aggregate amount outstanding
will be reduced by returns of capital received by the Company or any
Restricted Subsidiary in respect of such Investments) at any time; (x)
Currency Agreements, Interest Rate Agreements and related Hedging Obligations,
which transactions or obligations are Incurred in compliance with the
"Limitation on Indebtedness" covenant; and (xi) other Investments in an
aggregate amount outstanding at any time not to exceed $5.0 million.
"Permitted Liens" means, with respect to any Person, (a) pledges or deposits
by such Person under workmen's compensation laws, unemployment insurance laws
or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits or cash or United States government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment
of rent, in each case Incurred in the ordinary course of business; (b) Liens
imposed by law, including carriers', warehousemen's and mechanics' Liens, in
each case for sums not yet due or being contested in good faith by appropriate
proceedings; or other Liens arising out of judgments or awards against such
Person with respect to which such Person is then proceeding with an appeal or
other proceedings for review; (c) Liens for taxes, assessments or other
governmental charges not yet subject to penalties for non-payment or which are
being contested in good faith by appropriate proceedings provided appropriate
reserves have been taken on the books of the Company; (d) Liens in favor of
issuers of surety bonds or letters of credit issued pursuant to the request of
and for the account of such Person in the ordinary course of its business;
provided, however, that such letters of credit do not constitute Indebtedness;
(e) encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real properties or liens incidental to the conduct of the business of such
Person or to the ownership of its properties which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the
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business of such Person; (f) Liens securing an Interest Rate Protection
Agreement so long as the related Indebtedness is, and is permitted to be under
the Indenture, secured by a Lien on the same property securing the Interest
Rate Protection Agreement; and (g) leases and subleases of real property which
do not materially interfere with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries; (h) judgement Liens not giving
rise to an Event of Default so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment have not been finally terminated or the period within
which such proceedings may be initiated has not expired; (i) Liens for the
purpose of securing the payment (or the refinancing of the payment) of all or
a part of the purchase price of, or Capitalized Lease Obligations with respect
to, assets or property acquired or constructed in the ordinary course of
business provided that (x) the aggregate principal amount of Indebtedness
secured by such Liens is otherwise permitted to be Incurred under the
Indenture and does not exceed the cost of the assets or property so acquired
or constructed and (y) such Liens are created within 180 days of construction
or acquisition of such assets or property and do not encumber any other assets
or property of the Company or any Restricted Subsidiary other than such assets
or property and assets affixed or appurtenant thereto; (j) Liens arising
solely by virtue of any statutory or common law provision relating to banker's
Liens, rights of set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a creditor expository institution; provided
that (x) such deposit account is not a dedicated cash collateral account and
is not subject to restrictions against access by the Company in excess of
those set forth by regulations promulgated by the Federal Reserve Board, and
(y) such deposit account is not intended by the Company or any Restricted
Subsidiary to provide collateral to the depository institution; (k) Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Company and its Restricted Subsidiaries
in the ordinary course of business (l) Liens existing on the Issue Date; (m)
Liens on property or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of, such other
Person becoming a Subsidiary; provided further, however, that any such Lien
may not extend to any other property owned by the Company or any Restricted
Subsidiary; (n) Liens on property at the time the Company or a Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into the Company or any Restricted Subsidiary; provided,
however, that such Liens are not created, Incurred or assumed in connection
with, or in contemplation of, such acquisition; provided further, however,
that such Liens may not extend to any other property owned by the Company or
any Restricted Subsidiary; (o) Liens securing Indebtedness or other
obligations of a Subsidiary owing to the Company or a Wholly Owned Subsidiary;
and (p) Liens securing Refinancing Indebtedness Incurred to Refinance
Indebtedness that was previously so secured, provided that any such Lien is
limited to all or part of the same property or assets (plus improvements,
accessions, proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the original Lien
arose, could secure) the obligations to which such Liens relate.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision hereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
A "Public Market" exists at any time with respect to the common stock of the
Company, Holdings or AHI, as the case may be, if (i) the common stock of the
Company, Holdings or AHI, as the case may be, is then registered with the
Securities Exchange Commission pursuant to Section 12(b) or 12(g) of Exchange
Act and traded either on a national securities exchange or in the National
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Association of Securities Dealers Automated Quotation System and (ii) at least
15% of the total issued and outstanding common stock of the Company, Holdings
or AHI, as the case may be, has been distributed prior to such time by means
of an effective registration statement under the Securities Act 1933.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances,"
and "refinanced" shall have a correlative meaning) any Indebtedness existing
on the date of the Indenture or Incurred in compliance with the Indenture
(including Indebtedness of the Company that refinances Indebtedness of any
Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness, provided, however, that
(i) (x) if the Stated Maturity of the Indebtedness being refinanced is earlier
than the Stated Maturity of the Notes, the Refinancing Indebtedness has a
Stated Maturity no earlier than the Stated Maturity of the Indebtedness being
refinanced or (y) if the Stated Maturity of the Indebtedness being refinanced
is later than the Stated Maturity of the Notes, the Refinancing Indebtedness
has a Stated Maturity later than the Notes, (ii) the Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
refinanced, and (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding (plus fees and expenses, including any
premium and defeasance costs) of the Indebtedness being refinanced.
"Related Business" means any business related, ancillary or complementary to
the businesses of the Company and the Restricted Subsidiaries on the Issue
Date.
"Related Business Assets" means assets used or useful in a Related Business.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Senior Credit Agreement" means (i) the amended and restated Senior Secured
Credit Agreement to be entered into on the Issue Date among the Company, the
guarantors parties thereto, The Chase Manhattan Bank, as Administrative Agent,
and the lenders parties thereto from time to time, as the same may be amended,
supplemented or otherwise modified from time to time and any guarantees issued
thereunder and (ii) any renewal, extension, refunding, restructuring,
replacement or refinancing thereof (whether with the original Administrative
Agent and lenders or another administrative agent or agents or other lenders,
whether provided under the original Senior Credit Agreement or any other
credit or other agreement or indenture and whether entered into concurrently
with or subsequent to the termination of the prior Senior Credit Agreement).
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
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"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-
X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and
one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of
such Person. Unless otherwise specified herein, each reference to a Subsidiary
will refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment of the
Notes by a Subsidiary Guarantor pursuant to the terms of the Indenture, and,
collectively, all such Guarantees. Each such Subsidiary Guarantee will be in
the form prescribed in the Indenture.
"Subsidiary Guarantor" means each Subsidiary of the Company (other than a
Foreign Subsidiary) in existence on the Issue Date and any Restricted
Subsidiary (other than a Foreign Subsidiary) created or acquired by the
Company after the Issue Date.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Company or any
Restricted Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total consolidated assets of $10,000 or
less or (B) if such Subsidiary has consolidated assets greater than $10,000,
then such designation would be permitted under "Limitation on Restricted
Payments." The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation (x) the Company could Incur $1.00 of additional
Indebtedness pursuant to paragraph (a) under "Limitation on Indebtedness" and
(y) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company, all
of the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly-Owned Subsidiary.
"Wholly-Owned Subsidiary Guarantor" means a Wholly-Owned Subsidiary which is
a Subsidiary Guarantor.
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement concurrently with the issuance of the Original
Notes. Pursuant to the Registration Rights Agreement, the Company agreed to
(i) file with the Commission on or prior to 60 days after the date of issuance
of the Original Notes (the "Issue Date") a registration statement on Form S-1
or Form S-4, if the use of such form is then available (the "Exchange Offer
Registration Statement") relating to the Exchange Offer and (ii) use its
reasonable best efforts to cause the Exchange Offer Registration Statement to
be declared effective under the Securities Act within 150 days after the Issue
Date. As soon as practicable after the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the holders of Transfer
Restricted Securities (as defined below) who are not prohibited by any law or
policy of the Commission from participating in the Exchange Offer the
opportunity to exchange their Transfer Restricted Securities for the Exchange
Notes that are identical in all material respects to the Original Notes
(except that the Exchange Notes will not contain terms with respect to
transfer restrictions) and that would be registered under the Securities Act.
The Company will keep the Exchange Offer open for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Exchange Offer is mailed to the holders of the Original Notes.
If (i) because of any change in law or applicable interpretations thereof by
the staff of the Commission, the Company is not permitted to effect the
Exchange Offer as contemplated hereby, (ii) any Securities validly tendered
pursuant to the Exchange Offer are not exchanged for Exchange Securities
within 185 days after the Issue Date, (iii) any Initial Purchaser so requests
with respect to Original Notes not eligible to be exchanged for Exchange Notes
in the Exchange Offer, (iv) any Holder so requests because any applicable law
or interpretations do not permit such holder of Original Notes to participate
in the Exchange Offer, (v) any holder of Notes so requests because such Holder
participated in the Exchange Offer and did not receive freely transferable
Exchange Notes in exchange for tendered Original Notes, or (vi) the Company so
elects, then the Company will file with the Commission a shelf registration
statement (the "Shelf Registration Statement") to cover resales of Transfer
Restricted Securities by such holders who satisfy certain conditions relating
to the provision of information in connection with the Shelf Registration
Statement. For purposes of the foregoing, "Transfer Restricted Securities"
means each Original Note until (i) the date on which such Note has been
exchanged for a freely transferable Exchange Note in the Exchange Offer; (ii)
the date on which such Original Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iii) the date on which such Original Note is distributed to the
public pursuant to Rule 144 under the Securities Act or is salable pursuant to
Rule 144(k) under the Securities Act.
The Company will use its reasonable best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement
(each, a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will
commence the Exchange Offer and will use its reasonable best efforts to
consummate the Exchange Offer as promptly as practicable, but in any event
prior to 185 days after the Issue Date. If applicable, the Company will use
its reasonable best efforts to keep the Shelf Registration Statement effective
for a period of two years after the Issue Date.
Subject to certain conditions and limitations set forth in the Registration
Rights Agreement, if (i) the applicable Registration Statement is not filed
with the Commission on or prior to 60 days after the Issue Date; (ii) the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is not declared effective within 150 days after the Issue
Date; (iii) the Exchange Offer is not consummated on or prior to 185 days
after the Issue Date or (iv) the Shelf Registration Statement is filed and
declared effective within 150 days after the Issue Date but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain
the effectiveness thereof) without being
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succeeded within 45 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will be obligated to pay liquidated
damages to each holder of Transfer Restricted Securities, during the period of
one or more such Registration Defaults, in an amount equal to $0.192 per week
per $1,000 principal amount of the Original Notes constituting Transfer
Restricted Securities held by such holder until the applicable Registration
Statement is filed, the Exchange Offer Registration Statement is declared
effective and the Exchange Offer is consummated or the Shelf Registration
Statement is declared effective or again becomes effective, as the case may
be. All accrued liquidated damages shall be paid to holders in the same manner
as interest payments on the Original Notes on semi-annual payment dates which
correspond to interest payment dates for the Original Notes. Following the
cure of all Registration Defaults, the accrual of liquidated damages will
cease. Notwithstanding the foregoing, the Company may issue a notice (a
"Suspension Notice") to the Holders stating that a Shelf Registration
Statement may not be used; a Suspension Notice may be given by the Company
pending the announcement of material information by the Company which the
Board of Directors of the Company has determined, based upon an opinion of
counsel, would be required to be disclosed in such Registration Statement in
order to make the statements therein not misleading, and may issue any
Suspension Notice suspending use of the Shelf Registration Statement required
under applicable securities laws to be issued (a "Suspension"). In the event
that the aggregate number of days in any consecutive twelve-month period for
which all such Suspension Notices are issued and effective exceeds 45 days in
the aggregate, then the Company will be obligated to pay liquidated damages to
each Holder of Transfer Restricted Securities, during the period of one or
more such Suspension, in an amount equal to $0.192 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder.
The Exchange and Registration Rights Agreement also will provide that the
Company (i) shall make available for a period of 180 days after the
consummation of the Exchange Offer a prospectus meeting the requirements of
the Securities Act to any broker-dealer for use in connection with any resale
of any such Exchange Notes and (ii) shall pay all expenses incident to the
Exchange Offer (including the expense of one counsel to the holders of the
Notes) and will indemnify certain holders of the Original Notes (including any
broker-dealer) against certain liabilities, including liabilities under the
Securities Act. A broker-dealer which delivers such a prospectus to purchasers
in connection with such resales will be subject to certain of the civil
liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
Each holder of Original Notes who wishes to exchange such Notes for Exchange
Notes in the Exchange Offer will be required to make certain representations,
including representations that (i) any Exchange Notes to be received by it
will be acquired in the ordinary course of its business; (ii) it has no
arrangement or understanding with any person to participate in the
distribution of the Exchange Notes and (iii) it is not an "affiliate" (as
defined in Rule 405 under the Securities Act) of the Company, or if it is an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of
the Exchange Notes. If the holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Original Notes that were
acquired as a result of market-making activities or other trading activities
(an "Exchanging Dealer"), it will be required to acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
Holders of the Original Notes will be required to make certain
representations to the Company (as described above) in order to participate in
the Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement in order to have their
110
<PAGE>
Original Notes included in the Shelf Registration Statement and benefit from
the provisions regarding liquidated damages set forth in the preceding
paragraphs. A holder who sells Original Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations).
For so long as the Original Notes are outstanding, the Company will continue
to provide to holders of the Original Notes and to prospective purchasers of
the Original Notes the information required by Rule 144A(d)(4) under the
Securities Act.
Each Guarantor will agree to be bound by the terms and provisions of the
Registration Rights Agreement with respect to registration of the Note
Guarantees.
The foregoing description of the Registration Rights Agreement is a summary
only, does not purport to be complete and is qualified in its entirety by
reference to all provisions of the Registration Rights Agreement. A copy of
the Registration Rights Agreement is filed as an exhibit to the Registration
Statement of which this Prospects is a part.
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BOOK-ENTRY; DELIVERY AND FORM
THE GLOBAL NOTES
Exchange Notes will be issued in the form of one or more registered notes in
global form, without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited on the date of the closing of the Exchange
Offer (the "Closing Date") with, or on behalf of, The Depository Trust Company
("DTC") and registered in the name of Cede & Co., as nominee of DTC, or will
remain in the custody of the Trustee pursuant to the FAST Balance Certificate
Agreement between DTC and the Trustee.
Except as set forth below, the Global Notes, may be transferred, in whole
and not in part, solely to another nominee of DTC or to a successor of DTC or
its nominee. Beneficial interests in the Global Notes may not be exchanged for
Notes in physical, certificated form ("Certificated Notes") except in the
limited circumstances described below.
All interests in the Global Notes may be subject to the procedures and
requirements of DTC.
CERTAIN BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The descriptions of the operations and procedures of DTC set forth below are
provided solely as a matter of convenience. These operations and procedures
are solely within the control of DTC and are subject to change by it from time
to time. The Company takes no responsibility for these operations or
procedures, and investors are urged to contact DTC or its participants
directly to discuss these matters.
DTC has advised the Company that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a "banking
organization" within the meaning of the New York Banking Law, (iii) a member
of the Federal Reserve System, (iv) a "clearing corporation" within the
meaning of the Uniform Commercial Code, as amended, and (v) a "clearing
agency" registered pursuant to Section 17A of the Exchange Act. DTC was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical
transfer and delivery of certificates. DTC's Participants include securities
brokers and dealers, banks and trust companies, clearing corporations and
certain other organizations. Indirect access to DTC's system is also available
to other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Investors who are not Participants may beneficially own securities held by or
on behalf of DTC only through Participants or Indirect Participants.
The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Notes, DTC will credit the accounts of Participants with
an interest in the Global Notes and (ii) ownership of the Notes will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the interests of Participants) and
the records of Participants and the Indirect Participants (with respect to the
interests of persons other than Participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by the
Global Notes to such persons may be limited. In addition, because DTC can act
only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an
interest in Notes represented by the Global Notes to pledge or transfer such
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of such interest, may be affected by the
lack of a physical definitive security in respect of such interest.
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So long as DTC or its nominee is the registered owner of the Global Notes,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by the Global Notes for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in the
Global Notes will not be entitled to have Notes represented by such Global
Notes registered in their names, will not receive or be entitled to receive
physical delivery of Certificated Notes, and will not be considered the owners
or holders thereof under the Indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the Trustee
thereunder. Accordingly, each holder owning a beneficial interest in the
Global Notes must rely on the procedures of DTC and, if such holder is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such holder owns its interest, to exercise any rights of a
holder of Notes under the Indenture or such Global Notes. The Company
understands that under existing industry practice, in the event that the
Company requests any action of holders of Notes, or a holder that is an owner
of a beneficial interest in the Global Notes desires to take any action that
DTC, as the holder of such Global Notes, is entitled to take, DTC would
authorize the Participants to take such action and the Participants would
authorize holders owning through such Participants to take such action or
would otherwise act upon the instruction of such holders. Neither the Company
nor the Trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of Notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such
Notes.
Payments with respect to the principal of, and premium, if any, Liquidated
Damages, if any, and interest on, any Notes represented by the Global Notes
registered in the name of DTC or its nominee on the applicable record date
will be payable by the Trustee to or at the direction of DTC or its nominee in
its capacity as the registered holder of the Global Notes representing such
Notes under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names the Notes, including the
Global Notes, are registered as the owners thereof for the purpose of
receiving payment thereon and for any and all other purposes whatsoever.
Accordingly, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to owners of
beneficial interests in the Global Notes (including principal, premium, if
any, Liquidated Damages, if any, and interest). Payments by the Participants
and the Indirect Participants to the owners of beneficial interests in the
Global Notes will be governed by standing instructions and customary industry
practice and will be the responsibility of the Participants or the Indirect
Participants and DTC.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary or DTC ceases to be registered as a
clearing agency under the Exchange Act and a successor depositary is not
appointed within 90 days of such notice or cessation, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance
of Notes in definitive form under the Indenture or (iii) upon the occurrence
of certain other events as provided in the Indenture, then, upon surrender by
DTC of the Global Notes, Certificated Notes will be issued to each person that
DTC identifies as the beneficial owner of the Notes represented by the Global
Notes. Upon any such issuance, the Trustee is required to register such
Certificated Notes in the name of such person or persons (or the nominee of
any thereof) and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners
of the related Notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the Notes to be issued).
113
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a summary of certain United States federal tax consequences
to holders of the Original Notes of (i) the exchange of the Original Notes for
the Exchange Notes and (ii) the ownership and disposition of the Exchange
Notes. Except where noted, the summary deals only with Exchange Notes held as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). As used herein, the term "Non-U.S. Holder"
means any person or entity that is not a United States holder ("U.S. Holder").
A U.S. Holder is any beneficial owner of an Exchange Note that is (i) an
individual who is a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any state or political subdivision thereof, (iii) an estate
the income of which is subject to United States federal income taxation
regardless of its source, and (iv) a trust which is subject to the supervision
of a court within the United States and the control of a United States person
as described in Section 7701(a)(30) of the Code.
The following summary is based upon the provisions of the Code, and on
regulations, rulings and judicial decisions thereunder as of the date hereof,
and does not address any state, local or foreign tax consequences. This
summary does not discuss all aspects of United States federal taxation which
may be important to particular holders in light of their individual investment
circumstances, such as Exchange Notes held by investors subject to special tax
rules (e.g. financial institutions, insurance companies, broker-dealers, tax-
exempt organizations and private foundations) or to persons that will hold the
Exchange Notes as part of a straddle, hedge, or synthetic security transaction
for United States federal income tax purposes, all of whom may be subject to
tax rules that differ significantly from those summarized below. Special rules
may also apply to certain Non-U.S. Holders, such as "controlled foreign
corporations," "passive foreign investment companies" and "foreign personal
holding companies." Finally, prospective holders of Exchange Notes should be
aware that tax laws frequently change. When these changes occur, the statutes,
regulations, rulings and judicial decisions giving rise to such changes may
have a retroactive effect. Accordingly, there can be no assurance that future
changes in such tax laws will not cause the consequences of the exchange of
the Original Notes for the Exchange Notes or the ownership and disposition of
the Exchange Notes to differ significantly from the consequences summarized
below. HOLDERS OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER ANY STATE,
LOCAL, FOREIGN OR OTHER LAWS OR ANY APPLICABLE TAX TREATIES, WHICH MAY PROVIDE
FOR A LOWER RATE OF WITHHOLDING TAX, EXEMPTION FROM OR REDUCTION OF BRANCH
PROFITS TAX, OR OTHER RULES DIFFERENT FROM THOSE DESCRIBED BELOW.
EXCHANGE OFFER
The exchange of Original Notes for Exchange Notes pursuant to the Exchange
Offer should be treated as a continuation of the corresponding Original Notes
because the terms of the Exchange Notes are not materially different from the
terms of the Original Notes. Accordingly, such exchange should not constitute
a taxable event and, therefore, (i) no gain or loss should be realized upon
receipt of an Exchange Note, (ii) the holding period of the Exchange Notes
should include the holding period of the Original Note exchanged therefor and
(iii) the adjusted tax basis of the Exchange Note should be the same as the
adjusted tax basis of the Original Note exchanged therefor immediately before
the exchange.
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NON-U.S. HOLDERS
United States Withholding Tax
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any paying agent of principal
or interest on an Exchange Note owned by a Non-U.S. Holder, provided that
(i) the beneficial owner does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote within the meaning of section 871(h)(3) of the
Code and the regulations thereunder, (ii) the beneficial owner is not a
controlled foreign corporation that is related to the Company through stock
ownership, (iii) the beneficial owner is not a bank whose receipt of
interest on an Exchange Note is described in section 881(c)(3)(A) of the
Code and (iv) the beneficial owner satisfies the ownership statement
requirement (described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder;
(b) no withholding of United States federal income tax will be required
with respect to any gain or income realized by a Non-U.S. Holder upon the
sale, exchange, retirement or other disposition of an Exchange Note; and
(c) an Exchange Note beneficially owned by an individual who at the time
of death is a Non-U.S. Holder will not be subject to United States federal
estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote within the meaning of section 871(h)(3) of the Code and provided that
the interest payments with respect to such Exchange Note would not have
been, if received at the time of such individual's death, effectively
connected with the conduct of a United States trade or business by such
individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Exchange Note, or a financial institution holding the Exchange
Note on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a United States person. Currently, these
requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States person (which certification may be made on an Internal Revenue Service
("IRS") Form W-8 (or successor form)) or (2) a financial institution holding
the Exchange Note on behalf of the beneficial owner certifies, under penalties
of perjury, that such statement has been received by it and furnishes a paying
agent with a copy thereof.
If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio
interest" exception described in (a) above, payments of interest made to such
Non-U.S. Holder will be subject to a 30% withholding tax unless the beneficial
owner of the Exchange Note provides the Company or its paying agent, as the
case may be, with a properly executed (1) IRS Form 1001 (or successor form)
claiming an exemption from (or a reduction in) withholding under the benefit
of an applicable tax treaty or (2) IRS Form 4224 (or successor form) stating
that interest paid on the Exchange Note is not subject to withholding tax
because it is effectively connected with the beneficial owner's conduct of a
trade or business in the United States. Under recently finalized Treasury
Regulations, the benefit of an applicable tax treaty may, in certain
circumstances, and subject to significant limitations under the Code, be
claimed by the foreign partners of a foreign partnership that holds the
Exchange Notes. Foreign partners are urged to consult their own tax advisors
to determine whether they are eligible to claim such benefits.
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If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the Exchange Note is effectively connected with the conduct of
such trade or business, the Non-U.S. Holder, although exempt from the
withholding tax discussed above, will be subject to United States federal
income tax on such interest on a net income basis in the same manner as if it
were a U.S. Holder. In addition, if such holder is a foreign corporation, it
may be subject to a branch profits tax equal to 30% (or lower applicable
treaty rate) of its effectively connected earnings and profits for the taxable
year, subject to adjustments. For this purpose, interest on an Exchange Note
will be included in such foreign corporation's earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of an Exchange Note generally will not be subject to United States
federal income tax unless (i) such gain or income is effectively connected
with a trade or business in the United States of the Non-U.S. Holder, (ii) in
the case of a Non-U.S. Holder who is an individual, such individual is present
in the United States for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition, and certain other conditions are
met, or (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions
of U.S. tax law applicable to certain U.S. expatriates.
INFORMATION, REPORTING AND BACKUP WITHHOLDING
In general, no information reporting or backup withholding will be required
with respect to payments made by the Company or any paying agent to Non-U.S.
Holders if a statement described in (a)(iv) above has been received (and the
payor does not have actual knowledge that the beneficial owner is a United
States person).
In addition, backup withholding and information reporting may apply to the
proceeds of the sale of an Exchange Note within the United States or conducted
through certain U.S. related financial intermediaries unless the statement
described in (a)(iv) above has been received (and the payor does not have
actual knowledge that the beneficial owner is a United States person) or the
holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS and
certain procedures are followed.
PROSPECTIVE FINAL REGULATIONS
On October 6, 1997, new Treasury Regulations ("New Regulations") were issued
that modify the requirements imposed on a Non-U.S. Holder and certain
intermediaries for establishing the recipient's status as a Non-U.S. Holder
eligible for exemption from or reduction in United States withholding tax and
backup withholding described above. In general, the New Regulations do not
significantly alter the substantive withholding and information reporting
requirements but rather unify current certification procedures and forms and
clarify reliance standards. The New Regulations are generally effective for
payments made after December 31, 1999, subject to certain transition rules. In
addition, the New Regulations impose different conditions on the ability of
financial intermediaries acting for a Non-U.S. Holder to provide
certifications on behalf of the Non-U.S. Holder, which may include entering
into an agreement with the IRS to audit certain documentation with respect to
such certifications. Non-U.S. Holders should consult their own tax advisors to
determine the effects of the application of the New Regulations to their
particular circumstances.
116
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offers must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that for a
period of 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, for 90 days after the date of this
Prospectus, all dealers effecting transactions in the Exchange Notes may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offers may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Exchange Offers and any broker or dealer
that participates in a distribution of such Exchange Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal. The Company has agreed to pay all expenses incident to
the Exchange Offer (including the expenses of one counsel for the holders of
the Original Notes), other than commissions or concessions of any broker-
dealers, and will indemnify the holders of the Notes (including any broker-
dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The audited financial statements included in this Prospectus and elsewhere
in the Registration Statement, to the extent and for the periods indicated in
their reports, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
The consolidated balance sheets of MAGIC as of May 31, 1996 and 1997 and the
consolidated statements of income, shareholders' equity and cash flows for
each of the years in the three year period ended May 31, 1997 included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given upon their authority as experts
in accounting and auditing, appearing herein.
117
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Exchange Notes offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in
the Registration Statement. For further information with respect to the
Company and the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. The Registration
Statement (and the exhibits and schedules thereto), as well as the periodic
reports and other information filed by the Company with the Commission, may be
inspected and copied at the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the regional offices of the Commission located at Room 1400, 75 Park Place,
New York, New York 10007 and Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such materials may be
obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its
public reference facilities in New York, New York and Chicago, Illinois at
prescribed rates. Such information can also be reviewed through the
Commission's Electronic Data Gathering, Analysis and Retrieval System which is
publicly available through the Commission's Web Site (http: www.sec.gov).
Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete, and in each instance reference
is made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified by such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Notes, without cost to the Trustee or such
registered holders, copies of all reports and other information that would be
required to be filed by the Company with the Commission under the Exchange
Act, whether or not the Company is then required to file reports with the
Commission. As a result of the Exchange Offer, the Company will become subject
to the periodic reporting and other informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
has agreed that, whether or not the Company is subject to filing requirements
under Section 13 or 15(d) of the Exchange Act, and so long as any Notes remain
outstanding, it will file with the Commission (but only if the Commission at
such time is accepting such voluntary filings) and will send the Trustee
copies of the financial information, documents and reports that would have
been required to be filed with the Commission pursuant to the Exchange Act.
118
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ADVANSTAR COMMUNICATIONS INC. AND SUBSIDIARIES (AND PREDECESSOR)
Report of Arthur Andersen LLP........................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............ F-3
Consolidated Statements of Operations for the year ended December 31,
1995, five months ended May 31, 1996, seven months ended December 31,
1996 and year ended December 31, 1997.................................. F-4
Consolidated Statements of Shareholder's Equity for the periods ended
December 31, 1994, 1995, 1996 and 1997 and May 31, 1996................ F-5
Consolidated Statements of Cash Flows for the year ended December 31,
1995, five months ended May 31, 1996, seven months ended December 31,
1996 and year ended December 31, 1997.................................. F-6
Notes to Consolidated Financial Statements.............................. F-7
Condensed Consolidated Balance Sheet as of March 31, 1998 (unaudited)... F-20
Condensed Consolidated Statement of Operations for the three month peri-
ods ended March 31, 1997 and 1998 (unaudited).......................... F-21
Condensed Consolidated Statements of Cash Flows for the three month pe-
riods ended March 31, 1997 and 1998 (unaudited)........................ F-22
Notes to Condensed Consolidated Financial Statements (unaudited)........ F-23
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
Report of Arthur Andersen LLP........................................... F-30
Report of Coopers and Lybrand L.L.P..................................... F-31
Consolidated Balance Sheets as of May 31, 1996 and 1997 and February 28,
1998................................................................... F-32
Consolidated Statements of Income for the fiscal years ended May 31,
1995, 1996 and 1997 and the nine months ended February 28, 1998........ F-33
Consolidated Statements of Cash Flows for the fiscal years ended May 31,
1995, 1996 and 1997 and the nine months ended February 28, 1998........ F-34
Consolidated Statements of Shareholders' Equity for the fiscal years
ended May 31, 1995, 1996 and 1997 and the nine months ended February
28, 1998............................................................... F-35
Notes to Consolidated Financial Statements.............................. F-36
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Advanstar Communications Inc.:
We have audited the accompanying consolidated balance sheets as of December
31, 1996 and 1997 and the consolidated statements of operations, shareholder's
equity and cash flows of Advanstar Communications Inc. (a New York Corporation
and wholly-owned subsidiary of Advanstar Holdings, Inc.) and subsidiaries and
its predecessor for the year ended December 31, 1995, the five-month period
ended May 31, 1996, the seven-month period ended December 31, 1996 and the
year ended December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Advanstar
Communications Inc. and subsidiaries and its predecessor as of December 31,
1996 and 1997, and the results of their operations and their cash flows for
the year ended December 31, 1995, the five-month period ended May 31, 1996,
the seven-month period ended December 31, 1996, and the year ended December
31, 1997, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Minneapolis, Minnesota,
February 6, 1998
F-2
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
(IN THOUSANDS,
EXCEPT SHARE AND
PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 2,531 $ 7,024
Accounts receivable, net of allowance for doubtful
accounts of $541 at December 31, 1996 and $553 at
December 31, 1997..................................... 16,530 18,819
Prepaid expenses....................................... 6,437 9,607
Other.................................................. 1,705 2,256
--------- ---------
Total current assets................................. 27,203 37,706
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements.................................. 3,034 2,514
Buildings.............................................. 5,007 5,041
Furniture, machinery and equipment..................... 7,023 9,229
Leasehold improvements................................. 490 517
Accumulated depreciation and amortization.............. (1,954) (5,155)
--------- ---------
Net property, plant and equipment.................... 13,600 12,146
--------- ---------
INTANGIBLE ASSETS, net:
Goodwill............................................... 161,199 176,103
Other intangibles...................................... 74,871 72,542
--------- ---------
Total intangible assets.............................. 236,070 248,645
--------- ---------
OTHER ASSETS, net........................................ 300 --
--------- ---------
$ 277,173 $ 298,497
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt................... $ 9,500 $ 15,350
Accounts payable....................................... 5,303 10,938
Accrued compensation................................... 6,535 6,809
Income taxes payable................................... 2,961 1,552
Other accrued liabilities.............................. 4,763 2,312
Deferred revenue....................................... 16,682 21,105
--------- ---------
Total current liabilities............................ 45,744 58,066
--------- ---------
LONG-TERM DEBT, net of current maturities:
Senior term loans...................................... 124,500 146,873
Revolving credit loan.................................. 17,000 2,000
--------- ---------
Total long-term debt................................. 141,500 148,873
--------- ---------
OTHER LONG-TERM LIABILITIES.............................. 3,090 1,824
--------- ---------
COMMITMENTS AND CONTINGENCIES (Notes 3, 4, 5 and 7)
SHAREHOLDER'S EQUITY:
Common stock, $.01 par value; 1,500,000 shares
authorized, 1,000,000 shares outstanding at December
31, 1996 and December 31, 1997........................ 10 10
Capital in excess of par value......................... 96,990 108,990
Accumulated deficit.................................... (10,414) (19,309)
Translation adjustment................................. 253 43
--------- ---------
Total shareholder's equity........................... 86,839 89,734
--------- ---------
$ 277,173 $ 298,497
========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
F-3
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------
SEVEN MONTHS
YEAR ENDED FIVE MONTHS ENDED YEAR ENDED
DECEMBER 31, ENDED DECEMBER 31, DECEMBER 31,
1995 MAY 31, 1996 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenue............... $145,300 $68,286 $ 82,720 $ 187,656
-------- ------- ---------- ----------
Operating expenses:
Cost of sales........... 34,729 15,764 18,394 39,096
Selling, editorial and
circulation............ 62,213 28,063 35,099 87,007
General and administra-
tive................... 23,747 10,031 15,446 27,514
Amortization of goodwill
and other intangible
assets................. 4,801 1,588 13,171 24,326
Depreciation............ 3,405 1,431 1,949 3,200
-------- ------- ---------- ----------
Total operating ex-
penses............... 128,895 56,877 84,059 181,143
-------- ------- ---------- ----------
Operating income (loss)... 16,405 11,409 (1,339) 6,513
Other income (expense):
Interest expense, net... (19,613) (6,963) (7,511) (15,117)
Other income (expense),
net.................... 2,230 23 (488) 292
-------- ------- ---------- ----------
Income (loss) before in-
come taxes............... (978) 4,469 (9,338) (8,312)
Provision for income tax-
es....................... (16) (13) (1,076) (583)
-------- ------- ---------- ----------
Net income (loss)......... $ (994) $ 4,456 $ (10,414) $ (8,895)
======== ======= ========== ==========
Net income (loss) per
share, basic and
diluted.................. $ (10.41) $ (8.90)
========== ==========
Weighted average common
stock outstanding, basic
and diluted.............. 1,000,000 1,000,000
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
F-4
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON CAPITAL IN
NUMBER OF STOCK $.01 EXCESS OF TRANSLATION ACCUMULATED
SHARES PAR VALUE PAR VALUE ADJUSTMENT DEFICIT TOTAL
--------- ---------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994 (Predecessor)..... 1,000,000 $10 $ 53,089 $119 $(180,639) $(127,421)
Net loss.............. -- -- -- -- (994) (994)
Stock proceeds........ 0 -- 125 -- -- 125
Translation adjust-
ment................. -- -- -- (14) -- (14)
--------- --- -------- ---- --------- ---------
Balance, December 31,
1995 (Predecessor)..... 1,000,000 10 53,214 105 (181,633) (128,304)
Net income............ -- -- -- -- 4,456 4,456
Translation adjust-
ment................. -- -- -- (105) -- (105)
--------- --- -------- ---- --------- ---------
Balance, May 31, 1996
(Predecessor).......... 1,000,000 $10 $ 53,214 $-- $(177,177) $(123,953)
========= === ======== ==== ========= =========
Balance, May 31, 1996
(Successor)............ 1,000,000 10 96,990 -- -- 97,000
Net loss.............. -- -- -- -- (10,414) (10,414)
Translation adjust-
ment................. -- -- -- 253 -- 253
--------- --- -------- ---- --------- ---------
Balance, December 31,
1996 (Successor)....... 1,000,000 10 96,990 253 (10,414) 86,839
Net loss.............. -- -- -- -- (8,895) (8,895)
Translation adjust-
ment................. -- -- -- (210) -- (210)
Capital contribution.. -- -- 12,000 -- -- 12,000
--------- --- -------- ---- --------- ---------
Balance, December 31,
1997 (Successor)....... 1,000,000 $10 $108,990 $ 43 $ (19,309) $ 89,734
========= === ======== ==== ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
F-5
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
--------------------
FIVE SEVEN
MONTHS MONTHS YEAR
YEAR ENDED ENDED ENDED ENDED
DECEMBER 31, MAY 31, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............. $ (994) $ 4,456 $ (10,414) $ (8,895)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortiza-
tion......................... 8,206 3,019 15,120 27,526
Noncash interest............. 3,443 963 (4) 934
(Gain) loss on sales of as-
sets and other............... (1,929) (28) 8 (228)
Changes in operating assets
and liabilities:
Accounts receivable, net... (373) (422) (2,010) (2,098)
Inventories................ (553) 257 (45) (317)
Prepaid expenses........... 861 2,055 (2,206) (2,001)
Accounts payable and
accrued liabilities........ (3,570) (5,820) 6,169 (2,591)
Deferred revenue........... 692 (5,320) 5,745 290
Other...................... (1,876) (171) 253 (28)
------- ------- --------- --------
Net cash provided by
(used in) operating
activities............... 3,907 (1,011) 12,616 12,592
------- ------- --------- --------
INVESTING ACTIVITIES:
Additions to property, plant
and equipment................ (1,451) (365) (780) (2,260)
Change in notes receivable.... 119 34 235 (235)
Acquisition of publications
and trade shows.............. (468) -- (18,379) (31,871)
Proceeds from sale of fixed
assets....................... 6,232 57 -- 1,043
------- ------- --------- --------
Net cash provided by (used
in) investing activities... 4,432 (274) (18,924) (33,323)
------- ------- --------- --------
FINANCING ACTIVITIES:
Acquisition-related financing
transactions:
Redemption of common stock,
options and warrants......... -- -- (57,002) --
Repayment of long-term debt.. -- -- (171,162) --
Repayment of revolving
credit loan.................. -- -- (6,898) --
Proceeds from capital
contributions................ -- -- 97,000 --
Proceeds from long-term
debt......................... -- -- 140,000 --
Proceeds from revolving
credit loan.................. -- -- 4,000 --
Transaction costs and loan
origination fees............. -- -- (5,699) --
Repayments of:
Revolving credit loan........ (21,602) (7,950) (1,000) (15,000)
Long-term debt............... (7,452) (2,500) (6,000) (11,776)
Borrowings of:
Revolving credit loan........ 13,166 12,282 14,000 --
Long-term debt............... 922 245 -- 40,000
Proceeds from sale of common
stock and capital contribu-
tions and other.............. 308 150 -- 12,000
Purchase of interest rate cap
agreements and
origination/underwriters
fees......................... -- -- (1,295) --
------- ------- --------- --------
Net cash provided by
(used in) financing
activities............... (14,658) 2,227 5,944 25,224
------- ------- --------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS.......... (6,319) 942 (364) 4,493
CASH AND CASH EQUIVALENTS, be-
ginning of period............. 8,272 1,953 2,895 2,531
------- ------- --------- --------
CASH AND CASH EQUIVALENTS, end
of period..................... $ 1,953 $ 2,895 $ 2,531 $ 7,024
======= ======= ========= ========
Supplemental disclosures of
cash flow information:
Cash paid during the period
for:
Interest..................... $15,600 $ 9,839 $ 6,343 $ 15,437
Income taxes................. 17 0 908 2,877
</TABLE>
The accompanying notes to financial statements
are an integral part of these consolidated statements.
F-6
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997
1. DESCRIPTION OF BUSINESS AND ACQUISITION:
Description of Business
The accompanying consolidated financial statements include the accounts of
Advanstar Communications Inc. (a New York corporation) and its wholly owned
subsidiaries, collectively referred to as the Company. The Company is a wholly
owned subsidiary of Advanstar Holdings, Inc. (Holdings). Holdings has limited
operations and its activities are solely on behalf of the Company.
Accordingly, all assets, liabilities, revenues and expenses of Holdings are
reflected in the financial statements of the Company. All intercompany
transactions have been eliminated in consolidation.
The Company publishes controlled circulation trade and professional
periodicals; operates and manages expositions, trade shows and conferences;
and markets a broad range of marketing, direct mail and database products and
services.
Acquisition of the Company
On May 31, 1996, Holdings acquired in a cash merger the stock and became the
sole shareholder of the Company. Holdings was established expressly for the
purpose of effecting the acquisition of the Company (the HFCP III Acquisition)
and is wholly owned by AHI Advanstar. The aggregate purchase price for the
Company was approximately $267.0 million, consisting of $97.0 million cash
equity, $144.0 million debt and approximately $26.0 million of assumed
liabilities and transaction costs.
Due to the effects of the HFCP III Acquisition on the recorded bases of
goodwill, intangibles, property and shareholder's equity, as discussed below
and in Note 4, the financial statements prior to and subsequent to the HFCP
III Acquisition are not comparable. Periods prior to June 1, 1996 represent
the accounts of the Predecessor.
Other Acquired Entities
During 1995, 1996 and 1997, the Company purchased certain publication and
exposition properties for an aggregate purchase price of $.5 million, $18.3
million and $39.7, respectively. The cost of these acquired entities in excess
of the fair market value of net assets acquired has been recorded as goodwill
and intangibles. The pro forma affect of these acquisitions on the results of
operations was not material.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit and highly liquid
investments with original maturities of three months or less. Cash equivalents
are stated at cost, which approximates their fair market value. The effect of
foreign currency translation on cash held by foreign operations is immaterial.
Prepaid Expenses and Other Current Assets
Prepaid expenses consist primarily of prepaid exposition expenses, prepaid
publication production costs and miscellaneous deposits. Exposition and
publication expenses are charged to operations at the time of the occurrence
of the related exposition and at the time of publication issuance. Other
current assets consist of paper inventories and notes receivable.
F-7
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
Property, Plant and Equipment
Property, plant and equipment additions are recorded at cost. For financial
reporting purposes, depreciation is provided on a straight-line basis over the
following estimated useful lives:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
-------------
<S> <C>
Land improvements.............................................. 10-15 years
Buildings...................................................... 20-40 years
Furniture, machinery and equipment............................. 3-10 years
Leasehold improvements......................................... Life of lease
</TABLE>
For tax reporting purposes, certain assets have different estimated useful
lives.
Goodwill
All acquisitions have been accounted for using the purchase method of
accounting, with the purchase price in excess of the fair values of specific
identifiable tangible and intangible assets acquired allocated to goodwill.
Goodwill, which is being amortized on a straight-line basis over an average
life of 23 years, is recorded in the accompanying consolidated balance sheet
net of accumulated amortization of $3.9 million and $11.9 million at December
31, 1996 and 1997, respectively.
Intangible Assets
Intangible assets related to the HFCP III Acquisition consist primarily of
advertiser, paid subscriber and trade show exhibitor lists, computer software,
the value assigned to the Company's assembled workforce and fulfillment
agreements. Such intangibles are being amortized on a straight-line basis over
3 months to 20 years. Intangible assets associated with acquired businesses
consist primarily of identifiable intangibles and are being amortized on a
straight-line basis over one to eight years. Accumulated amortization was $9.6
million and $25.6 million at December 31, 1996 and 1997, respectively.
Impairment of Long-Lived Assets
The Company evaluates the carrying value of long-lived assets in accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" to determine whether certain
circumstances may affect the estimated useful lives or the recoverability of
such assets. A number of factors, including estimated future undiscounted cash
flows associated with the long-lived asset, are considered in this
determination. The accompanying financial statements reflect no adjustments
relative to this evaluation.
Revenue Recognition
Exposition revenue is recognized in the accounting period in which the
exposition is conducted. Subscription revenue is recognized on a pro rata
basis as publications are issued to fulfill the subscription obligations.
Deferred revenue is recorded when cash is received in advance of providing the
related service.
Deferred revenue consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred exposition revenue................................. $10,777 $16,529
Deferred advertising and subscription revenue............... 5,905 4,576
------- -------
Total deferred revenue...................................... $16,682 $21,105
======= =======
</TABLE>
F-8
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Ultimate results could differ from these estimates.
Foreign Currency Translation
The Company accounts for translation investments in foreign entities in
accordance with SFAS No. 52, "Foreign Currency Translation."
Reclassifications
Certain amounts previously reported in the 1995 and 1996 financial
statements have been reclassified to conform to the 1997 presentation.
Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." The statement requires an enterprise to
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of the statement of financial position. The Company will adopt this
standard during 1998. Adoption of this standard is not expected to have a
material effect on the Company.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information." The
statement requires that a public business enterprise report financial and
descriptive information about its reportable operating segments such as a
measure of segment profit or loss, certain specific revenue and expense items,
and segment assets. The Company will adopt this standard during 1998 and is
currently analyzing the impact it will have on the disclosures in its
financial statements.
3. DEBT:
In connection with the HFCP III Acquisition, all existing debt at May 31,
1996 was paid in full, and the Company entered into a credit agreement
securing new debt in the form of two tranche term loan notes and a revolving
credit loan. During 1997, the Company obtained an amendment to its credit
facility which provided $40 million of a new tranche term loan. The Company
also expanded its revolving credit loan capacity during 1997 from $25.0
million to $35.0 million. The credit facility was used to finance acquisitions
completed late in 1996 and early 1997.
F-9
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1997
-------- --------
<S> <C> <C>
Tranche A term loan, interest at LIBOR plus 2.25%, 8.19%
at December 31, 1997, due June 30, 2001.................. $ 60,000 $ 51,500
Tranche A2 term loan, interest at LIBOR plus 2.75%, 8.69%
at December 31, 1997, due December 31, 2002.............. -- 38,850
Tranche B term loan, interest at LIBOR plus 3.0%, 8.94% at
December 31, 1997, due December 31, 2003................. 74,000 71,873
Revolving credit loan, interest at LIBOR plus 2.25%, 8.19%
at December 31, 1997, due June 30, 2001.................. 17,000 2,000
-------- --------
151,000 164,223
Less--Current maturities.................................. (9,500) (15,350)
-------- --------
$141,500 $148,873
======== ========
</TABLE>
Based on the borrowing rates currently available to the Company for bank
loans with similar terms and average maturities, the fair value of long-term
debt was substantially the same as its carrying value at December 31, 1996 and
1997.
The Tranche A , A2 and B term loan notes require annual scheduled principal
payments as follows (in thousands):
<TABLE>
<S> <C>
1998................................................................. $15,350
1999................................................................. 18,874
2000................................................................. 23,000
2001................................................................. 29,000
2002................................................................. 43,000
</TABLE>
The Company has a revolving credit loan with a commitment of $35.0 million
against which an outstanding letter of credit of approximately $0.5 million
was utilized at December 31, 1997. As of December 31, 1997, $32.5 million of
borrowing capacity remains available under the revolving credit loan. The
revolving credit loan expires June 30, 2001.
In connection with the tranche term notes and revolving credit loan, the
Company has granted a security interest in substantially all real and
intellectual property of the Company.
The Company has also agreed, among other matters, to maintain certain
defined ratios of total leverage (debt to EBITDA) and total fixed charges
(EBITDA to fixed charges). The Company was in compliance with all such
covenants as of December 31, 1997.
4. SHAREHOLDER'S EQUITY:
The amounts recorded in the Company's shareholder's equity accounts as of
May 31, 1996 have been adjusted to reflect a $97.0 million capital
contribution from the new shareholder. During 1997, the Company received an
additional capital contribution from its shareholder of $12.0 million at the
time of the credit facility amendment discussed in Note 3.
F-10
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
Stock Option Plan
In November 1996, Holdings implemented a nonqualified stock option plan (the
Plan) under which certain members of the Company's management were granted
options to purchase shares of Holdings' common stock. The exercise price for
these options was $10 per share initially, and increases at a 10% annually
compounded rate. The term of the options runs for ten years, with options
vesting 20% in each of the first five years of the option term. Options become
immediately exercisable upon a change of control of Holdings, as defined, or
at the discretion of Holdings' Board of Directors. If the Company does not
complete an initial public offering by January 1, 2001, option holders may
agree with the Company to sell the shares under option to the Company at a
fair market value price to be determined by the Board of Directors. However,
the Company is not obligated to agree to any such repurchase under the terms
of the Plan. In addition, the Company has certain repurchase rights under the
Plan. Under the Plan, up to 745,200 options may be granted at the discretion
of the Holdings' Board of Directors.
Because of the variable features of the Plan, the Company measures the
difference between the exercise price of the options and the fair value of the
shares under option at the end of each fiscal period, and recognizes
compensation expense to provide for such difference. As of December 31, 1996
and 1997 no compensation expense was required to be recognized.
A summary of stock option activity under the Plan is as follows:
<TABLE>
<CAPTION>
1996 1997
---------------- ----------------
SHARES SHARES
UNDER EXERCISE UNDER EXERCISE
OPTION PRICE OPTION PRICE
------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of year.............. -- 623,700
Granted..................................... 623,700 $10.00 111,700 $11.00
Exercised................................... -- --
Forfeited................................... -- --
------- -------
Outstanding at end of year.................... 623,700 735,400
======= =======
Exercisable at end of year.................... -- 124,740
======= =======
</TABLE>
As of December 31, 1997, the outstanding stock options granted in 1996 had a
remaining contractual life of approximately 9 years and the outstanding stock
options granted in 1997 had a remaining contractual life of approximately 10
years.
5. POSTRETIREMENT AND OTHER EMPLOYEE BENEFITS:
Postretirement Benefits
Prior to June 1, 1995, the Company maintained a plan whereby employees
retiring from the Company on or after attaining age 62 who had rendered at
least 20 years of service were entitled to postretirement medical coverage and
life insurance. These benefits were subject to deductibles, copayment
provisions and other limitations.
F-11
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
As permitted by the provisions of the plan, on June 1, 1995, the Company
terminated the plan for all employees, except current retirees and active
employees who were at least 57 years of age and will have 20 years of service
at age 62.
The components of net postretirement benefit cost for 1997 were as follows
(in thousands):
<TABLE>
<CAPTION>
FULLY OTHER
CURRENT ELIGIBLE ACTIVE PLAN
RETIREES PARTICIPANTS PARTICIPANTS TOTAL
-------- ------------ ------------ -----
<S> <C> <C> <C> <C>
Service cost...................... $-- $-- $ 8 $ 8
Interest on accumulated benefit
obligations...................... 46 5 10 61
---- ---- --- ---
Net periodic postretirement bene-
fit cost......................... $ 46 $ 5 $18 $69
==== ==== === ===
</TABLE>
The accumulated postretirement benefit obligation at December 31, 1997
included in the accompanying consolidated balance sheet was as follows (in
thousands):
<TABLE>
<S> <C>
Retirees............................................................. $ 677
Fully eligible active plan participants.............................. 70
Other fully active plan participants................................. 155
------
Total accumulated postretirement benefit obligation.................. 902
Unrecognized actuarial loss.......................................... 326
------
Accrued postretirement benefit cost.................................. $1,228
======
</TABLE>
The actuarial determinations were based on various assumptions as follows:
<TABLE>
<S> <C>
Annual increase in cost of covered healthcare benefits:
Participants under age 65...................................... 8.5%
Participants over age 65....................................... 7.5%
Assumed annual reduction in rate for ten years:
Participants under age 65...................................... 0.25%-0.50%
Participants over age 65....................................... 0.25%-0.50%
Discount rate.................................................. 7.00%
</TABLE>
401(k) Plan
Holdings has an Employees' 401(k) Plan and Trust (the "Plan") available to
employees of Holdings, the Company and its domestic subsidiaries. All current
and future domestic employees who have completed one year of service and are
at least 21 years of age are eligible to participate in the Plan. Holdings is
required to make a matching contribution to the Plan and may, at its
discretion, make discretionary contributions to the Plan. Eligible employees
are vested 100% in their own contributions. Contributions made by the Company
vest in equal installments over five years. The Company expensed $0.4 million
in the seven months ended December 31, 1996 and $0.9 million for the year
ended December 31, 1997.
6. INCOME TAXES:
The Company utilizes the liability method for calculating deferred income
taxes, and deferred tax assets and liabilities are determined based on the
estimated future tax effects of differences between
F-12
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
the financial statement and tax bases of assets and liabilities pursuant to
the provisions of enacted tax laws. Significant components of the Company's
deferred tax assets were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards......................... $ 1,200 $ 4,900
Foreign tax credit carryforwards......................... 1,025 1,042
Charitable contribution carryover........................ -- 9
Amortization of intangible assets........................ 556 305
Postretirement benefits other than pension............... 467 467
Allowance for bad debts.................................. 55 --
Depreciation............................................. 495 572
Other, primarily accrued expenses........................ 950 823
------- -------
Gross deferred tax assets.............................. 4,748 8,118
Deferred tax liabilities:
Prepaid expenses......................................... -- (1,736)
Valuation allowance...................................... (4,748) (6,382)
------- -------
Deferred income taxes...................................... $ -- $ --
======= =======
</TABLE>
A valuation allowance has been provided because of the Company's history of
operating losses. Net operating loss carryforwards totalling $1,200 expire in
2011 and the remainder ($3,700) expire in 2012. The foreign tax credit
carryforwards substantially expire in 2001.
7. COMMITMENTS AND CONTINGENCIES:
Leases
The Company has long-term operating leases for office space and office
equipment. The leases generally require the Company to pay maintenance,
insurance, taxes and other expenses in addition to minimum annual rentals.
Building and equipment rent expense was $2.7, $2.6 and $3.0 million for 1995,
1996 and 1997, respectively. Future minimum lease commitments under operating
leases with initial terms of one year or more are as follows (in thousands):
<TABLE>
<S> <C>
1998................................................................... 2,874
1999................................................................... 2,266
2000................................................................... 1,686
2001................................................................... 1,525
2002................................................................... 1,369
Thereafter............................................................. 2,313
</TABLE>
Employment Agreements
Two senior executives of the Company entered into employment agreements with
Holdings dated as of July 1, 1996. Each agreement provides for a four year
term. Pursuant to the agreements, the executives are entitled to annual base
salaries and annual bonuses based on the Company's EBITDA for any year. The
agreements also provide for severance benefits equal to one year's base salary
and benefits (and a pro rated bonus) upon termination of employment by
Holdings without "cause" or by
F-13
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
the executive for "good reason". The executives also entered into
noncompetition and confidentiality agreements with Holdings. The noncompete
period is one year after termination of employment unless employment is
terminated by Holdings without cause or by the executive for good reason, in
which case the noncompetition period is six months. During the noncompetition
period, the executives may not hire any Company employee or solicit any trade
show or publishing business from a third party which has a relationship or
contract with the Company. Compensation expense for these executives is
included in general and administrative expenses of the Company.
Litigation
The Company is a defendant in legal proceedings arising in the ordinary
course of business. Although the outcome of these proceedings cannot presently
be determined, in the opinion of management, disposition of these proceedings
will not have a material effect on the results of operations or financial
position of the Company.
8. EVENTS SUBSEQUENT TO THE DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(UNAUDITED):
VSDA and TelExpo Acquisitions
In February and March, 1998, the Company borrowed an additional $14.0
million under its revolving credit line. $7.0 million was used as a portion of
the approximately $9.8 million purchase price for a 50% interest in The Video
Software Dealers Association's (VSDA) annual industry exposition. As the
Company will exert management and operational control over the joint venture,
this entity will be consolidated and accounted for under the purchase method
of accounting.
The remaining $7.0 million borrowed in 1998 was used to acquire TelExpo, a
Brazilian telecommunications exposition. This transaction closed in the first
quarter 1998 and will be accounted for under the purchase method of
accounting.
MAGIC Acquisition
On April 30, 1998, the Company acquired Men's Apparel Guild in California,
Inc. (MAGIC), which operates apparel expositions. The purchase price was
approximately $230.2 million in cash. Concurrent with the MAGIC Acquisition,
the Company renegotiated its credit agreement to provide additional borrowing
capacity, issued $150.0 million in senior subordinated notes and received an
additional equity contribution from Holdings of approximately $70.0 million.
Other 1998 Acquisitions
In the first five months of 1998, the Company completed five other
acquisitions of exposition and publishing properties, with a cumulative
purchase price totaling approximately $36.6 million. In addition, the Company
has signed a letter of intent and expects to complete an additional
transaction in June or July 1998 with an estimated purchase price of
approximately $6.5 million.
Pro Forma Financial Information
The aforementioned acquisitions will be accounted for as purchases and,
accordingly, the acquired entities' assets and liabilities will be recorded at
fair values as of the acquisition dates. Following is an unaudited pro forma
balance sheet of the Company, based on preliminary estimates of
F-14
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
the allocation of the purchase price, as if the acquisitions and the financing
transactions described above had been completed as of December 31, 1997 (in
thousands):
ASSETS
<TABLE>
<S> <C>
Current assets..................................................... $ 40,079
Property, plant and equipment, net................................. 13,124
Other assets, net.................................................. 535,838
--------
$589,041
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities................................................ $ 75,595
Long-term debt, net of current maturities.......................... 207,000
Subordinated Notes (net of discount)............................... 149,613
Other noncurrent liabilities....................................... 1,824
Shareholder's equity............................................... 155,009
--------
$589,041
========
</TABLE>
Following are unaudited pro forma results of operations for the year ended
December 31, 1997 as if the aforementioned Acquisitions and the financing
transactions described above had been completed at the beginning of the year
(in thousands, expect per share data):
<TABLE>
<S> <C>
Revenues.......................................................... $247,250
========
Operating income.................................................. $ 17,445
========
Net loss.......................................................... $ (9,093)
========
Net loss per share, basic and diluted............................. $ (9.09)
========
</TABLE>
The unaudited pro forma financial information does not purport to represent
what the Company's financial position or results of operations would actually
have been if these transactions had occurred at such dates or to project the
Company's future results of operations.
F-15
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1997
9. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
Basis of presentation
The Notes will be fully and unconditionally guaranteed on a senior
subordinated basis, jointly and severally, by the Company's wholly-owned
domestic subsidiaries (the Subsidiary Guarantors) and by Holdings. As
discussed in Note 1, the Company is a wholly-owned subsidiary of Holdings. The
limited activities of Holdings are exclusively for the benefit of the Company.
Accordingly, the financial results of Holdings are included in the results of
the Company. Holding's financial information has not been provided herein as
it was not deemed to be material. The Subsidiary Guarantors are Art
Expositions International, Inc.; Expocon Management Associates, Inc.; On
Demand Marketing, Inc.; Men's Apparel Guild in California, Inc.; Magic Kids,
Inc.; Technology Events Company, LLC and Applied Business teleCommunications.
The condensed consolidating financial statements of the Guarantors are
presented below and should be read in connection with the Consolidated
Financial Statements of the Company. Separate financial statements of the
Guarantors are not presented because the Guarantors are jointly, severally and
unconditionally liable under the guarantees and the Company believes the
condensed consolidating financial statements presented are more meaningful in
understanding the financial position of the Guarantors.
There are no significant restrictions on the ability of the Subsidiary
Guarantors to make distributions to the Company. Condensed consolidating
financial information has not been presented for 1996 and 1995 because the
Company had no non-guarantor subsidiaries in 1996 and 1995.
F-16
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-------------------------------------------------------------
NON-
GUARANTOR GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equiva-
lents................. $ 3,403 $ (317) $3,938 $ -- $ 7,024
Accounts receivable,
net................... 16,545 (77) 2,351 -- 18,819
Prepaid expenses....... 6,887 2,107 613 -- 9,607
Intercompany
receivable/(payable).. 4,488 (1,420) (3,068) -- --
Other.................. 1,894 -- 362 -- 2,256
-------- ------- ------ -------- --------
Total current assets.. 33,217 293 4,196 -- 37,706
PROPERTY PLANT AND
EQUIPMENT, net: ....... 11,453 207 486 -- 12,146
INVESTMENTS IN SUBSIDI-
ARIES.................. 29,194 -- -- (29,194) --
INTANGIBLE ASSETS,
net:................... 216,540 28,856 3,249 -- 248,645
-------- ------- ------ -------- --------
$290,404 $29,356 $7,931 $(29,194) $298,497
======== ======= ====== ======== ========
LIABILITIES AND SHARE-
HOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt........ $ 15,350 $ -- $ -- $ -- $ 15,350
Accounts payable....... 8,806 799 1,333 -- 10,938
Deferred revenue....... 17,122 2,681 1,302 -- 21,105
Accrued liabilities.... 8,695 230 1,748 -- 10,673
-------- ------- ------ -------- --------
Total current liabili-
ties................. 49,973 3,710 4,383 -- 58,066
LONG-TERM DEBT, net of
current maturities: ... 148,873 -- -- -- 148,873
OTHER LONG TERM LIABILI-
TIES: ................. 1,824 1,824
SHAREHOLDER'S EQUITY:
Common stock........... 10 2 332 (334) 10
Capital in excess of
par value............. 108,990 26,959 1,863 (28,822) 108,990
Retained earnings (def-
icit)................. (19,309) (1,315) 1,353 (38) (19,309)
Translation adjust-
ment.................. 43 -- -- -- 43
-------- ------- ------ -------- --------
Total shareholder's
equity............... 89,734 25,646 3,548 (29,194) 89,734
-------- ------- ------ -------- --------
$290,404 $29,356 $7,931 $(29,194) $298,497
======== ======= ====== ======== ========
</TABLE>
F-17
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
--------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue............. $146,349 $17,848 $23,459 $ -- $187,656
-------- ------- ------- ----- --------
Operating expenses:
Cost of sales and sell-
ing, editorial and
circulation........... 96,852 13,991 15,260 -- 126,103
General and administra-
tive.................. 24,242 703 2,569 -- 27,514
Amortization of
goodwill and other
intangible assets..... 21,777 2,499 50 -- 24,326
Depreciation........... 2,855 93 252 -- 3,200
-------- ------- ------- ----- --------
Total operating ex-
penses............... 145,726 17,286 18,131 -- 181,143
-------- ------- ------- ----- --------
Operating income
(loss)................. 623 562 5,328 -- 6,513
Other income (expense):
Interest expense, net.. (15,173) 5 51 -- (15,117)
Other income (expense),
net................... 5,714 (1,759) (3,663) -- 292
-------- ------- ------- ----- --------
Income (loss) before in-
come taxes............. (8,836) (1,192) 1,716 -- (8,312)
Provision for income
taxes.................. 14 (125) (472) (583)
Equity in income (loss)
of subsidiaries........ (73) -- -- 73 --
-------- ------- ------- ----- --------
Net income (loss)....... $ (8,895) $(1,317) $ 1,244 $ 73 $ (8,895)
======== ======= ======= ===== ========
</TABLE>
F-18
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...... $ (8,895) $ (1,317) $1,244 $ 73 $ (8,895)
Adjustments to recon-
cile net income (loss)
to net cash provided
by operating activi-
ties:
Depreciation and amor-
tization.............. 24,632 2,592 302 -- 27,526
Non cash interest...... 934 -- -- -- 934
(Gain) loss on sales of
assets and other...... (223) -- (5) -- (228)
Changes in operating
assets and liabili-
ties.................. (36,715) 27,273 2,770 (73) (6,745)
-------- -------- ------ ---- --------
Net cash provided by
(used in) operating
activities........... (20,267) 28,548 4,311 -- 12,592
-------- -------- ------ ---- --------
INVESTING ACTIVITIES:
Additions to property,
plant and
equipment............. (1,609) (299) (352) -- (2,260)
Changes in notes re-
ceivable.............. 65 -- (300) -- (235)
Acquisition of publica-
tions and trade
shows................. (3,183) (28,566) (122) -- (31,871)
Proceeds from sale of
fixed assets.......... 1,043 -- -- -- 1,043
-------- -------- ------ ---- --------
Net cash provided by
(used in) investing
activities........... (3,684) (28,865) (774) -- (33,323)
-------- -------- ------ ---- --------
FINANCING ACTIVITIES:
Proceeds from sale of
common stock and capi-
tal contributions and
other................. 12,000 -- -- -- 12,000
Borrowings of long-term
debt.................. 40,000 -- -- -- 40,000
Repayments of long-term
debt.................. (26,776) -- -- -- (26,776)
-------- -------- ------ ---- --------
Net cash provided by
(used in) financing
activities........... 25,224 -- -- -- 25,224
-------- -------- ------ ---- --------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIV-
ALENTS: 1,273 (317) 3,537 -- 4,493
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD:............. 2,130 -- 401 -- 2,531
-------- -------- ------ ---- --------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD:................ $ 3,403 $ (317) $3,938 $-- $ 7,024
======== ======== ====== ==== ========
</TABLE>
F-19
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 7,024 $ 8,095
Receivables, net..................................... 18,819 20,096
Prepaids............................................. 9,607 10,859
Other................................................ 2,256 2,207
-------- --------
Total current assets............................... 37,706 41,257
-------- --------
Property, plant and equipment, net..................... 12,146 12,847
Goodwill and intangibles, net.......................... 248,645 283,760
-------- --------
$298,497 $337,864
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt................. $ 15,350 $ 16,249
Accounts payable..................................... 10,938 11,709
Accrued liabilities.................................. 10,673 7,669
Deferred revenue..................................... 21,105 25,440
-------- --------
Total current liabilities.......................... 58,066 61,067
-------- --------
Long-term debt, net of current portion................. 148,873 170,750
Other noncurrent liabilities........................... 1,824 1,801
Minority interest...................................... -- 13,956
SHAREHOLDER'S EQUITY:
Common stock......................................... 10 10
Paid-in-capital...................................... 108,990 108,990
Accumulated earnings (deficit)....................... (19,309) (18,585)
Translation adjustment............................... 43 (125)
-------- --------
Total shareholder's equity......................... 89,734 90,290
-------- --------
$298,497 $337,864
======== ========
</TABLE>
F-20
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS--UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
Net revenue............................................ $ 49,663 $ 55,748
Operating expenses
Cost of sales........................................ 10,660 11,881
Selling, editorial and circulation................... 22,162 25,014
General and administrative........................... 7,029 7,900
Depreciation and amortization........................ 6,211 6,347
---------- ----------
Operating income....................................... 3,601 4,606
Interest expense, net.................................. 3,678 3,814
Other, net............................................. (58) 14
Provision for income taxes............................. 911 54
---------- ----------
Net income (loss)...................................... (930) 724
========== ==========
Net income (loss) per share, basic and diluted......... $ (0.93) $ 0.72
========== ==========
Weighted average common stock outstanding, basic and
diluted............................................... 1,000,000 1,000,000
</TABLE>
F-21
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (930) $ 724
Adjustments to reconcile net income (loss) to net cash
provided by operating activities--
Depreciation and amortization........................ 6,211 6,347
Other non cash items................................. 229 238
Changes in operating items........................... (5,001) (4,108)
--------- ---------
Net cash provided by operating activities.............. 509 3,201
--------- ---------
INVESTING ACTIVITIES:
Additions to property, plant and equipment, net........ (775) (1,394)
Additions to intangible assets and acquisition working
capital............................................... (26,532) (23,557)
Change in notes receivable............................. 29 47
--------- ---------
Net cash used in investing activities.................... (27,278) (24,904)
--------- ---------
FINANCING ACTIVITIES:
Borrowings (payments) of long-term debt, net........... 34,599 (3,726)
Stock purchase proceeds................................ 10,000 --
Revolver borrowings, net............................... (17,000) 26,500
--------- ---------
Net cash provided by financing activities................ 27,599 22,774
--------- ---------
Net increase (decrease) in cash and cash equivalents..... 830 1,071
Cash and cash equivalents beginning of period............ 2,531 7,024
--------- ---------
Cash and cash equivalents end of period.................. $ 3,361 $ 8,095
========= =========
</TABLE>
F-22
<PAGE>
ADVANSTAR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying condensed consolidated financial statements have been
prepared by Advanstar Communications Inc. (the Company), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished in the condensed consolidated financial
statements includes normal recurring adjustments and reflects all adjustments
which are, in the opinion of management, necessary for a fair presentation of
such financial statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it
is suggested that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and the notes thereto
included in the Company's Registration Statement on Form S-4, relating to the
Company's exchange offer for its outstanding 9 1/4% Senior Subordinated Notes.
Revenues and operating results for the three months ended March 31, 1998 and
1997 are not necessarily indicative of the results to be expected for the full
year.
2. ACQUISITIONS AND FINANCING TRANSACTIONS:
MAGIC Acquisition
On April 30, 1998, the Company acquired Men's Apparel Guild in California,
Inc. (MAGIC), which operates apparel expositions. The purchase price was
approximately $230.2 million in cash. Concurrent with the MAGIC Acquisition,
the Company renegotiated its credit agreement to provide additional borrowing
capacity and issued $150.0 million of 9 1/4% Senior Subordinated Notes (see
Note 3). On the Closing Date, the Company also received an additional equity
contribution from its parent of approximately $70.0 million.
VSDA and TelExpo Acquisitions
In February and March, 1998, the Company borrowed an additional $14.0
million under its revolving credit line. $7.0 million was used as a portion of
the approximately $9.8 million purchase prices for a 50% interest in The Video
Software Dealers Association's (VSDA) annual industry exposition. As the
Company will exert management and operational control over the joint venture,
this entity will be consolidated and accounted for under the purchase method
of accounting.
The remaining $7.0 million borrowed in 1998 was used to acquire TelExpo, a
Brazilian telecommunications exposition. This transaction closed in the first
quarter 1998 and was accounted for under the purchase method of accounting,
based on preliminary allocations.
Other 1998 Acquisitions
In the first quarter of 1998, the Company completed three other acquisitions
of exposition and publishing properties, with a cumulative purchase price
totaling approximately $12.0 million. In addition, since March 31, 1998, the
Company has completed two additional acquisitions with a cumulative purchase
price totalling approximately $24.6 million and has signed a letter of intent
and expects to complete an additional transaction in June/July 1998 with an
estimated purchase price of approximately $6.5 million.
Pro Forma Financial Information
The aforementioned acquisitions have been or will be accounted for as
purchases and, accordingly, the acquired entities' assets and liabilities have
been or will be recorded at fair values as of the acquisition dates.
F-23
<PAGE>
ADVANSTAR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
Following is an unaudited pro forma balance sheet of the Company, based on
preliminary estimates of the allocation of the purchase price, as if the
acquisitions and the financing transactions described herein had been
completed as of March 31, 1998 (in thousands):
<TABLE>
<S> <C>
ASSETS
Current assets........................................................ $ 46,407
--------
Property, plant and equipment, net.................................... 13,387
--------
Goodwill, intangibles and other assets, net........................... 529,819
--------
$589,613
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities................................................... $ 61,474
--------
Long-term debt, net of current maturities............................. 207,000
--------
Subordinated Notes (net of discount).................................. 149,613
--------
Other noncurrent liabilities.......................................... 15,757
--------
Shareholder's equity.................................................. 155,769
--------
$589,613
========
Following are unaudited pro forma results of operations for the quarter
ended March 31, 1998 as if the aforementioned Acquisitions and the financing
transactions described above had been completed at the beginning of the year
(in thousands, except per share data):
Revenues.............................................................. $ 79,628
========
Operating income...................................................... $ 14,548
========
Net income............................................................ $ 6,702
========
Net income per share, basic and diluted .............................. $ 6.70
========
</TABLE>
The unaudited pro forma financial information does not purport to represent
what the Company's financial position or results of operations would actually
have been if these transactions had occurred at such dates or to project the
Company's future results of operations.
3. DEBT AND AMENDED CREDIT FACILITY:
In order to facilitate the acquisition of MAGIC and to provide greater
flexibility in pursuing its growth strategy, on April 30, 1998, the Company
issued $150 million of its 9 1/4% Senior Subordinated Notes (the Notes) and
amended its existing senior credit facility (the "Original Credit Facility"
and, as amended, the "Amended Credit Facility") with a syndicate of banks, by
increasing its borrowing capacity thereunder from $215.0 million under the
Original Credit Facility to $270.0 million under the Amended Credit Facility.
Description of Amended Credit Facility
The Amended Credit Facility will consist of three components: a 5 1/2-year
term loan in an aggregate principal amount equal to $85 million, a 7-year term
loan in an aggregate principal amount
F-24
<PAGE>
ADVANSTAR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
equal to $125 million, and a 5 1/2-year revolving credit facility in the
maximum available amount of $60 million.
The obligations of the Company under the Amended Credit Facility will be
guaranteed by the parent and will be collateralized by substantially all
tangible and intangible assets and pledges of the capital stock of the Company
and substantially all of the Company's subsidiaries (including MAGIC).
The term loans will be amortized in quarterly installments totaling
approximately $1.5 million in 1998, $7.0 million in 1999, $13.5 million in
2000 and $17.0 million in 2001, $19.5 million 2002, $31.5 million in 2003,
$60.25 million in 2004 and $59.75 in 2005. Principal amounts outstanding under
the revolving credit facility will be due and payable in full at maturity,
approximately 5 1/2 years after April 30, 1998. Interest on outstanding
borrowings will accrue, at floating variable rates, as defined, approximating
a blended average rate of 8.1% on April 30, 1998. In addition, the Company
will be required to pay a commitment fee under the revolving credit facility
in respect of the unutilized commitments thereunder at a rate that will vary
based upon operating performance targets and step-downs set forth in the
agreement, subject to a maximum commitment fee rate of 0.50% per annum.
The Company will be required to apply certain amounts to prepay the term
loans, including (i) proceeds from certain issuances of equity or indebtedness
by the Company, its parent, or its subsidiaries; (ii) the net cash proceeds of
certain sales or other dispositions by the Company or any of its subsidiaries
of any assets; and (iii) 50% of excess cash flow (as defined) for each fiscal
year. The Company will also have the right to optionally prepay the loans
under the Amended Credit Facility, without premium, in whole or in part.
Amounts applied as prepayments of the revolving credit facility may be
reborrowed; amounts prepaid in respect of the term loans may not.
Under the Amended Credit Facility, restrictive financial covenants include a
minimum fixed charge coverage ratio and a maximum leverage ratio.
Description of Notes
The Notes are unsecured, senior subordinated obligations of the Company,
limited to $150.0 million aggregate principal amount, and will mature on May
1, 2008. Each Note will bear interest at the 9 1/4%, payable semi-annually.
The Notes will be redeemable at the Company's option after May 1, 2003 through
April 30, 2006 at specified premiums, and at par thereafter. A portion of the
Notes may be redeemed at a premium prior to May 1, 2001 with proceeds of
certain equity offerings made by the Company, and the Notes may also be
redeemed at par prior to May 1, 2003 upon a qualifying change of control of
the Company.
Restrictive financial covenants under the Notes include a minimum fixed
charge coverage ratio and limitations on certain asset dispositions and
dividend, distribution, and other restricted payments.
4. COMPREHENSIVE INCOME:
The table below presents comprehensive income, defined as changes in the
equity of the Company excluding changes resulting from investments by and
distributions to shareholders, for the three month periods ended March 31,
1997 and 1998 (in thousands):
<TABLE>
<CAPTION>
1997 1998
----- -----
<S> <C> <C>
Net Income (loss)........................................... $(930) $ 724
Change in translation adjustment............................ 9 (168)
----- -----
Comprehensive income (loss)................................. $(921) $ 556
===== =====
</TABLE>
F-25
<PAGE>
ADVANSTAR COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
5. COMMITMENTS AND CONTINGENCIES:
Litigation
The Company is a defendant in legal proceedings arising in the ordinary
course of business. Although the outcome of these proceedings cannot presently
be determined, in the opinion of management, disposition of these proceedings
will not have a material effect on the results of operations or financial
position of the Company.
6. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:
Basis of presentation
The Notes will be fully and unconditionally guaranteed on a senior
subordinated basis, jointly and severally, by the Company's wholly-owned
domestic subsidiaries (the Subsidiary Guarantors) and by Holdings. The Company
is a wholly-owned subsidiary of Holdings. The limited activities of Holdings
are exclusively for the benefit of the Company. Accordingly, the financial
results of Holdings are included in the results of the Company. Holding's
financial information has not been provided herein as it was not deemed to be
material. The Subsidiary Guarantors are Art Expositions International, Inc.;
Expocon Management Associates, Inc.; On Demand Marketing, Inc.; Men's Apparel
Guild in California, Inc.; Magic Kids, Inc.; Technology Events Company, LLC
and Applied Business teleCommunications. The condensed consolidating financial
statements of the Guarantors are presented above and should be read in
connection with the Consolidated Financial Statements of the Company. Separate
financial statements of the Guarantors are not presented because the
Guarantors are jointly, severally and unconditionally liable under the
guarantees and the Company believes the condensed consolidating financial
statements presented are more meaningful in understanding the financial
position of the Guarantors.
There are no significant restrictions on the ability of the Subsidiary
Guarantors to make distributions to the Company.
F-26
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
--------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents... $ 3,101 $ 402 $ 4,592 $ -- $ 8,095
Accounts receivable, net.... 16,877 277 2,942 -- 20,096
Prepaid expenses............ 5,547 2,544 2,768 -- 10,859
Intercompany receivable
(payable).................. 8,612 2,077 (10,689) -- --
Other....................... 1,891 -- 316 -- 2,207
-------- ------- ------- -------- --------
Total current assets....... 36,028 5,300 (71) -- 41,257
PROPERTY, PLANT AND
EQUIPMENT, net:............. 11,921 277 649 -- 12,847
INVESTMENTS IN SUBSIDIAR-
IES:........................ 54,274 -- -- (54,274) --
INTANGIBLE ASSETS, net:...... 215,510 55,878 12,372 -- 283,760
-------- ------- ------- -------- --------
$317,733 $61,455 $12,950 $(54,274) $337,864
======== ======= ======= ======== ========
LIABILITIES AND SHAREHOLDER'S
EQUITY
CURRENT LIABILITIES:
Current maturities of long-
term debt.................. $ 16,249 $ -- $ -- $ -- $ 16,249
Accounts payable............ 9,595 939 1,175 -- 11,709
Deferred revenue............ 9,578 8,839 7,023 -- 25,440
Accrued liabilities......... 5,514 123 2,032 -- 7,669
-------- ------- ------- -------- --------
Total current liabili-
ties...................... 40,936 9,901 10,230 -- 61,067
LONG-TERM DEBT, net of
current maturities:......... 170,750 -- -- -- 170,750
OTHER LONG TERM LIABILI-
TIES:....................... 1,801 -- -- -- 1,801
MINORITY INTEREST:........... 13,956 -- -- -- 13,956
SHAREHOLDER'S EQUITY:
Common stock................ 10 2 332 (334) 10
Capital in excess of par
value...................... 108,990 55,478 2,181 (57,659) 108,990
Retained earnings (defi-
cit)....................... (18,585) (3,926) 207 3,719 (18,585)
Translation adjustment...... (125) -- -- -- (125)
-------- ------- ------- -------- --------
Total shareholders' equi-
ty........................ 90,290 51,554 2,720 (54,274) 90,290
-------- ------- ------- -------- --------
$317,733 $61,455 $12,950 $(54,274) $337,864
======== ======= ======= ======== ========
</TABLE>
F-27
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------------------------------------------
NON-
GUARANTOR GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue............. $50,549 $ 283 $4,916 $ -- $55,748
Operating expenses
Cost of sales and
selling, editorial and
circulation........... 31,702 1,309 3,884 -- 36,895
General and administra-
tive.................. 6,701 249 950 -- 7,900
Amortization........... 4,909 722 21 -- 5,652
Depreciation........... 614 27 54 -- 695
------- ------- ------ ------ -------
Total operating ex-
penses............... 43,926 2,307 4,909 -- 51,142
Operating income........ 6,623 (2,024) 7 -- 4,606
Other income (expense):
Interest expense, net.. (3,717) -- (97) -- (3,814)
Other income (expense),
net................... 1,345 (579) (780) -- (14)
------- ------- ------ ------ -------
Income (loss) before
income taxes........... 4,251 (2,603) (870) -- 778
Provision for income
taxes.................. 2 8 44 -- 54
Equity in (loss) of sub-
sidiaries.............. (3,525) -- -- 3,525 --
------- ------- ------ ------ -------
Net income (loss)....... $ 724 $(2,611) $ (914) $3,525 $ 724
======= ======= ====== ====== =======
</TABLE>
F-28
<PAGE>
ADVANSTAR COMMUNICATIONS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR CONSOLIDATED
REGISTRANT SUBSIDIARIES SUBSIDIARIES ELIMINATION TOTAL
---------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...... $ 724 $ (2,611) $ (914) $ 3,525 $ 724
Adjustments to recon-
cile net income (loss)
to net cash provided
by operating activi-
ties:
Depreciation and amor-
tization.............. 5,523 749 75 -- 6,347
Non cash interest...... 238 -- -- -- 238
(Gain) loss on sales of
assets and other...... -- -- -- -- --
Translation adjust-
ment..................
Changes in operating
assets and liabili-
ties.................. (24,356) 16,162 7,611 (3,525) (4,108)
-------- -------- ------- ------- --------
Net cash provided by
(used in) operating
activities......... (17,871) 14,300 6,772 -- 3,201
-------- -------- ------- ------- --------
INVESTING ACTIVITIES:
Additions to property,
plant and equipment,
net................... (1,080) (98) (216) -- (1,394)
Changes in notes
receivable............ (9) -- 56 -- 47
Acquisition of
publications and trade
shows................. (4,116) (13,483) (5,958) -- (23,557)
-------- -------- ------- ------- --------
Net cash provided by
(used in) investing
activities......... (5,205) (13,581) (6,118) -- (24,904)
-------- -------- ------- ------- --------
FINANCING ACTIVITIES:
Proceeds from sale of
common stock and capi-
tal contributions and
other.................
Borrowings of long-term
debt.................. 26,500 -- -- -- 26,500
Repayment of long-term
debt.................. (3,726) -- -- -- (3,726)
-------- -------- ------- ------- --------
Net cash provided by
(used in) financing
activities......... 22,774 -- -- -- 22,774
-------- -------- ------- ------- --------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIV-
ALENTS:................ (302) 719 654 -- 1,071
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD:............. 3,403 (317) 3,938 -- 7,024
-------- -------- ------- ------- --------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD:................ $ 3,101 $ 402 $ 4,592 $ -- $ 8,095
======== ======== ======= ======= ========
</TABLE>
F-29
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Men's Apparel Guild in California, Inc.:
We have audited the accompanying consolidated balance sheets of Men's
Apparel Guild in California, Inc. and subsidiary as of February 28, 1998, and
the related consolidated statements of income, shareholder's equity and cash
flows for the nine-month period ended February 28, 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Men's Apparel Guild in California, Inc. and subsidiary as of February 28,
1998, and the consolidated results of their operations and their cash flows
for the nine-month period ended February 28, 1998 in conformity with generally
accepted accounting principles.
Arthur Andersen LLP
Minneapolis, Minnesota,
March 20, 1998
F-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Men's Apparel Guild in California, Inc.:
We have audited the accompanying consolidated balance sheets of Men's
Apparel Guild in California, Inc. and subsidiary as of May 31, 1997 and 1996,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three year period ended May 31, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Men's Apparel Guild in California, Inc. and subsidiary as of May 31, 1997
and 1996, and the consolidated results of their operations and their cash
flows for each of the years in the three year period ended May 31, 1997 in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Los Angeles, California
June 24, 1997
F-31
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28,
MAY 31, 1998
------------------------ ------------
1996 1997
----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 8,773,384 $ 9,386,181 $19,707,338
Short-term investments................ 6,830,325 9,743,512 --
Other current assets.................. 1,691,956 1,688,580 3,370,926
----------- ----------- -----------
Total current assets................ 17,295,665 20,818,273 23,078,264
Property and equipment, net............. 201,768 343,788 292,336
Long-term investments................... 7,502,131 7,909,644 --
Intangible and other assets............. 14,098 911,243 989,963
----------- ----------- -----------
Total assets........................ $25,013,662 $29,982,948 $24,360,563
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued ex-
penses............................... $ 3,572,234 $ 1,648,838 $ 8,687,916
Deferred revenue...................... 8,140,750 8,064,014 890,025
Exhibitors' security deposits......... 1,875,576 1,909,760 1,909,497
----------- ----------- -----------
Total current liabilities........... 13,588,560 11,622,612 11,487,438
Commitments and contingencies (Notes 7,
8)
Shareholders' equity:
Common stock (no par value; 100,000
shares authorized 42,000, 40,000 and
33,523 shares issued and outstanding
at May 31, 1996 and 1997 and February
28, 1998, respectively).............. 161,204 153,528 128,668
Retained earnings..................... 11,342,077 18,241,367 12,744,457
Shareholders' note receivable......... (16,211) -- --
Unrealized loss on investments........ (61,968) (34,559) --
----------- ----------- -----------
Total shareholders' equity.......... 11,425,102 18,360,336 12,873,125
----------- ----------- -----------
Total liabilities and shareholders'
equity............................. $25,013,662 $29,982,948 $24,360,563
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-32
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED MAY 31, ENDED
----------------------------------- FEBRUARY 28,
1995 1996 1997 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Booth revenue................. $19,802,379 $24,716,709 $28,460,935 $35,692,946
Other operating revenue....... 1,931,848 1,890,940 2,691,582 3,001,601
----------- ----------- ----------- -----------
Total revenue............... 21,734,227 26,607,649 31,152,517 38,694,547
Direct costs.................. 10,067,269 13,036,535 14,491,101 14,562,032
----------- ----------- ----------- -----------
Gross profit................ 11,666,958 13,571,114 16,661,416 24,132,515
General and administrative
expenses..................... 3,423,456 3,109,448 4,303,749 3,262,179
Profit participation.......... 289,123 574,279 354,624 364,640
----------- ----------- ----------- -----------
Income from operations...... 7,954,379 9,887,387 12,003,043 20,505,696
Interest and investment in-
come......................... 677,381 986,603 1,194,568 653,738
----------- ----------- ----------- -----------
Income before provision for
income taxes............... 8,631,760 10,873,990 13,197,611 21,159,434
Provision for income taxes.... 3,089,209 3,965,213 4,805,997 7,696,565
----------- ----------- ----------- -----------
Net income.................. $ 5,542,551 $ 6,908,777 $ 8,391,614 $13,462,869
=========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-33
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE
MONTHS
YEARS ENDED MAY 31, ENDED
---------------------------------- FEBRUARY 28,
1995 1996 1997 1998
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................... $5,542,551 $6,908,777 $8,391,614 $13,462,869
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization............... 459,391 282,778 243,905 211,974
Deferred income taxes....... (85,791) 121,395 (91,401) 166,781
Loss on disposal of fixed
assets..................... 65,635 -- -- --
Realized loss on sale of
investments................ -- -- -- 34,559
Changes in operating assets
and liabilities:
Prepaid expenses and other
current assets............. (342,175) (138,448) (223,593) (844,945)
Prepaid income taxes........ (8,397) (509,194) 318,364 (1,132,002)
Other assets................ (100,000) 112,087 2,855 16,159
Accounts payable and accrued
expenses................... 468,185 (534,205) 911,604 7,039,078
Deferred revenue............ 1,366,910 924,116 (76,736) (7,173,989)
Exhibitors' security
deposits................... 266,715 370,861 34,184 (263)
Accrued loss on leasehold... 250,470 (455,949) -- --
---------- ---------- ---------- -----------
Net cash provided by
operating activities...... 7,883,494 7,082,218 9,510,796 11,780,221
---------- ---------- ---------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net change in short-term
investments................. (4,023,766) (2,806,559) (2,913,187) 9,743,512
Proceeds from sale of long-
term investments............ 3,416,011 4,150,613 3,596,778 7,875,085
Purchases of investments..... (3,592,471) (4,575,474) (3,976,902) --
Investment in subsidiary..... -- -- (900,000) --
Purchases of fixed assets.... (335,932) (119,962) (385,899) (93,022)
---------- ---------- ---------- -----------
Net cash used in investing
activities................ (4,536,158) (3,351,382) (4,579,210) 17,525,575
---------- ---------- ---------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payment of dividends......... -- (2,835,000) (2,835,000) (2,835,000)
Repayments of shareholders'
notes receivable............ 85,660 60,933 16,211 --
Repurchases of common stock.. (2,000) -- (1,500,000) (16,149,639)
---------- ---------- ---------- -----------
Net cash used in financing
activities................ 83,660 (2,774,067) (4,318,789) (18,984,639)
---------- ---------- ---------- -----------
Net increase in cash and
cash equivalents.......... 3,430,996 956,769 612,797 10,321,157
CASH AND CASH EQUIVALENTS,
beginning of year............ 4,385,619 7,816,615 8,773,384 9,386,181
---------- ---------- ---------- -----------
CASH AND CASH EQUIVALENTS, end
of year...................... $7,816,615 $8,773,384 $9,386,181 $19,707,338
========== ========== ========== ===========
SUPPLEMENTARY INFORMATION:
Cash paid for income taxes... $3,138,397 $4,353,500 $4,583,000 $ 4,305,000
========== ========== ========== ===========
NONCASH INVESTING AND
FINANCING ACTIVITIES:
</TABLE>
The Company's Board of Directors declared a dividend of $67.50 per common
share on May 31, 1996. Payment of these dividends, totaling $2,835,000 was
made on June 14, 1996.
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-34
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31, 1995, 1996 AND 1997
AND FOR THE NINE MONTHS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK SHAREHOLDERS' GAIN (LOSS)
---------------- RETAINED NOTES ON
SHARES AMOUNT EARNINGS RECEIVABLE INVESTMENTS TOTAL
------ -------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 31, 1994... 43,000 $163,204 $ 4,560,749 $(162,804) $ (58,897) $ 4,502,252
Change in unrealized
gain (loss) on
investments........... -- -- -- -- 113,868 113,868
Dividends declared on
common stock ($67.50
per share)............ -- -- (2,835,000) -- -- (2,835,000)
Repurchase of common
stock................. (1,000) (2,000) -- -- -- (2,000)
Repayments of notes
receivable from
shareholders.......... -- -- -- 85,660 -- 85,660
Net income............. -- -- 5,542,551 -- -- 5,542,551
------ -------- ------------ --------- --------- ------------
Balance, May 31, 1995... 42,000 161,204 7,268,300 (77,144) 54,971 7,407,331
Change in unrealized
gain (loss) on
investments........... -- -- -- -- (116,939) (116,939)
Dividends declared on
common stock ($67.50
per share)............ -- -- (2,835,000) -- -- (2,835,000)
Repayments of notes
receivable from
shareholders.......... -- -- -- 60,933 -- 60,933
Net income............. -- -- 6,908,777 -- -- 6,908,777
------ -------- ------------ --------- --------- ------------
Balance, May 31, 1996... 42,000 161,204 11,342,077 (16,211) (61,968) 11,425,102
Change in unrealized
gain (loss) on
investments........... -- -- -- -- 27,409 27,409
Repurchase of common
stock................. (2,000) (7,676) (1,492,324) -- -- (1,500,000)
Repayments of notes
receivable from
shareholders.......... -- -- -- 16,211 -- 16,211
Net income............. -- -- 8,391,614 -- -- 8,391,614
------ -------- ------------ --------- --------- ------------
Balance, May 31, 1997... 40,000 153,528 18,241,367 -- (34,559) 18,360,336
Change in unrealized
gain (loss) on
investments........... -- -- -- -- 34,559 34,559
Dividends declared on
common stock ($84.57
per share)............ -- -- (2,835,000) -- -- (2,835,000)
Repurchase of common
stock................. (6,477) (24,860) (16,124,779) -- -- (16,149,639)
Net income............. -- -- 13,462,869 -- -- 13,462,869
------ -------- ------------ --------- --------- ------------
Balance, February 28,
1998................... 33,523 $128,668 $ 12,744,457 $ -- $ -- $ 12,873,125
====== ======== ============ ========= ========= ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-35
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 1995, 1996 AND 1997
AND FOR THE NINE MONTHS ENDED FEBRUARY 28, 1998
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION:
The accompanying consolidated financial statements include the accounts of
Men's Apparel Guild in California (MAGIC) and its wholly owned subsidiary,
MAGIC KIDS, INC. (MAGIC Kids), collectively referred to as the Company. All
intercompany transactions have been eliminated in consolidation.
Nature of Operations
The Company has produced trade shows for the men's apparel industry for over
sixty years. For each of the periods presented in the accompanying statements
of operations, including the nine months ended February 28, 1998, two trade
shows have occurred (in February and August).
Basis of Presentation
During fiscal 1994, as a result of a private placement offering circular,
the Company converted from a nonprofit mutual benefit corporation to a for-
profit corporation status and issued common stock to its "charter" members. In
addition, the Company issued common stock to four individuals for notes
receivable (Note 6).
Joint Participation Agreement
During fiscal 1995, the Company entered into a joint participation agreement
to co-sponsor a women's apparel trade show with Fairchild Publications under
the name "WWD/Magic." In accordance with the cosponsor agreement, 30% of show
net income and 50% of publication net income related to the WWD/Magic show has
been allocated to the cosponsor of the show as profit participation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash Equivalents and Short-Term Investments
The Company considers all highly liquid investments with an initial maturity
of three months or less to be cash equivalents and are stated at cost, which
approximates their fair market value. Short-term investments principally
include United States Treasury bills with original maturities greater than
three months and are stated at fair value. The Company places its cash, cash
equivalents and short-term investments with high-credit quality financial
institutions. At times, bank balances may be in excess of the federally
insured limit. Bank balances were in excess of federally insured limits in the
amounts of $11,395,338 for the nine-month period ended February 28, 1998 and
$5,813,723 and $7,055,031 at May 31, 1997 and 1996, respectively.
Other Current Assets
Other current assets consist primarily of prepaid expenses, which consists
of prepaid show costs and prepaid taxes.
Property and Equipment
The Company's property and equipment are recorded at cost. For financial
reporting purposes depreciation and amortization of property and equipment are
provided on the straight-line method based on the estimated useful lives of
the respective assets. Leasehold improvements are amortized over the lesser of
the useful life or the term of the lease. Maintenance and repair costs are
expensed
F-36
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED MAY 31, 1995, 1996 AND 1997 AND FOR THE NINE MONTHS ENDED
FEBRUARY 28, 1998
as incurred; renewals and betterments are capitalized. Upon the sale or
retirement of fixed assets, any resulting profit or loss is included in
operations. Estimated useful lives are as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Show equipment.................................................. 2-5 years
Computer equipment.............................................. 5 years
Office furniture, fixtures and equipment........................ 5 years
Leasehold improvements.......................................... 3-10 years
</TABLE>
Intangible Assets and Other Assets
Intangible assets, consisting primarily of goodwill, are stated at cost less
accumulated amortization, and are amortized on a straight-line basis over
their estimated useful lives of approximately 10 years.
The Company periodically evaluates the realizability of its long-lived and
intangible assets. Based on its most recent analysis, no impairment exists at
May 31, 1997 or February 28, 1998.
Revenue Recognition
Revenue is recorded in the period in which the applicable shows are held.
Deferred revenue is recorded when cash is received in advance of the
applicable show.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and the tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. If required, valuation allowances would
be established to reduce deferred tax assets to the amount expected to be
realized.
Long-Term Investments
The Company accounts for its long-term investments in accordance with SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
For the years ended May 31, 1996 and 1997, all of the Company's investments
have been classified as available-for-sale. The Company utilizes specific
identification in computing realized and unrealized gains and losses on
investments. At May 31, 1996 and 1997, the Company had unrealized losses on
investments of $61,968 and $34,559, respectively, which is included as a
separate component of equity. The long-term investments had a fair market
value of $7,502,131 and a cost basis of $7,564,099 as of May 31, 1996 and a
fair market value of $7,909,644 and a cost basis of $7,944,203 as of May 31,
1997. The Company's available-for-sale investments at May 31, 1997 consist
primarily of tax advantaged municipal bonds (54%), United States Treasury
Notes (36%), money market funds (6%) and corporate bonds (4%). Of the
investments, other than money market funds, 23% will mature in one year or
less, 38% in two years, 30% in three years and 9% mature in four or more
years.
During February 1998, the Company liquidated its investment portfolio which
approximated book value. At February 28, 1998, the Company is invested in
highly liquid investments with maturities of less than 60 days.
F-37
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED MAY 31, 1995, 1996 AND 1997
AND FOR THE NINE MONTHS ENDED FEBRUARY 28, 1998
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Ultimate results could differ from the estimates.
Recently Issued Accounting Standard
In March 1997, the Financial Accounting Standards Board issued SFAS No. 129,
"Disclosure of Information About Capital Structure." The accounting or
disclosure requirements of this statement are effective for the Company's
fiscal year 1998. The Company is reviewing the potential impact of adopting
the new accounting standard.
During June 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," effective for fiscal years beginning after December 15,
1997. SFAS No. 130 establishes standards for the reporting and display in the
financial statements of total net income and the components of all other
nonowner changes in equity, referred to as comprehensive income. The Company
will adopt SFAS No. 130 in 1998 and has not yet determined the impact it will
have on the disclosures in its financial statements.
During June 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
Segments of an Enterprise and Related Information," effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 requires disclosure of
business and geographic segments in the consolidated financial statements of
the Company. The Company will adopt SFAS No. 131 in 1998 and is currently
analyzing the impact it will have on the disclosures in its financial
statements.
3. INCOME TAXES:
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
NINE
MONTHS
YEARS ENDED MAY 31, ENDED
--------------------------------- FEBRUARY 28,
1995 1996 1997 1998
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Federal:
Current.................... $2,920,000 $3,641,859 $4,722,243 $7,045,407
Deferred................... (78,928) 121,395 (91,401) 157,766
---------- ---------- ---------- ----------
2,841,072 3,763,254 4,630,842 7,203,173
---------- ---------- ---------- ----------
State:
Current.................... 255,000 201,959 175,155 484,377
Deferred................... (6,863) -- -- 9,015
---------- ---------- ---------- ----------
248,137 201,959 175,155 493,392
---------- ---------- ---------- ----------
$3,089,209 $3,965,213 $4,805,997 $7,696,565
========== ========== ========== ==========
</TABLE>
F-38
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED MAY 31, 1995, 1996 AND 1997 AND FOR THE NINE MONTHS ENDED
FEBRUARY 28, 1998
The provision for income taxes differs from the amount obtained by applying
the federal statutory income tax rate primarily due to tax-exempt interest and
state income taxes.
The tax effected amounts of temporary differences which give rise to the
Company's net deferred tax asset are as follows:
<TABLE>
<CAPTION>
NINE
MONTHS
YEARS ENDED MAY 31, ENDED
---------------------------- FEBRUARY 28,
1995 1996 1997 1998
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Accrued loss on contingency and
other............................. $ -- $111,099 $ 99,106 $ 96,498
Accrued loss on leasehold.......... 168,593 -- -- --
Accrued compensation............... 63,045 29,689 129,900 76,535
Accrued pension liability.......... 38,973 -- -- --
Depreciation....................... (14,611) (6,183) (3,000) (26,813)
-------- -------- -------- --------
Net deferred tax asset............. $256,000 $134,605 $226,006 $146,220
======== ======== ======== ========
</TABLE>
No valuation allowance has been established since net deferred tax assets
are expected to be realized through either expected future taxable income or
taxable income in prior carryback years. At February 28, 1998, approximately
$4.2 million is included in accrued liabilities for income taxes payable.
4. BENEFIT PLANS:
During fiscal 1994, the Company implemented a defined contribution plan
covering all full-time employees. The Company's contributions to this plan for
the years ended May 31, 1995, 1996 and 1997 and for the nine-month period
ended February 28, 1998 were $55,988, $40,365, $97,531 and $63,800,
respectively.
In addition, the Company had a noncontributory defined benefit pension plan
(the Plan) which covered all full-time employees through May 31, 1993.
Effective May 31, 1993, the Company terminated this Plan. Upon formal approval
from the Internal Revenue Service, the Company distributed the assets of the
Plan during the year ended May 31, 1996.
5. SHAREHOLDERS' EQUITY:
In July 1997, the Company's Board of Directors approved a stock redemption
plan under which a total amount not to exceed $50.0 million may be
repurchased. These repurchases are made through a "dutch auction" program at a
price range of $2,080 to $2,500 per share subject to certain restrictions.
Total shares repurchased during the nine month period ended February 28, 1998
were 6,477 for approximately $16.1 million including certain transaction
costs.
6. RELATED-PARTY TRANSACTIONS:
During fiscal year 1994, the Company issued 2,000 shares of common stock to
four board members who were not charter members in exchange for notes
receivable which were due in three equal annual installments. Payments made
during fiscal years 1995, 1996 and 1997 on these notes receivable totaled
$85,660, $60,933 and $16,211, respectively.
F-39
<PAGE>
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED MAY 31, 1996, 1996 AND 1997 AND FOR THE NINE MONTHS ENDED
FEBRUARY 28, 1998
7. EXECUTIVE EMPLOYMENT AGREEMENT:
On July 16, 1996, the Company entered into an Executive Employment Agreement
(the Agreement) with an officer of the Company that effectively granted the
officer stock appreciation rights (SARs) with respect to 1,000 shares of the
Company's common stock. The SARs granted by the Agreement become vested in and
exercisable by the officer in five equal installments each May 31 beginning
May 31, 1996. The SARs become fully vested and exercisable by the officer only
in the event of a change of control or if the officer's employment is
terminated. The Agreement was amended in July 1997 to provide for additional
grants of SARs based on the Company's future performance. The future
compensation expense related to this Agreement (assuming change in control at
May 31, 1998) is estimated at $6.5 million. Due to the contingent nature of
the SARs, no compensation expense was recognized as of May 31, 1996 and 1997
or February 28, 1998. No SARs have been exercised as of February 28, 1998.
8. COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS:
The Company leases facilities and various equipment under operating leases.
Leases that expire are expected to be renewed or replaced by leases on other
properties.
Future minimum rental payments as of May 31, 1997 for operating leases
having initial or remaining noncancellable lease terms in excess of one year
are as follows:
<TABLE>
<S> <C>
1998.............................................................. $154,477
1999.............................................................. 139,777
2000.............................................................. 10,566
2001.............................................................. 5,728
2002.............................................................. 5,728
Thereafter........................................................ --
</TABLE>
Rent expense amounted to $112,244, $114,896, $244,403 and $217,856 for the
nine months ended February 28, 1998 and for the years ended May 31, 1997, 1996
and 1995, respectively.
The Company was obligated under a noncancellable operating lease for its
premises which would have expired on August 31, 2000. On April 11, 1996, the
Company entered into a lease termination agreement with its landlord to vacate
its premises prior to the scheduled expiration date of August 31, 2000. The
Company paid $275,000 to relinquish it from all obligations under the lease
after September 30, 1996. Rental payments with respect to this lease were made
through September 30, 1996.
9. ACQUISITION BY ADVANSTAR COMMUNICATIONS INC.:
On March 6, 1998, Advanstar Communications Inc. signed a merger agreement to
acquire the Company. The aggregate purchase price will consist of
approximately $230.2 million in cash subject to adjustment based on the
shareholders' equity of the Company on the closing date.
F-40
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary................................................................... 1
Risk Factors.............................................................. 20
The Acquisitions and Refinancing.......................................... 27
Use of Proceeds........................................................... 28
Capitalization............................................................ 28
Unaudited Pro Forma Combined Financial Information........................ 29
Selected Historical Consolidated Financial and Other Data of Advanstar and
the Predecessor.......................................................... 35
Selected Historical Consolidated Financial and Other Data of MAGIC........ 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 37
Business.................................................................. 46
Management................................................................ 61
Principal Stockholders.................................................... 66
The Exchange Offer ....................................................... 68
Description of Amended Credit Facility.................................... 78
Description of Notes...................................................... 80
Exchange and Registration Rights Agreement................................ 109
Book-Entry; Delivery and Form............................................. 112
Certain United States Federal Tax Consequences ........................... 114
Plan of Distribution...................................................... 117
Legal Matters............................................................. 117
Experts................................................................... 117
Available Information..................................................... 118
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN SELLING EXCHANGE NOTES
RECEIVED IN EXCHANGE FOR ORIGINAL NOTES HELD FOR THEIR ACCOUNT. SEE "PLAN OF
DISTRIBUTION."
ADVANSTAR COMMUNICATIONS INC.
OFFER TO EXCHANGE ITS 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL
OF ITS OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE NOT
BEEN SO REGISTERED
LOGO
---------------
PROSPECTUS
---------------
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Andvanstar Communications Inc. (the "Company") is a New York Corporation.
Section 402(b) of the New York Business Corporation (" NYBCL") statute
generally provides that a company's certificate of incorporation may set forth
a provision eliminating or limiting the personal liability of its directors
for damages for any breach of duty in such capacity, provided that no such
provision shall eliminate or limit: the liability of any director if a
judgment or other final adjudication adverse to him establishes (i) that his
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law; or (ii) that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; or
(iii) that his acts violated section 719 of the NYBCL.
In addition, section 722(a) of the NYBCL generally provides that a
corporation may indemnify officers made, or threatened to be made, a party to
an action or proceeding, other than one by or in the right of the corporation
to procure a judgment in its favor, including an action by or in the right of
any other corporation, or other enterprise, which any director or officer of
the corporation served in any capacity at the request of the corporation, by
reason of the fact that he was a director or officer of the corporation, or
served such other corporation, or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys fees, if such director or officer acted in good faith.
Section 722(c), in general, further provides that a corporation may
indemnify any person made, or threatened to be made, a party to an action by
or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or
officer of any other corporation, or other enterprise, against amounts paid in
settlement and reasonable expenses, including attorneys fees in connection
with the defense or settlement of such action if such director or officer
acted in good faith.
Generally, the Company's certificate of incorporation eliminates the
personal liability of its directors to the fullest extent permitted by the
provisions of paragraph (b) of Section 402 of the NYBCL. In addition, the
Company's bylaws indemnify its directors and officers in connection with any
proceeding, including an action by or in the right of the corporation, by
reason of the fact that such person is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director,
officer, trustee, employee or agent of another corporation or other
enterprise, except in relation to matters as to which a director or officer is
adjudged to have breached his duty of care or to have acted in bad faith.
Advanstar Holdings, Inc. ("Holdings") and Art Expositions International
("Art Expositions") are each Delaware corporations. The Delaware General
Corporation Law (the "DCCL") permits the indemnification by a Delaware
corporation of its directors and officers for liabilities and expenses that
they may incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the Registrant,
and with respect to any criminal action proceeding, actions that the
indemnified party has no reasonable cause to believe were unlawful.
Holdings' certificate of incorporation states that no director shall be
personally liable for monetary damages for breaches of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty (ii) acts or omission not in good faith or which involve intentional
misconduct or a know violation of law (iii) under section 174 of the DGCL or
(iv) for any transaction for which the director derived any improper personal
benefit. If the DGCL is amended then liability of the director shall be
eliminated or limited to the fullest extent permitted. In general, Holdings'
bylaws indemnify any
II-1
<PAGE>
person, made a party to an action, suit or proceeding by or in the right of
Holdings to procure a judgment in its favor by reason of the fact that he is
or was a director or officer against the reasonable expenses, including
attorneys' fees incurred by him in connection with the defense of such action,
except in relation to matters as to which a director or officer is adjudged to
have breached his duty of care or have acted in bad faith.
Art Expositions' certificate incorporation generally provides that no
director shall be personally liable for monetary damages for breach of
fiduciary duty, except for liability (i) for breach of the duty of loyalty
(ii) acts omissions not in good faith involving intentional misconduct or
knowing violation of law (iii) under Section 174 of the DGCL (iv) for any
transaction from which the director derived any improper personal benefit. Art
Exposition's bylaws provide that directors and officers made a party to an
action, suit or proceeding by or in the right of Art Expositions to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer shall be indemnified against the reasonable expenses, including
attorneys' fees, incurred in connection with the defense of such action to the
fullest extent permitted by the DGCL.
Men's Apparel Guild in California, Inc. ("MAGIC"), Magic Kids, Inc. ("Magic
Kids") and Applied Business teleCommunications ("ABC") are each California
corporations. Section 204 of the California Corporations Code (the "CCC")
generally provides that articles of incorporation may set forth provisions
eliminating or limiting the personal liability of a director for monetary
damages in an action brought by or in the right of the corporation for breach
or a director's duties to the corporation and its shareholders as set forth in
Section 309 of the CCC, provided, however, that (A) such provision may not
eliminate or limit the liability of directors (i) for acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law,
(ii) for acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders or that involve the absence
of good faith on the part of the director, (iii) for any transaction from
which a director derived an improper personal benefit, (iv) for acts or
omissions that show a reckless disregard for the director's duty of the
corporation or its shareholders in circumstances in which the director was
aware, or should have been aware, in the ordinary course of performing a
director's duties, or a risk of serious injury to the corporation or its
shareholders, (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders, (vi) under Section 310 of the CCC; and (B) no
such provision shall eliminate or limit the liability of an officer for any
act or omission as an offer not withstanding that the officer is also a
director or that his actions, if negligent or improper, have been ratified by
the directors.
MAGIC's articles of incorporation and bylaws generally authorize that, to
the fullest extent permissible under California law and in excess of that
which is expressly permitted by Section 317 of the CCC, MAGIC shall indemnify
its directors and officers against all expenses, judgments, fines, settlements
and other amounts actually and reasonably incurred by them in connection with
any proceeding, including an action by or in the right of the corporation, by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, trustee, employee or agent of another corporation or other
enterprise.
Magic Kids' articles of incorporation provide for indemnification of its
agents (as defined in Section 317 of the CCC) through bylaw provisions,
agreements with agents, a vote of shareholders or disinterested directors or
otherwise, in excess of the indemnification otherwise permitted by Section 317
of the California Corporations Code, subject only to the applicable limits set
forth in Section 204 of the CCC with respect to actions for breach of duty to
Magic Kids and its shareholders. The liability of the directors of Magic Kids
for monetary damages shall be eliminated to the fullest extent permissible
under California law. Magic Kids' bylaws indemnify directors and officers to
the maximum extent permitted by the CCC.
The articles of incorporation of ABC are silent on the topic of director and
officer indemnification. The bylaws of ABC provide for the indemnification of
its agents against expenses, judgments, fines,
II-2
<PAGE>
settlements and other amounts, actually and reasonably incurred by reason such
person's having been made or having been threatened to be party to a
proceeding to the fullest extent permissible under the CCC.
On Demand Marketing Inc. ("On Demand") and Expocon Management Associates
("Expocon") are each Connecticut corporations. Section 33-636 of the
Connecticut Business Corporation Act ("CBCA") provides that a corporation's
certificate of incorporation may set forth: a provision limiting the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of duty as a director to an amount that is not less than
the compensation received by the director for serving the corporation during
the year of the violation if such breach did not (i) involve a knowing and
culpable violation of law by the director, (ii) enable the director or an
associate, as defined in section 33-840, to receive an improper personal
economic gain, (iii) show a lack of good faith and a conscious disregard for
the duty of the director to the corporation under circumstances in which the
director was aware that his conduct or omission created an unjustifiable risk
of serious injury to the corporation, (iv) constitute a sustained and
unexcused pattern of inattention that amounted to an abdication of the
director's duty to the corporation, or (v) create liability under section 33-
757. Furthermore, section 33-771 generally gives a corporation a right to
indemnify a director if (1) he acted in good faith; and (2) he reasonably
believed his conduct, when acting in his official capacity, was in the best
interest of the corporation and that his conduct, other than in an official
capacity, was not opposed to the best interest of the corporation; and (3) in
the case of a criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. Section 33-772 states that a corporation must indemnify
a director who was wholly successful, on the merits or otherwise in the
defense of any action or proceeding to which he was a party because he was of
director. Finally, section 33-776 states that a corporation may indemnify and
advance expenses to an officer who is party to a proceeding because he is an
officer to the same extent as a director, or to such further extent consistent
with public policy as provided in the certificate of incorporation, bylaws or
by contract.
The certificate of incorporation of On Demand provides that the personal
liability of a director to On Demand or its stockholders for any monetary
damages for breach of duty as a director shall be limited to an amount that is
equal to the compensation received by the director for serving On Demand
during the year of the violation, if such breach did not (i) involve a knowing
and culpable violation or law by the director, (ii) enable the director or an
associate, as defined in subdivision (3) of section 33-374d of the Act, to
receive an improper personal economic gain, (iii) show a lack of good faith
and a conscious disregard for the duty of the director to On Demand under
circumstances in which the director was aware that his conduct or omission
created an unjustifiable risk of serious injury to the corporation, (iv)
constitute a sustained and unexcused pattern of inattention that amounted to
an abdication of the director's duty to the corporation or (v) create a
liability under section 33-321 of the Act. In general, the bylaws of On Demand
state that the On Demand shall be bound by and comply with the provisions the
CBCA pertaining to indemnification of officers and directors.
The articles of incorporation and the bylaws of Expocon are silent on the
topic of director and officer indemnification.
Technology Events Company, LLC ("Technology Events") is a Connecticut
limited liability company. Section 34-143 of the Connecticut Limited Liability
Corporation Act ("the CLLC") provides that the operating agreement of a
limited liability corporation may: (1) eliminate or limit the personal
liability of a member or manager for monetary damages for breach of any duty
provided for in Section 34-141 of the CLLC; and (2) provide for
indemnification of a member or manager for judgments, settlements, penalties,
fines or expenses incurred in a proceeding to which an individual is a party
because such individual is or was a member or manager. The articles of
organization of Technology Events are silent on the topic of director and
officer indemnification.
Reference is made to each Registrant's charter and bylaws, filed herewith.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
3.1 The Company's Amended and Restated Certificate of Incorporation
3.2 The Company's Bylaws
3.3 Advanstar Holdings, Inc. Amended Certificate of Incorporation
3.4 Advanstar Holdings, Inc. Amended and Restated Bylaws
Art Expositions International, Inc. Amended Certificate of
3.5 Incorporation
3.6 Art Expositions International, Inc. Bylaws
3.7 Expocon Management Associates, Inc. Certificate of Incorporation
3.8 Expocon Management Associates, Inc. Bylaws
3.9 On Demand Marketing, Inc. Certificate of Incorporation
3.10 On Demand Marketing, Inc. Amended and Restated Bylaws
3.11 Technology Events Company, LLC Articles of Organization
3.12 Men's Apparel Guild in California, Inc. Articles of Incorporation
3.13 Men's Apparel Guild in California, Inc. Amended and Restated Bylaws
3.14 Magic Kids, Inc. Articles of Incorporation
3.15 Magic Kids, Inc. Bylaws
3.16 Applied Business teleCommunications Amended Articles of Incorporation
3.17 Applied Business teleCommunications Bylaws
4.1 Indenture, dated as of April 30, 1998, among the Company, the
Guarantors (as defined therein) and the Bank of New York
4.2 Supplemental Indenture, dated as of May 19, 1998, among the Company,
Applied Business teleCommunications and the Bank of New York
4.3 Form of Rule 144A Global Note
4.4 Form of Regulation S Global Note
4.5 Form of Accredited Investor Global Note
4.6 Form of Exchange Note
5.1 Opinion of Testa, Hurwitz & Thibeault LLP regarding the legality of
the securities being issued
10.1 Purchase Agreement, dated April 27, 1998, among the Company, the
Guarantors (as defined therein), Chase Securities Inc. and Lehman
Brothers Inc.
10.2 Exchange and Registration Rights Agreement, dated April 30, 1998,
among the Company, the Guarantors (as defined therein), Chase
Securities Inc. and Lehman Brothers Inc.
10.3 Amended Credit Agreement (the "Credit Agreement"), dated as of May 31,
1996, as amended and restated as of April 30, 1998, among the Company,
the Guarantors (as defined in the Credit Agreement), the Lenders (as
defined in the Credit Agreement) and the Chase Manhattan Bank
10.4 Employment Agreement, dated July 1, 1996, between Advanstar Holdings,
Inc. and Robert Krakoff
10.5 Employment Agreement, dated July 1, 1996, between Advanstar Holdings,
Inc. and James M. Alic
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ---------------------------------------------------------------------
<C> <S>
10.6 Advanstar Holdings, Inc. 1996 Stock Option Plan
10.7 Advanstar Holdings, Inc. Employees' 401(k) Plan and Trust, as amended
10.8 Agreement, dated July 31, 1997, between the Company and Banta
Publications
10.9 Lease Agreement, dated February 2, 1996, between the Las Vegas
Convention and Visitors Authority and Men's Apparel Guild in
California, Inc.
10.10 Lease Agreement dated December 24, 1996, between the Las Vegas
Convention and Visitor's Authority and Men's Apparel Guild in
California, Inc.
10.11 Lease Agreement, dated September 25, 1996, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.12 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.13 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.14 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.15 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.16 Convention Agreement, dated March 19, 1998, between Las Vegas Hilton
Corporation and Men's Apparel Guild in California, Inc.
12.1 Statement re Computation of Ratios
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coopers & Lybrand, L.L.P.
23.3 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature pages of Registration
Statement)
25.1 Statement of Eligibility of Trustee
27.1 Financial Data Schedule (EDGAR version only)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Instructions to Registered Holder
</TABLE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)3 of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase
II-5
<PAGE>
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it becomes effective.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN BOSTON,
MASSACHUSETTS, ON THE 18TH DAY OF JUNE, 1998.
ADVANSTAR COMMUNICATIONS INC.
/s/ Robert L. Krakoff
By: ___________________________________
Robert L. Krakoff, Chairman of the
Board and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert L. Krakoff, James M. Alic, David W.
Montgomery and F. George Davitt and each of them acting individually, as such
person's true and lawful attorneys-in-fact and agents, each with full power of
substitution, for such person, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his or her substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
/s/ Robert L. Krakoff Chairman of the June 18, 1998
- ------------------------------------- Board and Chief
Robert L. Krakoff Executive Officer
(Principal Executive
Officer)
/s/ David W. Montgomery Vice President- June 18, 1998
- ------------------------------------- Finance, Chief
David W. Montgomery Financial Officer
and Secretary
(Principal Financial
and Accounting
Officer)
/s/ James M. Alic Vice Chairman and June 18, 1998
- ------------------------------------- Director
James M. Alic
/s/ Kenneth T. Berliner Director June 18, 1998
- -------------------------------------
Kenneth T. Berliner
/s/ Mitchell R. Cohen Director June 18, 1998
- -------------------------------------
Mitchell R. Cohen
/s/ John M. Pasquesi Director June 18, 1998
- -------------------------------------
John M. Pasquesi
</TABLE>
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT LISTED BELOW HAVE DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF, BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN BOSTON,
MASSACHUSETTS, ON THE 18TH DAY OF JUNE, 1998.
ADVANSTAR HOLDINGS, INC.
/s/ Robert L. Krakoff
By: __________________________________
Robert L. Krakoff, Chairman of the
Board and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert L. Krakoff, James M. Alic, David W.
Montgomery and F. George Davitt and each of them acting individually, as such
person's true and lawful attorneys-in-fact and agents, each with full power of
substitution, for such person, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitutes, may do or cause to be done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF
THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
/s/ Robert L. Krakoff Chairman of the June 18, 1998
- ------------------------------------ Board and Chief
Robert L. Krakoff Executive Officer
(Principal
Executive Officer)
/s/ David W. Montgomery Vice President- June 18, 1998
- ------------------------------------ Finance, Chief
David W. Montgomery Financial Officer
and Secretary
(Principal
Financial and
Accounting Officer)
/s/ James M. Alic Vice Chairman and June 18, 1998
- ------------------------------------ Director
James M. Alic
/s/ Kenneth T. Berliner Director June 18, 1998
- ------------------------------------
Kenneth T. Berliner
/s/ Mitchell R. Cohen Director June 18, 1998
- ------------------------------------
Mitchell R. Cohen
/s/ John M. Pasquesi Director June 18, 1998
- ------------------------------------
John M. Pasquesi
</TABLE>
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANTS LISTED BELOW HAVE DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON THEIR BEHALF, RESPECTIVELY, BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN BOSTON, MASSACHUSETTS, ON THE 18TH DAY OF JUNE, 1998.
ART EXPOSITIONS INTERNATIONAL, INC.
EXPOCON MANAGEMENT ASSOCIATES, INC.
ON DEMAND MARKETING, INC.
MEN'S APPAREL GUILD IN CALIFORNIA,
INC.
MAGIC KIDS, INC.
APPLIED BUSINESS TELECOMMUNICATIONS
/s/ Robert L. Krakoff
By: ___________________________________
Robert L. Krakoff, Chairman of the
Board and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert L. Krakoff, James M. Alic, David W.
Montgomery and F. George Davitt and each of them acting individually, as such
person's true and lawful attorneys-in-fact and agents, each with full power of
substitution, for such person, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his or her substitutes, may do or cause to be done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF
EACH OF THE REGISTRANTS LISTED ABOVE AND IN THE CAPACITIES FOR EACH SUCH
REGISTRANT AND ON THE DATES INDICATED:
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
/s/ Robert L. Krakoff Chairman of the June 18, 1998
- ------------------------------------- Board and Chief
Robert L. Krakoff Executive Officer
(Principal Executive
Officer)
/s/ David W. Montgomery Vice President- June 18, 1998
- ------------------------------------- Finance, Chief
David W. Montgomery Financial Officer
and Secretary
(Principal Financial
and Accounting
Officer)
/s/ James M. Alic Vice Chairman and June 18, 1998
- ------------------------------------- Director
James M. Alic
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
3.1 The Company's Amended and Restated Certificate of Incorporation
3.2 The Company's Bylaws
3.3 Advanstar Holdings, Inc. Amended Certificate of Incorporation
3.4 Advanstar Holdings, Inc. Amended and Restated Bylaws
Art Expositions International, Inc. Amended Certificate of
3.5 Incorporation
3.6 Art Expositions International, Inc. Bylaws
3.7 Expocon Management Associates, Inc. Certificate of Incorporation
3.8 Expocon Management Associates, Inc. Bylaws
3.9 On Demand Marketing, Inc. Certificate of Incorporation
3.10 On Demand Marketing, Inc. Amended and Restated Bylaws
3.11 Technology Events Company, LLC Articles of Organization
3.12 Men's Apparel Guild in California, Inc. Articles of Incorporation
3.13 Men's Apparel Guild in California, Inc. Amended and Restated Bylaws
3.14 Magic Kids, Inc. Articles of Incorporation
3.15 Magic Kids, Inc. Bylaws
3.16 Applied Business teleCommunications Amended Articles of Incorporation
3.17 Applied Business teleCommunications Bylaws
4.1 Indenture, dated as of April 30, 1998, among the Company, the
Guarantors (as defined therein) and the Bank of New York
4.2 Supplemental Indenture, dated as of May 19, 1998, among the Company,
Applied Business teleCommunications and the Bank of New York
4.3 Form of Rule 144A Global Note
4.4 Form of Regulation S Global Note
4.5 Form of Accredited Investor Global Note
4.6 Form of Exchange Note
5.1 Opinion of Testa, Hurwitz & Thibeault LLP regarding the legality of
the securities being issued
10.1 Purchase Agreement, dated April 27, 1998, among the Company, the
Guarantors (as defined therein), Chase Securities Inc. and Lehman
Brothers Inc.
10.2 Exchange and Registration Rights Agreement, dated April 30, 1998,
among the Company, the Guarantors (as defined therein), Chase
Securities Inc. and Lehman Brothers Inc.
10.3 Amended Credit Agreement (the "Credit Agreement"), dated as of May 31,
1996, as amended and restated as of April 30, 1998, among the Company,
the Guarantors (as defined in the Credit Agreement), the Lenders (as
defined in the Credit Agreement) and the Chase Manhattan Bank
10.4 Employment Agreement, dated July 1, 1996, between Advanstar Holdings,
Inc. and Robert Krakoff
10.5 Employment Agreement, dated July 1, 1996, between Advanstar Holdings,
Inc. and James M. Alic
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ---------------------------------------------------------------------
<C> <S>
10.6 Advanstar Holdings, Inc. 1996 Stock Option Plan
10.7 Advanstar Holdings, Inc. Employees' 401(k) Plan and Trust, as amended
10.8 Agreement, dated July 31, 1997, between the Company and Banta
Publications
10.9 Lease Agreement, dated February 2, 1996, between the Las Vegas
Convention and Visitors Authority and Men's Apparel Guild in
California, Inc.
10.10 Lease Agreement dated December 24, 1996, between the Las Vegas
Convention and Visitor's Authority and Men's Apparel Guild in
California, Inc.
10.11 Lease Agreement, dated September 25, 1996, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.12 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.13 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.14 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.15 Lease Agreement, dated September 5, 1997, between the Interface
Group--Nevada, Inc. and Men's Apparel Guild in California, Inc.
10.16 Convention Agreement, dated March 19, 1998, between Las Vegas Hilton
Corporation and Men's Apparel Guild in California, Inc.
12.1 Statement re Computation of Ratios
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coopers & Lybrand, L.L.P.
23.3 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature pages of Registration
Statement)
25.1 Statement of Eligibility of Trustee
27.1 Financial Data Schedule (EDGAR version only)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Instructions to Registered Holder
</TABLE>
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
HBJ PUBLICATIONS, INC.
UNDER SECTION 402 OF THE
BUSINESS CORPORATION LAW
* * * * *
WE, THE UNDERSIGNED, all of the age of eighteen years or over, for the
purpose of forming a corporation pursuant to Section 402 of the Business
Corporation Law of New York, do hereby certify:
FIRST: The name of the corporation is
HBJ PUBLICATIONS, INC.
SECOND: The purposes for which it is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the Business Corporation Law provided that it is not formed to
engage in any act or activity requiring the consent or approval of any state
official, department, board, agency or other body, without such consent or
approval first being obtained.
THIRD: The office of the corporation is to be located in the County of New
York, State of New York.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is Two Thousand (2,000) shares of the par value of One Dollar
($1.00) each.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against the corporation may be served. The post
office address to which the
<PAGE>
-2-
Secretary of State shall mail a copy of any process against the corporation
served upon him is: c/o Harcourt Brace Jovanovich Inc. 747 Third Avenue, New
York, New York 10017.
SIXTH: The name and address of the registered agent which is to be the
agent of the corporation upon whom process against it may be served, are C T
CORPORATION SYSTEM, 1633 Broadway, New York, New York 10019.
IN WITNESS WHEREOF, we have made and signed this Certificate of
Incorporation this 22nd day of January, A.D. 1987.
THOMAS C. TOTARO
----------------
Thomas C. Totaro
1633 Broadway,
New York, New York 10019
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 22nd day of January 1987, before me personally came THOMAS C.
TOTARO, to me known, and known to me to be the person described in and who
executed the foregoing certificate, and he duly acknowledged to me that he had
executed the same.
RICHARD P. BOROVOY
------------------
Richard P. Borovoy
Notary Public
RICHARD P. BOROVOY
Notary Public, State of New York
No. 24-4630102
Qualified in Kings County
Cert. Filed in New York County
Commission Expires February 28, 1989
<PAGE>
CERTIFICATE OF MERGER
OF
NCC ACQUISITION CORPORATION
INTO
HBJ PUBLICATIONS, INC.
_______________________________
Under Section 904 of the Business Corporation Law
________________________________
We, the undersigned, being respectively the President and the
Secretary of NCC Acquisition Corporation, a New York corporation ("NCC
Acquisition"), and the President and an Assistant Secretary of HBJ Publications,
Inc., a New York corporation ("HBJ"), do hereby certify as follows:
FIRST: The names of the constituent corporations are "NCC Acquisition
Corporation" and "HBJ Publications, Inc." NCC Acquisition was incorporated in
the State of New York on October 27, 1987 under its present name, and HBJ was
incorporated in the State of New York on January 23, 1987 under its present
name. HBJ shall be the surviving corporation (the "Surviving Corporation") in
the merger.
SECOND: The authorized capital stock of NCC Acquisition consists of
3,001,000 shares of capital stock, of which 1,000 shares are Common Stock, par
value $.01 per share ("NCC Acquisition Common Stock"), all of which are issued
and outstanding and owned by New Century Communications, Inc. a Delaware
corporation ("New Century"), and 3,000,000 are Preferred Stock, par value $.01
per share, none of which are outstanding. Each share of NCC Acquisition Common
Stock outstanding was entitled to one vote on the merger. The authorized
<PAGE>
-2-
capital stock of HBJ consists of 2,000 shares of Common Stock, par value $1.00
per share ("HBJ Common Stock"), of which 1,000 shares are issued and outstanding
and owned by NCC Acquisition. Each share of HBJ Common Stock outstanding was
entitled to one vote on the merger.
THIRD: The Certificate of Incorporation of HBJ as in effect on the
effective date of the merger shall be the Certificate of Incorporation of the
Surviving Corporation.
FOURTH: The effective date of the merger is the date of the filing of
this Certificate of Merger by the Department of State of the State of New York.
FIFTH: A Plan of Merger dated as of December 30, 1987, by and between
NCC Acquisition and HBJ (the "Plan of Merger") with respect to the merger of NCC
Acquisition into HBJ, was duly approved and adopted by the respective Boards of
Directors of NCC Acquisition on December 28, 1987 and of HBJ on December 30,
1987. Thereafter, the Plan of Merger was duly approved and adopted by New
Century, as the sole shareholder of NCC Acquisition, by a written consent dated
December 30, 1987 and by NCC Acquisition as sole shareholder of HBJ, by written
consent dated December 30, 1987.
<PAGE>
-3-
IN WITNESS WHEREOF, we have signed this certificate on the 31st day of
December, 1987 and we affirm the statements contained therein as true under
penalties of perjury.
NCC ACQUISITION CORPORATION
/s/ Donald J. Gogel
By:_______________________________
Donald J. Gogel, President
/s/ Matthew G. Harris
By:_______________________________
Matthew G. Harris, Secretary
HBJ PUBLICATIONS, INC.
/s/ Donald J. Gogel
By:_______________________________
Donald J. Gogel, President
/s/ Matthew G. Harris
By:_______________________________
Matthew G. Harris, Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
HBJ PUBLICATIONS, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and Secretary of HBJ
Publications, Inc., pursuant to Section 805 of the Business Corporation Law of
the State of New York, hereby restate, certify and set forth:
I. The name of the corporation is HBJ Publications, Inc. The name
under which the corporation was formed was HBJ Publications, Inc.
II. The original certificate of incorporation was filed by the
Department of State on January 23, 1987.
III. The certificate of incorporation, as amended heretofore, is
hereby further amended to effect the following amendments authorized by the
Business Corporation Law:
(a) To change the name of the corporation, as set forth in
paragraph 1 of this restated certificate of incorporation.
(b) To enlarge the corporate purposes, as set forth in paragraph
2 of this restated certificate of incorporation.
(c) To change the location of the office of the corporation, as
set forth in paragraph 3 of this restated certificate of incorporation.
(d) To change the address to which the Secretary of State shall
mail a copy of process in any action or proceeding against the corporation, as
set forth in paragraph 5 of this restated certificate of incorporation.
(e) To change the name and address of the registered agent of
the corporation upon whom process against it may be served, as set forth in
paragraph 6 of this restated certificate of incorporation.
<PAGE>
-2-
(f) To state that the business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors, as set
forth in paragraph 7(1) of this restated certificate of incorporation.
(g) To give the Board of Directors concurrent power to make and
change the by-laws of the corporation, as set forth in paragraph 7(2) of this
restated certificate of incorporation.
(h) To provide for the manner of election of Directors, as set
forth in paragraph 7(3) of this restated certificate of incorporation.
(i) To enlarge the powers of the Board of Directors, as set
forth in paragraph 7(4) of this restated certificate of incorporation.
(j) To permit a Director to be removed with or without cause, as
provided in paragraph 7(5) of this restated certificate of incorporation.
(k) To restate that the personal liability of the directors of
the corporation is eliminated to fullest extent possible, as set forth in
paragraph 8 of this restated certificate of incorporation.
IV. The certificate of incorporation is hereby restated to set
forth in its entire text as amended.
V. The amendment and restatement of the certificate of incorporation
was authorized by a unanimous vote of the Board of Directors at a meeting
thereof and followed by the unanimous vote of the sole holder of all outstanding
shares entitled to vote thereon.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
EDGELL COMMUNICATIONS, INC.
UNDER SECTION 402 OF THE BUSINESS CORPORATION
LAW
The undersigned, being of the age of eighteen years or over, for the
purpose of forming a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York do hereby certify:
1. The name of the corporation shall be Edgell Communications, Inc.
(hereinafter sometimes called the "Corporation").
2. The purposes for which it is formed are to engage in any lawful act or
activity for which corporations may be organized under the Business Corporation
Law provided that the corporation is not formed to engage in any act or activity
which requires the consent or approval of any state official, department, board,
agency or other body, without such consent or approval first being obtained.
It is hereby expressly provided that the foregoing shall not be held to
limit or restrict in any manner the power of this Corporation; and that this
Corporation may do all and everything necessary, suitable and appropriate for
the exercise of any of its general powers.
3. The office of the Corporation in the State of New York shall be
located in the County of New York.
4. The aggregate number of shares which the Corporation shall have the
authority to issue is two thousand (2,000) shares of the par value of one dollar
($1.00) each.
5. The Secretary of State of the State of New York is hereby designated
as the agent of the Corporation upon whom any process may in any action or
proceeding against it be served. The post office address to which the Secretary
of State shall mail a copy of any process in any action or proceeding against
the Corporation which may be served upon it is to: William A. Stone, Esquire,
471 Troy-Schenectady Road, Latham, NY, 12110.
6. The Corporation designates William A. Stone, Esquire, 471 Troy-
Schenectady Road, Latham, NY, 12110, and it is at that address which any process
against the Corporation may be served, its registered agent in this State upon
whom any process may be served.
7. The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
<PAGE>
-2-
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot
unless the By-Laws so provide.
(4) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of the Business Corporation Law, this Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid
if such By-Laws had not been adopted.
(5) Any Member of the Board of Directors may be removed, with or
without cause, at any time prior to the expiration of his term by a
majority vote of the outstanding shares.
8. The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (b) of
Section 402 of the Business Corporation Law of the State of New York, as the
same may be amended and supplemented.
IN WITNESS WHEREOF, we have made and subscribed this certificate and
affirm the same as true and correct under penalties of perjury this 6th day of
January, 1988.
HBJ PUBLICATIONS, INC.
/s/ Donald J. Gogel
______________________________________
Name: Donald J. Gogel
Title: President
/s/ Matthew C. Harris
______________________________________
Name: Matthew C. Harris
Title: Secretary
<PAGE>
CERTIFICATE OF MERGER
OF
ARMSTRONG CREATIVE SERVICES, INC.,
CARDIOLOGY TIMES, INC.,
DAVIES PUBLISHING COMPANY,
DERMATOLOGY TIMES, INC.,
EDGELL COMMUNICATIONS AND SERVICES, INC.,
EDGELL EXPOSITIONS AND CONFERENCES INC.,
THE INSTRUCTOR PUBLICATIONS, INC.,
MAGACYCLE, INC.,
MAGAZINES FOR INDUSTRY, INC.,
MURRAY COMMUNICATIONS, INC.,
OPHTHALMOLOGY TIMES, INC.,
PIT AND QUARRY PUBLICATIONS, INC.,
RESIN PUBLICATIONS, INC.,
SHOWSTYLE PUBLICATIONS, INC. and
UROLOGY TIMES, INC.
INTO
EDGELL COMMUNICATIONS, INC.
(Under Section 905 of the Business Corporation Law)
It is hereby certified by the corporation named herein as the
surviving corporation as follows:
FIRST: The Board of Directors of the corporation named herein as the
surviving corporation has adopted a plan of merger setting forth the terms and
conditions of merging the corporations named herein as the subsidiary
corporations into said surviving corporation.
SECOND: The name of the surviving corporation, the Certificate of
Incorporation of which was filed by the Department of State of January 23, 1987,
is Edgell Communications, Inc. ("ECI"). The name under which said corporation
was formed is HBJ Publications, Inc.
THIRD: The names of the subsidiary corporations are Armstrong
Creative Services, Inc. ("ACS"), Cardiology Times, Inc. ("CTI"), Davies
Publishing Company ("DPC"), Dermatology Times, Inc. ("DTI"), Edgell
Communications and Services, Inc. ("ECS"), Edgell Expositions and Conferences
Inc. ("EEC"), The Instructor Publications, Inc. ("TIP"), Magacycle, Inc. ("MI"),
<PAGE>
-2-
Magazines for Industry, Inc. ("MFI"), Murray Communications, Inc. ("MCI"),
Ophthalmology Times, Inc. ("OTI"), Pit and Quarry Publications, Inc. ("PQP"),
Resin Publications, Inc. ("RPI"), Showstyle Publications, Inc. ("SPI") and
Urology Times, Inc. ("UTI") (collectively, the "Subsidiaries").
FOURTH: ACS is a corporation formed under the laws of the State of
Arizona, its Certificate of Incorporation was filed in the office of the
Secretary of State of Arizona on the 12th day of September, 1977, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the Business
Corporation Law of the State of New York (the "BCL").
FIFTH: CTI is a corporation formed under the laws of the State of New
York and its Certificate of Incorporation was filed by the Department of State
on the 24th day of July, 1981.
SIXTH: DPC is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the office of the
Secretary of State of Delaware on the 18th day of December, 1961, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the BCL.
SEVENTH: DTI is a corporation formed under the laws of the State of
New York and its Certificate of Incorporation was filed by the Department of
State on the 24th day of July, 1981.
EIGHTH: ECS is a corporation formed under the laws of the State of
New York and its Certificate of Incorporation was filed by the Department of
State on the 7th day of May, 1980. The name under which said corporation was
formed is HBJ Communications and Services, Inc.
NINTH: EEC is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the office of the
Secretary of State of Delaware on the 25th day of February, 1987, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the BCL. The name
under which said corporation was formed is SCORE Show, Inc.
TENTH: TIP is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the office of the
Secretary of State of Delaware on the 23rd day of May, 1968, its application to
do business in the State of New York was filed by the Department of State on
June 11, 1968, and it has never filed an application for use of a fictitious
<PAGE>
-3-
name under Article 13 of the BCL. The name under which said corporation was
formed is Uphill Corporation.
ELEVENTH: MI is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the office of the
Secretary of State of Delaware on the 11th day of December, 1984, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the BCL.
TWELFTH: MFI is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the Office of the
Secretary of State of Delaware on the 24th day of August, 1970, its application
to do business in the State of New York was filed by the Department of State on
October 22, 1970 and it has never filed an application for use of a fictitious
name under Article 13 of the BCL. The name under which said corporation was
formed is Modern Communications to Industry, Inc.
THIRTEENTH: MCI is a corporation formed under the laws of the State
of New York and its Certificate of Incorporation was filed by the Department of
State on the 15th day of October, 1976.
FOURTEENTH: OTI is a corporation formed under the laws of the State
of New York and its Certificate of Incorporation was filed by the Department of
State on the 4th day of October, 1976.
FIFTEENTH: POP is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the Office of the
Secretary of State of Delaware on the 4th day of May, 1984, and it has never
filed an application to do business in the State of New York or an application
for use of a fictitious name under Article 13 of the BCL. The name under which
said corporation was formed is Carrara Publications, Inc.
SIXTEENTH: RPI is a corporation formed under the laws of the State of
Delaware, its Certificate of Incorporation was filed in the office of the
Secretary of State of Delaware on the 17th day of February, 1984, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the BCL.
SEVENTEENTH: SPI is a corporation formed under the laws of the State
of New York and its Certificate of Incorporation was filed by the Department of
State on the 10th day of April, 1986.
<PAGE>
-4-
EIGHTEENTH: UTI is a corporation formed under the laws of the State
of New York and its Certificate of Incorporation was filed by the Department of
State on the 3rd day of May, 1974.
NINETEENTH: The designation and number of outstanding shares of
capital stock of each of the Subsidiaries, all of which are owned by ECI, as set
forth in the Plan of Merger, are as follows:
<TABLE>
<CAPTION>
CORPORATION DESIGNATION NUMBER
----------- ----------- ------
<S> <C> <C>
ACS Common Stock 1,990
CTI Common Stock 100
DPC Common Stock 749
DTI Common Stock 100
ECS Common Stock 1,000
EEC Common Stock 100
TIP Common Stock 100
MI Common Stock 100
MFI Common Stock 100
MCI Common Stock 100
OTI Common Stock 100
POP Common Stock 100
RPI Common Stock 100
SPI Common Stock 100
UTI Common Stock 20
</TABLE>
TWENTIETH: The effective date of the merger herein certified shall be April
30, 1988.
<PAGE>
-5-
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated as of March 18, 1988
EDGELL COMMUNICATIONS, INC.
/s/ Richard J. Moeller
_______________________________
Richard J. Moeller, President
/s/ Arland E. Hirman
_______________________________
Arland E. Hirman, Secretary
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF ST. LOUIS )
Arland E. Hirmon, being duly sworn, deposes and says that he is one of
the persons who signed the foregoing certificate of merger on behalf of the
corporation name therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon; that
he has read the foregoing certificate and knows the contents thereof; and that
the statements contained therein are true to his own knowledge.
/s/ Arland E. Hirmon
_______________________________
Arland E. Hirmon, Secretary
Subscribed and sworn to
before me on March 31st, 1988.
Adele D. Hartwick
_______________________________
Notary Public - Minnesota
<PAGE>
======================================
CERTIFICATE OF MERGER
OF
ARMSTRONG CREATIVE SERVICES, INC.,
CARDIOLOGY TIMES, INC.,
DAVIES PUBLISHING COMPANY,
DERMATOLOGY TIMES, INC.,
EDGELL COMMUNICATIONS AND SERVICES, INC.,
EDGELL EXPOSITIONS AND CONFERENCES INC.,
THE INSTRUCTOR PUBLICATIONS, INC.,
MAGACYCLE, INC.,
MAGAZINES FOR INDUSTRY, INC.,
MURRAY COMMUNICATIONS, INC.,
OPHTHALMOLOGY TIMES, INC.,
PIT AND QUARRY PUBLICATIONS, INC.,
RESIN PUBLICATIONS, INC.,
SHOWSTYLE PUBLICATIONS, INC. and
UROLOGY TIMES, INC.
INTO
EDGELL COMMUNICATIONS, INC.
======================================
(Under Section 905 of the Business Corporation Law)
======================================
<PAGE>
CERTIFICATE OF MERGER
OF
MODERN MEDICINE PUBLICATIONS, INC.
INTO
EDGELL COMMUNICATIONS, INC.
(Under Section 905 of the Business Corporation Law)
It is hereby certified by the corporation named herein as the surviving
corporation as follows:
FIRST: The Board of Directors of the corporation named herein as the
surviving corporation has adopted a plan of merger setting forth the terms and
conditions of merging the corporation named herein as the subsidiary corporation
into said surviving corporation.
SECOND: The name of the surviving corporation, the Certificate of
Incorporation of which was filed by the Department of State on January 23, 1987,
is Edgell Communications, Inc. ("ECI"). The name under which said corporation
was formed is HBJ Publications, Inc.
THIRD: The name of the subsidiary corporation, the Certificate of
Incorporation of which was filed in the office of the Secretary of State of
Delaware on the 27th day of October, 1970, is Modern Medicine Publications, Inc.
("MMP"). Its application to do business in the State of New York was filed by
the Department of State on April 28, 1971. The name under which said
corporation was formed is Times Media Company.
FOURTH: The designation and number of outstanding shares of capital
stock of MMP, all of which are owned by ECI, as set forth in the plan of merger,
are as follows:
DESIGNATION NUMBER
----------- ------
Common Stock 1,000
<PAGE>
-2-
FIFTH: The effective date of the merger herein certified shall be July
31, 1988.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated: July 22, 1988
EDGELL COMMUNICATIONS, INC.
/s/ Richard J. Moeller
________________________________
Richard J. Moeller, President
/s/ Arland E. Hirman
________________________________
Arland E. Hirman, Secretary
<PAGE>
STATE OF MINNESOTA )
) ss.:
COUNTY OF ST. LOUIS )
Arland E. Hirman, being duly sworn, deposes and says that he is one of the
persons who signed the foregoing certificate of merger on behalf of the
corporation named therein as the surviving corporation; that he signed said
certificate in the capacity set opposite or beneath his signature thereon; that
he has read the foregoing certificate and knows the contents thereof; and that
the statements contained therein are true to his own knowledge.
/s/ Arland E. Hirman
________________________________
[Name] , [Capacity]
Arland E. Hirman, Secretary
Subscribed and sworn to
before me on July 22, 1988.
_______________________________________ Notary
<PAGE>
===========================================
CERTIFICATE OF MERGER
OF
MODERN MEDICINE PUBLICATIONS, INC.
INTO
EDGELL COMMUNICATIONS, INC.
===========================================
(Under Section 905 of the Business Corporation Law)
<PAGE>
CERTIFICATE OF MERGER
OF
MMI PUBLICATIONS, INC.
(a Minnesota corporation)
into
EDGELL COMMUNICATIONS, INC.
(a New York Corporation)
(Under Sections 905 of the New York Business Corporation Law)
It is hereby certified by the corporation named herein as the surviving
corporation that:
1. The Board of Directors of Edgell Communications, Inc. ("ECI"), a
business corporation organized under the laws of the State of New York and owner
of all of the outstanding shares of MMI Publications, Inc. ("MMI"), has adopted
a plan of merger setting forth the terms and conditions of the merger between
ECI, the surviving corporation, and MMI, its subsidiary.
2. The Certificate of Incorporation of ECI was filed by the Secretary of
State of the State of New York on the 23 day of January, 1987. The name under
which ECI was formed is HBJ Publications, Inc.
3. MMI is a business corporation organized under the laws of the State of
Minnesota, its Certificate of Incorporation was filed in the office of the
Secretary of the State of Minnesota on the 22 day of November, 1967, and it has
never filed an application to do business in the State of New York or an
application for use of a fictitious name under Article 13 of the Business
Corporation Law of the State of New York (the "BCL").
<PAGE>
-2-
4. The number of outstanding shares of MMI is 100, all of which are of
one class, and all of which are owned by ECI.
5. No amendments or changes in the Certificate of Incorporation of ECI
are to be effected by the merger.
6. The effective date of the merger herein certified shall be October 31,
1989.
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained herein have been examined by us and are true and correct.
Executed as of _________________, 1989.
EDGELL COMMUNICATIONS, INC.
/s/ Richard J. Moeller
By:_______________________________
Richard J. Moeller
President
/s/ Arland E. Hirman
________________________________
Arland E. Hirman
Secretary and Treasurer
<PAGE>
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
CERTIFICATE OF MERGER
of
MMI PUBLICATIONS, INC.
(a Minnesota corporation)
into
EDGELL COMMUNICATIONS, INC.
(a New York corporation)
UNDER SECTION 905 OF THE
BUSINESS CORPORATION LAW
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
COUNSEL: Paul, Weiss, Rifkind, Wharton
& Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Matthew Nimitz, Atty.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
<PAGE>
CERTIFICATE OF MERGER
OF
AMERICAN MAGAZINE SERVICE COMPANY, INC.
(A Massachusetts Corporation)
INTO
EDGELL COMMUNICATIONS, INC.
(A New York Corporation)
UNDER SECTION 905 OF THE
BUSINESS CORPORATION LAW
* * * * *
EDGELL COMMUNICATIONS, INC., pursuant to the provisions of Section 905 of
the Business Corporation Law of the State of New York, hereby certifies as
follows:
1. EDGELL COMMUNICATIONS, INC., a corporation of the State of New York,
owns all of the outstanding shares of AMERICAN MAGAZINE SERVICE COMPANY, INC., a
Massachusetts corporation.
2. As to each subsidiary corporation, the designation and number of
outstanding shares and the number of such shares owned by the surviving
corporation are as follows:
<TABLE>
DESIGNATION AND NUMBER OF
NAME OF NUMBER OF SHARES OWNED
SUBSIDIARY OUTSTANDING SHARES BY SURVIVOR
---------- ------------------ -----------
<S> <C> <C>
AMERICAN MAGAZINE SERVICE COMPANY, INC. One Hundred (100) One Hundred (100)
</TABLE>
3. (a) The Certificate of Incorporation of EDGELL COMMUNICATIONS, INC.,
was filed in the Department of State on the 23rd day of January, 1987, under the
name HBJ PUBLICATIONS, INC.
<PAGE>
-2-
(b) The AMERICAN MAGAZINE SERVICE COMPANY, INC. was incorporated under
the laws of the State of Massachusetts on the 8th day of March, 1979, and no
application has been filed for authority to do business in the State of New
York.
(c) The merger is permitted by the laws of the state of incorporation
of each foreign subsidiary and is in compliance therewith.
4. The surviving corporation owns all of the outstanding shares of the
corporation to be merged.
5. The merger shall be effective upon filing of the Certificate of
Merger.
6. The Plan of Merger was adopted by the Board of Directors of the
surviving corporation.
IN WITNESS WHEREOF, this Certificate has been signed on the 30th day of
November, 1989 and the statements contained therein are affirmed as true under
penalties of perjury.
________________________________
EDGELL COMMUNICATIONS, INC.
/s/ Richard J. Moeller
________________________________
Richard J. Moeller, President
/s/ Arland E. Hirman
________________________________
Arland E. Hirman, Secretary
<PAGE>
CERTIFICATE OF MERGER
OF
AMERICAN MAGAZINE SERVICE COMPANY, INC.
(A Massachusetts Corporation)
INTO
EDGELL COMMUNICATIONS, INC.
(A New York Corporation)
UNDER SECTION 905 OF THE
BUSINESS CORPORATION LAW
* * * * *
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
<PAGE>
CERTIFICATE OF RESIGNATION
OF REGISTERED AGENT OF
EDGELL COMMUNICATIONS, INC.
(Under Section 305 of the Business Corporation Law)
Pursuant to the provisions of Section 305 of the New York Business
Corporation Law, the undersigned hereby resigns as registered agent of EDGELL
COMMUNICATIONS, INC.
On October 27, 1987, the Certificate of Incorporation was filed with
the New York Department of State.
A copy of this Certificate of Resignation has been sent to the
corporation by certified mail, to the post office address on file in the
Department of State specified for mailing of process. This address is as
follows:
Arland E. Hirman, Vice President
Edgell Communications, Inc.
1 East First Street
Duluth, MN 55802
IN WITNESS WHEREOF, this certificate has been subscribed this 14th day
of March, 1990 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
/s/ William A. Stone
________________________________
Signature of Registered Agent
William A. Stone, Esquire
471 Troy-Schenectady Road
Latham, NY 12110
Name & Address of Registered Agent
<PAGE>
________________________________________________________________________________
CERTIFICATE OF RESIGNATION
OF REGISTERED AGENT OF
EDGELL COMMUNICATIONS, INC.
(Under Section 305 of the Business Corporation Law)
Filed By: William A. Stone
471 Troy-Schenectady Road
Latham, NY 12110
________________________________________________________________________________
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EDGELL COMMUNICATIONS, INC.
UNDER SECTIONS 805 AND 808 OF THE
BUSINESS CORPORATION LAW
The undersigned, Richard B. Swank and Arland E. Hirman, being the persons
duly appointed, qualified and acting in the reorganization proceedings of Edgell
Communications, Inc. (the "Corporation"), by the order of the United States
Bankruptcy Court for the Northern District of Ohio (the "Bankruptcy Court")
pursuant to Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code"), do hereby certify:
(1) The name of the Corporation is Edgell Communications, Inc. The name
under which the Corporation was formed was HBJ Publications, Inc.
(2) The original Certificate of Incorporation was filed by the Department
of State on January 23, 1987.
(3) Paragraph 1 of the Corporation's Certificate of Incorporation, which
sets forth the name of the Corporation, is hereby amended to change the
Corporation's name and shall read in its entirety as follows:
"FIRST: The name of the Corporation shall be Advanstar Communications
-----
Inc. (hereinafter sometimes called the "Corporation")."
(4) Paragraph 4 of the Corporation's Certificate of Incorporation, which
sets forth the aggregate number of shares that the Corporation shall have the
authority to issue, is hereby amended to increase the Corporation's stock and
decrease the par value of the stock form 1,000 shares of unissued stock at $1.00
par value to 1,499,000 shares of unissued stock at $.01 par value and the number
of issued shares from 1,000 shares of issued stock at $1.00 par value to 1,000
shares of issued stock at $.01 par value. Paragraph 4 is also amended to include
a prohibition of issuance of any shares of non-voting Common Stock. To effect
the foregoing amendments, Paragraph 4 shall be amended to read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall
------
have the authority to issue is one million five hundred thousand
(1,500,000) shares of Common Stock each having a par value of one cent
($.01). The Corporation shall not issue non-voting Common Stock."
<PAGE>
-2-
(5) This amendment to the Corporation's Certificate of Incorporation was
authorized by the undersigned persons pursuant to the Joint Plan of
Reorganization of said Corporation and New Century Communications, Inc. dated
the 20th day of November, 1991 (the "Plan of Reorganization").
(6) Provision for this certificate is contained in the Plan of
Reorganization.
(7) The Plan of Reorganization has been confirmed as provided in Chapter
11 of the Bankruptcy Code.
(8) The proceeding for the reorganization of said Corporation resulting in
the Plan of Reorganization and the confirmation thereof is entitled In re:
------
Edgell Communications, Inc. and New Century Communications, Inc., Debtors, Case
- --------------------------------------------------------------------------
No. B91-17030 and the venue thereof is in the United State Bankruptcy Court for
the Northern District of Ohio.
(9) The order confirming the Plan of Reorganization was made on the 23rd
day of January, 1992, and entered in the office of the clerk of the aforesaid
court on the 23rd day of January, 1992.
IN WITNESS WHEREOF, the undersigned have executed and signed this
Certificate on behalf of the Corporation this 17th day of January, 1992.
/s/ Richard B. Swank
_________________________________
Name: Richard B. Swank
Title: Chairman & CEO
/s/ Arland Hirman
_________________________________
Name: Arland Hirman
Title: Vice President, Treasurer
and Secretary
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
Richard B. Swank, being duly sworn, deposes and says that he is one of the
persons who signed the foregoing certificate of amendment on behalf of the
corporation; that he signed said certificate in the capacity set opposite or
beneath his signature thereon; that he has read the foregoing certificate and
knows the contents thereof; and that the statements contained therein are true
to his own knowledge.
/s/ Richard B. Swank
_________________________________
Name: Richard B. Swank
Capacity: Chairman & CEO
Subscribed and sworn to
before me on January 17, 1992.
______________________________ Notary
STATE OF MINNESOTA )
) ss.:
COUNTY OF ST. LOUIS )
Arland Hirman, being duly sworn, deposes and says that he is one of the
persons who signed the foregoing certificate of amendment on behalf of the
corporation; that he signed said certificate in the capacity set opposite or
beneath his signature thereon; that he has read the foregoing certificate and
knows the contents thereof; and that the statements contained therein are true
to his own knowledge.
/s/ Arland Hirman
___________________________________
Name: Arland Hirman
Capacity: Vice President, Treasurer
and Secretary
Subscribed and sworn to
before me on January 20, 1992.
_______________________________ Notary
<PAGE>
===========================================
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
EDGELL COMMUNICATIONS, INC.
===========================================
SKADDEN ARPS SLATE MEAGHER & FLOM
ONE RODNEY SQUARE
WILMINGTON, DELAWARE 19899-0636
<PAGE>
CERTIFICATE OF MERGER
OF INFOTEXT PUBLISHING, INC. INTO ADVANSTAR COMMUNICATIONS, INC.,
UNDER SECTION 905 OF THE BUSINESS CORPORATION LAW
Advanstar Communications Inc. ("Advanstar" or "Surviving
Corporation"), a New York corporation, pursuant to the provisions of Section 905
of the Business Corporation Law of New York, desires to combine its operations
with its subsidiary Infotext Publishing, Inc. ("Infotext" or "Merging
Corporation"), a Nevada corporation, and certifies the following facts:
1. Advanstar owns all of the outstanding shares of Infotext.
2. Infotext has 10,000 shares of common stock, par value $.01,
issued and outstanding, all of which are owned by Advanstar.
3. The effective date of the merger is the date of filing (the
"Effective Date").
4(a). The certificate of incorporation of Advanstar was filed with
the Department of State of the State of New York on January 23, 1987, under the
name of HBJ Publications, Inc.
4(b). Infotext was incorporated under the laws of the State of
Nevada on November 4, 1988, and no application has been filed for authority to
do business in the State of New York.
4(c). This merger is permitted by the General Corporation Law of
Nevada and is in compliance therewith.
5. The Surviving Corporation currently owns all of the issued
and outstanding stock of the Merging Corporation.
6. The Plan of Merger was adopted by the Board of Directors of
the Surviving Corporation on September 28, 1993.
This certificate has been signed and witnessed on the 30th day of
September, 1993 and the statements contained herein are affirmed as true under
penalties of perjury.
Advanstar Communications Inc.
By: /s/ Edward D. Aster
_______________________________________
Name: Edward D. Aster
Title: President and Chief Executive Officer
/s/ David W. Montgomery
______________________________________
Name: David W. Montgomery
Title: Secretary
<PAGE>
) State of Ohio
) County of Cuyahoga
The foregoing instrument was acknowledged before me on this September
30, 1993, by Edward D. Aster, President and Chief Executive Officer, and David
W. Montgomery, Secretary, of Advanstar Communications Inc., a New York
corporation, on behalf of the corporation.
__________________________
Notary Public
<PAGE>
CERTIFICATE OF MERGER
OF ART RESOURCE TRADE EXPO, INC. INTO ADVANSTAR COMMUNICATIONS INC., UNDER
SECTION 905 OF THE BUSINESS CORPORATION LAW
Advanstar Communications Inc. ("Advanstar" or "Surviving Corporation"), a
New York corporation, pursuant to the provisions of Section 905 of the Business
Corporation Law of New York, desires to combine its operations with its
subsidiary Art Resource Trade Expo, Inc. ("Art Resource" or "Merging
Corporation"), a New York corporation, and certifies the following facts:
1. Advanstar owns all of the outstanding shares of Art Resource.
2. Art Resource has 200 shares of common stock without par value issued
and outstanding, all of which are owned by Advanstar.
3. The effective date of the merger is the date of filing (the
"Effective Date").
4(a). The certificate of incorporation of Advanstar was filed with the
Department of State of the State of New York on January 23, 1987, under the name
of HBJ Publications, Inc.
4(b). The certificate of incorporation of Art Resource was filed with the
Department of State of the State of New York on November 15, 1991, under the
name Art Resource Trade Expo, Inc.
5. The Surviving Corporation currently owns all of the issued and
outstanding stock of the Merging Corporation.
6. The Plan of Merger was adopted by the Board of Directors of the
Surviving Corporation on September 28, 1993.
<PAGE>
-2-
This certificate has been signed and witnessed on the 30th day of
September, 1993 and the statements contained herein are affirmed as true under
penalties of perjury.
Advanstar Communications, Inc.
By: /s/ Edward D. Aster
_______________________________________________
Name: Edward D. Aster
Title: President and Chief Executive Officer
/s/ David W. Montgomery
__________________________________________________
Name: David W. Montgomery
Title: Secretary
<PAGE>
CERTIFICATE OF MERGER OF
ART RESOURCE TRADE EXPO, INC. INTO
ADVANSTAR COMMUNICATIONS, INC.
UNDER SECTION 905 OF THE BUSINESS CORPORATION LAW
SQUIRE, SANDERS & DEMPSEY
4900 PUBLIC SQUARE
CLEVELAND, OH 44114-1304
<PAGE>
CERTIFICATE OF MERGER
OF
LIVE TIME, INC.
INTO
ADVANSTAR COMMUNICATIONS INC.
UNDER SECTION 905 OF THE BUSINESS CORPORATION LAW
* * * * *
Advanstar Communications Inc., pursuant to the provisions of Section 905
and Section 907(c) of the Business Corporation Law of the State of New York,
hereby certifies as follows:
1. Advanstar Communications Inc., a corporation of the State of New York
(formerly known as Edgell Communications, Inc. and formerly known as and
incorporated under the name HBJ Publications, Inc.), owns all of the outstanding
shares of Common Stock, no par value, of Live Time, Inc., a corporation of the
State of California.
2. Pursuant to an agreement and plan of merger, Live Time, Inc. is to be
merged into Advanstar Communications Inc., the surviving corporation of such
merger.
3. The designation and number of all outstanding shares of Live Time, Inc.
and the number of such shares owned by the surviving corporation are as follows:
<TABLE>
<CAPTION>
Designation and Number Number of Shares
---------------------- ----------------
Name of Subsidiary of Outstanding Shares Owned by Survivor
------------------ --------------------- -----------------
<S> <C> <C>
Live Time, Inc. 2,000 shares of Common Stock 2,000 shares of Common Stock
</TABLE>
(a) The certificate of incorporation of Advanstar Communications Inc. was
filed in the Department of State on the 23rd day of January, 1987.
<PAGE>
-2-
(b) Live Time, Inc. was incorporated under the laws of the State of
California on the 15th day of November, 1984, and no application for authority
to do business in the State of New York has been filed by Live Time, Inc. with
the Department of State.
4. The merger is permitted by the laws of the State of California and is
in compliance therewith.
5. The agreement and plan of merger was adopted by the Board of Directors
of Advanstar Communications Inc., the surviving corporation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-3-
IN WITNESS WHEREOF, this certificate has been signed on the 27th day of
April, 1998 and the statements contained therein are affirmed as true under
penalties of perjury.
Advanstar Communications Inc.
/s/ Robert L. Krakoff
By:_______________________________
Robert L. Krakoff
President
/s/ David W. Montgomery
By:_______________________________
David W. Montgomery
Secretary
<PAGE>
CERTIFICATE OF MERGER
OF
ADVANSTAR S.A. VENTURES, INC.
INTO
ADVANSTAR COMMUNICATIONS INC.
UNDER SECTION 905 OF THE BUSINESS CORPORATION LAW
* * * * *
Advanstar Communications Inc., pursuant to the provisions of Section 905
and Section 907(c) of the Business Corporation Law of the State of New York,
hereby certifies as follows:
1. Advanstar Communications Inc., a corporation of the State of New York
(formerly known as Edgell Communications Inc. and formerly known as and
incorporated under the name HBJ Publications, Inc.), owns all of the outstanding
shares of Advanstar S.A. Ventures, Inc., a corporation of the State of Ohio.
2. Pursuant to an agreement and plan of merger, Advanstar S.A. Ventures,
Inc. is to be merged into Advanstar Communications Inc., the surviving
corporation of the merger.
3. The designation and number of outstanding shares of Advanstar S.A.
Ventures, Inc. and the number of such shares owned by the surviving corporation
are as follows:
<TABLE>
<CAPTION>
Designation and Number Number of Shares
---------------------- ----------------
Name of Subsidiary of Outstanding Shares Owned by Survivor
------------------ --------------------- -----------------
<S> <C> <C>
Advanstar S.A. Ventures, Inc. 100 shares of Common Stock 100 shares of Common Stock
</TABLE>
(a) The certificate of incorporation of Advanstar Communications Inc.
was filed in the Department of State on the 23rd day of January, 1987.
<PAGE>
-2-
(b) Advanstar S.A. Ventures, Inc. was incorporated under the laws of the
State of Ohio on the 20th day of November 1992, and no application for authority
to do business in the State of New York has been filed by Advanstar S.A.
Ventures, Inc. with the Department of State.
4. The merger is permitted by the laws of the State of Ohio and is in
compliance therewith.
5. The agreement and plan of merger was adopted by the Board of Directors
of Advanstar Communications Inc., the surviving corporation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-3-
IN WITNESS WHEREOF, this certificate has been signed on the 27th day
of April, 1998 and the statements contained therein are affirmed as true under
penalties of perjury.
Advanstar Communications Inc.
By: /s/ Robert L. Krakoff
_______________________________
Robert L. Krakoff
President
By: /s/ David W. Montgomery
_______________________________
David W. Montgomery
Secretary
<PAGE>
PLAN
OF
MERGER
* * * * *
FIRST: Advanstar Communications Inc. (f/k/a HBJ Publications, Inc. and
Edgell Communications, Inc.), a corporation of the State of New York owns all of
the outstanding shares of Live Time, Inc. and Advanstar S.A. Ventures, Inc.
SECOND: As to each subsidiary corporation, the designation and number
of outstanding shares and the number of such shares owned by the surviving
corporation are as follows:
<TABLE>
<CAPTION>
Designation and Number of Number of Shares
------------------------- ----------------
Name of Subsidiary Outstanding Shares Owned by Survivor
- ------------------ ----------------- ------------------
<S> <C> <C>
Live Time, Inc. 100 100
Advanstar S.A. 100 100
Ventures, Inc.
</TABLE>
THIRD: The terms and conditions of the proposed merger are as follows:
(INCLUDE HERE A STATEMENT OF THE SURRENDER AND ELIMINATION OF ALL SHARES
OWNED BY THE SURVIVING PARENT; AND, IF ALL OUTSTANDING SUBSIDIARY SHARES
ARE NOT OWNED BY PARENT, THE MANNER AND BASIS OF CONVERTING SUCH SHARES
INTO SHARES, BONDS OR OTHER SECURITIES OF THE PARENT, OR THE CASH OR OTHER
CONSIDERATION TO BE PAID FOR SUCH SHARES.)
FORTH: (THE PLAN MAY INCLUDE SUCH OTHER PROVISIONS WITH RESPECT TO THE
PROPOSED MERGER AS THE BOARD CONSIDERS NECESSARY OR DESIRABLE.)
<PAGE>
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The foregoing Plan of Merger was duly adopted by the Board of Directors of
the surviving corporation on _____________________.
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
ADVANSTAR COMMUNICATIONS INC.
(formerly Edgell Communications, Inc.)
Under the Business Corporation Law
of the State of New York
ARTICLE I
Shareholders
------------
Section 1.01. Annual Meeting. The annual meeting of shareholders for the
------------ --------------
election of directors and the transaction of such other business as may come
before it shall be held on such date in each calendar year, not later than the
one hundred twentieth day after the close of the Corporation's preceding fiscal
year, and at such place, within or without the State of New York, as shall be
fixed by the Board of Directors (or by any officer so designated by the Board)
and stated in the notice or waiver of notice of the meeting.
Section 1.02. Special Meetings. Special meetings of the shareholders, for
------------ ----------------
any purpose or purposes, may be called at any time by resolution of the Board of
Directors (or by any officer designated by the Board) and shall be so called
when requested by the holders of not less than 50% of all shares entitled to
vote at such meeting. Special meetings of shareholders shall be held at such
place, within or without the State of New York, as shall be fixed by the Board
of Directors (or such designated officer) and stated in the notice or waiver of
notice of the meeting. At any such special meeting only such business may be
transacted which is related to the purpose or purposes set forth in the notice
required by the next Section 1.03.
<PAGE>
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A special meeting, other than one called at the request of the holders of
not less than 50% of all shares entitled to vote at such meeting, may be
canceled by resolution of the Board of Directors.
Section 1.03. Notice of Meetings of Shareholders. Whenever shareholders
------------ ----------------------------------
are required or permitted to take any action at a meeting, a written notice
thereof shall state the place, date and hour of the meeting, and, unless it is
the annual meeting, shall indicate that it is being issued by or at the
direction of the Board of Directors (or officer designated by the Board to call
the meeting). A notice of a special meeting shall also state the purpose or
purposes for which the meeting is called. A copy of the notice of any meeting
shall be given either personally, by telegraph or by mail, not less than ten nor
more than fifty days before the date of the meeting, to each shareholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, with postage thereon prepaid,
directed to the shareholder at his address as it appears on the record of
shareholders, or, if he shall have filed with the Secretary of the Corporation a
written request that notices to him be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken; however, if after the adjournment the Board fixes a new
record date for the adjourned meeting, a notice of the adjourned meeting shall
be given to each shareholder of record on the new record date entitled to notice
under the next preceding paragraph.
Section 1.04. Waivers of Notice. Notice of meeting need not be given to
------------ -----------------
any shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the
<PAGE>
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meeting. The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver of notice by him.
Section 1.05. Quorum. The holders of a majority of the shares entitled to
------------ ------
vote thereat, present in person or by proxy, shall constitute a quorum at a
meeting of shareholders for the transaction of any business, provided that when
a specified item of business is required to be voted on by a class or series,
voting as a class, the holders of a majority of the shares of such class or
series, present in person or by proxy, shall constitute a quorum for the
transaction of such specified item of business.
When a quorum is once present to organize a meeting, it shall not be broken
by the subsequent withdrawal of any shareholders.
The shareholders present in person or by proxy may adjourn the meeting
despite the absence of a quorum and at any such adjourned meeting at which the
requisite holders of shares shall be present, in person or by proxy, any
business may be transacted which might have been transacted at the meeting as
originally noticed.
Section 1.06. Fixing Record Date. For the purpose of determining the
------------ ------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board may fix, in advance, a date as the record
date for any such determination of shareholders. Such date shall not be more
than fifty nor less than ten days before the date of such meeting, nor more than
fifty days prior to any other action.
<PAGE>
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Section 1.07. List of Shareholders at Meetings. A list of shareholders as
------------ --------------------------------
of the record date, certified by the corporate officer responsible for its
preparation or by a transfer agent, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder. If
the right to vote at any meeting is challenged, the inspectors of election, or
person presiding thereat, shall require such list of shareholders to be produced
as evidence of the right of the persons challenged to vote at such meeting, and
all persons who appear from such list to be shareholders entitled to vote
thereat may vote at such meeting.
Section 1.08. Proxies. Every shareholder entitled to vote at a meeting of
------------ -------
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it except as otherwise provided in Section
609 of the Business Corporation Law.
Section 1.09. Selection and Duties of Inspectors. The Board may appoint
------------ ----------------------------------
in advance of any shareholders' meeting one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at a shareholders' meeting may, and on the request of any
shareholder entitled to vote thereat shall appoint one or more inspectors. In
case any person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
<PAGE>
-5-
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by them
and execute a certificate of any fact found by them. Any report or certificate
made by them shall be prima facie evidence of the facts stated and of the vote
as certified by them.
Unless appointed by the Board or the person presiding at the meeting, as
above provided in this section, inspectors shall be dispensed with at all
meetings of shareholders.
Section 1.10. Qualification of Voters. Except as otherwise provided by
------------ -----------------------
the Certificate of Incorporation of the Corporation, every shareholder shall be
entitled at every meeting of shareholders to one vote for every share standing
in his name on the record of shareholders.
Treasury shares and shares of the Corporation held by any majority-owned
domestic or foreign subsidiary of the Corporation shall not be shares entitled
to vote or to be counted in determining the total number of outstanding shares.
Shares held by an administrator, executor, guardian, conservator,
committee, or other fiduciary, except a trustee, may be voted by him, either in
person or by proxy, without transfer of such shares into his name. Shares held
by a trustee may be voted by him, either in person or by proxy, only after the
shares have been transferred into his name as trustee or into the name of his
nominee.
<PAGE>
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Section 1.11. Vote of Shareholders. Director shall be elected by a
------------ --------------------
plurality of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote in the election. Whenever any corporate action, other
than the election of directors, is to be taken by vote of the shareholders, it
shall, except as otherwise required by the Business Corporation Law or by the
Certificate of Incorporation of the Corporation in conformity with the Business
Corporation Law, be authorized by a majority of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
The vote upon any question at any shareholders' meeting need not be by
ballot.
Section 1.12. Action Without a Meeting. Whenever shareholders are
------------ ------------------------
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of all issued and outstanding shares entitled to vote thereon.
This paragraph shall not be construed to alter or modify the provisions of any
section of the Business Corporation Law or any provision in the Certificate of
Incorporation of the Corporation not inconsistent with the Business Corporation
Law under which the written consent of the holders of less than all outstanding
shares is sufficient for corporate action.
Written consent thus given by the holders of all outstanding shares
entitled to vote shall have the same effect as a unanimous vote of shareholders.
ARTICLE II
Directors
---------
Section 2.01. Management of Business; Qualifications of Directors. The
------------ ---------------------------------------------------
business of the Corporation shall be managed under the direction of the Board of
Directors. Each director shall be at least eighteen years of age but need not
be a shareholder.
<PAGE>
-7-
The Board, in addition to the powers and authority expressly conferred upon
it herein, by statute, by the Certificate of Incorporation of the Corporation
and otherwise, is hereby empowered to exercise all such powers as may be
exercised by the Corporation, except as expressly provided otherwise by the
statutes of the State of New York, by the Certificate of Incorporation of the
Corporation and by these By-Laws.
Section 2.02. Number. The number of directors which shall constitute the
------------ ------
entire Board shall be such number as shall be fixed by action of a majority of
the entire Board from time to time, but no decrease in number shall shorten the
term of any incumbent director. The number of directors constituting the entire
Board shall not be less than three, except that if there are less than three
shareholders, the number of directors may be less than three but not less than
the number of shareholders.
Section 2.03. Election and Term. At each annual meeting of shareholders,
------------ -----------------
directors shall be elected to hold office until the next annual meeting. Each
director shall hold office until the expiration of the term for which he is
elected and until his successor has been elected and qualified, or until his
earlier resignation or removal.
Section 2.04. Resignation. Any director of the Corporation may resign at
------------ -----------
any time by giving written notice to the Board, the President or the Secretary
of the Corporation. Such resignation shall take effect at the time specified
therein, if any, or if no time is specified therein, then upon receipt of such
notice by the addressee; and, unless otherwise provided therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 2.05. Removal. Any member of the Board of Directors may be
------------ -------
removed, with or without cause, at any time prior to the expiration of his term
by a majority vote of the outstanding shares.
<PAGE>
-8-
Section 2.06. Vacancies. Newly created directorships resulting from an
------------ ---------
increase in the number of directors and vacancies occurring in the Board for any
reason except the removal of directors without cause may be filled by vote of a
majority of directors then in office although less than a quorum.
A director elected to fill a vacancy shall be elected to hold office for
the unexpired term of his predecessor.
Section 2.07. Quorum of Directors. At all meetings of the Board a
------------ -------------------
majority of the entire Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the vote of a majority of the
directors present at the time of the vote, if a quorum is present at such time,
shall be the act of the Board except as expressly provided otherwise by the laws
of the State of New York and except as provided in Sections 2.06, 2.11 and 2.14
hereof.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting of the directors to another time and place. Notice of
such adjournment need not be given if such time and place are announced at the
meeting.
Section 2.08. Annual Meetings. The newly elected Board shall meet
------------ ---------------
immediately following the adjournment of the annual meeting of shareholders in
each year at the same place and no notice of such meeting shall be necessary.
Section 2.09. Regular Meetings. Regular meetings of the Board may be held
------------ ----------------
at such time and at such place, within or without the State of New York, as
shall from time to time be fixed by the Board and no notice thereof shall be
necessary.
Section 2.10. Special Meetings. Special meetings of the Board may be
------------ ----------------
called at any time by the President or any Vice-President or by any two
directors or by resolution of the entire
<PAGE>
-9-
Board, at such place within or without the State of New York as shall be fixed
by the person or persons calling the meeting.
Notice of each special meeting, stating the time and place of the meeting,
shall be given by the President or the Secretary to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than forty-eight (48) hours prior to the
meeting, or by mailed letter deposited in the United States mail with postage
thereon prepaid not later than the fifth day prior to the meeting, or on such
shorter notice as the person or persons calling the meeting may deem necessary
or appropriate under the circumstances.
Notice of a special meeting need not be given to any director who submits a
signed waiver of notice whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to him. Notices of special meetings of the Board and waivers thereof
need not state the purpose or purposes of the meeting.
Section 2.11. Action Without a Meeting. Any action required or permitted
------------ ------------------------
to be taken by the Board may be taken without a meeting if all the members of
the Board consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of the
Board shall be filed with the minutes of the proceedings of the Board.
Section 2.12. Action By Means of Conference Telephone. Any one or more
------------ ---------------------------------------
members of the Board may participate in a meeting of the Board by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
<PAGE>
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Section 2.13. Compensation., Directors shall receive such compensation for
------------ -------------
their services in any capacity as may be determined from time to time by the
Board. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
Section 2.14. Committees. The Board, by resolution adopted by a majority
------------ ----------
of the entire Board, may designate from among its members an Executive Committee
and other committees, each consisting of three or more directors, and each of
which, to the extent provided in the resolution, shall have all the authority of
the Board, except that no such committee shall have authority as to the
following matters:
(a) The submission to shareholders of any action that needs
shareholders' authorization under the Business Corporation Law.
(b) The filling of vacancies in the Board or in any committee.
(c) The fixing of compensation of the directors for serving on the
Board or on any committee.
(d) The amendment or repeal of the By-Laws, or the adoption of new
By-Laws.
(e) The amendment or repeal of any resolution of the Board which by
its terms shall not be so amendable or repealable.
The Board may designate one or more directors as alternate members of any
such committee, who may replace any absent member or members at any meeting of
such committee.
Section 2.15. Action of Committees Without a Meeting. Any action required
------------ --------------------------------------
or permitted to be taken by any committee as provided in Section 2.14 hereof may
be taken without a meeting if all the members of the committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the committee shall be filed
with the minutes of the proceedings of the committee.
<PAGE>
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Section 2.16. Action of Committees by Means of Conference Telephone. Any
------------ -----------------------------------------------------
one or more members of any committee may participate in a meeting of the
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
Section 2.17. Interested Directors. No contract or other transaction
------------ --------------------
between the Corporation and one or more of its directors, or between the
Corporation and any other corporation, firm, association or other entity in
which one or more of the Corporation's directors are directors or officers, or
have a substantial financial interest, shall be either void or voidable by
reason alone of such interest or by reason alone that such director or directors
are present at the meeting of the Board, or of a committee thereof, which
approves such contract or transaction, or that his or their votes are counted
for such purpose so long as:
(a) The material facts as to such director's interest in such
contract or transaction and as to any such common directorship,
officership or financial interest are disclosed in good faith or
known to the Board or committee, and the Board or committee
approves such contract or transaction by a vote sufficient for
such purpose without counting the vote or votes of such
interested director or directors; or
(b) The material facts as to such director's interest in such
contract or transaction and as to any such common directorship,
officership or financial interest are disclosed or known to the
shareholders entitled to vote thereon, and such contract or
transaction is approved by vote of the shareholders; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is approved by the Board, a committee
or the shareholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board or of a committee which approves such
contract or transaction.
<PAGE>
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Section 2.18. Loans to Directors. A loan shall not be made by the
------------ ------------------
Corporation to any director unless it is authorized by vote of the shareholders.
For this purpose, the shares of the director who would be the borrower shall not
be shares entitled to vote. A loan made in violation of this section shall be a
violation of the duty to the Corporation of the directors approving it, but the
obligation of the borrower with respect to the loan shall not be affected
thereby.
ARTICLE III
Officers
--------
Section 3.01. Election or Appointment; Number. The officers of the
------------ -------------------------------
Corporation shall be elected or appointed by the Board of Directors and shall be
a President, a Secretary and a Treasurer. The Board of Directors, in its
discretion, may also choose a Chairman of the Board of Directors (who must be a
director) and such number of Vice-Presidents, Assistant Secretaries and
Assistant Treasurers, and such other officers, as the Board may from time to
time determine. Any person may hold two or more offices at the same time,
except (subject to the next sentence) the offices of President and Secretary or,
additionally if there be a Chairman of the Board, the offices of Chairman of the
Board and Secretary. When all of the issued and outstanding stock of the
Corporation is owned by one person, such person may hold all or any combination
of offices. The officers of the Corporation may, but need not, be shareholders
of the Corporation nor, except in the case of the Chairman of the Board of
Directors, need such officers be directors of the Corporation.
Section 3.02. Term. Subject to the provisions of Section 3.03 hereof, all
------------ ----
officers shall be elected or appointed to hold office until the next annual
meeting of the Board, and each officer shall hold office for the term for which
he is elected or appointed and until his successor has been elected or appointed
and qualified or until his earlier resignation or removal.
<PAGE>
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The Board may require any officer to give security for the faithful
performance of his duties.
Section 3.03. Removal. Any officer elected or appointed by the Board may
------------ -------
be removed by the Board with or without cause. The removal of an officer
without cause shall be without prejudice to his contract rights, if any;
however, the election or appointment of an officer shall not of itself create
contract rights.
Section 3.04. General Authority. The officers shall have such authority,
------------ -----------------
duties and powers as may be assigned to them from time to time by the Board, the
Chairman of the Board, if there be one, or the President and, to the extent
consistent therewith and with other provisions of these By-Laws, shall have the
authority, perform the duties and exercise the powers in the management of the
Corporation usually incident to the offices held by them.
Section 3.05. Voting Securities Owned by the Corporation. Powers of
------------ ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, if there be one,
the President or any Vice-President and any such officer may, in the name of and
on behalf of the Corporation, take all such action as any such officer may deem
advisable to vote in person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board may, by
resolution, from time to time confer like powers upon any other person or
persons.
Section 3.06. Chairman of the Board of Directors. The Chairman of the
------------ ----------------------------------
Board of Directors, if there be one, shall preside at all meetings of the
shareholders and of the Board of
<PAGE>
-14-
Directors. He shall be the Chief Executive Officer of the Corporation, unless
the Board of Directors designates the President as the Chief Executive Officer,
and except where by law the signature of the President is required, the Chairman
of the Board of Directors shall possess the same power as the President to sign
all contracts, certificates and other instruments of the Corporation which may
be authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman of the Board of
Directors shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 3.07. President. The President shall, subject to the control of
------------ ---------
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President.
In the absence or disability of the Chairman of the Board of Directors, or if
there be none, the President shall preside at all meetings of the shareholders
and the Board of Directors. If there be no Chairman of the Board of Directors,
or if the Board of Directors designates the President as Chief Executive Officer
of the Corporation, the President shall be the Chief Executive Officer of the
Corporation. The President shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors.
<PAGE>
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Section 3.08. Vice-Presidents. At the request of the President or in his
------------ ---- ----------
absence or in the event of his inability or refusal to act, and if there be no
Chairman of the Board of Directors, the Vice-President or the Vice-Presidents if
there is more than one (in the order designated by the Board of Directors) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice-
President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of
the Board of Directors and no Vice-President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President,
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
Section 3.09. Secretary. The Secretary shall attend all meetings of the
------------ ---------
Board of Directors and all meetings of the shareholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision he shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
shareholders and special meetings of the Board of Directors, and if there be no
Assistant Secretary, then the Board of Directors, the Chairman of the Board, if
there be one, or the President may choose another officer to cause such notice
to be given. The Secretary shall have custody of the seal of the Corporation
and the Secretary or any Assistant Secretary, if there be one, shall have
authority to affix the same to any instrument requiring it and when so affixed,
<PAGE>
-16-
it may be attested by the signature of the Secretary or by the signature of any
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by his signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records required by law to be
kept or filed are properly kept or filed, as the case may be.
Section 3.10. Treasurer. The Treasurer shall have the custody of the
------------ ---------
corporate funds and securities and shall keep full and accurate accounts of
receipts an disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation.
Section 3.11. Assistant Secretaries. Except as may be otherwise provided
------------ ---------------------
in these By-Laws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President, any Vice-President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
Section 3.12. Assistant Treasurers. Assistant Treasurers, if there be
------------ --------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice-President,
if there be one, or the Treasurer, and in the absence
<PAGE>
-17-
of the Treasurer or in the event of his disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer.
Section 3.13. Other Officers. Such other officers as the Board of
------------ --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE IV
Capital Stock
-------------
Section 4.01. Stock Certificates. The shares of the Corporation shall be
------------ ------------------
represented by certificates signed by the President or a Vice-President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
of the Corporation, and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation itself or its employee. If any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
Each certificate representing shares shall also set forth such additional
material as is required by subdivisions (b) and (c) of Section 508 of the
Business Corporation Law.
Section 4.02. Transfers. Stock of the Corporation shall be transferable
------------ ---------
in the manner prescribed by the laws of the State of New York and in these By-
Laws. Transfers of stock shall
<PAGE>
-18-
be made on the books of the Corporation only by the person named in the
certificate or by attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate or certificates shall be issued.
Section 4.03. Registered Holders. The Corporation shall be entitled to
------------ ------------------
treat and shall be protected in treating the persons in whose names shares or
any warrants, rights or options stand on the record of shareholders, warrant
holders, rights holders or option holders, as the case may be, as the owners
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, any such share, warrant, right or option on the
part of any other person, whether or not the Corporation shall have notice
thereof, except as expressly provided otherwise by these By-Laws and the laws of
the State of New York.
Section 4.04. New Certificates. The Corporation may issue a new
------------ ----------------
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the directors may, in their
discretion, require the owner of the lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient (in the
judgment of the directors) to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss or theft or destruction of
any such certificate or the issuance of such new certificate. A new certificate
may be issued without requiring any bond when, in the judgment of the directors,
it is proper so to do.
Section 4.05. Dividends. The Corporation may declare and pay dividends or
------------ ---------
make other distributions in cash or its bonds or its property, including the
shares or bonds of other corporations, on its outstanding shares, except when
currently the Corporation is insolvent or would thereby be made insolvent, or
when the declaration, payment or distribution would be contrary to any
restrictions contained in the Certificate of Incorporation of the Corporation.
<PAGE>
-19-
Dividends may be declared or paid and other distributions may be made out of
surplus only, so that the net assets of the Corporation remaining after such
declaration, payment or distribution shall at least equal the amount of its
stated capital. When any dividend is paid or any other distribution is made, in
whole or in part, from sources other than earned surplus, it shall be
accompanied by a written notice (a) disclosing the amounts by which such
dividend or distribution affects stated capital, capital surplus and earned
surplus, or (b) if such amounts are not determinable at the time of such notice,
disclosing the approximate effect of such dividend or distribution upon stated
capital, capital surplus and earned surplus and stating that such amounts are
not yet determinable.
ARTICLE V
Financial Notices to Shareholders
---------------------------------
Section 5.01. Cancellation of Reacquired Shares. When reacquired shares
------------ ---------------------------------
other than converted shares are cancelled, the stated capital of the Corporation
shall be reduced by the amount of stated capital then represented by such shares
plus any stated capital not theretofore allocated to any designated class or
series which is thereupon allocated to the shares cancelled. The amount by
which stated capital has been reduced by cancellation of reacquired shares
during a stated period of time shall be disclosed in the next financial
statement covering such period that is furnished by the Corporation to all its
shareholders or, if practicable, in the first notice of dividend or share
distribution that is furnished to the holders of each class or series of its
shares between the end of the period and the next such financial statement, and
in any event to all its shareholders within six months of the date of the
reduction of capital.
Section 5.02. Reduction of Stated Capital. When a reduction of stated
------------ ---------------------------
capital has been effected under Section 516 of the Business Corporation Law, the
amount of such reduction shall
<PAGE>
-20-
be disclosed in the next financial statement covering the period in which such
reduction is made that is furnished by the Corporation to all its shareholders
or, if practicable, in the first notice of dividend or share distribution that
is furnished to the holders of each class or series of its shares between the
date of such reduction and the next such financial statement, and in any event
to all its shareholders within six months of the date of such reduction.
ARTICLE VI
Duties of Directors and Officers; Indemnification
-------------------------------------------------
Section 6.01. Duties of Directors. A director shall perform his duties as
------------ -------------------
a director, including his duties as a member of any committee of the Board upon
which he may serve, in good faith and with that degree of care which an
ordinarily prudent person in a like position would use under similar
circumstances. In performing his duties, a director shall be entitled to rely
on information, opinions, reports or statements including financial statements
and other financial data, in each case prepared or presented by:
(1) one or more officers or employees (i) of the Corporation or (ii)
of any other corporation of which at least fifty percentum of the
outstanding shares of stock entitling the holders thereof to vote for the
election of directors is owned directly or indirectly by the Corporation or
(iii) of any other corporation of any type or kind, domestic or foreign, or
of any partnership, joint venture, trust, employee benefit plan or other
enterprise which such director has served in any capacity at the request of
the Corporation, whom the director believes to be reliable and competent in
the matters presented, or
(2) counsel, public accountants or other persons as to matters which
the director believes to be within such person's professional or expert
competence, or
<PAGE>
-21-
(3) a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Certificate of
Incorporation or the By-Laws, as to matters within its designated
authority, which committee the director believes to merit confidence.
so long as in so relying he shall be acting in good faith and with such degree
of care, but he shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance to be
unwarranted. A person who so performs his duties shall have no liability by
reason of being or having been a director of the Corporation.
Section 6.02. Duties of Officers. An officer shall perform his duties as
------------ ------------------
an officer in good faith and with that degree of care which an ordinarily
prudent person in a like position would use under similar circumstances. In
performing his duties, an officer shall be entitled to rely on information,
opinions, reports or statements including financial statements and other
financial data, in each case prepared or presented by:
(1) one or more other officers or employees (i) of the Corporation or
(ii) of any other corporation of which at least fifty percentum of the
outstanding shares of stock entitling the holders thereof to vote for the
election of directors is owned directly or indirectly by the Corporation or
(iii) of any other corporation of any type or kind, domestic or foreign, or
of any partnership, joint venture, trust, employee benefit plan or other
enterprise which such officer has served in any capacity at the request of
the Corporation, whom the officer believes to be reliable and competent in
the matters presented, or
(2) counsel, public accountants or other persons as to matters which
the officer believes to be within such person's professional or expert
competence, so long as
<PAGE>
-22-
in so relying he shall be acting in good faith and with such degree of
care, but he shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
to be unwarranted. A person who so performs his duties shall have no
liability by reason of being or having been an officer of the Corporation.
Section 6.03. Indemnification of Directors, Officers, Employees and Agents
------------ ------------------------------------------------------------
in Actions by or in the Right of the Corporation.
- ------------------------------------------------
(a) Subject to Section 6.05, the Corporation shall indemnify any person,
made a party to an action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a director, officer, employee or agent of the Corporation, against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense of such action, or in connection
with an appeal therein, except in relation to matters as to which a director or
officer is adjudged to have breached his duty to the Corporation under Section
6.01 or under Section 6.02, as the case may be, or in which an employee or agent
is adjudged to have breached his duty to the Corporation, as that duty may from
time to time be defined.
(b) The indemnification authorized under paragraph (a) shall in no case
include:
(1) amounts paid in settling or otherwise disposing of a threatened
action, or a pending action with or without court approval, or
(2) expenses incurred in defending a threatened action, or a pending
action which is settled or otherwise disposed of without court approval.
Section 6.04. Indemnification of Directors, Officers, Employees and Agents
------------ ------------------------------------------------------------
in Other Actions or Proceedings.
- -------------------------------
<PAGE>
-23-
(a) Subject to Section 6.05, the Corporation shall indemnify any person,
made, or threatened to be made, a party to an action or proceeding other than
one by or in the right of the Corporation to procure a judgment in its favor,
whether civil or criminal, including an action by or in the right of any other
corporation of any type or kind, domestic or foreign, of any partnership, joint
venture, trust, employee benefit plan or other enterprise, which any director,
officer, employee or agent of the Corporation served in any capacity at the
request of the Corporation, by reason of the fact that he, his testator or
intestate, was a director, officer, employee or agent of the Corporation, or
served such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees
actually and necessarily incurred as a result of such action or proceeding, or
any appeal therein, if such director, officer, employee or agent of the
Corporation acted, in good faith, for a purpose which he reasonably believed to
be in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation and, in criminal actions or proceedings,
in addition, had no reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
---- ----------
equivalent, shall not in itself create a presumption that any such director,
officer, employee or agent of the Corporation did not act, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of service for
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the Corporation
or that he had reasonable cause to believe that his conduct was unlawful.
<PAGE>
-24-
(c) For the purpose of this Section, the Corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the Corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Corporation.
Section 6.05. Payment of Indemnification Other than by Court Award.
------------ ----------------------------------------------------
(a) A person who has been wholly successful, on the merits or otherwise,
in the defense of a civil or criminal action or proceeding of the character
described in Section 6.03 or 6.04 shall be entitled to indemnification as
authorized in such sections.
(b) Except as provided in paragraph (a), any indemnification under Section
6.03 or 6.04 unless ordered by a court under Section 725 of the Business
Corporation Law of New York, shall be made by the Corporation, only if
authorized in the specific case:
(1) by the Board acting by a quorum consisting of directors who are
not parties to such action or proceeding upon a finding that the director,
officer, employee or agent has met the standard of conduct set forth in
Section 6.03 or 6.04, as the case may be, or,
(2) if a quorum under subparagraph (1) is not obtainable with due
diligence:
(A) by the Board upon the opinion in writing of independent
legal counsel that indemnification is proper in the circumstances
because the applicable
<PAGE>
-25-
standard of conduct set forth in such sections has been met by such
director, officer, employee or agent, or
(B) by the shareholders upon a finding that the director,
officer, employee or agent has met the applicable standard of conduct
set forth in such sections.
It is the policy of the Corporation that indemnification of the persons
specified in Sections 6.03 and 6.04 shall be made to the fullest extent
permitted by law.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the Corporation in advance of the final disposition of
such action or proceeding if authorized under paragraph (b).
Section 6.06. Other Provisions Affecting Indemnification of Directors,
------------ --------------------------------------------------------
Officers, Employees and Agents.
- ------------------------------
(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the Corporation under paragraph (c) of Section
6.05 or allowed by a court shall be repaid in case the person receiving such
advancement or allowance is ultimately found, under the procedure set forth in
this Article VI or in Section 725 of the New York Business Corporation Law, not
to be entitled to indemnification or, where indemnification is granted, to the
extent the expenses so advanced by the Corporation or allowed by the court
exceed the indemnification to which he is entitled.
(b) No indemnification, advancement or allowance shall be made under this
Article VI in any circumstance where it appears:
(1) that the indemnification would be inconsistent with a provision
of the Certificate of Incorporation, a By-Law, a resolution of the Board or
of the shareholders,
<PAGE>
-26-
an agreement or other proper corporate action, in effect at the time of the
accrual of the alleged cause of action asserted in the threatened or
pending action or proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(2) if there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect to
indemnification expressly imposed by the court in approving the settlement.
(c) If, under this Article VI, any expenses or other amounts are paid by
way of indemnification, otherwise than by court order or action by the
shareholders, the Corporation shall, not later than the next annual meeting of
shareholders unless such meeting is held within three months from the date of
such payment, and, in any event, within fifteen months from the date of such
payment, mail to its shareholders of record at the time entitled to vote for the
election of directors a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
Section 6.07. Non-Exclusivity and Survival of Indemnification. The
------------ -----------------------------------------------
provisions of this Article VI shall not be deemed to preclude the
indemnification of any person who is not specified in Section 6.03 or 6.04 but
whom the Corporation has the power or obligation to indemnify under the
provisions of the Business Corporation Law of New York, or otherwise. The
indemnification provided by this Article VI shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors, and administrators of such person. The
indemnification provided by this Article VI shall not be deemed exclusive of any
other right to which employees or agents (other than officers or directors) of
the Corporation seeking indemnification may be entitled under any By-Law,
<PAGE>
-27-
agreement, contract, vote of shareholders or disinterested directors or pursuant
to the direction (howsoever embodied) of any court of competent jurisdiction or
otherwise, both as to actions in their official capacity and as to actions in
another capacity while serving the Corporation.
Section 6.08. Insurance for Indemnification of Directors, Officers,
------------ -----------------------------------------------------
Employees and Agents.
- --------------------
(a) Subject to paragraph (b) below, the Corporation shall have the power
to purchase and maintain insurance:
(1) to indemnify the Corporation for any obligation which it incurs
as a result of the indemnification of directors, officers, employees and
agents under the provisions of this Article VI, and
(2) to indemnify directors, officers, employees and agents in
instances in which they may be indemnified by the Corporation under the
provisions of this Article VI, and
(3) to indemnify directors, officers and employees and agents in
instances in which they may not otherwise be indemnified by the Corporation
under the provisions of this Article VI provided the contract of insurance
covering such directors, officers employees and agents provides, in a
manner acceptable to the superintendent of insurance, for a retention
amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment, other
than cost of defense, to or on behalf of any director, officer or employee or
agent:
(1) if a judgment or other final adjudication adverse to the insured
director, officer, employee or agent establishes that his acts of active
and deliberate dishonesty
<PAGE>
-28-
were material to the cause of action so adjudicated, or that he personally
gained in fact a financial profit or other advantage to which he was not
legally entitled, or
(2) in relation to any risk the insurance of which is prohibited
under the insurance law of the State of New York.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The Corporation shall, within the time and to the persons provided in
paragraph (c) of Section 6.06, mail a statement in respect of any insurance it
has purchased or renewed under this Section, specifying the insurance carrier,
date of the contract, cost of the insurance, corporate positions insured, and a
statement explaining all sums, not previously reported in a statement to
shareholders, paid under any indemnification insurance contract.
Section 6.09. Meaning of "Corporation" for Purposes of Article VI. For
------------ ---------------------------------------------------
purposes of this Article VI, references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents so that any person who is
or was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee benefit plan or
other enterprise, shall stand in the same position under the provisions of this
Article VI with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
<PAGE>
-29-
ARTICLE VII
Miscellaneous
-------------
Section 7.01. Offices. The principal office of the Corporation shall be
------------ -------
in the City of New York, County of New York, State of New York or such other
place within the State of New York as may from time to time be designated by the
Board of Directors. The Corporation may also have offices at other places
within or without the State of New York.
Section 7.02. Seal. The Corporate seal shall have inscribed thereon the
------------ ----
name of the Corporation, the year of its incorporation and the words "Corporate
Seal New York"
Section 7.03. Checks. All checks or demands for money shall be signed by
------------ ------
such person or persons as the Board of Directors may from time to time
determine.
Section 7.04. Books and Records. The Corporation shall keep correct and
------------ -----------------
complete books and records of account and shall keep minutes of the proceedings
of its shareholders, Board of Directors and Executive Committee, if any, and
shall keep at the office of the Corporation in New York State or at the office
of its transfer agent or registrar in New York State, a record containing the
names and addresses of all shareholders, the number and class of shares held by
each and the dates when they respectively became the owners of record thereof.
Any of the foregoing books, minutes or records may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
Section 7.05. When Notice of Lapse of Time Unnecessary; Notices Dispensed
------------ -----------------------------------------------------------
With When Delivery is Prohibited. Whenever, under the Business Corporation Law
- --------------------------------
or the Certificate of Incorporation of the Corporation or these By-Laws or by
the terms of any agreement or instrument, the Corporation or the Board of
Directors or any committee thereof is authorized to take any action after notice
to any person or persons or after the lapse of a prescribed period of
<PAGE>
-30-
time, such action may be taken without notice and without the lapse of such
period of time, if at any time before or after such action is completed the
person or persons entitled to such notice or entitled to participate in the
action to be taken or, in the case of a shareholder, by his attorney-in-fact,
submit a signed waiver of notice of such requirements.
Whenever any notice or communication is required to be given to any person
by the Business Corporation Law, the Certificate of Incorporation of the
Corporation or these By-Laws, or by the terms of any agreement or instrument, or
as a condition precedent to taking any corporate action and communication with
such person is then unlawful under any statute of the State of New York or of
the United States or any regulation, proclamation or order issued under said
statutes, then the giving of such notice or communication to such person shall
not be required and there shall be no duty to apply for license or other
permission to do so. Any affidavit, certificate or other instrument which is
required to be made or filed as proof of the giving of any notice or
communication required under the Business Corporation Law shall, if such notice
or communication to any person is dispensed with under this paragraph, include a
statement that such notice or communication was not given to any person with
whom communication is unlawful. Such affidavit, certificate or other instrument
shall be as effective for all purposes as though such notice or communication
had been personally given to such person.
Section 7.06. Entire Board. As used in these By-Laws, the term "entire
------------ ------------
Board" means the total number of directors which the Corporation would have if
there were no vacancies.
Section 7.07. Amendment of By-Laws. These By-Laws may be amended or
------------ --------------------
repealed and new By-Laws adopted by the Board of Directors or by vote of the
holders of the shares at the time entitled to vote in the election of any
directors, except that any action by the Board changing
<PAGE>
-31-
the number of directors shall require the vote of a majority of the entire Board
and except that any By-Laws adopted by the Board may be amended or repealed by
the shareholders entitled to vote thereon as provided in the Business
Corporation Law.
If any By-Law regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of the
next meeting of shareholders for the election of directors the By-Laws so
adopted, amended or repealed, together with a concise statement of the changes
made.
Section 7.08. Section Headings. The headings of the Articles and Sections
------------ ----------------
of these By-Laws have been inserted for convenience of reference only and shall
not be deemed to be a part of these By-Laws.
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
ADVANSTAR HOLDINGS, INC.
WITH AND INTO
AHI HOLDING CORP.
The undersigned, being a duly authorized officer of AHI HOLDING CORP., a
Delaware corporation (the "Corporation") does hereby certify, pursuant to
Section 253 of the General Corporation Law of the State of Delaware, to the
following information relating to the merger of ADVANSTAR HOLDINGS, INC., a
Delaware corporation ("Advanstar Holdings"), with and into the Corporation:
1. The Corporation was incorporated on April 11, 1996 pursuant to and in
accordance with the General Corporation Law of the State of Delaware.
2. The Corporation owns 100% of the outstanding shares of capital stock,
$.01 par value per share, of Advanstar Holdings, a corporation incorporated on
November 19, 1993 pursuant to and in accordance with the General Corporation Law
of the State of Delaware.
3. The Board of Directors of the Corporation unanimously consented on
April 7, 1998 to the adoption of the following resolutions, which resolutions
provided that Advanstar Holdings be merged with and into the Corporation:
RESOLVED: That, the Corporation merge (the "Merger") into itself Advanstar
Holdings, Inc., its wholly-owned subsidiary and a Delaware
Corporation ("Holdings"); that the Agreement and Plan of Merger by
and between the Corporation and Holdings, in substantially the form
attached hereto as Exhibit A (the "Agreement and Plan of Merger"),
---------
be, and it hereby is, adopted and approved; that; as provided in the
Agreement and Plan of Merger, the Certificate of Incorporation be
amended as of the effective time of the Merger so as to change the
name of the Corporation to Advanstar Holdings, Inc.; and that the
Chairman and Chief Executive Officer of the Corporation is hereby
authorized, acting singly, to execute and deliver the Agreement and
Plan of Merger in the name and on behalf of the Corporation, with
such additions, deletions or changes therein as the Chairman and
Chief Executive Officer may, acting alone, in his sole discretion,
deem necessary, desirable, convenient or appropriate and consistent
with the best interests of the Corporation, his execution and
delivery thereof to be conclusive evidence of his authority to so act
and of this approval thereof.
RESOLVED: That, the officers of the Corporation are hereby directed to make,
execute and acknowledge a Certificate of Ownership and Merger and to
<PAGE>
cause the same to be filed in the office of the Secretary of State of
Delaware and to do all acts and things whatsoever, whether within or
without the State of Delaware, which may be necessary or proper to
effect the Merger and the foregoing resolution; and that the Merger
shall become effective upon the effective filing of all documents or
instruments necessary to perfect the Merger pursuant to the
requirements of the General Corporation Law of the State of Delaware
and the laws of the State of Delaware.
RESOLVED: That the officers of the Corporation be, and each of the
officers acting alone hereby is, authorized and empowered, for and on
behalf of the Corporation, to execute and deliver any and all other
documents, papers or instruments and to do or cause to be done any
and all such acts and things as they, or any of them, may deem
necessary, appropriate or desirable in order to enable the
Corporation fully and promptly to carry out the purposes and intents
of the foregoing resolutions.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Certificate of
Ownership and Merger to be duly executed and delivered on behalf of the
Corporation this 10th day of June, 1998.
AHI HOLDING CORP.
By:/s/ Robert L. Krakoff
___________________________
Robert L. Krakoff
Chairman and Chief Executive Officer
ATTEST:
/s/ David W. Montgomery
__________________________
David W. Montgomery
Secretary
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of the 10th
day of June, 1998 by and between AHI Holding Corp., a corporation organized
under the laws of the State of Delaware ("AHI"), and Advanstar Holdings, Inc., a
corporation organized under the laws of the State of Delaware and a wholly-owned
subsidiary of AHI ("Holdings"). The two corporations are hereinafter sometimes
called the "Constituent Corporations." Holdings is hereinafter also sometimes
referred to as the "Merged Corporation," and AHI is hereinafter also sometimes
referred to as the "Surviving Corporation."
WITNESSETH THAT:
WHEREAS, the Constituent Corporations deem it advisable and generally
to the welfare of the Constituent Corporations that Holdings be merged with and
into AHI under the terms and conditions hereinafter set forth, such merger to be
effected pursuant to the statutes of the State of Delaware; and
WHEREAS, AHI by its Certificate of Incorporation has an authorized
capital stock consisting of 20,000,000 shares of Common Stock, $.01 par value
per share, of which 16,733,333 shares of such Common Stock are now issued and
outstanding; and
WHEREAS, Holdings by its Certificate of Incorporation has an
authorized capital stock consisting of 3,000,000 shares of Common Stock, no par
value, of which 100 shares are now issued and outstanding, all of which are
owned solely by AHI, and 100,000 shares of Preferred Stock, $.01 par value per
share, of which no shares are outstanding; and
NOW, THEREFORE, the Constituent Corporations, parties to this
Agreement, in consideration of the mutual covenants, agreements and provisions
hereinafter contained, do hereby prescribe the terms and conditions of such
merger and mode of carrying the same into effect as follows:
FIRST: AHI hereby merges into itself Holdings and Holdings shall be
and hereby is merged into AHI, which shall be the Surviving Corporation. The
separate existence of Holdings shall cease at the effective time of the merger,
except insofar as it may be continued by law or in order to carry out the
purposes of this Agreement and except as continued in the Surviving Corporation.
SECOND: The Certificate of Incorporation of AHI, as in effect at the
time of the merger provided for in this Agreement, shall continue in full force
and effect as the Certificate of Incorporation of the Surviving Corporation
until the same shall be altered, amended or repealed as provided therein or in
accordance with the law; provided that the
<PAGE>
Certificate of the AHI shall be amended at the effective time of the merger to
provide the name of the Surviving Corpoartion shall be Advanstar Holdings, Inc.
THIRD: The effect of the Merger on the outstanding shares of the
capital stock of the Merged Corporation shall be as follows:
(a) Each share of Common Stock of the Merged Corporation which shall
be outstanding at the effective time of the merger, and all rights in respect
thereof shall, without any further action on the part of anyone, be canceled.
(b) After the effective time of the merger, each holder of a
certificate or certificates which theretofore represented shares of Common Stock
of the Merged Corporation shall cease to have any rights as a stockholder of the
Merged Corporation except as such are expressly reserved to such stockholder by
statute.
FOURTH: The terms and conditions of the merger are as follows :
(a) The by-laws of AHI as they shall exist at the effective time of
the merger shall be and remain the by-laws of the Surviving Corporation until
the same shall be altered, amended and repealed as therein provided or in
accordance with law.
(b) The directors and officers of AHI shall continue in office until
the next annual meeting of stockholders or directors, respectively, and until
their successors shall have been elected and qualified.
(c) At and after the effective time of the merger, the Surviving
Corporation shall succeed to and possess, without further act or deed, all the
rights, privileges, obligations, powers and franchises, both public and private,
and all of the property, real, personal and mixed, of each of the Constituent
Corporations; all debts due to either of the Constituent Corporations on
whatever account, as well as for stock subscriptions, shall be vested in the
Surviving Corporation; all claims, demands, property, rights, privileges, powers
and franchises and every other interest of either of the Constituent
Corporations shall be as effectively the property of the Surviving Corporation
as they were of the respective Constituent Corporations; the title to any real
estate vested by deed or otherwise in either of the Constituent Corporations
shall not revert or be in any way impaired by reason of the merger, but shall be
vested in the Surviving Corporation; all rights of creditors and all liens upon
any property of either of the Constituent Corporations shall be preserved
unimpaired; all debts, liabilities and duties of the respective Constituent
Corporations shall thenceforth attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it; and the Surviving Corporation shall
indemnify and hold harmless the officers and directors of each of the
Constituent Corporations against all such debts, liabilities and duties and
against all claims and demands arising out of the merger.
<PAGE>
(d) As and when requested by the Surviving Corporation or by its
successors or assigns, the Merged Corporation will execute and deliver or cause
to be executed and delivered all such deeds and instruments and will take or
cause to be taken all such further action that the Surviving Corporation may
deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of any property of either of the Constituent
Corporations acquired by the Surviving Corporation by reason or as a result of
the merger herein provided for and otherwise to carry out the intent and
purposes hereof, and the officers and directors of the Merged Corporation and
the officers and directors of the Surviving Corporation are fully authorized in
the name of the Merged Corporation or otherwise to take any and all such action.
(e) This Agreement shall not be submitted to the stockholders of each
of the Constituent Corporations as permitted by law and specifically by Section
253 of the General Corporation Law of the State of Delaware (the "DGCL"). The
merger shall take effect when any and all documents or instruments necessary to
perfect the merger, pursuant to the requirements of the DGCL, are accepted for
filing by the Secretary of State of the State of Delaware.
(f) This Agreement may be terminated or abandoned by the mutual
consent of the Constituent Corporations, each acting by its Board of Directors
prior to the effective time of the merger. In the event of such termination or
abandonment, this Agreement shall become wholly void and of no effect and there
shall be no further liability or obligation hereunder on the part of either of
the Constituent Corporations or of its Board of Directors or stockholders.
(g) All corporate acts, plans, policies, approvals and authorizations
of Holdings, its stockholders, Board of Directors, committees elected or
appointed by the Board of Directors, officers and agents, which were valid and
effective immediately prior to the effective time of the merger, shall be taken
for all purposes as the acts, plans, policies, approvals and authorizations of
the Surviving Corporation and shall be effective and binding thereon as they
were on Holdings. The employees of Holdings shall become the employees of the
Surviving Corporation and continue to be entitled to the same rights and
benefits they enjoyed as employees of Holdings.
(h) From the effective time of the merger, the officers and directors
of the Surviving Corporation are hereby authorized in the name of the
corporations that were the Constituent Corporations to execute, acknowledge and
deliver all instruments and do all things as may be necessary or desirable to
vest in the Surviving Corporation any property or rights of either of the
Constituent Corporations or to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors, have caused these presents to be executed by the Chairman
and Chief Executive Officer and attested by the Secretary, as indicated below,
of each party hereto.
AHI HOLDING CORP.
By:/s/ Robert L. Krakoff
____________________________________
Robert L. Krakoff
Chairman and Chief Executive Officer
ATTEST:
By: /s/ David W. Montgomery
__________________________
David W. Montgomery
Secretary
ADVANSTAR HOLDINGS, INC.
By:/s/ Robert L. Krakoff
_______________________________
Robert L. Krakoff
Chairman and Chief Executive Officer
ATTEST:
By: /s/ David W. Montgomery
__________________________
David W. Montgomery
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
AHI HOLDING CORP.
AHI Holding Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: Article Fourth of the Certificate of Incorporation of this
corporation be amended to read as follows:
FOURTH: This corporation is authorized to issue only one class of
shares of stock and the total number of shares which this corporation
is authorized to issue is 20,000 with a par value of $0.01 per share.
Upon the amendment of this article to read as herein set forth, each
outstanding share is split up and converted into 100 shares.
SECOND: That said amendment to the Certificate of Incorporation
herein certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware and has been
consented to in writing by the stockholders, and written notice has been given,
in accordance with Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Mitchell Cohen, its authorized officer, this 20th day of May, 1997.
--------------
/s/ Mitchell Cohen
By: ___________________________
Mitchell Cohen
Title: Vice President
<PAGE>
CERTIFICATE OF CORRECTION OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AHI HOLDING CORP.
AHI Holding Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, pursuant to
Section 103 (f) of the General Corporation Law of the State of Delaware:
FIRST: The Certificate of Amendment of the Certificate of
Incorporation of AHI Holding Corporation dated May 28, 1996 (the "Amendment")
inaccurately states such Amendment, in that such certificate purported to change
the par value of the corporation's common stock from $0.01 per share to shares
without par value.
SECOND: Article First of the Certificate of Amendment is corrected as
follows:
FIRST: That the Board of Directors of said corporation at a
meeting duly convened and held, adopted the following resolution:
RESOLVED, that the Board of Directors hereby declares it
advisable and in the best interest of the corporation that
Article Fourth of the Certificate of Incorporation be amended to
read as follows:
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is 200,000 with a par value of
$0.01 per share.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by the undersigned officers this 30th day of May, 1996.
/s/ Mitchell R. Cohen
By: ___________________________
Mitchell R. Cohen
Title: Vice President
ATTEST:
/s/ Paul J. Mundie
_________________________
By: Paul J. Mundie
Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AHI HOLDING CORP.
AHI Holding Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation at a meeting
duly convened and held, adopted the following resolution:
RESOLVED, that the Board of Directors hereby declares it
advisable and in the best interest of the corporation that
Article Fourth of the Certificate of Incorporation be amended to
read as follows:
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is 200,000 without par value.
SECOND: That the said amendment has been consented to and authorized
by the holders of a majority of the issued and outstanding stock entitled to
vote by written consent given in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 and 228 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by ______________ this 28th day of May, 1996.
----
/s/ Mitchell R. Cohen
_____________________________
By: Mitchell R. Cohen,
Vice President
ATTEST:
_______________________________
By: Timothy G. _________
<PAGE>
CERTIFICATE OF INCORPORATION
OF
AHI HOLDING CORP.
FIRST The name of the corporation is AHI Holding Corp.
-----
SECOND. The address of the corporation's registered office in the
------
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle.
Its registered agent at that address is Corporation Service Company.
THIRD. The nature of the business or purposes to be conducted or
-----
promoted by the corporation is to engage in any lawful act or activity of which
corporation may be organized under the General Corporation Law of the State of
Delaware (the "GCL").
FOURTH. The total number of shares of all classes of capital stock
------
which the corporation is authorized to issue is 3,000 shares of common stock
with a par value of $0.01 per share.
FIFTH. The name and mailing address of the corporation's sole
-----
incorporator is:
Bonnie Thompson
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, CA 94104
SIXTH. The corporation shall have a perpetual existence.
-----
SEVENTH. No director of the corporation shall be personally liable to
-------
the corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the GLC or (iv) for any
transaction from which the director derived any improper personal benefit. If
the GCL is amended to authorize or require corporate action that further
eliminates or limits the personal liability of directors, then the liability of
the directors of the corporation shall be eliminated or limited to the fullest
extent permitted by the GCL, as so amended. Any repeal or modification of this
Article SEVENTH shall not adversely affect any right or protection of a director
of the corporation existing at the time of the repeal or modification.
EIGHTH. In addition to all powers granted to the board of directors
------
under the GCL:
A. The board of directors of the corporation is expressly authorized
to make, alter or repeal the by-laws of the corporation.
<PAGE>
B. Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
C. The books of the corporation may be kept at such place within or
without the State of Delaware as the by-laws of the corporation may provide or
as may be designated from time to time by the board of directors of the
corporation.
NINTH. The corporation reserves the right to amend or repeal any provision
-----
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by statute. All rights conferred upon the corporation's stockholders
are granted subject to this reservation.
* * *
Being the sole incorporator, for the purpose of forming a corporation
pursuant to the GCL, I do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts stated above are true, and
accordingly have hereunto set my hand on April 11, 1996.
/s/ Bonnie Thompson
_________________________________
Bonnie Thompson,
Sole Incorporator
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BY-LAWS
ADVANSTAR HOLDINGS, INC.
ARTICLE I - STOCKHOLDERS
--------- ------------
Section 1. Annual Meeting.
--------- --------------
An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within thirteen months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders.
Section 2. Special Meetings.
--------- ----------------
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of Directors
or the chief executive officer and shall be held at such place, on such date,
and at such time as they or he or she shall fix.
Section 3. Notice of Meetings.
--------- ------------------
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten nor more than sixty days before
the date on which the meeting is to be held, to each stockholder entitled to
vote at such meeting, except as otherwise provided herein or required by law
(meaning, here and hereinafter, as required from time to time by the Delaware
General Corporation Law or the Certificate of Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
--------- ------
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law.
<PAGE>
-2-
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 5. Organization.
--------- ------------
Such person as the Board of Directors may have designated or, in the
absence of such a person, the chief executive officer of the Corporation or, in
his or her absence, such person as may be chosen by the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 6. Conduct of Business.
--------- -------------------
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
Section 7. Proxies and Voting.
--------- ------------------
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his or her name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be a voice vote; provided, however, that upon
demand therefore by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.
<PAGE>
-3-
Section 8. Stock List.
--------- ----------
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
--------- ------------------------------------------
Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted.
ARTICLE II - BOARD OF DIRECTORS
---------- ------------------
Section 1. Number and Term of Office.
--------- -------------------------
The number of directors who shall constitute the whole board shall be such
number as the Board of Directors shall at the time have designated, except that
in the absence of any such designation, such number shall be four (4). Each
director shall be elected for a term of one year and until his or her successor
is elected and qualified, except as otherwise provided herein or required by
law.
Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.
Section 2. Vacancies.
--------- ---------
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although
<PAGE>
-4-
less than a quorum may elect a successor for the unexpired term and until his or
her successor is elected and qualified.
Section 3. Regular Meetings.
--------- ----------------
Regular meetings or of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
--------- ----------------
Special meetings of the Board of Directors may be called by one-third of
the directors then in office (rounded up to the nearest whole number) or by the
chief executive officer and shall be held at such place, on such date, and at
such time as they or he or she shall fix. Notice of the place, date, and time
of each such special meeting shall be given each director by whom it is not
waived by mailing written notice not less than five days before the meeting or
by telegraphing the same not less than twenty-four hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
Section 5. Quorum.
--------- ------
At any meeting of the Board of Directors, a majority of the total number of
the whole Board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting, a majority of those present may adjourn the meeting
to another place, date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone.
--------- -------------------------------------------------
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business.
--------- -------------------
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
<PAGE>
-5-
Section 8. Powers.
--------- ------
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it
may determine, of written obligations of every kind, negotiable or non-
negotiable, secured or unsecured, and to do all things necessary in connection
therewith;
(4) To remove any officer of the Corporation with or without cause,
and from time to time to devolve the powers and duties of any officer upon any
other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, employees and agents of the Corporation
and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with
these by-laws, for the management of the Corporation's business and affairs.
Section 9. Compensation of Directors.
--------- -------------------------
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
----------- ----------
Section 1. Committees of the Board of Directors.
--------- ------------------------------------
The Board of Directors, by a vote of a majority of the whole Board, may
from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it
<PAGE>
-6-
thereby confers, to serve at the pleasure of the Board and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as the member or members, designating, if it desires, other directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power and
authority of the Board of Directors to declare a dividend or to authorize the
issuance of stock if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business.
--------- -------------------
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the members shall constitute
a quorum unless the committee shall consist of one or two members, in which
event one member shall constitute a quorum; and all matters shall be determined
by a majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.
ARTICLE IV - OFFICERS
---------- --------
Section 1. Generally.
--------- ---------
The officers of the Corporation shall consist of a President, one or more
Vice Presidents, a Secretary, a Treasurer and such other officers as may from
time to time be appointed by the Board of Directors. Officers shall be elected
by the Board of Directors, which shall consider that subject at its first
meeting after every annual meeting of stockholders. Each officer shall hold
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal. The President shall be a member of the Board of
Directors. Any number of offices may be held by the same person.
Section 2. President.
--------- ---------
The President shall be the chief executive officer of the Corporation.
Subject to the provisions of these by-laws and to the direction of the Board of
Directors, he or she shall have the responsibility for the general management
and control of the business and affairs of the Corporation and shall perform all
duties and have all powers which are commonly incident to the office of chief
executive or which are delegated to him or her by the Board of Directors. He or
she shall have the power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized and shall have general
supervision and direction of all of the other officers, employees and agents of
the Corporation.
<PAGE>
-7-
Section 3. Vice President.
--------- --------------
Each Vice President shall have such powers and duties as may be delegated
to him or her by the Board of Directors. One Vice President shall be designated
by the Board to perform the duties and exercise the powers of the President in
the event of the President's absence or disability.
Section 4. Treasurer.
--------- ---------
The Treasurer shall have the responsibility for maintaining the financial
records of the Corporation and shall have custody of all monies and securities
of the Corporation. He or she shall make such disbursements of the funds of the
Corporation as are authorized and shall render from time to time an account of
all such transactions and of the financial condition of the Corporation. The
Treasurer shall also perform such other duties as the Board of Directors may
from time to time prescribe.
Section 5. Secretary.
--------- ---------
The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He or
she shall have charge of the corporate books and shall perform such other duties
as the Board of Directors may from time to time prescribe.
Section 6. Delegation of Authority.
--------- -----------------------
The Board of Directors may from time to time delegate the powers or duties
of any officer to any other officers or agents, notwithstanding any provision
hereof.
Section 7. Removal.
--------- -------
Any officer of the Corporation may be removed at any time, with or without
cause, by the Board of Directors.
Section 8. Action with Respect to Securities of Other Corporations.
--------- -------------------------------------------------------
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such.
<PAGE>
-8-
ARTICLE V - INDEMNIFICATION
--------- ---------------
Section 1. Indemnification of Directors, Officers, Employees and Agents.
--------- ------------------------------------------------------------
Any person who was or is a party or s threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action or suit by or in
the right of the Corporation to procure a judgment in its favor) by reason of
the fact that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including, without limitation, employee
benefit plans), shall be indemnified by the Corporation, if, as and to the
extent authorized by applicable law, against expenses (including attorney's
fees), judgments, fines (including, without limitation, any excise taxes
assessed on a person with respect to any employee benefit plan) and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
the defense or settlement of such action, suit or proceeding. Expenses incurred
by an officer or director in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized by statute. Such expenses incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the Board of Directors
deemed appropriate. The indemnification and advancement of expenses provided
by, or granted pursuant to, this By-law or statute in a specific case shall not
be deemed exclusive of any other rights to which any person seeking
indemnification or advancement of expenses may be entitled under any lawful
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VI - STOCK
----------- -----
Section 1. Certificates of Stock.
--------- ---------------------
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by, the President or a Vice President, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
certifying the number of shares owned by him or her. Any of or all the
signatures on the certificate may be facsimile.
Section 2. Transfer of Stock.
--------- -----------------
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 1 of Article V of
<PAGE>
-9-
these by-laws, an outstanding certificate for the number of shares involved
shall be surrendered for cancellation before a new certificate is issued
therefore.
Section 3. Record Date.
--------- -----------
The Board of Directors may fix a record date, which shall not be more than
sixty nor less than ten days before the date of any meeting of stockholders, nor
more than sixty days prior to the time for the other action hereinafter
described, as of which there shall be determined the stockholders who are
entitled: to notice of or to vote at any meeting of stockholders or any
adjournment thereof; to express consent to corporate action in writing without a
meeting; to receive payment of any dividend or other distribution or allotment
of any rights; or to exercise any rights with respect to any change, conversion
or exchange of stock or with respect to any other lawful action.
Section 4. Lost, Stolen or Destroyed Certificates.
--------- --------------------------------------
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations.
--------- -----------
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VII - NOTICES
----------- -------
Section 1. Notices.
--------- -------
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram. Any
such notice shall be addressed to such stockholder, director, officer, employee
or agent at his or her last know address as the same appears on the books of the
Corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mails or by telegram or mailgram, shall be
the time of the giving of the notice.
Section 2. Waivers.
--------- -------
A written waiver of any notice, signed by a stockholder, director, officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, director, officer,
<PAGE>
-10-
employee or agent. Neither the business nor the purpose of any meeting need be
specified in such a waiver.
ARTICLE VII - MISCELLANEOUS
----------- -------------
Section 1. Facsimile Signatures.
--------- --------------------
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these by-laws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
--------- --------------
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Treasurer or by an Assistant Secretary or
Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
--------- ----------------------------------------
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the Corporation, including reports made to the Corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
Section 4. Fiscal Year.
--------- -----------
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
Section 5. Time Periods.
--------- ------------
In applying any provisions of these by-laws which require that an act be
done or not done a specified number of days prior to an event or that an act be
done during a period of a specified number of days prior to an event, calendar
days shall be used, the day of the doing of the act shall be excluded, and the
day of the event shall be included.
ARTICLE IX - AMENDMENTS
---------- ----------
These by-laws may be amended or repealed by the Board of Directors at any
meeting or by the stockholders at any meeting.
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
of
International Exposition Inc.
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware, certifies as follows:
1. Name. The name of the corporation is International Art
----
Exposition Inc.
2. Address; Registered Agent. The address of the Corporation's
-------------------------
registered office is 229 South State Street, City of Dover, County of Kent,
State of Delaware; and its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
3. Purposes. The nature of the business and purposes to be conducted
--------
or promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
4. Number of Shares. The total number of shares of stock which the
----------------
Corporation shall have authority to issue is: one hundred (100), all of which
shall be shares of Common Stock of the par value of One Dollar ($1.00) each.
5. Name and Address of Incorporator. The name and mailing address of
--------------------------------
the incorporator are: Mr. David L. Goldwyn, c/o Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, New York 10019.
6. Election of Directors. Members of the Board of Directors may be
---------------------
elected either by written ballot or by voice vote.
7. Limitation of Liability. No director of the Corporation shall be
-----------------------
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary
<PAGE>
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
8. Adoption, Amendment and/or Repeal of By-Laws. The Board of
--------------------------------------------
Directors may from time to time (after adoption by the undersigned of the
original by-laws of the Corporation) make, alter or repeal the by-laws of the
Corporation; provided, that any by-laws made, amended or repealed by the Board
of Directors may be amended or repealed, and any by-laws may be made by the
stockholders of the Corporation.
IN WITNESS WHEREOF, this Certificate has been signed on this 30th of
March, 1988.
/s/ David L. Goldwyn
________________________________
David L. Goldwyn, Incorporator
<PAGE>
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
OF
INTERNATIONAL ART EXPOSITION INC.
* * * * *
International Art Exposition Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: The present registered agent of the Corporation is The
-----
Prentice-Hall Corporation System, Inc., and the present registered office of the
corporation in the State of Delaware is 229 South State Street, in the City of
Dover, County of Kent.
SECOND: The Board of Directors of the Corporation adopted the
------
following resolution on the 20th day of April, 1988:
RESOLVED, that the registered office of the Corporation in the
State of Delaware be and it hereby is changed to Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New
Castle, and the authorization of the present registered agent of the
Corporation be and the same is hereby withdrawn, and The Corporation
Trust Company, shall be and is hereby constituted and appointed the
registered agent of the Corporation at the address of its registered
office.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this statement to be
signed by Richard J. Moeller, its President and attested by Arland E. Hirman,
its Secretary this 20th day of April, 1988.
INTERNATIONAL ART EXPOSITION INC.
By /s/ Richard J. Moeller
___________________________________
President
ATTEST:
By /s/ Arland E. Hirman
____________________________
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL ART EXPOSITION INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is International Art Exposition Inc.
2. The certificate of incorporation of the Corporation is hereby
amended by striking out Article 1 thereof and by substituting in lieu of said
Article the following new Article:
"1. Name. The name of the corporation is Art Expositions
----
International, Inc."
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware.
4. The effective date of the amendment herein certified shall be
September 26, 1988.
Signed and attested to on September 26, 1988.
/s/ Richard J. Moeller
_____________________________
Richard J. Moeller, President
Attest:
/s/ Arland E. Hirman
______________________
Arland E. Hirman
Secretary
<PAGE>
EXHIBIT 3.6
BY-LAWS
OF
INTERNATIONAL ART EXPOSITION INC.
(A Delaware Corporation)
_________________________________
ARTICLE 1
DEFINITIONS
-----------
As used in these By-laws, unless the context otherwise requires, the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as amended
from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Corporation" means International Art Exposition Inc.
1.7 "Directors" means directors of the Corporation.
1.8 "General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
1.9 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.10 "President" means the President of the Corporation.
<PAGE>
1.11 "Secretary" means the Secretary of the Corporation.
1.12 "Stockholders" means stockholders of the Corporation.
1.13 "Total number of directors" means the total number of directors
determined in accordance with Section 141(b) of the General Corporation Law and
Section 3.2 of the By-laws.
1.14 "Treasurer" means the Treasurer of the Corporation.
1.15 "Vice President" means a Vice President of the Corporation.
1.16 "Whole Board" means the total number of directors of the Corporation.
ARTICLE 2
STOCKHOLDERS
------------
2.1 Place of Meetings. Every meeting of stockholders shall be held at
-----------------
the office of the Corporation or at such other place within or without the State
of Delaware as shall be specified or fixed in the notice of such meeting or in
the waiver of notice thereof.
2.2 Annual Meeting. The annual meeting of shareholders for the election
--------------
of directors and the transaction of such other business as may come before it
shall be held on such date in each calendar year, not later than the one hundred
twentieth day after the close of the Corporation's preceding fiscal year, and at
such place, within or without the State of Delaware, as shall be fixed by the
Board (or by any officer so designated by the Board) and stated in the notice or
waiver of notice of the meeting.
2.3 Deferred Meeting for Election of Directors. Etc. If the annual
-----------------------------------------------
meeting of stockholders for the election of directors and the transaction of
other business is not held within the months specified in Section 2.2, the Board
shall call a meeting of stockholders for the election of directors and the
transaction of other business as soon thereafter as convenient.
-2-
<PAGE>
2.4 Other Special Meetings. A special meeting of stockholders (other than
----------------------
a special meeting for the election of directors), unless otherwise prescribed by
statute, may be called at any time by the Board or by the President or by the
Secretary. At any special meeting of stockholders only such business may be
transacted as is related to the purpose or purposes of such meeting set forth in
the notice thereof given pursuant to Section 2.6 of the By-laws or in any waiver
of notice thereof given pursuant to Section 2.7 of the By-laws.
2.5 Fixing Record Date. For the purpose of determining the stockholders
------------------
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the Board
may fix, in advance, a date as the record date for any such determination of
stockholders. Such date shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. If no such record date is fixed:
2.5.1 The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held;
2.5.2 The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is necessary, shall be the day on which the first
written consent is expressed;
-3-
<PAGE>
2.5.3 The record date for determining stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5 such
determination shall apply to any adjournment thereof, unless the Board fixes a
new record date for the adjourned meeting.
2.6 Notice of Meetings of Stockholders. Except as otherwise provided in
----------------------------------
Sections 2.5 and 2.7 of the By-laws, whenever under the General Corporation Law
or the Certificate of Incorporation or the By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. A copy of the notice
of any meeting shall be given, personally or by mail, not less than ten nor more
than sixty days before the date of the-meeting, to each stockholder entitled to
notice of or to vote at such meeting. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, with postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Corporation. An affidavit of the Secretary or an Assistant Secretary or of the
transfer agent of the Corporation that the notice required by this section has
been given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted at the
meeting as originally called. If, however, the adjournment is for more than
thirty days, or if after
-4-
<PAGE>
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
2.7 Waivers of Notice. Whenever notice is required to be given to any
-----------------
stockholder under any provision of the General Corporation Law or the
Certificate of Incorporation or the By-laws, a written waiver thereof, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
2.8 List of Stockholders. The Secretary shall prepare and make, or cause
--------------------
to be prepared and made, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
2.9 Quorum of Stockholders; Adjournment. The holders of one-third of the
-----------------------------------
shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy,
-5-
<PAGE>
shall constitute a quorum for the transaction of any business at such meeting.
When a quorum is once present to organize a meeting of stockholders, it is not
broken by the subsequent withdrawal of any stockholders. The holders of a
majority of the shares of stock present in person or represented by proxy at any
meeting of stockholders, including an adjourned meeting, whether or not a quorum
is present, may adjourn such meeting to another time and place.
2.10 Voting; Proxies. Unless otherwise provided in the Certificate of
---------------
Incorporation every stockholder of record shall be entitled at every meeting of
stockholders to one vote for each share of capital stock standing in his name on
the record of stockholders determined in accordance with Section 2.5 of the By-
laws. If the Certificate of Incorporation provides for more or less than one
vote for any share, on any matter, every reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in treating
the persons in whose names shares of capital stock stand on the record of
stockholders as owners thereof for all purposes. At any meeting of stockholders
(at which a quorum was present to organize the meeting), all matters, except as
otherwise provided by law or by the Certificate of Incorporation or by the By-
laws, shall be decided by a majority of the votes cast at such meeting by the
holders of shares present in person or represented by proxy and entitled to vote
thereon, whether or not a quorum is present when the vote is taken. All
elections of directors shall be by written ballot unless otherwise provided in
the Certificate of Incorporation. In voting on any other question on which a
vote by ballot is required by law or is demanded by any stockholder entitled to
vote, the voting shall be by ballot. Each ballot shall be signed by the
stockholder
-6-
<PAGE>
voting or by his proxy, and shall state the number of shares voted. On all other
questions, the voting may be viva voce. Every stockholder entitled to vote at a
---- ----
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy. The validity and enforceability of any proxy shall be determined in
accordance with Section 212 of the General Corporation Law.
2.11 Selection and Duties of Inspectors at Meetings of-Stockholders. The
--------------------------------------------------------------
Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at such meeting may, and on the request
of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy
may be filled by appointment made by the Board in advance of the meeting or at
the meeting by the person presiding thereat. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspector or inspectors shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting or any
stockholder entitled to vote thereat, the inspector or inspectors shall make a
report in writing of any challenge, question or matter determined by him or them
and execute a certificate of any fact found by him or them. Any
-7-
<PAGE>
report or certificate made by the inspector or inspectors shall be prima facie
evidence of the facts stated and of the vote as certified by him or them.
2.12 Organization. At every meeting of stockholders, the President, or in
------------
the absence of the President a Vice President, and in case more than one Vice
President shall be present, that Vice President designated by the Board (or in
the absence of any such designation, the most senior Vice President, based on
age, present), shall act as chairman of the meeting. The Secretary, or in his
absence one of the Assistant Secretaries, shall act as secretary of the meeting.
In case none of the officers above designated to act as chairman or secretary of
the meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority of the votes cast at
such meeting by the holders of shares of capital stock present in person or
represented by proxy and entitled to vote at the meeting.
2.13 Order of Business. The order of business at all meetings of
-----------------
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless otherwise
-------------------------------------------------
provided in the Certificate of Incorporation, any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which
-8-
<PAGE>
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
---------
3.1 General Powers. Except as otherwise provided in the Certificate of
--------------
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of-Incorporation or the By-
laws or applicable laws, as it may deem proper for the conduct of its meetings
and the management of the Corporation. In addition to the powers expressly
conferred by the By-laws, the Board may exercise all powers and perform all acts
which are not required, by the By-laws or the Certificate of Incorporation or by
law, to be exercised and performed by the stockholders.
3.2 Number; Qualification; Term of Office. The Board shall consist of one
-------------------------------------
or more members. The total number of directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
stockholders or by action of the Board. Directors need not be stockholders.
Each director shall hold office until his successor is elected and qualified or
until his earlier death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by law or by
--------
the Certificate of Incorporation, be elected by a plurality of the votes cast at
a meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise provided
-----------------------------------------
in the Certificate of Incorporation, newly created directorships resulting from
an increase in the number
-9-
<PAGE>
of directors and vacancies occurring in the Board for any other reason,
including the removal of directors without cause, may be filled by vote of a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director, or may be elected by a plurality of the votes cast by
the holders of shares of capital stock entitled to vote in the election at a
special meeting of stockholders called for that purpose. A director elected to
fill a vacancy shall be elected to hold office until his successor is elected
and qualified, or until his earlier death, resignation or removal.
3.5 Resignations. Any director may resign at any time by written notice
------------
to the Corporation. Such resignation shall take effect at the time therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective.
3.6 Removal of Directors. Subject to the provisions of Section 141(?) of
--------------------
the General Corporation Law, any or all of the directors may be removed with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors.
3.7 Compensation. Each director, in consideration of his service as such,
------------
shall be entitled to receive from the Corporation such amount per annum or such
fees for attendance at directors' meetings, or both, as the Board may from time
to time determine, together with reimbursement for the reasonable expenses
incurred by him in connection with the performance of his duties. Each director
who shall serve as a member of any committee of directors in consideration of
his serving as such shall be entitled to such additional amount per annum or
such fees for attendance at committee meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable expenses
incurred by him in the performance of his duties. Nothing contained in this
section shall preclude any director from
-10-
<PAGE>
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 Place and Time of Meetings of the Board. Meetings of the Board,
---------------------------------------
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to resolution
of the Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the annual
---------------
meeting of stockholders for the election of directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
of the By-laws for special meetings of the Board or in a waiver of notice
thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held at such
----------------
times and places as may be fixed from time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be a
Saturday or Sunday or a legal holiday at the place where such meeting is to be
held, then such meeting shall be held at the same hour at the same place on the
first business day thereafter which is not a Saturday, Sunday or legal holiday.
3.11 Special Meetings. Special meetings of the Board shall be held
----------------
whenever called by the President or the Secretary or by any two or more
directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
director at such address by
-11-
<PAGE>
telegraph, cable, or wireless, or be delivered to him personally, not later than
the day before the date on which such meeting is to be held. Every such notice
shall state the time and place of the meeting but need not state the purposes of
the meeting, except to the extent required by law. If mailed, each notice shall
be deemed given when deposited, with postage thereon prepaid, in a post office
or official depository under the exclusive care and custody of the United States
post office department. Such mailing shall be by first class mail.
3.12 Adjourned Meetings. A majority of the directors present at any
------------------
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Notice of any
adjourned meeting of the Board need not be given to any director whether or not
present at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting as originally
called.
3.13 Waiver of Notice. Whenever notice is required to be given to any
----------------
director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or By-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice.
-12-
<PAGE>
3.14 Organization. At each meeting of the Board, the President of the
------------
Corporation, or in the absence of the President, a chairman chosen by a majority
of the directors present, shall preside. The Secretary shall act as secretary
at each meeting of the Board. In case the Secretary shall be absent from any
meeting of the Board, an Assistant Secretary shall perform the duties of
secretary at such meeting; and in the absence from any such meeting of the
Secretary and all Assistant Secretaries, the person presiding at the meeting may
appoint any person to act as secretary of the meeting.
3.15 Quorum of Directors. One-third of the total number of directors
-------------------
shall constitute a quorum for the transaction of business or of any specified
item of business at any meeting of the Board.
3.16 Action by the Board. All corporate action taken by the Board or any
-------------------
committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3.16 shall constitute presence in person at such meeting. Except as
otherwise provided by the Certificate of Incorporation or by law, the vote of a
majority of the directors present (including those who participate by means of
conference telephone or similar
-13-
<PAGE>
communications equipment) at the time of the vote, if a quorum is present at
such time, shall be the act of the Board.
ARTICLE 4
COMMITTEES OF THE BOARD
-----------------------
The Board may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the By-laws of the Corporation; and, unless the resolution
designating it expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
-14-
<PAGE>
ARTICLE 5
OFFICERS
--------
5.1 Officers. The Board shall elect a President, a Secretary and a
--------
Treasurer, and may elect or appoint one or more Vice Presidents and such other
officers as it may determine. The Board may designate one or more Vice
Presidents as Executive Vice Presidents, and may use descriptive words or
phrases to designate the standing, seniority or area of special competence of
the Vice Presidents elected or appointed by it. Each officer shall hold his
office until his successor is elected and qualified or until his earlier death,
resignation or removal in the manner provided in Section 5.2 of the By-laws.
Any two or more offices may be held by the same person. The Board may require
any officer to give a bond or other security for the faithful performance of his
duties, in such amount and with such sureties as the Board may determine. All
officers as between themselves and the Corporation shall have such authority and
perform such duties in the management of the Corporation as may be provided in
the By-laws or as the Board may from time to time determine.
5.2 Removal of Officers. Any officer elected or appointed by the Board
-------------------
may be removed by the Board with or without cause. The removal of an officer
without cause shall be without prejudice to his contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights.
5.3 Resignations. Any officer may resign at any time by so notifying the
------------
Board or the President or the Secretary in writing. Such resignation shall take
effect at the date of receipt of such notice or at such later time as is therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of an officer
shall be without prejudice to the contract rights of the Corporation, if any.
-15-
<PAGE>
5.4 Vacancies. A vacancy in any office because of death, resignation,
---------
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in the By-laws for the regular
election or appointment to such office.
5.5 Compensation. Salaries or other compensation of the officers may be
------------
fixed from time to time by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
director.
5.6 President. The President shall be the chief executive officer of the
---------
Corporation and shall have general supervision over the business of the
Corporation, subject, however, to the control of the Board and of any duly
authorized committee of directors. The President shall, if present, preside at
all meetings of the stockholders and at all meetings of the Board. He may, with
the Secretary or the Treasurer or an Assistant Secretary or an Assistant
Treasurer, sign certificates for shares of capital stock of the Corporation. He
may sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or by the By-laws to some
other officer or agent of the Corporation, or shall be required by law otherwise
to be signed or executed; and, in general, he shall perform all duties incident
to the office of President and such other duties as from time to time may be
assigned to him by the Board.
5.7 Vice Presidents. At the request of the President, or, in his absence,
---------------
at the request of the Board, the Vice Presidents shall (in such order as may be
designated by the Board or, in the absence of any such designation, in order of
seniority based on age) perform all of the duties of the President and so acting
shall have all the powers of and be subject to all restrictions upon the
President. Any Vice President may also, with the Secretary or the Treasurer or
an Assistant Secretary or an Assistant Treasurer, sign certificates for shares
of capital stock of the
-16-
<PAGE>
Corporation; may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments authorized by the Board, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board or by the By-laws to some other officer or agent of the Corporation,
or shall be required by law otherwise to be signed or executed; and shall
perform such other duties as from time to time may be assigned to him by the
Board or by the President.
5.8 Secretary. The Secretary, if present, shall act as secretary of all
---------
meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given and
served; he may, with the President or a Vice President, sign certificates for
shares of capital stock of the Corporation; he shall be custodian of the seal of
the Corporation and may seal with the seal of the Corporation, or a facsimile
thereof, all certificates for shares of capital stock of the Corporation and all
documents the execution of which on behalf of the Corporation under its
corporate seal is authorized in accordance with the provisions of the By-laws;
he shall have charge of the stock ledger and also of the other books, records
and papers of the Corporation relating to its organization and management as a
Corporation, and shall see that the reports, statements and other documents
required by law are properly kept and filed; and shall, in general, perform all
the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board or by the President.
5.9 Treasurer. The Treasurer shall have charge and custody of, and be
---------
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected
-17-
<PAGE>
in accordance with these By-laws; against proper vouchers, cause such funds to
be disbursed by checks or drafts on the authorized depositories of the
Corporation signed in such manner as shall be determined in accordance with any
provisions of the By-laws, and be responsible for the accuracy of the amounts of
all moneys so disbursed; regularly enter or cause to be entered in books to be
kept by him or under his direction full and adequate account of all moneys
received or paid by him for the account of the Corporation; have the right to
require, from time to time, reports or statements giving such information as he
may desire with respect to any and all financial transactions of the Corporation
from the officers or agents transacting the same; render to the President or the
Board, whenever the President or the Board, respectively, shall require him so
to do, an account of the financial condition of the Corporation and of all his
transactions as Treasurer; exhibit at all reasonable times his books of account
and other records to any of the directors upon application at the office of the
Corporation where such books and records are kept; and, in general, perform all
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board or by the President; and he may
sign with the President or a Vice President certificates for shares of capital
stock of the Corporation.
5.10 Assistant Secretaries and Assistant Treasurers. Assistant
----------------------------------------------
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the President. Assistant Secretaries and Assistant Treasurers may,
with the President or a Vice President, sign certificates for shares of capital
stock of the Corporation.
-18-
<PAGE>
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
----------------------------------------------
6.1 Execution of Contracts. The Board may authorize any officer, employee
----------------------
or agent, in the name and on behalf of the Corporation, to enter into any
contract or execute and satisfy any instrument, and any such authority may be
general or confined to specific instances, or otherwise limited.
6.2 Loans. The President or any other officer, employee or agent
-----
authorized by the By-laws or by the Board may effect loans and advances at any
time for the Corporation from any bank, trust company or other institutions or
from any firm, corporation or individual and for such loans and advances may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, and, when authorized by the Board
so to do, may pledge and hypothecate or transfer any securities or other
property of the Corporation as security for any such loans or advances. Such
authority conferred by the Board may be general or confined to specific
instances or otherwise limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for the
--------------------
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed shall
--------
be deposited from time to time to the order of the Corporation in such banks,
trust companies or other depositories as the Board may select or as may be
selected by an officer, employee or agent of the Corporation to whom such power
may from time to time be delegated by the Board.
-19-
<PAGE>
ARTICLE 7
STOCK AND DIVIDENDS
-------------------
7.1 Certificates Representing Shares. The shares of capital stock of the
--------------------------------
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and may be sealed with the seal of the Corporation or
a facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles, if the certificate is countersigned by a transfer agent or registrar
other than the Corporation itself or its employee. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon any certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, such certificate may, unless
otherwise ordered by the Board, be issued by the Corporation with the same
effect as if such person were such officer, transfer agent or registrar at the
date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
------------------
Corporation shall be made only on the books of the Corporation by the holder
thereof or by his duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or an Assistant Secretary or the transfer agent of the Corporation. A
person in whose name shares of capital stock shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
-20-
<PAGE>
such owner and for all other purposes as respects the Corporation. No transfer
of shares of capital stock shall be valid as against the Corporation, its
stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
such transfer shall have been entered on the books of the Corporation by an
entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to time
----------------------------
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder of any
--------------------------------------------------
shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his legal representatives, to make proof satisfactory
to the Board of such loss, destruction, theft or mutilation and to advertise
such fact in such manner as the Board may require, and to give the Corporation
and its transfer agents and registrars, or such of them as the Board may
require, a bond in such form, in such sums and with such surety or sureties as
the Board may direct, to indemnify the Corporation and its transfer agents and
registrars against any claim that may be made against any of them on account of
the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
-21-
<PAGE>
7.5 Regulations. The Board may make such rules and regulations as it may
-----------
deem expedient, not inconsistent with the By-laws or with the Certificate of
Incorporation, concerning the issue, transfer and registration of certificates
representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
--------------------------------
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law, shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by an agreement among any number of stockholders
or among such stockholders and the Corporation. No restriction so imposed shall
be binding with respect to capital stock issued prior to the adoption of the
restriction unless the holders of such capital stock are parties to an agreement
or voted in favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the Certificate
------------------------
of Incorporation and of law, the Board:
7.7.1 May declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time or
times as, in its discretion, the condition of the affairs of the
Corporation shall render advisable;
-22-
<PAGE>
7.7.2 May use and apply, in its discretion, any of the surplus of the
Corporation in purchasing or acquiring any shares of capital stock of the
Corporation, or purchase warrants therefor, in accordance with law, or any
of its bonds, debentures, notes, scrip or other securities or evidences of
indebtedness;
7.7.3 May set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 Indemnification of Officers and Directors. The Corporation shall
-----------------------------------------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director or an officer of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent and in the manner set forth in and permitted by
the General Corporation Law, and any other applicable law, as from time to time
in effect. Such right of indemnification shall not be deemed exclusive of any
other rights to which such director or officer may be entitled apart from the
foregoing provisions. The foregoing provisions of this Section 8.1 shall be
deemed to be a contract between the Corporation and each director and officer
who serves in such capacity at any time while this Article 8 and the relevant
provisions of the General Corporation Law and
-23-
<PAGE>
other applicable law, if any, are in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
8.2 Indemnification of Other Persons. The Corporation may indemnify any
--------------------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending. or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the extent and in the manner set forth in and
permitted by the General Corporation Law, and any other applicable law, as from
time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which any such person may be entitled apart
from the foregoing provisions.
8.3 Insurance. The Corporation shall have power to purchase and maintain
---------
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of Sections 8.1 and 8.2 of the By-
laws or under Section 145 of the General Corporation Law or any other provision
of law.
-24-
<PAGE>
ARTICLE 9
BOOKS AND RECORDS
-----------------
9.1 Books and Records. The Corporation shall keep correct and complete
-----------------
books and records of account and shall keep minutes of the proceedings of the
stockholders, the Board and any committee of the Board. The Corporation shall
keep at the office designated in the Certificate of Incorporation or at the
office of the transfer agent or registrar of the Corporation, a record
containing the names and addresses of all stockholders, the number and class of
shares held by each and the dates when they respectively became the owners of
record thereof.
9.2 Form of Records. Any records maintained by the Corporation in the
---------------
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided by law,
-------------------------------
the Board shall determine from time to time whether, and, if allowed, when and
under what conditions and regulations, the accounts, books, minutes and other
records of the Corporation, or any of them, shall be open to the inspection of
the stockholders.
ARTICLE 10
SEAL
----
The Board may adopt a corporate seal which shall be in the form of a circle
and shall bear the full name of the Corporation, the year of its incorporation
and the word "Delaware."
-25-
<PAGE>
ARTICLE 11
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be determined, and may be changed,
by resolution of the Board.
ARTICLE 12
VOTING OF SHARES HELD
---------------------
Unless otherwise provided by resolution of the Board, the President may,
from time to time, appoint one or more attorneys or agents of the Corporation,
in the name and on behalf of the Corporation, to cast the votes which the
Corporation may be entitled to cast as a stockholder or otherwise in any other
Corporation, any of whose shares or securities may be held by the Corporation,
at meetings of the holders of stock or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments as he
may deem necessary or proper in the premises; or the President may himself
attend any meeting of the holders of the stock or other securities of any such
other corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
Corporation.
ARTICLE 13
AMENDMENTS
----------
The By-laws may be altered, amended, supplemented or repealed, or new By-
laws may be adopted, by vote of the holders of the shares entitled to vote in
the election of directors. The
-26-
<PAGE>
By-laws may be altered, amended, supplemented or repealed, or new By-laws may be
adopted, by the Board. Any By-laws adopted, altered, amended, or supplemented by
the Board may be altered, amended, or supplemented or repealed by the
stockholders entitled to vote thereon.
-27-
<PAGE>
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
STOCK CORPORATION
61-5 REV 10-69
STATE OF CONNECTICUT
SECRETARY OF THE STATE
VOL 938 1040
The undersigned incorporator(s) hereby from(s) a corporation under the Stock
Corporation Act of the State of Connecticut.
1. The name of the corporations EXPOCON MANAGEMENT ASSOCIATES, INC.
2. The nature of the business to be transacted, or the purposes to be promoted
or carried out by the corporation are as follows:
To transact any business and permit any purpose to which may
lawfully be carried on by a Connecticut stock corporation under
the laws of the State of Connecticut, and more particularly the
management and market of expositions, trade shows, meetings and
conventions.
3. The designation, of each class of shares, the authorized number of shares
of each such class, and the par value (if any) of each are thereof, are as
follows:
500 AUTHORIZED SHARE OF COMMON STOCK - $100 PAR VALUE
4. The terms, limitations, and relative rights and preferences of each class
of shares and series thereof (if any), or an express grant of authority to
the board of directors pursuant to Section 33-341, 1959 Supp. Conn. G.S.,
are as follows:
5. The minimum amount of stated capital with which the corporation shall
commence business is
ONE THOUSAND DOLLARS ($1,000.00) dollars. (Not less than one thousand dollars.)
- ---------------------------------
6. (7) - Other provisions.
Dated at STAMFORD this 15TH day of MAY, 1978.
I/We hereby declare, under the penalties of false statement, that the statements
made in the foregoing certificate are true.
<PAGE>
-2-
This certificate of incorporation must be signed by one or more incorporators.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type)
1. ALFRED J. FAVATA 2. MARY M. FAVATA 3.
- ----------------------------------------------------------------------------------------------------------------
SIGNED (Incorporator) SIGNED (Incorporator) SIGNED (Incorporator)
1. 2. 3.
- ----------------------------------------------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type)
4. 5. 6.
- ----------------------------------------------------------------------------------------------------------------
SIGNED (Incorporator) SIGNED (Incorporator) SIGNED (Incorporator)
4 5. 6.
- ----------------------------------------------------------------------------------------------------------------
FOR FRANCHISE FEE FILING FEE CERTIFICATION FEE TOTAL FEES
$50 $20 $9 $50 $129
----------------------------------------------------------------------------
OFFICE STATE OF CONNECTICUT SIGNED (For the Secretary of the State)
----------------------------------------------------------------------------
USE FILED CERTIFIED COPY SENT ON (Date) INITIALS
Rec. $ 1 cc sent 10/24/78 gl
----------------------------------------------------------------------------
ONLY MAY 24, 1978 TO J Michael Cantore, Jr.
1172 Bedford St., Stamford CT 06905
SECRETARY OF STATE
----------------------------------------------------------------------------
BY CARD PROOF PROOF
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPOINTMENT OF STATUTORY AGENT FOR SERVICE
DOMESTIC CORPORATION
VOL 938 1042
TO: THE SECRETARY OF THE STATE OF CONNECTICUT
For office use only
-------------------------
ACCOUNT NO.
-------------------------
INITIALS
-------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME OF CORPORATION
EXOCON MANAGEMENT ASSOCIATES, INC.
- --------------------------------------------------------------------------------------------------------------------
APPOINTMENT
- --------------------------------------------------------------------------------------------------------------------
The above corporation appoints as its statutory agent for service one of the following:
- --------------------------------------------------------------------------------------------------------------------
NAME OF NATURAL PERSON WHO IS RESIDENT OF BUSINESS ADDRESS
CONNECTICUT
21 Charles Street, Westport, Connecticut 06880
Alfred J. Favata
______________________________________________
RESIDENCE ADDRESS
Mail Coach Drive, Wilton, Connecticut 06897
- --------------------------------------------------------------------------------------------------------------------
NAME OF CONNECTICUT CORPORATION ADDRESS OF PRINCIPAL OFFICE IN CONN. (If none,
enter address of appointee's statutory's agent for
service.)
- --------------------------------------------------------------------------------------------------------------------
NAME OF CORPORATION not Organized Under the ADDRESS OF PRINCIPAL OFFICE IN CONN. (if none,
Laws of Conn. enter "Secretary of the State of Connecticut".)
- --------------------------------------------------------------------------------------------------------------------
Which shares proceeds a Certificate of Authority to transact business or conduct affairs in this
state
- --------------------------------------------------------------------------------------------------------------------
AUTHORIZATION
- --------------------------------------------------------------------------------------------------------------------
ORIGINAL NAME OF INCORPORATOR (Print or type) SIGNED (Incorporator) DATE
APPOINTMENT Alfred J. Favata May 15, 1978
- --------------------------------------------------------------------------------------------------------------------
(MUST BE SIGNED BY NAME OF INCORPORATOR (Print or type) SIGNED (Incorporator) DATE
A MAJORITY OF Mary M. Favata May 15, 1978
INCORPORATORS.)
- --------------------------------------------------------------------------------------------------------------------
NAME OF PRESIDENT VICE PRESIDENT, OR SIGNED (President, or Vice DATE
SEC President, or Secretary)
- --------------------------------------------------------------------------------------------------------------------
SUBSEQUENT NAME OF INCORPORATOR (Print or type) SIGNED (Incorporator) DATE
APPOINTMENT
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
ACCEPTANCE
- --------------------------------------------------------------------------------------------------------------------
Accepted NAME OF STATUTORY AGENT FOR SERVICE SIGNED (Statutory Agent
(Print or Type) for service)
ALFRED J. FAVATA
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
FOR FILING FEE CERTIFICATION FEE TOTAL FEES
$ $ $
---------------------------------------------------
OFFICE STATE OF CONNECTICUT SIGNED (For the Secretary of the State)
- ------ ---------------------------------------------------
USE FILED CERTIFIED COPY SENT ON (Date) INITIALS
- ------ ---------------------------------------------------
ONLY MAY 24, 1978 TO
SECRETARY OF STATE
- ------ ---------------------------------------------------
BY CARD PROOF PROOF
- --------------------------------------------------------------------------------------------------------------------
497ERBD101/17.528750-1
</TABLE>
<PAGE>
EXHIBIT 3.8
BY-LAWS
of
EXPOCON MANAGEMENT ASSOCIATES, INC.
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
Sec. 1. ANNUAL MEETING. The annual meeting of shareholders shall be held
on the 1st day of May of each year. If the day so designated falls upon a Sunday
or a legal holiday, then the meeting shall be held upon the first business day
thereafter.
Sec. 2. QUORUM. The presence, in person or by proxy, of the holders of a
majority of the outstanding stock entitled to vote on the subject matter shall
be necessary to constitute a quorum for the transaction of business, but a
lesser number may adjourn to some future time not less than seven (7) nor more
than ten (10) days later, and the Secretary shall thereupon give at least ___
days notice by mail to each shareholder entitled to vote who was absent from
such meeting.
Sec. 3. SPECIAL MEETINGS. Special meetings of shareholders may be called
at any time by the President. The President shall call a special meeting of
shareholders whenever so requested in writing by a majority of Directors or by
one or more
<PAGE>
-2-
shareholders representing not less than a majority of the total number of shares
of the issued and outstanding capital stock entitled to vote at said meeting. No
business other than that specified in the call for the meeting shall be
transacted at any such special meeting of the shareholders.
Sec. 4. VOTING. At all meetings of the shareholders all questions, the
manner of deciding which is not specifically regulated by statute, shall be
determined by a majority vote of the shareholders present in person or by proxy.
Each shareholder present, in person or by proxy, shall be entitled to cast one
vote for each share of stock owned or represented by him.
Sec. 5 NOTICE. Written notice of the time and place and general purposes
of all annual and special meetings shall be mailed or otherwise given as
provided by law by the Secretary to each shareholder not less than ten (10) days
prior to the date thereof. Annual and special meetings of shareholders may be
held at such time and place within or without this State as the Directors shall
determine.
Sec. 6. UNANIMOUS CONSENT. In lieu of a meeting and vote of shareholders,
the unanimous written consent of all shareholders who would have been entitled
to vote upon the action if such meeting were held, or their duly authorized
attorneys or proxies, may be filed with the Secretary of the corporation as to
any action taken or to be taken by the shareholders, and said consents, when
filed, shall have the same force and effect as a unanimous vote of the
shareholders.
<PAGE>
-3-
ARTICLE II.
DIRECTORS.
Sec. 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of Directors elected by the Shareholders at their annual
meeting. The number of directorships at any time shall be fixed by resolution,
first, of the incorporators, and thereafter of the shareholders.
Sec. 2. TERM OF OFFICE. The term of office of each of the Directors shall
be one year, and thereafter until his successor has been elected.
Sec. 3. DUTIES OF DIRECTORS. The Board of Directors shall have the
control and general management of the affairs and business of the corporation.
Sec. 4. DIRECTORS' MEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the shareholders, and
at such other times as the Board of Directors may determine. Special meetings
of the Board of Directors may be called by the President at any time, and shall
be called by the President or the Secretary upon the written request of any of
the Directors. Any and all meetings may be held within or without this State as
the Directors shall determine.
Sec. 5. QUORUM. At any meeting of the Board of Directors, a majority of
the Board shall constitute a quorum for the transaction of business; but in the
event of a quorum not being present, a lesser number may adjourn the meeting to
some future time, not more than three (3) days later. The act of a majority of
the Directors present at a meeting at which there is a quorum shall be the act
of the Board of Directors.
<PAGE>
-4-
Sec. 6. VOTING. At all meetings of the Board of Directors, each director
is to have one vote, irrespective of the number of shares of stock that he may
hold.
Sec. 7. VACANCIES. Vacancies in the Board occurring between annual
meetings shall be filled for the unexpired portion of the term by the concurring
vote of a majority of the remaining Directors.
Sec. 8. REMOVAL OF DIRECTORS. Any one or more of the Directors may be
removed, either with or without cause, at any time by a vote of the shareholders
holding a majority of the stock, at any special meeting called for the purpose.
Sec. 9. NOTICE. Written notice of all regular and special meetings shall
be mailed to each director by the Secretary not less than seven (7) days prior
to the date fixed for such meeting.
Sec. 10. UNANIMOUS CONSENT. In lieu of any regular or special meeting and
vote of the Directors the unanimous written consent of all Directors may be
filed with the Secretary with respect to any action taken or to be taken by the
Directors, and said consents shall, when filed, have the same force and effect
as a unanimous vote of the Directors.
Sec. 11. EXECUTIVE COMMITTEE. The Board of Directors may by resolution
designate two or more Directors as an executive committee which shall have and
may exercise all such authority of the Board as shall be provided in such
resolution.
<PAGE>
-5-
ARTICLE III.
OFFICERS.
Sec. l. NUMBER. The officers of this corporation shall be a President,
Secretary and a Treasurer, and such other officers as are designated by the
Board of Directors.
Sec. 2. ELECTION. The Board of Directors, at its annual meeting, held
immediately after the annual meeting of shareholders, shall elect from among
their number a President, and those other officers enumerated above, all of whom
shall serve for the term of one year and until their successors are duly elected
and qualified. Any two officers may be held by the same person, except the
offices of President and Vice-President or President and Secretary.
Sec. 3. DUTIES OF OFFICERS. The duties and powers of the officers of the
corporation shall be as follows:
PRESIDENT.
The President shall preside at all meetings of the Board of Directors and
shareholders.
He shall present at each annual meeting of the shareholders and Directors
a report of the condition of the business of the corporation.
He shall cause to be called regular and special meetings of the
shareholders and Directors in accordance with these By-laws.
<PAGE>
-6-
He shall appoint and remove, employ and discharge, and fix the compensation
of all servants, agents, employees and clerks of the corporation other than the
duly appointed officers, subject to the approval of the Board of Directors.
He shall sign and make all contracts and agreements in the name of the
corporation.
He shall see that the books, reports, statements and certificates required
by the statutes are properly kept, made and filed according to law.
He shall sign all certificates of stock.
He shall have general direction and management of the affairs of the
corporation.
He shall enforce these By-laws and perform all the duties incident to the
office of President.
SECRETARY.
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the shareholders in appropriate books.
He shall give and serve all notices of the corporation.
He shall be custodian of the records and of the seal, and affix the latter
when authorized and required.
He shall keep the stock and transfer books in the manner prescribed by law.
He shall sign all certificates of stock.
He shall present to the Board of Directors at their stated meetings all
communications addressed to him officially by the President or any officer or
shareholder of the corporation.
<PAGE>
-7-
He shall attend to all correspondence and perform all the duties incident
to the office of Secretary.
TREASURER.
The Treasurer shall have the care and custody of and be responsible for the
funds and securities of the corporation, and deposit all such funds in the name
of the corporation in such bank or banks, trust company or trust companies or
safe deposit vaults as the Board of Directors may designate.
In the absence of a resolution of the Director to the contrary, he shall
sign, make and endorse in the name of the corporation, all checks, drafts, notes
and other evidences of debt.
He shall exhibit at all reasonable times his books and accounts to any
director or stockholder of the corporation upon application at the office of the
corporation during business hours.
He shall render a statement of the condition of the finances of the
corporation at each regular meeting of the Board of Directors, and at such other
times as shall be required of him.
He shall present a full financial report at the annual meeting of the
shareholders.
He shall keep, at the office of the corporation, correct books of account
of all its business and transactions and such other books of account as the
Board of Directors may require.
He shall perform all duties incident to the office of Treasurer.
<PAGE>
-8-
Sec. 4. VACANCIES, HOW FILLED. All vacancies in any office shall be
filled by the Board of Directors without undue delay, at its regular meeting, or
at a meeting specially called for that purpose.
Sec. 5. COMPENSATION OF OFFICERS. The officers shall receive such salary
or compensation as may be determined by the Board of Directors.
Sec. 6. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer, by a majority vote, at any time, with or without cause.
<PAGE>
-9-
ARTICLE IV.
CERTIFICATES OF STOCK.
Sec. 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock
shall be numbered and registered in the order in which they are issued. They
shall be signed by the President and by the Secretary and sealed with the seal
of the corporation.
Sec. 2. TRANSFER OF STOCK. The stock of the corporation shall be
assignable and transferable on the books of the corporation only by the person
in whose name it appears on said books, or his legal representatives. In case
of transfer by attorney, the power of attorney, duly executed and acknowledged,
shall be deposited with the Secretary. In all cases of transfer, the former
certificate must be surrendered up and canceled before a new certificate can be
issued. No transfer shall be made upon the books of the corporation within ten
days next preceding the annual meeting of the shareholders.
ARTICLE V.
DIVIDENDS.
Sec. 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the unsecured and unrestricted surplus of the corporation
whenever, in their opinion, the condition of the corporation's affairs will
render it expedient for such dividends to be declared, pursuant to law. No
dividend shall be paid that will impair the capital of the corporation.
<PAGE>
-10-
ARTICLE VI.
AMENDMENTS.
Sec. 1. HOW AMENDED. These By-laws may be amended by an affirmative vote
of the shareholders representing a majority of the capital stock entitled to
vote, at an annual meeting or at a special meeting called for that purpose,
provided that written notice shall have been sent to each shareholder entitled
to receive such notice, which notice shall state the amendments which are
proposed to be made in such By-laws. Only such changes as have been specified
in the notice shall be made. If, however, all the shareholders shall be present
at any regular or special meeting, these By-laws may be amended by a unanimous
vote, without any previous notice; and furthermore, these By-laws may be amended
by unanimous consent action of the shareholders as provided in these By-laws.
<PAGE>
EXHIBIT 3.9
CERTIFICATE OF INCORPORATION
OF
ON DEMAND MARKETING, INC.
The undersigned incorporator hereby forms a corporation under the Stock
Corporation Act of the State of Connecticut (the "Act"), as follows:
1. The name of the corporation is On Demand Marketing, Inc.
2. The nature of the business to be transacted, or the purposes to be
promoted or carried out by the corporation, are as follows:
To engage in any lawful act or business for which corporations may be
formed under the Act.
3. The designation of each class of shares, the authorized number of
shares of each such class, and the par value of each share thereof, are as
follows:
One class of twenty thousand (20,000) authorized shares of common
stock, without par value.
4. The terms, limitations and relative rights and preferences of each
class of shares and series thereof, if any, or an express grant of authority to
the board of directors pursuant to Section 33-341(b) of the Act, are as follows:
(a) Common Stock. Only one class of stock is authorized and all
------------
shares thereof shall have equal rights. Each holder of record of common stock
shall be entitled to one vote for each share held. There are no limitations on
shares of common stock of the corporation.
(b) Preemptive Rights. No holder of the shares of the corporation
-----------------
of any class, now or hereafter authorized, shall as such holder have any
preemptive right to subscribe to, purchase or receive any shares of the
corporation of any class, now or hereafter authorized, or any rights or options
to subscribe to or purchase any such shares or of the securities convertible
into or exchangeable for or carrying rights or options to purchase shares of any
class or other securities, which may at any time be issued, sold, or offered for
sale by the corporation or subjected to rights or options to purchase granted by
the corporation.
5. The minimum amount of stated capital with which the corporation shall
commence business is one thousand dollars ($1,000.00).
6. The corporation is to have perpetual existence.
<PAGE>
-2-
7. The personal liability of a director to the corporation or its
stockholders for any monetary damages for breach of duty as a director shall be
limited to an amount that is equal to the compensation received by the director
for serving the corporation during the year of the violation, if such breach did
not (i) involve a knowing and culpable violation or law by the director, (ii)
enable the director or an associate, as defined in subdivision (3) of Section
33-374d of the Act, to receive an improper personal economic gain, (iii) show a
lack of good faith and a conscious disregard for the duty of the director to the
corporation under circumstances in which the director was aware that his conduct
or omission created an unjustifiable risk of serious injury to the corporation,
(iv) constitute a sustained and unexcused pattern of inattention that amounted
to an abdication of the director's duty to the corporation or (v) create a
liability under 33-321 of the Act.
Dated at Bridgeport, Connecticut, this 16th day of August, 1993.
I hereby declare, under the penalties of false statement that the
statement, made in the foregoing certificate are true.
/s/ Andrea M. Popik
___________________________________________
Andrea M. Popik
Sole Incorporator
<PAGE>
Secretary of the State
30 Trinty Street
Hartford, CT 06106
<TABLE>
<CAPTION>
Name of Corporation: ON DEMAND MARKETING, INC. Complete All Blanks
- ---------------------------------------------------------------------------------------------------------------------
The above corporation appoints as its statutory agent for service one of the following:
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name of Natural Person Who is Resident of Connecticut Business Address Zip Code
c/o Expocon Management Associates,
Alfred J. Favata 7 Cambridge Drive, P.O. Box 1019, Trumbull, CT 06611
Residence Address
3171 Bronson Road, Fairfield, CT 06430
- ---------------------------------------------------------------------------------------------------------------------
Names of Connecticut Corporation Address of Principal Office in Conn. (If none, enter
address of appointee's statutory agent for service.)
_____________________________________________________________________________________________________________________
Name of Corporation (Not organized under the Laws of Address of Principal Office in Conn. (If none, enter
Conn.*) "Secretary of the State of Conn.".)
_____________________________________________________________________________________________________________________
* Which has procured a Certificate of Authority to transact business or conduct affairs in this state.
- ---------------------------------------------------------------------------------------------------------------------
AUTHORIZATION
- ---------------------------------------------------------------------------------------------------------------------
Name of Incorporator (Print Signed (Incorporator) Date
ORIGINAL APPOINTMENT or Type)
8/16/93
Andrea M. Popik
------------------------------------------------------------------------------------------
(MUST BE SIGNED BY A Name of Incorporator (Print Signed (Incorporator) Date
MAJORITY OF INCORPORATORS) or Type)
- ---------------------------------------------------------------------------------------------------------------------
Name of Incorporator (Print Signed (Incorporator) Date
or Type)
_____________________________________________________________________________________________________________________
SUBSEQUENT APPOINTMENT Name of President, Vice President or Secretary Date
_____________________________________________________________________________________________________________________
Signed (President, Vice President or Secretary)
_____________________________________________________________________________________________________________________
Acceptance: Name of Statutory Agent for Service (Print or Type) Signed (Statutory Agent for
Service)
Alfred J. Favata
- ----------------------------------------------------------------------------------------------------------------------
Rec: CC
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Please provide filer's name and complete address for mailing receipt.
</TABLE>
<PAGE>
EXHIBIT 3.10
BY-LAWS
OF
ON DEMAND MARKETING, INC.
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1. Annual Meeting. A meeting of shareholders shall be held
--------------
annually for the election of directors and the transaction of such other
business as may properly come before the meeting on the third Thursday in May in
each and every year, unless such day shall fall on a legal holiday, in which
case such meeting shall be held on the next succeeding business day, at 10:00
a.m. local time where the meeting is to be held.
SECTION 2. Special Meetings. Special meetings of the shareholders for any
----------------
purpose may be called by the Board of Directors or the President, and shall be
called by the President at the written request of the holders of record of not
less than one-tenth of the voting power of all outstanding shares of the
Corporation entitled to vote at such meeting. Special meetings shall be held at
such time as may be fixed in the call and stated in the notice of meeting or
waiver thereof. At any such special meeting only such business may be
transacted as is related to the purposes set forth in the notice of meeting.
SECTION 3. Place of Meeting. Meetings of shareholders shall be held at
----------------
such place, within or without the State of Connecticut or the United States of
America, as may be fixed in the call and notice of meeting or waiver thereof.
SECTION 4. Notice of Meetings. Notice of each meeting of shareholders
------------------
shall be given in writing and shall state the place, date and hour of the
meeting and, in the case of special
<PAGE>
-2-
meetings, (i) the purpose or purposes for which the meeting is called and (ii)
at whose direction the notice is being issued.
A copy of the notice of any meeting shall be given, personally or by mail,
not less than seven nor more than fifty days before the date of the meeting, to
each shareholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid.
SECTION 5. Waiver of Notice. Notice of any meeting need not be given to
----------------
any shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
SECTION 6. Closing of Transfer Books or Fixing of Record Date. For the
--------------------------------------------------
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividends, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten full days immediately preceding such meeting. In
lieu of closing stock transfer books, the Board of Directors may fix in advance
a date as the record date of any such determination of shareholders, such date
in any case to be not more than seventy days and, in case of a meeting of
shareholders, not less than ten full days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the
<PAGE>
-3-
stock transfer books are not closed and no record date is fixed for a
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders or a determination of shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof. A record date, or date for closing the stock
transfer books, is effective as of the close of business on such date unless
another hour is designated by the resolution of the Board of Directors.
SECTION 7. Voting Lists. The officer or agent having charge of the stock
------------
transfer books for shares of the Corporation shall make a complete list of the
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order with the address of and the number of
shares by each. Such list or other equivalent record shall, for a period of
five days prior to such meeting, be kept on file at the principal office of the
Corporation or at the office or place of business of a transfer agent in this
state and shall be subject to inspection by any shareholder during usual
business hours for any proper purpose. Such list or other equivalent record
shall also be produced and kept at the time and place of the meeting and shall
be subject for any such proper purpose to such inspection during the whole time
of the meeting.
SECTION 8. Qualification of Voters. Except as may otherwise be provided
-----------------------
in the Certificate of Incorporation, every shareholder of record shall be
entitled at every meeting of shareholders to one vote for every share standing
in his name on the record of shareholders.
<PAGE>
-4-
Shares of the Corporation standing in the name of another domestic or
foreign corporation of any type or kind may be voted by such officer, agent or
proxy as the by-laws or similar regulations of such corporation may provide, or
in the absence of such provision, as the Board of Directors of such corporation
may determine.
Treasury shares shall not be shares entitled to vote or to be counted in
determining the total number of outstanding shares of the Corporation.
SECTION 9. Quorum. At any meeting of the shareholders the presence, in
------
person or by proxy, of the holders of a majority of the shares entitled to vote
thereat shall constitute a quorum for the transaction of any business except
where a greater number is otherwise provided by law. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal of
any shareholders. A majority of the shareholders present, in person or by
proxy, may adjourn the meeting despite the absence of a quorum.
SECTION 10. Proxies. Every shareholder entitled to vote at a meeting of
-------
shareholders, to waive notice of such meeting or to express consent or dissent
without meeting may authorize another person or persons in writing to act for
him by proxy. Every proxy must be signed by the shareholder or his attorney-in-
fact. No proxy shall be valid after the expiration of eleven months from the
date thereof unless otherwise provided in the proxy, provided in no event shall
a proxy be valid after ten years from its date of execution. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided therein and as permitted by law. The attendance at any
meeting by the shareholder who shall have previously given a proxy applicable
thereto shall not, as such, have the effect of revoking the proxy. The
Corporation may treat any proxy as not revoked and in full force and effect
until it receives a duly executed
<PAGE>
-5-
instrument revoking it or a proxy bearing a later date or, in the event of death
or incapacity of the shareholder executing the same, written notice of such
death or incapacity.
SECTION 11. Voting. Directors shall be elected by a plurality of the
------
votes cast at a meeting of shareholders when a quorum is present by the holders
of shares entitled to vote in the election, in person or by proxy. Whenever any
corporate action, other than the election of directors, is to be taken by vote
of the shareholders, it shall, except as otherwise require by law, be authorized
by a majority of the votes cast in person or by proxy at a meeting when a quorum
is present.
SECTION 12. Action Without a Meeting. Whenever the shareholders are
------------------------
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of all outstanding shares entitled to vote thereon.
ARTICLE II.
----------
BOARD OF DIRECTORS
------------------
SECTION 1. Power of Board and Qualification of Directors. The business,
---------------------------------------------
properties and affairs of the Corporation shall be managed by or under the
direction of the Board of Directors, each of whom shall be at least eighteen
years of age.
SECTION 2. Number of Directors. The number of directors constituting the
-------------------
entire Board of Directors shall be such number not less than three nor more than
nine as may be fixed from time to time by resolution adopted by the shareholders
or by the Board. In the absence of such resolution, the number of directors
shall be the number of directors elected at the preceding annual meeting of
shareholders. The reduction of the number of directors shall not remove any
director in office or shorten his term. When all of the shares are owned by
less than three
<PAGE>
-6-
shareholders, the number of directors may be less than three but not less than
the number of shareholders.
SECTION 3. Election and Term of Directors. At each annual meeting of
------------------------------
shareholders, directors shall be elected to hold office until the next annual
meeting. Each director shall hold office until the expiration of the term for
which he is elected, and until his successor has been elected and qualified.
SECTION 4. Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Board of Directors or to the President
or the Secretary of the Corporation. Such resignation shall take effect at the
time specified therein; and unless otherwise specified therein the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 5. Removal of Directors. Any or all of the directors may be
--------------------
removed with or without cause and with or without notice or hearing by vote of
the shareholders.
SECTION 6. Newly Created Directorships and Vacancies. Newly created
-----------------------------------------
directorships resulting from an increase in the number of directors by
resolution adopted by the shareholders or the Board of Directors, shall be
filled by vote of the shareholders. Vacancies occurring in the Board of
Directors for any other reason whatsoever, including the removal of directors
without cause, shall be filled by vote of the shareholders. A director elected
to fill a vacancy or a newly created directorship shall be elected to hold
office until the next annual meeting of shareholders, and until his successor
has been elected and qualified.
SECTION 7. Executive and other Committees of Directors. The Board of
-------------------------------------------
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees to
serve at the pleasure of the Board of Directors,
<PAGE>
-7-
each consisting of two or more directors. The Board of Directors may designate
one or more directors as alternate members of any such committee, who may
replace any absent member or members at any meeting of such committee.
The designation of such executive committee or other committee shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law. The executive committee, when the Board of
Directors is not in session, shall have and may exercise all of the authority of
the Board of Directors except to the extent, if any, that such authority shall
be limited by these By-Laws, by the resolution appointing the executive
committee or by law. Each such other committee shall have and may exercise such
powers as may be authorized in the resolution appointing such other committee
and permitted by law. Neither the executive committee nor such other committees
shall have the authority of the Board of Directors with respect to amending the
certificate of incorporation, adopting a plan of merger or consolidation,
recommending to the shareholders a voluntary dissolution of the Corporation or a
revocation thereof, or amending the By-Laws of the Corporation.
SECTION 8. Compensation of Directors. The Board of Directors shall have
-------------------------
authority to fix the compensation of directors for services in any capacity, or
to allow a fixed sum plus expenses, if any, for attendance at meetings of the
Board or of committees of directors.
ARTICLE III.
-----------
MEETINGS OF THE BOARD
---------------------
SECTION 1. Directors' Meetings. A regular meeting of the Board of
-------------------
Directors shall be held immediately following the annual meeting of the
shareholders, and at such other times as the Board of Directors may determine.
Regular meetings of the Board of Directors may be held with or without notice at
such times and places, within or without the State of Connecticut or the
<PAGE>
-8-
United States of America, as may from time to time be fixed by the Board.
Special meetings of the Board of Directors may be held at any time and place,
within or without the State of Connecticut or the United States of America, upon
the call of the President by oral, telegraphic or written notice, or sent by
other public instrumentality, duly given to or sent or mailed to each director
by an officer of the Corporation not less than forty-eight (48) hours before
such meeting. The notice shall state the place, date and hour of the meeting and
indicate at whose direction the notice is being issued. Such notice shall be
deemed given, if mailed, three days after being deposited in the United States
mail, postage prepaid, or if oral, telegraphic or by other public
instrumentality or method of delivery, when received or when deposited with the
telegraph company or other public instrumentality, as the case may be. Special
meetings shall be called by the President upon the written request of any two
directors or of one director if there shall be less than three directors.
SECTION 2. Waiver of Notice. Notice of a special meeting or of a regular
----------------
meeting of the Board of Directors need not be given to any director who submits
a signed waiver of notice whether before or after the meeting, or who attends
the meeting without protesting, prior thereto or at its commencement, the lack
of notice to him.
A notice, or waiver of notice, need not specify the purpose or purposes of
any special meeting or regular meeting of the Board of Directors.
SECTION 3. Quorum; Action by the Board; Adjournment. At all meetings of
----------------------------------------
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business, except that when the number
of directors constituting the whole Board of Directors shall be an even number,
one-half of that number shall constitute a quorum, provided that a quorum shall
be not less than two (unless there is only one directorship).
<PAGE>
-9-
The vote of a majority of the directors present at a meeting at the time of
the vote, if a quorum is then present, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the Certificate
of Incorporation, by these By-Laws or by law.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time and place.
SECTION 4. Action Without a Meeting. Any action required or permitted to
------------------------
be taken by the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board of Directors or of the committee consent
in writing to the adoption of a resolution authorizing the action, provided that
the number of directors then in office or serving on such committee and taking
such action shall constitute a quorum for such action. Such resolution and the
written consent thereto by the members of the Board of Directors or the
committee shall be filed with the minutes of the proceedings of the Board of
Directors or the committee.
SECTION 5. Presumption of Assent. A director of the Corporation who is
---------------------
present at a meeting of the Board of Directors or any committee thereof at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
SECTION 6. Conference Telephone. Any one or more members of the Board of
--------------------
Directors or any committee thereof may participate in a meeting of the Board of
Directors or the
<PAGE>
-10-
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
ARTICLE IV.
-----------
OFFICERS
--------
SECTION 1. Officers. The officers of the Corporation shall be elected or
--------
appointed by the Board of Directors and shall be a President, Treasurer and a
Secretary. The Board of Directors may also elect or appoint, from time to time,
one or more Assistant Treasurers, one or more Vice Presidents, one or more
Assistant Secretaries and such other officers with such duties as may be
delegated to them, as the Board of Directors may determine. The officers of the
Corporation need not be directors, and any one person may hold two or more
offices, provided that the offices of President and Secretary shall not be held
by the same person.
SECTION 2. Term of Office; Removal. Each officer shall hold office at the
-----------------------
pleasure of the Board of Directors for such term as may be prescribed by the
Board of Directors and until his successor has been elected or appointed and
qualified. Any officer may be removed by the Board of Directors with or without
cause. The removal of an officer without cause shall be without prejudice to
his contract rights, if any. The election or appointment of an officer shall
not of itself create contract rights. Vacancies among the officers by reason of
death, resignation, removal or other causes shall be filled by the Board of
Directors.
SECTION 3. Powers and Duties. The officers of the Corporation shall each
-----------------
have such powers and authority and perform such duties in the management of the
property and affairs of the Corporation as are imposed by these By-Laws and from
time to time prescribed by the Board of Directors. To the extent not so imposed
or prescribed, the officers of the Corporation shall
<PAGE>
-11-
each have such powers and authority and perform such duties in the management of
the affairs and property of the Corporation, subject to the control of the Board
of Directors, as generally pertain to their respective offices.
Securities of other corporations held by the Corporation may be voted on
behalf of the Corporation by any officer designated by the Board of Directors
and, in the absence of any such designation, by the President, any Vice-
President, the Secretary or the Treasurer.
The Board may require any officer to give security for the faithful
performance of his duties.
SECTION 4. President. The President shall preside at all meetings of the
---------
Board of Directors and shareholders. He shall be the Chief Executive Officer of
the Corporation and shall have general charge and direction of the business of
the Corporation subject to the control of the Board of Directors.
SECTION 5. Vice-Presidents. The Vice-President, if any, or, if there
---------------
shall be more than one, the Vice-Presidents in the order of seniority or in any
other order determined by the Board of Directors shall, in the event of the
absence or disability of the President, perform the duties and exercise the
powers of the President. The Vice-President or Vice-Presidents shall assist the
President in the performance of his duties.
SECTION 6. Treasurer. The Treasurer, if any, shall keep the fiscal
---------
accounts of the Corporation, including an account of all moneys received or
disbursed. At intervals of not more than twelve (12) months, he shall prepare
or have prepared for the Corporation a balance sheet showing the financial
condition of the Corporation as of a date not more than four (4) months prior
thereto, and a profit and loss statement respecting its operation for the twelve
(12) months preceding such date. The balance sheet and the profit and loss
statement shall be deposited at the
<PAGE>
-12-
principal office of the Corporation and shall be kept by the Corporation for at
least ten (10) years from such date. In addition, within thirty (30) days after
the preparation of each such balance sheet and profit and loss statement, the
Corporation shall mail a copy thereof to each shareholder of record. He may
endorse for and on behalf of the Corporation, checks, notes and other
obligations and shall deposit the same and all moneys and valuables in the name
of, and to the credit of the Corporation in such banks and depositories as the
Board of Directors shall designate. The Treasurer shall have custody of and
shall have the power to endorse for transfer on behalf of the Corporation,
stock, securities or other investment instruments owned by the Corporation.
SECTION 7. Assistant Treasurer. The Assistant Treasurer, if any, shall
-------------------
assist the Treasurer in the performance of his duties and shall carry out the
duties of the Treasurer whenever the Treasurer is unable to perform such duties.
SECTION 8. Secretary. The Secretary shall keep the minutes of the
---------
meetings of shareholders and the Board of Directors and shall give notice of all
such meetings as required in these By-Laws. He shall have custody of the seal
of the Corporation and all books, records and papers of the Corporation, except
those in the custody of the Treasurer or some other person authorized to have
custody and possession thereof by a resolution of the Board of Directors.
SECTION 9. Assistant Secretary. The Assistant Secretary, if any, shall
-------------------
assist the Secretary in the performance of his duties and shall carry out the
duties of the Secretary whenever the Secretary is unable to perform such duties.
SECTION 10. Compensation. The compensation of all officers of the
------------
Corporation shall be fixed by the Board of Directors from time to time, or by
the President, if the Board of Directors shall delegate the authority to fix
compensation of officers to the President. No officer
<PAGE>
-13-
shall be prevented from receiving such salary by reason of the fact that he is
also a director of the Corporation.
ARTICLE V.
----------
INDEMNITY
---------
SECTION 1. Indemnification of Shareholders, Officers, Directors and
--------------------------------------------------------
Certain Other Parties. The Corporation shall be bound by and comply with the
- ---------------------
provisions of Section 33-320a of the Connecticut Stock Corporation Act,
pertaining to indemnification of corporate shareholders, officers, directors,
employees, agents and eligible outside parties (as defined in said Section).
ARTICLE VI.
-----------
SHARE CERTIFICATES
------------------
SECTION 1. Form of Share Certificates. The shares of the stock of the
--------------------------
Corporation shall be represented by certificates, in such form as the Board of
Directors may from time to time prescribe, signed by the President or a Vice
President and the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall be sealed with the seal of the Corporation or a
facsimile thereof. All certificates shall be consecutively numbered and the
name of the person owning the shares represented thereby and the number of such
shares and the date of issue shall be entered upon the Corporation's books.
SECTION 2. Registration of Transfers. Shares of the stock of the
-------------------------
Corporation shall be transferable upon the books of the Corporation, only by the
person specified in the certificate representing such shares or by special
indorsement to be entitled to such shares, or by the duly authorized attorney or
legal representative of such person. A new certificate shall be issued to the
purchaser or assignee upon surrender of the original share certificate properly
endorsed.
<PAGE>
-14-
In case of loss or destruction of a share certificate, another may be
issued in its place upon proof of loss or destruction and the giving of such
security as shall be satisfactory to the Board of Directors.
ARTICLE VII.
------------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 1. Corporate Seal. The corporate seal shall have inscribed
--------------
thereon the name of the Corporation, the state and year of its incorporation and
shall be in such form as the Board of Directors may from time to time determine.
SECTION 2. Fiscal Year. The fiscal year of the Corporation shall be the
-----------
twelve months ending December 31 or such other period as may be fixed by
resolution of the Board of Directors.
SECTION 3. Checks and Notes. All checks or demands for money and notes or
----------------
other instruments evidencing indebtedness or obligations of the Corporation
shall be signed by such officer or officers or other person or persons as shall
be thereunto authorized from time to time by the Board of Directors.
ARTICLE VIII.
-------------
AMENDMENTS
----------
SECTION 1. Power to Amend. These By-Laws may be altered, amended or
--------------
repealed, and new By-Laws may be adopted, by the vote of shareholders holding a
majority of the voting power of shares entitled to vote thereon, or by vote of a
majority of the entire Board of Directors of the Corporation. Any notice of a
meeting of shareholders or of the Board of Directors at which these By-Laws are
to be altered, amended, repealed or at which new By-Laws are to be adopted,
shall include notice of such proposed action.
<PAGE>
-15-
The foregoing is a true copy of the By-Laws of On Demand Marketing, Inc.,
adopted by the incorporator and ratified by the Board of Directors as of the 22
day of October, 1993.
/s/ Alfred J. Favata
________________________________
Alfred J. Favata
Secretary
<PAGE>
EXHIBIT 3.11
ARTICLES OF ORGANIZATION
DOMESTIC LIMITED LIABILITY COMPANY
LIC. Rev. 9/94
Secretary of State of the State of Connecticut
30 Trinity Street
Hartford, CT 06106
NOTE: This form constitutes only the minimum statutory requirements for filing
with the Office of the Secretary of the State. Should you wish to include
additional information, you may attach a plain sheet of 8 1/2 x 11 paper to the
document.
1. The name of the limited liability company:
Technology Events Company, LLC
---------------------------------------------------------------------------
2. The nature of business to be transacted or the purpose to be promoted or
carried out by the limited liability company is as follows:
To engage in any lawful act or activity for which limited liability
companies may be formed under the Connecticut Limited Liability Company Act
and the general laws of the State of Connecticut. Management of the
limited liability company shall be vested in one or more managers.
3. Principal office address: (P.O. Box is not acceptable) 363 Reef Road,
--- -------------------
Fairfield, CT 06430
---------------------------------------------------------------------------
4. Statutory agent for service of process, P.A. 93-267 (S)5:
Name: Alfred J. Favata Business Address: 363 Reef Road
-------------------- ------------------------------
Fairfield, CT 06430
------------------------------------------------
Residence Address: 3171 Bronson Road
------------------------------------------------
Fairfield, CT 06430
------------------------------------------------
5. The latest date upon which the limited liability company will dissolve:
December 31, 2045
---------------------------
<PAGE>
-2-
EXECUTION
---------
6. Dated this ____ day of May ____, 1995
7. Andrea M. Popik 8. /s/ Andrea M. Popik
---------------------------------------- ________________________
Name of Organizer (print or type) Signature
/s/ Alfred J. Favata
9. Acceptance of appointed statutory agent. 10. ________________________
Signature
Alfred J. Favata
----------------------------------------
Name (print or type)
______________________________________________________________________________
For Official Use Only Rec; CC:
______________________________________
______________________________________
______________________________________
______________________________________
______________________________________
Please provide filer's name and complete
address for mailing receipt
<PAGE>
EXHIBIT 3.12
AGREEMENT OF MERGER
This Agreement of Merger (the "Agreement") is dated as of April 30, 1998,
by and between CIGAM Merger Corp., a California corporation ("Merger Sub") and
Men's Apparel Guild in California, Inc., a California corporation ("MAGIC")
(MAGIC and Merger Sub being hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
A. Merger Sub's authorized stock consists of 1,000 shares of common stock,
no par value per share, all of which shares are issued and outstanding.
B. Advanstar Communications Inc., a New York corporation ("Advanstar"), is
the owner of all of the issued and outstanding capital stock of Merger Sub.
C. Advanstar, Merger Sub and MAGIC have entered into an Agreement and Plan
of Merger, dated March 6, 1998, as amended (the "Merger Agreement"), which
contemplates the merger of Merger Sub with and into MAGIC (the "Merger") in
accordance with this Agreement.
D. The respective Boards of Directors of Merger Sub and MAGIC deem it
advisable and in the best interest of each such corporation and their respective
shareholders that Merger Sub be merged with and into MAGIC as provided herein
and in the Merger Agreement, and they have accordingly adopted resolutions
approving the Merger Agreement and this Agreement.
E. Advanstar, as the sole shareholder of Merger Sub, has approved this
Agreement in accordance with the laws of California, and the shareholders of
MAGIC have approved this Agreement in accordance with the laws of California and
the Articles of Incorporation of MAGIC at a special meeting of the shareholders
of MAGIC.
Capitalized terms not otherwise defined herein shall have the meanings
given them in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
At the Effective Time (as defined below) and subject to the applicable
provisions of the Corporations code of California ("California Law"), Merger Sub
shall be merged with and into MAGIC, the separate corporate existence of Merger
Sub shall cease, and MAGIC shall continue at the surviving corporation and as a
wholly-owned subsidiary of Advanstar. MAGIC as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving Corporation".
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of California Law. Without limiting the generality of the
foregoing and
<PAGE>
-2-
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Merger Sub and MAGIC shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub and MAGIC shall
become the debts, liabilities and duties of the Surviving Corporation. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest the Surviving Corporation
with the full right, title and possession to all assets, property, rights,
privileges, immunities, powers and franchises of Merger Sub, the officers and
directors of the Surviving Corporation are fully authorized in the name of
either or both of the Constituent corporations or otherwise to take all such
action. As of the Effective Time, the Articles of Incorporation of the Surviving
Corporation shall be amended and restated to read as set forth in Exhibit A
---------
attached hereto.
ARTICLE II
EFFECTIVE TIME
As used in this Agreement, the term "Effective Time" shall mean the time
Secretary of State of the State of California files this Agreement and the
officers' certificates required by California Law with the Secretary of State of
the State of California.
ARTICLE III
MANNER AND BASIS OF EXCHANGING SHARES
A. Exchange Terms of MAGIC Common Stock. Subject to the terms and
------------------------------------
conditions of this Agreement, by virtue of the Merger and without any action on
the part of MAGIC or the holder of any shares (the "MAGIC Shareholders") of the
common stock, no par value, of MAGIC (the "MAGIC Common Stock"), each share of
MAGIC Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares in the treasury of MAGIC, all of which shall be
canceled, and Dissenting Shares, as defined below) shall, as of the Effective
Time and pursuant to the Merger Agreement, be canceled and extinguished and be
converted automatically into a right to receive a pro-rata share of $230,200,000
from which they shall pay on a pro-rata basis all costs, fees and expenses of
MAGIC's accountants, investment bankers and lawyers and payments to certain
MAGIC executives and employees, and shall deposit $3,000,000 in escrow (the
"Escrow Fund") in accordance with the Merger Agreement and the Adjustment Escrow
Agreement (the amount remaining after such payments and deposit in escrow is
herein referred to as the "Aggregate merger Consideration"). Each of such
shares of MAGIC Common Stock shall also have the right to receive a pro-rata
share of the Net Worth Surplus, if any, as defined and in accordance with the
Merger Agreement. Shares of MAGIC Common Stock held by MAGIC Shareholders who
(1) have not voted such shares in favor of the Merger, (2) shall have delivered
a written demand for appraisal of such shares in the manner provided by
California Law and (3) shall not have effectively withdrawn or lost such right
to appraisal as of the Effective Time ("Dissenting Shares") shall not be
converted automatically into a right to receive a pro-rata share of the merger
consideration, but the holders of Dissenting Shares shall be entitled only to
such rights as are granted by California Law. If a holder of Dissenting Shares
shall withdraw his or her demand for such payment and appraisal or shall become
ineligible for such payment and appraisal under California Law, then, as of the
occurrence of such event of withdrawal or ineligibility, such holder's
Dissenting Shares shall cease to be Dissenting Shares and shall be converted
into the right to receive, and shall be
<PAGE>
-3-
exchangeable for, the merger consideration, without interest thereon, into which
such Dissenting Shares would have been converted pursuant to this paragraph A of
Article III.
B. Exchange Procedures
-------------------
1. MAGIC Common Stock. At or after the Effective Time, each MAGIC
------------------
Shareholder shall surrender to the Exchange Agent all certificate(s)
representing shares of MAGIC Common Stock (the "MAGIC Stock Certificates") in
accordance with the requirements of the Merger Agreement, the Exchange Agent
Agreement and the Exchange Agent, if any. At or immediately prior to the
Effective Time, Advanstar will, or will cause Merger Sub to, deliver (a) the
Aggregate Merger Consideration to the Exchange Agent, who will make appropriate
payments to the MAGIC Shareholders as soon as practicable after the Effective
Time, and (b) the Escrow Fund to the Escrow Agent. Within five (5) days of the
Determination Date, Advanstar will, or will cause the Surviving Corporation to,
deliver the Net Worth Surplus, if any, and the Escrow Agent will deliver the
amount of the Escrow Fund payable to the MAGIC Shareholders, each to the
Exchange Agent, who will make appropriate payments to the MAGIC Shareholders as
soon as practicable thereafter in accordance with the Exchange Agent Agreement.
2. Merger Sub Common Stock. Each share of common stock of the Merger
-----------------------
Sub issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into and represent the right to receive one share of common stock
of the Surviving Corporation.
3. Transfers. If payment is to be made to a person other than the
---------
person in whose name the surrendered MAGIC Stock Certificate is registered, it
shall be a condition of payment that the MAGIC Stock Certificate so surrendered
shall be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the MAGIC
Stock Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
4. No Liability. Notwithstanding anything to the contrary in this
------------
Article III, neither Advanstar nor any party to this Agreement shall be liable
to the MAGIC Shareholders for any amount of the merger consideration if such
holder fails to present his or her MAGIC Stock Certificate to the Exchange
Agent.
C. Instructions to Exchange Agent. At or prior to the Closing, MAGIC
------------------------------
shall deliver to the Exchange Agent instructions, which may be amended from time
to time thereafter (the "MAGIC Instructions"), identifying each of the holders
of MAGIC Common Stock and the portion of the merger consideration that each such
holder is entitled to receive in the Merger. The Exchange Agent shall be
entitled to rely without investigation on the information set forth in the MAGIC
Instructions in delivering the merger consideration to the MAGIC Shareholders.
Notwithstanding anything to the contrary in this Agreement of Merger, neither
the Exchange Agent nor any successor thereto shall be obligated to deliver any
portion of the merger
<PAGE>
-4-
consideration to the MAGIC Shareholders unless and until MAGIC shall have
delivered the MAGIC Instructions.
D. No Further Rights in MAGIC Common Stock. The Aggregate Merger
---------------------------------------
Consideration delivered upon the surrender for exchange of shares of MAGIC
Common Stock in accordance with the terms hereof, and the right to receive, in
accordance with the terms of the Exchange Agent Agreement, a share of the Escrow
Fund, if payable, and the Net Worth Surplus, if any, shall be deemed to been
issued in full satisfaction of all rights pertaining to such shares of MAGIC
Common Stock and there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of MAGIC Common Stock which were
outstanding immediately prior to the Effective Time.
E. Lost, Stolen or Destroyed MAGIC Stock Certificates. In the event any
--------------------------------------------------
MAGIC Stock Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall distribute the appropriate pro-rata share of the merger
consideration to the holder of such MAGIC Stock Certificate only upon the
making, and delivery to the Exchange Agent, of an affidavit of that fact by such
holder.
ARTICLE IV
ABANDONMENT OF MERGER
This Agreement shall be terminated and abandoned without further action by
the parties hereto in the event that the Merger Agreement is terminated in
accordance with its terms, and in such event this Agreement of Merger shall have
no further force and there shall be no liability on the part of the parties
hereto to each other, except to the extent otherwise provided in the Merger
Agreement.
ARTICLE V
AMENDMENT
Subject to applicable law, this Agreement may be amended or modified or
supplemented only by written agreement of Merger Sub and MAGIC, duly authorized
by each of their respective Boards of Directors, at any time prior to the filing
of the officers' certificates required by California law with respect to the
Merger with the Secretary of State of the State of California; provided,
however, that no such amendment, modification or supplement shall change the
amount or the form of the consideration to be furnished to the MAGIC
Shareholders in accordance with Article III hereof or change any principle terms
without obtaining shareholder approval as required by law.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
MEN'S APPAREL GUILD IN
CALIFORNIA, INC.
/s/ Joseph Loggia
By:______________________________
Joseph Loggia
President
/s/ Carol Maller
By:______________________________
Carol Maller
Secretary
CIGAM MERGER CORP.
/s/ James M. Alic
By:______________________________
James M. Alic
Vice President
/s/ Martin C. (Skip) Farber
By:______________________________
Martin C. (Skip) Farber
Assistant Secretary
<PAGE>
Exhibit A
---------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
FIRST: The name of this corporation is Men's Apparel Guild In California,
Inc.
SECOND: The Purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the
trust company business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
THIRD: This Corporation is authorized to issue only one class of shares, all
of which shall be known as Common Stock, without par value. The total
number of shares which this corporation is authorized to issue is
1,000.
FOURTH: The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under
California law. This corporation is also authorized, to the fullest
extent permissible under California law, to indemnify its agents (as
defined in Section 317 of the California Corporations Code), whether
by by-law, agreement or otherwise, for breach of duty to this
corporation and its shareholders in excess of that expressly permitted
by Section 317 and to advance defense expenses to its agents in
connection with such matters as they are incurred, subject to the
limits on such excess indemnification set forth in Section 204 of the
California Corporations Code. If, after the effective date of this
Article, California law is amended in a manner which permits a
corporation to limit the monetary or other liability of its directors
or to authorize indemnification of, or advancement of such defense
expenses to, its directors or other persons, in any such case to a
greater extent than is permitted on such effective date, the
references in this Article to "California law" shall to that extent be
deemed to refer to California law as so amended.
<PAGE>
OFFICERS' CERTIFICATE
OF
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
Joseph Loggia and Carol Maller hereby certify that:
1. They are the President and Secretary, respectively, of Men's Apparel
Guild in California, Inc., a California corporation (the "Corporation").
2. This certificate is attached to the Agreement of Merger dated as of
April 30, 1998, providing for the merger of CIGAM Merger Corp. with and into
this Corporation.
3. The Agreement of Merger in the form attached hereto has been approved
by the board of directors of the Corporation.
4. The principal terms of the Agreement of Merger in the form attached
hereto were approved by the holders of the requisite number of shares of the
Corporation in accordance with the California General Corporation Law; the total
number of outstanding shares of stock entitled to vote with respect thereto was
33,523 shares of Common Stock. The number of such shares voting in favor of the
principal terms of the Agreement equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common Stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Dated: April 26, 1998
/s/ Joseph Loggia
_______________________________
Joseph Loggia
President
/s/ Carol Maller
_______________________________
Carol Maller
Secretary
<PAGE>
OFFICERS' CERTIFICATE
OF
CIGAM MERGER CORP.
James M. Alic and Martin C. (Skip) Farber hereby certify that:
1. They are the President and Assistant Secretary, respectively, of CIGAM
Merger Corp., a California corporation (the "Corporation").
2. This certificate is attached to the Agreement of Merger dated as of
April 30, 1998, providing for the merger of this Corporation with and into Men's
Apparel Guild in California, Inc.
3. The Agreement of Merger in the form attached hereto has been approved
by the board of directors of the Corporation.
4. The principal terms of the Agreement of Merger in the form attached
hereto were approved by the holders of the requisite number of shares of the
Corporation in accordance with the California General Corporation Law; the total
number of outstanding shares of each class entitled to vote with respect thereto
was 1,000 shares of Common Stock. The number of such shares voting in favor of
the principal terms of the Agreement equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common Stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Dated: April 26, 1998
/s/ James M. Alic
_______________________________
James M. Alic
Vice President
/s/ Martin C. (Skip) Farber
_______________________________
Martin C. (Skip) Farber
Assistant Secretary
<PAGE>
EXHIBIT 3.13
SECOND AMENDED AND RESTATED
BY-LAWS FOR THE REGULATION
OF
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
SHAREHOLDERS
------------
1. Annual Meeting. Unless the Board of Directors or the President of the
--------------
corporation selects a different time or date, the annual meeting of shareholders
shall be held at 11:00 a.m. on the last Wednesday in February. The annual
meeting shall be for the purpose of electing a Board of Directors and
transacting such other business as may properly be brought before the meeting.
2. Special Meeting. Special meetings of shareholders may be called at any
---------------
time by the Board of Directors, the Chairman of the Board, the President or the
holders of shares entitled to cast not less than one-tenth of the votes at the
meeting.
3. Place. Meetings of shareholders shall be held at the principal
-----
executive office of the corporation or at any other place, within or without
California, which is designated by the Board of Directors or the President.
4. Notice.
------
(a) Annual and Special Meetings. A written notice of each meeting of
---------------------------
shareholders shall be given not more than 60 days and, except as provided below,
not less than 10 (or, if sent by third-class mail, 30) days before the meeting
to each shareholder entitled to vote at the meeting. The notice shall state the
place, date and hour of the meeting and, if directors are to be elected at the
meeting, the names of the nominees intended to be presented by the Board of
Directors for election. The notice shall also state (i) in the case of an
annual meeting, those matters which the Board of Directors intends to present
for action by the shareholders, and (ii) in the case of a special meeting, the
general nature of the business to be transacted and that no other business may
be transacted. Notice shall be delivered personally, by mail or other means
addressed to each such shareholder at the address of the shareholder appearing
on the books of the corporation, the address given by the shareholder to the
corporation for the purpose of notice or as otherwise provided by law. Upon
written request to the Chairman of the Board, the President, the Secretary or
any Vice President of the corporation by any person (other than the Board of
Directors) entitled to call a special meeting of shareholders, the person
receiving such request shall cause notice to be given to the shareholders
entitled to vote that a meeting will be held at a time requested by the person
calling the meeting not less than 35 nor more than 60 days after receipt of the
request.
(b) Adjourned Meetings. Notice of an adjourned meeting need not be
------------------
given if (i) the meeting is adjourned for 45 days or less, (ii) the time and
place of the adjourned meeting
<PAGE>
are announced at the meting at which the adjournment is taken and (iii) no new
record date is fixed for the adjourned meeting. Otherwise, notice of the
adjourned meeting shall be given as in the case of an original meeting.
5. Record Date. The Board of Directors may fix in advance a record date
-----------
for the determination of the shareholders entitled to notice of any meeting, to
vote, to receive any dividend or other distribution or allotment of rights or to
exercise any rights. The record date shall be not more than 60 nor less than 10
days prior to the date of the meeting nor more than 60 days prior to such other
action. If no record date is fixed, the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the business day next preceding the day on which notice is
given or, if notice is waived, the close of business on the business day next
preceding the day on which the meeting is held. The record date for determining
shareholders entitled to give consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors has been taken, shall be
the day on which the first written consent is given. The record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto, or the 60th day prior to the date of such other action, whichever is
later. Except as otherwise provided by law, only shareholders at the close of
business on the record date are entitled to notice and to vote, to receive the
dividend, distribution or allotment of rights or to exercise rights, as the case
may be, notwithstanding any transfer of shares on the books of the corporation
occurring after the record date. Except as otherwise provided by law, the
corporation shall be entitled to treat the holder of record of any shares as the
holder in fact of such shares and shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of any other person,
whether or not the corporation shall have express or other notice of such claim
or interest. A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholders shall apply to any adjournment of the
meeting unless the Board of Directors fixes a new record date. The Board of
Directors shall fix a new record date if the adjourned meeting takes place more
than 45 days after the date set for the original meeting.
6. Meeting Without Regular Call and Notice. The transactions of any
---------------------------------------
meeting of shareholders, however called and noticed and wherever held, are as
valid as though had at a meeting duly held after regular call and notice if a
quorum is present in person or by proxy and if, either before or after the
meeting, each of the persons entitled to vote who is not present at the meeting
in person or by proxy signs a written waiver of notice, a consent to the holding
of the meeting or an approval of the minutes of the meeting. Attendance of a
shareholder at a shareholders' meeting shall constitute a waiver of notice of
such meeting unless, at the beginning of the meeting, the shareholder objects to
the transaction of any business because the meeting was not properly called or
convened or, with respect to the consideration of a matter required to be
included in the notice for the meeting which was not so included, the
shareholder expressly objects to such consideration at the meeting.
7. Quorum and Required Vote. A majority of the shares entitled to vote,
------------------------
represented in person or by proxy, constitutes a quorum for the transaction of
business. No business may be transacted at a meeting in the absence of a quorum
other than the adjournment of the meeting,
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<PAGE>
except that if a quorum is present at the commencement of the meeting, business
may be transacted until the meeting is adjourned even though the withdrawal of
shareholders results in less than a quorum. If a quorum is present at a meeting,
the affirmative vote of the holders of shares having a majority of the voting
power of the shares represented and voting at the meeting on any matter shall be
the act of the shareholders unless the vote of a larger number or voting by
classes is required by law or the Articles of Incorporation. If a quorum is
present at the commencement of a meeting but the withdrawal of shareholders
results in less than a quorum, the affirmative vote of a majority of shares
required to constitute a quorum shall be the act of the shareholders unless the
vote of a larger number is required by law or the Articles of Incorporation. Any
meeting of shareholders, whether or not a quorum is present, may be adjourned by
the vote of a majority of the shares represented at the meeting.
8. Proxies. A shareholder may be represented at any meeting of
-------
shareholders by a written proxy signed by the person entitled to vote or by such
person's duly authorized attorney-in-fact. A proxy must bear a date within 11
months prior to the meeting, unless the proxy specifies a different length of
time. A revocable proxy is revoked by a writing delivered to the Secretary of
the corporation stating that the proxy is revoked or by a subsequent proxy
executed and delivered to the Secretary by, or by attendance at the meeting and
voting in person by, the person executing the proxy.
9. Voting. Except as provided below or as otherwise provided by the
------
Articles of Incorporation or by law, a shareholder shall be entitled to one vote
for each share held of record on the record date fixed for the determination of
the shareholders entitled to vote or, if no such date is fixed, the date
determined in accordance with law. Upon the demand of any shareholder made at a
meeting before the voting begins, the election of directors shall be by ballot.
At any election of directors, shareholders may cumulate votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shares are entitled or distribute
votes according to the same principle among as many candidates as desired. No
shareholder shall be entitled to cumulate votes for any one or more candidates
unless such candidate or candidates' names have been placed in nomination prior
to the voting and at least one shareholder has given notice at the meeting prior
to the voting of such shareholder's intention to cumulate votes.
10. Election Inspectors. One or three election inspectors may be
-------------------
appointed by the Board of Directors in advance of a meeting of shareholders or
at the meeting by the chairman of the meeting. If not previously chosen, one or
three inspectors shall be appointed by the chairman of the meeting if a
shareholder or proxyholder so requests. When inspectors are appointed at the
request of a shareholder or proxyholder, the majority of shares represented in
person or by proxy shall determine whether one or three inspectors shall be
chosen. The election inspectors shall determine all questions concerning the
existence of a quorum and the right to vote, shall tabulate and determine the
results of voting and shall do all other acts necessary or helpful to the
expeditious and impartial conduct of the vote. If there are three inspectors,
the decision, act or certificate of a majority of the inspectors is effective as
if made by all.
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<PAGE>
11. Action Without Meeting. Except as provided below or by the Articles
----------------------
of Incorporation, any action which may be taken at a meeting of shareholders may
be taken without a meeting and without prior notice if a consent in writing
setting forth the action so taken is signed by the holders of outstanding shares
having not less than the minimum number of votes which would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
on such action were present and voted. Unless the consents of all shareholders
entitled to vote have been solicited in writing, the corporation shall give to
those shareholders entitled to vote who have not consented in writing (i) a
written notice at least 10 days before consummation of an action authorized by
shareholders without a meeting covered by the following Sections of the
California Corporations Code: 310 (certain transactions involving interested
directors), 317 (indemnification of corporate agents), 1201 (reorganizations)
and 2007 (certain distributions of assets) and (ii) a written notice promptly
after the taking of any other action approved by shareholders without a meeting.
Subject to Section 305(b) of the California Corporations Code, directors may not
be elected by written consent except by unanimous written consent of all shares
entitled to vote for the election of directors.
12. Reports. The annual report to shareholders specified in Section 1501
-------
of the California Corporations Code is dispensed with, except as the Board of
Directors may otherwise determine, as long as there are less than 100 holders of
record of the corporation's shares. Any such annual report sent to shareholders
shall be sent at least 15 (or, if sent by third-class mail, 35) days prior to
the next annual meeting of shareholders and not later than 120 days after the
close of the fiscal year.
13. Lost Stock Certificates. The corporation may cause a new stock
-----------------------
certificate to be issued in place of any certificate previously issued by the
corporation alleged to have been lost, stolen or destroyed. The corporation
may, at its discretion and as a condition precedent to such issuance, require
the owner of such certificate to deliver an affidavit stating that such
certificate was lost, stolen or destroyed or to give the corporation a bond or
other security sufficient to indemnify it against any claim that may be made
against it, including any expense or liability, on account of the alleged loss,
theft or destruction or the issuance of a new certificate.
BOARD OF DIRECTORS
------------------
14. Number. The authorized number of directors of this corporation shall
------
be not less than three (3) nor more than five (5), provided, that (i) so long as
the Corporation has only one shareholder, the authorized number of directors
shall be no less than (1), and (ii) so long as the Corporation has only two
shareholders, the authorized number of directors shall be no less than two (2).
The exact number of directors shall be fixed by resolution of the Board of
Directors. The indefinite number of directors may be changed or a definite
number fixed without provision for an indefinite number by an amendment to the
Articles of Incorporation or by amendment to these By-laws duly adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote. An amendment reducing the minimum number of directors to a
number less than five cannot be adopted if the votes cast against its adoption
at a meeting of the shareholders, or the shares not consenting in the case of
action by written consent, are equal to more than 16-2/3% of the outstanding
shares entitled to vote. No amendment may change the
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<PAGE>
maximum number of authorized directors to a number greater than two times the
minimum number of directors minus one.
15. Powers. Subject to the limitations imposed by law or contained in the
------
Articles of Incorporation, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the ultimate
direction of the Board of Directors.
16. Election, Term of Office and Vacancies. At each annual meeting of
--------------------------------------
shareholders, directors shall be elected to hold office until the next annual
meeting. Each director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which the director was elected
and until a successor has been elected. The Board of Directors may declare
vacant the office of any director who has been declared to be of unsound mind by
court order or convicted of a felony. Vacancies on the Board of Directors not
caused by removal may be filled by a majority of the directors then in office,
regardless of whether they constitute a quorum, or by a sole remaining director.
The shareholders may elect a director at any time to fill any vacancy not
filled, or which cannot be filled, by the Board of Directors. No reduction in
the authorized number of directors shall have the effect of removing any
director prior to the expiration of his term of office.
17. Removal. Except as provided below, any or all of the directors may be
-------
removed without cause if such removal is approved by the affirmative vote or
written consent of a majority of the outstanding shares entitled to vote.
Unless the entire Board of Directors is so removed, no director may be removed
if (i) the votes cast against removal, or not consenting in writing to such
removal in the case of written consent, would be sufficient to elect such
director if voted cumulatively at an election at which the same total number of
votes was cast or, if such action is taken by written consent, all shares
entitled to vote were voted and (ii) the entire number of directors authorized
at the time of the director's most recent election were then being elected.
18. Resignation. Any director may resign by giving notice to the Chairman
-----------
of the Board, the President, the Secretary or the Board of Directors. The
resignation of a director shall be effective when given unless the director
specifies a later time. The resignation shall be effective regardless of
whether it is accepted by the corporation.
19. Compensation. If the Board of Directors so resolves, the directors,
------------
including the Chairman of the Board, shall receive compensation and expenses of
attendance for meetings of the Board of Directors and of committees of the
Board. Nothing herein shall preclude any director from serving the corporation
in another capacity and receiving compensation for such service.
20. Committees. The Board of Directors may, by resolution adopted by a
----------
majority of the authorized number of directors, designate one or more
committees, each consisting of two or more directors, to serve at the pleasure
of the Board. The Board may designate one or more directors as alternate
members of a committee who may replace any absent member at any meeting of the
committee. To the extent permitted by the resolution of the Board of Directors,
a committee may exercise all of the authority of the Board except:
-5-
<PAGE>
(a) the approval of any action which, under the California
Corporations Code, must be approved by the outstanding shares or approved by the
shareholders;
(b) the filling of vacancies on the Board or any committee;
(c) the fixing of compensation of the directors for serving on the
Board or any committee;
(d) the adoption, amendment or repeal of By-laws;
(e) the amendment or repeal of any resolution of the Board which by
its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except at a
rate, in a periodic amount or within a price range determined by the Board; and
(g) the appointment of any other committees of the Board or the
members of such committees.
21. Inspection of Records and Properties. Each director may inspect all
------------------------------------
books, records, documents and physical properties of the corporation and its
subsidiaries at any reasonable time. Inspections may be conducted either by the
director or the director's agent or attorney. The right of inspection includes
the right to copy and make extracts.
22. Time and Place of Meetings and Telephone Meetings. Unless the Board
-------------------------------------------------
of Directors determines otherwise, the Board shall hold a regular meeting during
each quarter of the corporation's fiscal year. One such meeting shall take
place immediately following the annual meeting of shareholders. All meetings of
directors shall be held at the principal executive office of the corporation or
at such other place, within or without California, as shall be designated in the
notice of the meeting or in a resolution of the Board of Directors. Directors
may participate in a meeting through use of conference telephone or similar
communications equipment, provided that all members so participating can hear
each other.
23. Call. Meetings of the Board of Directors, whether regular or special,
----
may be called by the Chairman of the Board, the President, the Secretary, any
Vice President or any two directors.
24. Notice. Regular meetings of the Board of Directors may be held
------
without notice if the time of such meetings has been fixed by the Board.
Special meetings shall be held upon four days' notice by mail or 48 hours'
notice delivered personally or by telephone or telegraph, and regular meetings
shall be held upon similar notice if notice is required for such meetings.
Neither a notice nor a waiver of notice must specify the purpose of any regular
or special meeting. Notice of the time and place of holding an adjourned
meeting need not be given to absent directors if the time and place of the
adjourned meeting is announced at the meeting at which the adjournment is taken,
but if a meeting is adjourned for more than 24 hours, notice of
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<PAGE>
the adjourned meeting shall be given prior to the time of such meeting to the
directors who were not present at the time of the adjournment.
25. Meeting Without Regular Call and Notice. The transactions of any
---------------------------------------
meeting of the Board of Directors, however called and noticed or wherever held,
are as valid as though had at a meting duly held after regular call and notice
if a quorum is present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to the holding
of the meeting or an approval of the minutes of the meeting. For such purposes,
a director shall not be considered present at a meeting if, although in
attendance at the meeting, the director protests the lack of notice prior to the
meeting or at its commencement.
26. Action Without Meeting. Any action required or permitted to be taken
----------------------
by the Board of Directors may be taken without a meeting, if all of the members
of the Board individually or collectively consent in writing to such action.
27. Quorum and Required Vote. A majority of the authorized number of
------------------------
directors then in office shall constitute a quorum for the transaction of
business, provided that, unless the authorized number of directors is one, the
number constituting a quorum shall not be less than the greater of one-third of
the authorized number of directors or two directors. Subject to the provisions
of Section 310 (relating to certain transactions involving interested directors)
and Section 317(e) (relating to indemnification of corporate agents) of the
California Corporations Code, every act or decision done or made by a majority
of the directors present at a meeting duly held at which a quorum is present is
the act of the Board. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum for
such meeting. A majority of the directors present at a meeting, whether or not
a quorum is present, may adjourn the meeting to another time and place.
28. Committee Meetings. The principles set forth in Sections 22 through
------------------
27 of these By-laws shall apply to committees of the Board of Directors and to
actions taken by such committees.
29. Indemnification of Directors and Officers.
-----------------------------------------
(a) Indemnification. As authorized by the articles of incorporation,
---------------
to the fullest extent permissible under California law and in excess of that
which is expressly permitted by Section 317 of the California Corporations Code,
the corporation shall indemnify its directors and officers against all expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
by them in connection with any proceeding, including an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer, trustee, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise
(including service with respect to employee benefit plans). To the fullest
extent permissible under California law, expenses incurred by a director or
officer seeking indemnification under this By-law in defending any proceeding
shall be advanced by the
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<PAGE>
corporation as they are incurred upon receipt by the corporation of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that the director or officer is not entitled
to be indemnified by the corporation for those expenses. If, after the effective
date of this By-law, California law is amended in a manner which permits the
corporation to authorize indemnification of or advancement of expenses to its
directors or officers, in any such case to a greater extent than is permitted on
such effective date, the references in this By-law to "California law" shall to
that extent be deemed to refer to California law as so amended. The rights
granted by this By-law are contractual in nature and, as such, may not be
altered with respect to any present or former director or officer without the
written consent of that person.
(b) Procedure. Upon written request to the Board of Directors by a
---------
person seeking indemnification under this By-law, the Board shall promptly
determine in accordance with Section 317(e) of the California Corporations Code
whether the applicable standard of conduct has been met and, if so, the Board
shall authorize indemnification. If the Board cannot authorize indemnification
because the number of directors who are parties to the proceeding with respect
to which indemnification is sought prevents the formation of a quorum of
directors who are not parties to the proceeding, then, upon written request by
the person seeking indemnification, independent legal counsel (by means of a
written opinion obtained at the corporation's expense) or the corporation's
shareholders shall determine whether the applicable standard of conduct has been
met and, if so, shall authorize indemnification.
(c) Definitions. The term "proceeding" means any threatened pending or
-----------
completed action or proceeding, whether civil criminal, administrative or
investigative. The term "expenses" includes, without limitation, attorneys' fees
and any expenses of establishing a right to indemnification.
OFFICERS
--------
30. Titles and Authority; Execution of Corporate Instruments.
---------------------------------------------------------
(a) Titles and Authority. The officers of the corporation shall
--------------------
include a Chairman of the Board or a President or both, a Secretary and a
Treasurer. The Board of Directors may also choose one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers or other officers. Any number of
offices may be held by the same person. All officers shall perform their duties
and exercise their powers subject to the direction of the Board of Directors.
(b) Execution of Corporate Instruments. The Board of Directors may,
----------------------------------
in its discretion, determine the method and designate the signatory officer or
officers, or other person or persons, to execute any corporate instrument or
document, or to sign the corporate name without limitation, except where
otherwise provided by law, and such execution or signature shall be binding upon
the corporation. Unless otherwise specifically determined by the Board of
Directors:
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<PAGE>
(a) formal contracts of the corporation, promissory notes, deeds
of trust, mortgages, and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring
the corporate seal (except for share certificates issued by the
corporation), and share certificates owned by the corporation, shall
be executed, signed, or endorsed by the President, any Vice President,
the Secretary or the Treasurer;
(b) checks drawn on banks or other depositories on funds to the
credit of the corporation, or in special accounts of the corporation,
shall be signed in such manner (which may be a facsimile signature)
and by the President, any Vice President, the Secretary, or the
Treasurer;
(c) dividend warrants, drafts, insurance policies, and all other
instruments and documents requiring the corporate signature, but not
requiring the corporate seal, shall be executed or signed by the
President, any Vice President, the Secretary, or the Treasurer;
(d) share certificates issued by the corporation shall be signed
(which may be a facsimile signature) jointly by (i) the President or a
Vice President and (ii) the secretary or an Assistant Secretary.
(c) Ratification by Shareholders. The Board of Directors may, in its
----------------------------
discretion, submit any contract or act for approval or ratification by the
shareholders at any annual meeting of shareholders or at any special meeting of
shareholders called for that purpose. Any contract or act which shall be
approved or ratified by the holders of a majority of the voting power of the
corporation represented at such meeting shall be as valid and binding upon the
Corporation as though approved or ratified by each and every shareholder of the
Corporation, unless a greater vote is required by law for such purpose.
(d) Voting of Shares Owned by the Corporation. All shares of other
-----------------------------------------
corporations owned or held by the corporation for itself or for other parties in
any capacity shall be voted, and all proxies with respect thereto shall be
executed, by the person authorized to do so by resolution of the Board or, in
the absence of such authorization, by the President, any of the Vice Presidents,
the Secretary or any Assistant Secretary.
31. Election, Term of Office and Vacancies. At its regular meeting after
--------------------------------------
each annual meeting of shareholders, the Board of Directors shall choose the
officers of the corporation. The Board may choose additional officers or fill
vacant offices at any other time. No officer must be a member of the Board of
Directors except the Chairman of the Board. The officers shall hold office
until their successors are chosen, except that the Board of Directors may remove
any officer at any time.
32. Resignation. Any officer may resign at any time upon notice to the
-----------
corporation without prejudice to the rights, if any, of the corporation under
any contract to which the officer is a party. The resignation of an officer
shall be effective when given unless the officer specifies
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<PAGE>
a later time. The resignation shall be effective regardless of whether it is
accepted by the corporation.
33. Chairman of the Board; President. If the Board of Directors elects a
--------------------------------
Chairman of the Board, such officer shall preside over all meetings of the Board
of Directors and of shareholders. If there be no Chairman of the Board, the
President shall perform such duties. The Board of Directors shall designate
either the Chairman of the Board or the President as the chief executive officer
and may prescribe the duties and powers of the chief executive officer. If
there be no Chairman of the Board, the President shall be the chief executive
officer.
34. Secretary. Unless otherwise determined by the Board of Directors or
---------
the chief executive officer, the Secretary shall have the following powers and
duties:
(a) Record of Corporate Proceedings. The Secretary shall attend
-------------------------------
meetings of shareholders and the Board of Directors and its committees and shall
record all votes and the minutes of such meetings in a book to be kept at the
principal executive office of the corporation or at such other place as the
Board may determine. The Secretary shall keep at the corporation's principal
execute office, if in California, or at its principal business office in
California if the principal execute office is not in California, the original or
a copy of these By-laws, as amended.
(b) Record of Shares. Unless a transfer agent is appointed by the
----------------
Board of Directors to keep a share register, the Secretary shall keep a share
register at the principal executive office of the corporation showing the names
of the shareholders and their addresses, the number and class of shares held by
each, the number and date of certificates issued and the number and date of
cancellation of each certificate surrendered for cancellation.
(c) Notices. The Secretary shall give such notices as may be required
-------
by law or these By-laws.
35. Treasurer. Unless the Board of Directors designates another chief
---------
financial officer, the Treasurer shall be the chief financial officer of the
corporation. Unless otherwise determined by the Board of Directors or the chief
executive officer, the Treasurer shall have custody of the corporate funds and
securities, shall keep adequate and correct amounts of the corporation's
properties and business transactions, shall disburse such funds of the
corporation as may be ordered by the Board or the chief executive officer
(taking proper vouchers for such disbursements), and shall render to the chief
executive officer and the Board, at regular meetings of the Board or whenever
the Board may require, an account of all transactions and the financial
condition of the corporation.
36. Other Officers. The other officers of the corporation, if any, shall
--------------
exercise such powers and perform such duties as the Board of Directors or the
chief executive officer shall prescribe.
37. Salaries. The Board of Directors shall fix the salary of the chief
--------
executive officer and may fix the salaries of other employees of the
corporation, including the other officers. If the
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<PAGE>
Board does not fix the salaries of the other officers, the chief executive
officer shall fix such salaries.
AMENDMENT OF
BY-LAWS
-------
38. By-laws may be adopted, amended or repealed by the affirmative vote of
a majority of the outstanding shares entitled to vote or by the Board of
Directors, except that an amendment changing the authorized number of directors
may only be adopted as provided in Section 14.
39. These By-laws shall be subject to any provision of the Articles of
Incorporation, as the same may be amended or restated from time to time, to the
extent that the California Corporations Code permits such provision, if set
forth in the Articles of Incorporation, to supervene, to modify or to constitute
an exception or supplement to any provision of these By-laws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
Exhibit 3.14
ARTICLES OF INCORPORATION
OF
MAGIC KIDS, INC.
I
The name of this corporation is Magic Kids, Inc.
II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession to be incorporated by the California Corporations
Code.
III
The name and address in this state of this corporation's initial agent
for service of process is:
Joseph Loggia
6200 Canoga Avenue, #303
Woodland Hills, California 91367
IV
The corporation is authorized to issue one class of shares of stock,
which shall be Common Stock. The total number of shares of Common Stock which
this corporation is authorized to issue One Thousand (1,000).
V
This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
<PAGE>
VI
The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
Date: March 21, 1997
/s/ Victoria C. Phelps
________________________________
Victoria C. Phelps, Incorporator
<PAGE>
CERTIFICATE OF OWNERSHIP
OF MAGIC KIDS, INC.
Glenn E. Mounger and Joseph Loggia certify that :
1. They are the Chairman of Board and Secretary, respectively, of Magic
-----
Kids Inc., a California corporation (the "Corporation).
- --------
2. The Corporation owns all of the outstanding shares of Browning/Cohen,
Inc. a California corporation.
3. The Board of Directors of the Corporation duly adopted the following
resolution:
RESOLVED, that the Corporation merge of Browning/Cohen Inc., its
wholly-owned subsidiary corporation, into itself and assume all of its
obligations pursuant to Section 1110 of the California Corporations Code.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: April 23, 1997
/s/ Glenn E. Mounger
____________________________
Glenn E. Mounger
Chairman of the Board
/s/ Joseph Loggia
____________________________
Joseph Loggia,
Secretary
<PAGE>
EXHIBIT 3.15
BYLAWS
OF
MAGIC KIDS, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICES. The Board of Directors shall fix the
location of the principal executive office of the corporation at any place
within or outside the State of California. If the principal executive office is
located outside this state, and the corporation has one or more business offices
in this state, the Board of Directors shall likewise fix and designate a
principal business office in the State of California.
Section 2. OTHER OFFICES. The Board of Directors may at any time establish
branch or subordinate offices at any place or places where the corporation is
qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at
any place within or outside the State of California designated by the Board of
Directors. In the absence of any such designation, shareholders' meetings shall
be held at the principal executive office of the corporation.
Section 2. ANNUAL MEETINGS OF SHAREHOLDERS. The annual meeting of
shareholders shall be held each year on a date and at a time designated by the
Board of Directors. At each annual meeting directors shall be elected and any
other proper business may be transacted.
Section 3. SPECIAL MEETINGS. A special meeting of the shareholders may be
called at any time by the Board of Directors, or by the Chairman of the Board,
or by the President, or by one or more shareholders holding shares in the
aggregate entitled to cast not less than 10% of the votes at any such meeting.
If a special meeting is called by any person or persons other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the Chairman of the Board, the President, any
Vice President or the Secretary of the corporation. The officer receiving such
request forthwith shall cause notice to be given to the shareholders entitled to
vote, in accordance with the provisions of Sections 4 and 5 of
<PAGE>
this Article II, that a meeting will be held at the time requested by the person
or persons calling the meeting, not less than thirty-five (35) or more than
sixty (60) days after the receipt of the request. If the notice is not given
within twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this paragraph
of this Section 3 shall be construed as limiting, fixing or affecting the time
when a meeting of shareholders called by action of the Board of Directors may be
held.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices or meetings of
shareholders shall be sent or otherwise given in accordance with Section 5 of
this Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting being noticed. The notice shall specify the place, date and
hour of the meeting and (i) in the case of a special meeting, the general nature
of the business to be transacted, or (ii) in the case of the annual meeting
those matters which the Board of Directors, at the time of giving the notice,
intends to present for action by the shareholders. The notice of any meeting at
which directors are to be elected shall include the name of any nominee or
nominees which, at the time of the notice, management intends to present for
election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the articles of incorporation, pursuant to Section 902 of such
Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of
such Code, (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of such Code, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares pursuant to Section 2007 of such
Code, the notice shall also state the general nature of such proposal.
Section 5. MANNER OF GIVING NOTICE: AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice. If no such address appears on the corporation's books or has been so
given, notice shall be deemed to have been given if sent by first-class mail or
telegraphic or other written communication to the corporation's principal
executive office, or if published at least once in a newspaper of general
circulation in the county where such office is located. Notice shall be deemed
to have been given at the time when delivery personally or deposited in the mail
or sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of such shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at such address, all
future notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available to
<PAGE>
the shareholder upon written demand of the shareholder at the principal
executive office of the corporation for a period of one year from the date of
the giving of such notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting shall be executed by the Secretary, Assistant Secretary or
any transfer agent of the corporation giving such notice, and shall be filed and
maintained in the minute book of the corporation.
Section 6. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting of shareholders shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of the majority of the shares represented at such
meeting, either in person or by proxy, but in the absence of a quorum, no other
business may be transacted at such meeting, except as provided in Section 6 of
this Article II.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless a new record date for the adjourned meeting is fixed, or unless
the adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting, if required, shall be given to each
shareholder of record entitled to vote at the adjourned meeting in accordance
with the provisions of Sections 4 and 5 of this Article II. At any adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting.
Section 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Section 702 to 704, inclusive,
of the Corporations Code of California (relating to voting shares held by a
fiduciary, in the name of a corporation or in joint ownership). Such vote may be
by voice vote or by ballot; provided, however, that all elections for directors
must be by ballot upon demand by a shareholder at any election and before the
voting begins. Any shareholder entitled to vote on any matter (other than the
election of directors) may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal, but,
if the shareholder fails to specify the number of shares such shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares such shareholder is entitled to
vote. If a quorum is
<PAGE>
present, the affirmative vote of the majority of the shares represented at the
meeting and voting on any matter (other than the election of directors),
provided that the shares voting affirmatively must also constitute at least a
majority of the required quorum, shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by the California
General Corporation Law or the articles of incorporation.
At a shareholders' meeting involving the election of directors, no
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of the shareholder's shares) unless such
candidate or candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholders' intention to cumulate votes. If
any shareholder has given such notice, then every shareholder entitled to vote
may cumulate such shareholder's votes for candidates in nomination and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which such shareholder's shares are
entitled, or distribute the shareholder's votes on the same principle among any
or all of the candidates, as the shareholder thinks fit. The candidates
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, not present in person or by proxy, signs a written waiver of
notice or a consent to the holding of the meeting, or an approval of the minutes
thereof. The waiver of notice or consent need not specify either the business to
be transacted or the purpose of any annual or special meeting of shareholders,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the waiver of notice or consent shall state the general nature of such proposal.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a waiver of
notice of such meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if such objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any annual or special meeting of shareholders may
be taken without a meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize
<PAGE>
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. In the case of election of directors, such consent shall
be effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors; provided, however, that a director may be
elected at any time to fill a vacancy not created by removal and not filled by
the directors by the written consent of the holders of a majority of the
outstanding shares entitled to vote for the election of directors. All such
consents shall be filed with the Secretary of the corporation and shall be
maintained in the corporate records. Any shareholder giving a written consent,
or the shareholder's proxy holders, or a transferee of the shares or a personal
representative of the shareholder or their respective proxy holder, may revoke
the consent by a writing received by the Secretary of the corporation prior to
the time that written consents of the number of shares required to authorize the
proposed action have been filed with the Secretary.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, the Secretary shall give prompt notice of any corporate
action approved by the shareholders without a meeting by less than unanimous
consent, to those shareholders entitled to vote who have not consented in
writing. Such notice shall be given in the manner specified in Section 5 of this
Article II. In the case of approval of (i) contracts or transactions in which a
director has a direct or indirect financial interest, pursuant to Section 310 of
the Corporations Code of California, (ii) indemnification of agents of the
corporation, pursuant to Section 317 of such Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of such Code, or (iv) a distribution in
dissolution other than in accordance with the rights of outstanding preferred
shares pursuant to Section 2007 of such Code, such notice shall be given at
least ten (10) days before the consummation of any such action authorized by any
such approval.
Section 11. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of any
meeting to vote or entitled to give consent to corporate action without a
meeting, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days prior to the date
of any such meeting nor more than sixty (60) days prior to such action without a
meeting, and in such case only shareholders of record at the close of business
on the date so fixed are entitled to notice and to vote or to give consents, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date fixed as aforesaid, except as otherwise
provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice if
given or, if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held.
<PAGE>
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the Board has been taken, shall be the day on which the first
written consent is given, or (ii) when prior action of the Board has been
taken, shall be at the close of business on the day on which the Board
adopts the resolution relating thereto, or the sixtieth (60th) day prior to
the date of such other action, whichever is later.
Section 12. PROXIES. Every person entitled to vote for directors or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
Secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, prior to the vote pursuant thereto, by a
writing delivered to the corporation stating that the proxy is revoked or by a
subsequent proxy presented to the meeting and executed by, or attendance at the
meeting and voting in person by, the person executing the proxy; or (ii) written
notice of the death or incapacity of the maker of such proxy is received by the
corporation before the vote pursuant thereto is counted; provided, however, that
no such proxy, unless otherwise provided in the proxy. The revocability of a
proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 705(e) and (f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION. Before any meeting of shareholders, the
Board of Directors may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If not inspectors
of election are so appointed, the chairman of the meeting may, and on the
request of any shareholder or a shareholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3). If inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the chairman of the meeting may, and upon the
request of any shareholder or a shareholder's proxy shall, appoint a person to
fill such vacancy.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
<PAGE>
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all the shareholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the California General
Corporation Law and any limitations in the articles of incorporation and these
bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have the
power and authority to:
(a) Select and remove all officers, agents, and employees of the
corporation, prescribe such powers and duties for them as may not be
inconsistent with law, the articles of incorporation or these bylaws, fix
their compensation, and require from them security for faithful service.
(b) Change the principal executive office or the principal business
office in the State of California from one location to another; cause the
corporation to be qualified to do business in any other state, territory,
dependency, or foreign country and conduct business within or outside the
State of California; designate any place within or without the State for
the holding of any shareholders' meeting or meetings, including annual
meetings; adopt, make and use a corporate seal, and prescribe the forms of
certificates of stock, and alter the form of such seal and of such
certificates from time to time as in their judgment they may deem best,
provided that such forms shall at all times comply with the provisions of
law.
(c) Authorize the issuance of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money
paid, labor done or services actually rendered, debts or securities
cancelled or tangible or intangible property actually received.
<PAGE>
(d) Borrow money and incur indebtedness for the purposes of the
corporation, and cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and
securities therefor.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors shall be two (2) until changed by an amendment to this bylaw adopted
by the vote or written consent of holders of a majority of the outstanding
shares entitled to vote; provided, however, that an amendment reducing the
number of directors to a number less than five (5) cannot be adopted if the
votes cast against its adoption at a meeting, or the shares not consenting in
the case of action by written consent, are equal to more than 16-2/3% of the
outstanding shares entitled to vote.
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Director shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting. Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
Section 4. VACANCIES. Vacancies in the Board of Directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining director, except that a vacancy created by the removal of a director
by the vote or written consent of the shareholders or by court order may be
filled only by the vote of a majority of the shares represented and voting at a
duly held meeting at which a quorum is present, or by the written consent of
holders of all outstanding shares entitled to vote. Each director so elected
shall hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the case of death, resignation or removal of any director, or if the Board of
Directors by resolution declares vacant the office of a director who has been
declared of unsound mind by an order of court or convicted of a felony, or if
the authorized number of directors by increased, or if the shareholders fail, at
any meeting of shareholders at which any director or directors are elected, to
elect the full authorized number of directors to be voted for at that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent, other than to fill a vacancy created by removal, shall require
the consent of a majority of the outstanding share entitled to vote.
Any director may resign upon giving written notice to the Chairman of the
Board, the President, the Secretary or the Board of Directors. A resignation
shall be effective upon the giving of the notice, unless the notice specifies a
later time for its effectiveness.
<PAGE>
If the resignation of a director is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation becomes
effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETINGS AND TELEPHONIC MEETINGS. Regular meetings of
the Board of Directors may be held at any place within or without the State that
has been designated from time to time by resolution of the board. In the absence
of such designation, regular meetings shall be held at the principal executive
office of the corporation. Special meetings of the board shall be held at any
place within or without the State that has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, at the principal
executive office of the corporation. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, so long as all
directors participating in such meeting can hear one another, and all such
directors shall be deemed to be present in person at such meeting.
Section 6. ANNUAL MEETING. Immediately following each annual meeting of
shareholders, the Board of Directors shall hold a regular meeting for the
purpose of organization, any desired election of officers and the transaction of
other business. Notice of this meeting shall not be required.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board of
Directors shall be held without call at such time as shall from time to time be
fixed by the Board of Directors. Such regular meeting may be held without
notice.
Section 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
for any purpose or purposes may be called at any time by the Chairman of the
Board or the President or any Vice President or the Secretary or any two
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at his or her address as
it is shown upon the records of the corporation. In case such notice is mailed,
it shall be deposited in the United States mail at least four (4) days prior to
the time of the holding of the meeting. In case such notice is delivered
personally, or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours prior to
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated to either the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
<PAGE>
Section 9. DISPENSING WITH NOTICE. The transactions of any meeting of the
Board of Directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to holding the
meeting or an approval of the minutes thereof. The waiver of notice or consent
need not specify the purpose of the meeting. All such waivers, consents and
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Notice of a meeting need not be given to any director
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such director.
Section 10. QUORUM. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors, subject to the provisions of
Section 310 of the Corporations Code of California (approval of contracts or
transactions in which a director has a direct or indirect material financial
interest), Section 311 (appointment of committees), and Section 317(e)
(indemnification of directors). A meeting at which a quorum is initially present
may continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required quorum
for such meeting.
Section 11. ADJOURNMENT. A majority of the directors present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
Section 12. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than twenty-four (24) hours, in which case notice of such time and place shall
be given prior to the time of the adjourned meeting, in the manner specified in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.
Section 13. ACTION WITHOUT MEETING. Any action required or permitted to be
taken by the Board of Directors may be taken without a meeting, if all members
of the board shall individually or collectively consent in writing to such
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the Board of Directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.
Section 14. FEES AND COMPENSATION OF DIRECTORS. Directors and member of
committees may receive such compensation, if any, for their services, and such
reimbursement of expenses, as may be fixed or determined by resolution of the
Board of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation for such services.
<PAGE>
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution adopted by a majority of the authorized numbers of directors,
designate one or more committees, each consisting of two or more directors, to
serve at the pleasure of the board. The board may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution of the board, shall have all the authority of the
board, except with respect to:
(a) the approval of any action which, under the General Corporation
Law of California also requires shareholders' approval or approval of the
outstanding shares:
(b) the filling of vacancies on the Board of Directors or in any
committee:
(c) the fixing of compensation of the directors for serving on the
board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amenable or repealable;
(f) a distribution to the shareholders of the corporation, except at
a rate or in a periodic amount or within a price range determined by the
Board of Directors; or
(g) the appointment of any other committees of the Board of Directors
or the members thereof.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Sections 5 (place of meetings), 7
(regular meetings), 8 (special meetings and notice), 9 (dispensing with notice),
10 (quorum), 11 (adjournment), 12 (notice of adjournment) and 13 (action without
meeting), with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the Board of Directors and its
members, except that the time of regular meetings of committees may be
determined by resolution of the Board of Directors as well as the committee,
special meetings of committees may also be called by resolution of the Board of
Directors and notice of special meetings of committees shall also be given
<PAGE>
to all alternate members, who shall have the right to attend all meetings of the
committee. The Board of Directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a President,
a Secretary and a Chief Financial Officer. The corporation may also have, at the
discretion of the Board of Directors, a Chairman of the Board, a Chief Executive
Officer, one or more Vice Presidents, once or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any number of
offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section 3
of this Article V, shall be chosen by the Board of Directors, and shall serve at
the pleasure of the board, subject to the rights, if any, of an officer under
any contract of employment.
Section 3. SUBORDINATE OFFICERS, ETC.. The Board of Directors may appoint,
and may empower the President to appoint, such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Board of Directors, at any regular or
special meeting thereof, or except in the case of an officer chosen by the Board
of Directors, by any officer upon whom such power of removal may be conferred by
the Board of Directors.
Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Any such resignation is without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to such office.
<PAGE>
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the Board of Directors or prescribed by the
bylaws. If there is no President, the Chairman of the Board shall in addition
be the Chief Executive Officer of the corporation and shall have the powers and
duties prescribed in Section 7 of this Article V.
Section 7. CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers,
if any, as may be given by the Board of Directors to the Chairman of the Board,
if there by such an officer, the Chief Executive Officer of the corporation
shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and the officers of the
corporation. He shall preside at all meetings of the shareholders and, in the
absence of the Chairman of the Board, or if there be none, at all meetings of
the Board of Directors. He shall have the general powers and duties of
management usually vested in the office of Chief Executive Officer of a
corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or the bylaws.
Section 8. PRESIDENT. In the absence or disability of the Chief Executive
Officer, the President shall perform all the duties of the Chief Executive
Officer, and when so acting shall have all the powers of and be subject to all
the restrictions upon, the Chief Executive Officer. The President shall have
such other powers and perform such other duties as from time to time any be
prescribed by the Board of Directors or the bylaws, the Chief Executive Officer
or the Chairman of the Board if there is no Chief Executive Officer.
Section 9. VICE PRESIDENT. In the absence or disability of the President,
the Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors or, if not ranked, a Vice President designated by the Board of
Directors or, if not ranked, a Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties from time to time may be prescribed for them respectively by the
Board of Directors or the bylaws, the Chief Executive Officer, President or the
Chairman of the Board if there is no Chief Executive Officer to the President.
Section 10. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office or such other places as the Board of Directors
may order, a book of minutes of all meetings and actions of directors,
committees of directors and shareholders, with the time and place of holding,
whether regular or special, and, if special, how authorized, the notice thereof
given, the names of those present at directors' and committee meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings thereof.
<PAGE>
The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the corporation's transfer agent or registrar, as
determined by resolution of the Board of Directors, a share register, or
duplicate share register, showing the names of all shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued by the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the Board of Directors required by the bylaws or by law
to be given, and he shall keep the seal of the corporation, if one be adopted,
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or by the bylaws.
Section 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall be open at all reasonable times to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all his
transactions as Chief Financial Officer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
The corporation shall, to the maximum extent permitted by the General
Corporation Law of California, indemnify each of its directors and officers
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact any such person is or was a director or officer of the corporation and
shall advance to such director or officer expenses incurred in defending any
such proceeding to the maximum extent permitted by such law. For purposes of
this Article VI, a "director" or "officer" of the corporation includes any
person who is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of another
corporation, or other enterprise, or was a director or officer of a corporation
which was a predecessor corporation or of another enterprise at the request of
such predecessor
<PAGE>
corporation. The Board of Directors may in its discretion provide by resolution
for such indemnification of, or advance of expenses to, other agents of the
corporation, and likewise may refuse to provide for such indemnification or
advance of expenses except to the extent such indemnification is mandatory under
the California General Corporate Law.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. The corporation
shall keep at its principal executive office, or at the office of its transfer
agent or registrar, if either be appointed and as determined by resolution of
the Board of Directors, a record of its shareholders, giving the names and
addresses of all shareholders and the number and class of shares held by each
shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholders during usual business hours upon five (5) business
days prior written demand upon the corporation, and/or (ii) obtain from the
transfer agent of the corporation, upon written demand and upon the tender of
such transfer agent's usual charges for such list, a list of the shareholders'
names and addresses, who are entitled to vote for the election of directors, and
their shareholdings, as of the most recent record date for which such list has
been compiled or as of a date specified by the shareholder subsequent to the
date of demand. Such list shall be made available to such shareholder or
shareholders by the transfer agent on or before the later of five (5) business
days after the demand is received or the date specified therein as the date as
of which the list is to be compiled. The record of shareholders shall also be
open to inspection upon the written demand of any shareholder or holder of a
voting trust certificate, at any time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as the holder
of a voting trust certificate. Any inspection and copying under this Section 1
may be made in person or by an agent or attorney of the shareholder or holder of
a voting trust certificate making such demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep
at its principal executive office, or if its principal executive office is not
in the State of California at its principal business office in the state, the
original or a copy of the bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is outside this state and the
corporation has no principal business office in this state, the Secretary
shall, upon written request of any shareholder, furnish to such shareholder a
copy of the bylaws as amended to date.
<PAGE>
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the shareholders and
the Board of Directors and any committee or committees of the Board of Directors
shall be kept as such place or places designated by the Board of Directors, or,
in the absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. Such minutes and accounting books and
records shall be open to inspection upon the written demand of any shareholder
or holder of a voting trust certificate, at any reasonable time during usual
business hours, for a purpose reasonably related to such holder's interests as a
shareholder or as the holder of a voting trust certificate. Such inspection may
be made in person or by an agent or attorney, and shall include the right to
copy and make extracts. The foregoing rights of inspection shall extend to the
records of each subsidiary corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every director shall have the absolute
right at any reasonable time to inspect all books, records and documents of
every kind and the physical properties of the corporation and each of its
subsidiary corporations. Such inspection by a director may be made in person or
by agent or attorney and the right of inspection includes the right to copy and
make extracts.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the General Corporation Law is
expressly dispensed with, but nothing herein shall be interpreted as prohibiting
the Board of Directors from issuing annual or other periodic reports to the
shareholders of the corporations as they deem appropriate.
Section 6. FINANCIAL STATEMENTS. A copy of annual financial statement and
any income statement of the corporation for each quarterly period of each fiscal
year, and any accompanying balance sheet of the corporation as of the end of
each such period, that has been prepared by the corporation shall be kept on
file in the principal executive office of the corporation for twelve (12) months
and each such statement shall be exhibited at all reasonable times to any
shareholder demanding an examination of any such statement or a copy shall be
mailed to any such shareholder.
If the Corporation has not sent to the shareholders an annual report for
the last fiscal year, a balance sheet as of the end of such fiscal year and an
income statement and statement of changes in financial position for such fiscal
year shall, upon the written request of any shareholder made more than one
hundred twenty (120) days after the close of such fiscal year, be delivered or
mailed to such shareholder within thirty (30) days after such request.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation make a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or
<PAGE>
nine-month period of the current fiscal year ended more than thirty (30) days
prior to the date of the request, and a balance sheet of the corporation as of
the end of such period, the Chief Financial Officer shall cause such statement
to be prepared, if not already prepared, and shall deliver personally or mail
such statement or statements to the person making the request within thirty (30)
days after the receipt of such request.
The corporation also shall, upon the written request of any shareholder,
mail to the shareholder a copy of the last annual, semi-annual or quarterly
income statement which it has prepared and a balance sheet as of the end of such
period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report thereon, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that such financial statements were prepared without
audit from the books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION. The corporation shall
each year during the calender month in which its articles of incorporation were
originally filed with the California Secretary of State, or at any time during
the immediately preceding five (5) calender months, file with the Secretary of
State of the State of California, on the prescribed form, a statement setting
forth the names and complete business or residence addresses of all incumbent
directors, the number of vacancies on the Board of Directors, if any, the names
and complete business or residence addresses of the Chief Executive Officer,
Secretary and Chief Financial Officer, the street address of its principal
executive office or principal business office in this state and the general type
of business constituting the principal business activity of the corporation,
together with a designation of the agent of the corporation for the purpose of
service of process, all in compliance with Section 1502 of the Corporations Code
of California.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, (other than action by
shareholders by written consent without a meeting) the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
prior to any such action, and in such case only shareholders of record on the
date so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date
fixed as aforesaid, except as otherwise provided in the California General
Corporation Law.
<PAGE>
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the resolution relating thereto,
or the sixtieth (60th) day prior to the date of such action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks, drafts or
other orders for payment of money, notes or other evidences of indebtedness,
issued in the name of or payable to the corporation, shall be signed or endorsed
by such person or persons and in such manner as, from time to time, shall be
determined by resolution of the Board of Directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board of
Directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the Board of Directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or to any amount.
Section 4. CERTIFICATES FOR SHARES. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid, and the Board of Directors may
authorize the issuance of certificates or shares as partly paid provided that
such certificates shall state the amount of the consideration to be paid
therefor and the amount paid thereon. All certificates shall be signed in the
name of the corporation by the Chairman of the Board or Vice Chairman of the
Board or the President or Vice President and by the Chief Financial Officer or
an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying
the number of shares and the class or series of shares owned by the shareholder.
Any or all of the signatures on the certificate may be facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
Section 5. LOST CERTIFICATES. Except as hereinafter in this Section 5
provided, no new certificates for shares shall be issued in lieu of an old
certificate unless the latter is surrendered to the corporation and canceled at
the same time. The Board of Directors may in case any share certificate or
certificate for any other security is lost, stolen or destroyed, authorize the
issuance of a new certificate in lieu thereof, upon such terms and conditions as
the board may require, including provision for indemnification of the
corporation secured by a bond or other adequate security sufficient to protect
the corporation against any claim that may be made against it, including any
expense or
<PAGE>
liability, on account of the alleged loss, theft or destruction of such
certificate or the issuance of such new certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The Chairman of
the Board, the President, or any Vice President, or any other person authorized
by resolution of the Board of Directors by any of the foregoing designated
officers, is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations, foreign or domestic, standing in the
name of the corporation. The authority herein granted to said officers to vote
or represent on behalf of the corporation any and all shares held by the
corporation in any other corporation or corporations may be exercised by any
such officer in person or by any person authorized to do so by proxy duly
executed by said officer.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided, however, that if
the articles of incorporation of the corporation set forth the number of
authorized directors of the corporation, the authorized number of directors may
be changed only by an amendment of the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section 1 of this Article IX, bylaws, other than a
bylaw or an amendment thereof changing the authorized number of directors, may
be adopted, amended or repealed by the Board of Directors.
ARTICLE X
GENERAL
Section 1. GOVERNING LAW. This corporation is organized under the
provisions of the California General Corporation Law (Corporations Code Sections
100-2319) as in effect on the date of filing of its original articles of
incorporation, namely March 24, 1997. Upon such filing the California Secretary
of State assigned the following corporation number to this corporation: 2005444.
The corporate affairs of this corporation shall be governed by and conducted in
accordance with the provisions of the California General Corporation Law, as the
same presently exist and are from time to time hereafter amended or superseded,
except in those instances where the articles of incorporation or bylaws of this
corporation, now or through amendment hereafter, may adopt alternative rules
which are permissible under the California General Corporation Law. Any
provision (or portion thereof) in these bylaws which is not permissible under
the California General Law or is inconsistent with the articles of incorporation
of this corporation (as they may from time to time be amended
<PAGE>
and supplemented) is void, but the balance of these bylaws shall nevertheless be
valid and effective.
Section 2. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
California General Corporation Law shall govern the construction of these
bylaws. Without limiting the generality of the foregoing, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am duly elected and acting Secretary of Magic Kids, Inc.,
a California corporation; and
(2) That the foregoing bylaws constitute the bylaws of said
corporation as duly adopted by the written consent of the Incorporator of said
corporation as of March 24, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 24th day
of March, 1997.
/s/ Joseph Loggia
__________________________________
Joseph Loggia
Secretary
<PAGE>
EXHIBIT 3.16
ARTICLES OF INCORPORATION
OF
ALLIED BUSINESS COMMUNICATIONS
I
The name of this corporation is: Allied Business Communications.
II
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The name and address in the State of California of the corporation's
initial agent for the service of process, is:
Rosemary P. Brear
Gason Snow & Ely Bartlett
Two Palo Alto Square
Palo alto, California 94306
IV
The corporation is authorized to issue only one class of shares of stock
and the total number of shares which the corporation is authorized to issue is
100,000 shares, each having a par value of ten cents (10c).
Dated this 4th day of May, 1983.
/s/ Rosemary P. Brear
__________________________________
Rosemary P. Brear, Incorporator
<PAGE>
I hereby declare that I am the person who executed the foregoing Articles
of Incorporation which execution is my act and deed.
/s/ Rosemary P. Brear
_________________________________
Rosemary P. Brear
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Allied Business Communications
Patrick S. Portway, Patricia M. Portway and Terry Kaufman certify that:
1. They are all of the directors of Allied Business Communications, a
California corporation
2. Article I of the Articles of Incorporation is hereby amended in its
entirety to read as follows:
The name of this corporation is
APPLIED BUSINESS COMMUNICATIONS
3. No shares have been issued.
/s/ Patrick S. Portway
_________________________________
Patrick S. Portway
/s/ Patricia M. Portway
_________________________________
Patricia M. Portway
/s/ Terry Kaufman
_________________________________
Terry Kaufman
<PAGE>
Patrick S. Portway, Particia M. Portway and Terry Kaufman each declares
under penalty of perjury that he or she has read the foregoing certificate and
knows the contents thereof and that the same is true and of his or her own
knowledge.
Executed at Palo Alto, California, on May 13, 1983.
/s/ Patrick S. Portway
_________________________________
Patrick S. Portway
/s/ Patricia M. Portway
_________________________________
Patricia M. Portway
/s/ Terry Kaufman
_________________________________
Terry Kaufman
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF APPLIED BUSINESS COMMUNICATIONS
Patrick S. Portway and Terry Kaufman certify that:
1. They are the President and the Secretary, respectively, of Applied
-------
Business Communications, a California corporation.
- -----------------------
2. Article I of the Articles of Incorporation of this corporation is
amended to read as follows:
"The name of this corporation is
Applied Business teleCommunications"
3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote or shareholders in accordance with Section 902 of
the Corporations Code. The total number of outstanding shares of the corporation
is 38,220. The number of shares voting in favor of the amendment equaled or
------
exceeded the vote required. The percentage vote required was more than fifty
percent (50%).
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated June 19, 1984
-------------
/s/ Patrick S. Portway
-----------------------------
Patrick S. Portway
/s/ Terry Kaufman
-----------------------------
Terry Kaufman
<PAGE>
Exhibit 3.17
BYLAWS
OF
APPLIED BUSINESS TELECOMMUNICATIONS
ARTICLE I - OFFICES
-------------------
Section 1. The principal executive office of APPLIED BUSINESS
TELECOMMUNICATIONS(the "Corporation") shall be at such place inside or outside
the State of California as the Board of Directors may determine from time to
time.
Section 2. The Corporation may also have offices at such other places as
the Board of Directors may from time to time designate, or as the business of
the Corporation may require.
ARTICLE II - SHAREHOLDERS' MEETINGS
-----------------------------------
Section 1. Annual Meetings. The annual meeting of the shareholders of the
---------------
Corporation for the election of directors to succeed those whose terms expire
and for the transaction of such other business as may properly come before the
meeting shall be held at such place and at such time as may be fixed from time
to time by the Board of Directors and stated in the notice of the meeting. If
the annual meeting of the shareholders be not held as herein prescribed, the
election of directors may be held at any meeting thereafter called pursuant to
these Bylaws.
Section 2. Special Meetings. Special meetings of the shareholders, for
----------------
any purpose whatsoever, unless otherwise prescribed by statute, may be called at
any time by the Chairman of the Board, the President, or by the Board of
Directors, or by one or more shareholders holding not less than ten percent of
the voting owner of the Corporation.
Section 3. Place. All meetings of the shareholders shall be at any place
-----
within or without the State of California designated by the Board of Directors
or by written consent of all the persons entitled to vote thereat, given either
before or after the meeting. In the absence of any such designation,
shareholders' meetings shall be held at the principal executive office of the
Corporation.
Section 4. Notice. Notice of meetings of the shareholders of the
------
Corporation shall be given in writing to each shareholder entitled to vote,
either personally or by first-class mail (unless the Corporation has 500 or more
shareholders determined as provided by the California Corporations Code on the
record date for the meeting, in which case notice may be sent by third class
mail) or other means of written communication, charges prepaid, addressed to the
shareholder at his address appearing on the books of the corporation or given by
the shareholder to the Corporation for the purpose of notice. Notice of any
such meeting of shareholders shall be
<PAGE>
-2-
sent to each shareholder entitled thereto not less than ten (or, if sent by
third-class mail, thirty) nor more than sixty days before the meeting. Said
notice shall state the place, date and hour of the meeting and, (1) in the case
of special meetings, the general nature of the business to be transacted, and no
other business may be transacted, or (2) in the case of annual meetings, those
matters which the Board of Directors, at the time of the mailing of the notice,
intends to present for action by the shareholders. but subject to Section 601
(f) of the California Corporations Code any proper matter may be presented at
the meeting for shareholder action, and (3) in the case of any meeting at which
directors are to be elected, the names of the nominees intended at the time of
the mailing of the notice to be presented by management for election.
Section 5. Adjourned Meetings. Any shareholders' meeting may be adjourned
------------------
from time to time by the vote of the holders of a majority of the voting shares
present at the meeting either in person or by proxy. Notice of any adjourned
meeting need not be given unless a meeting is adjourned for forty-five days or
more from the date set for the original meeting.
Section 6. Quorum. The presence in person or by proxy of the persons
------
entitled to vote a majority of the shares entitled to vote at any meeting
constitutes a quorum for the transaction of business. The shareholders present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
In the absence of a quorum, any meeting of shareholders may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but no other
business may be transacted, except as provided above.
Section 7. Shareholder Action by Written Consent. Any action which may be
-------------------------------------
take at any meeting of shareholders may be taken without a meeting and without
prior notice, if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which al I shares entitled to vote thereon were present and voted;
provided, however, that (1) unless the consents of all shareholders entitled to
vote have been solicited in writing, notice of any shareholder approval without
a meeting by less than unanimous written consent shall be given as required by
the California Corporations Code, and (2) directors may not be elected by
written consent except by unanimous written consent of all shares entitled to
vote for the election of directors.
Any written consent may be revoked by a writing received by the Secretary
of the Corporation prior to the time that written consents of the number of
shares required to authorize the proposed action have been filed with the
Secretary.
Section 8. Waiver of Notice. The transactions of any meeting of
----------------
shareholders, however called and noticed, and whenever held, shall be as valid
as though had at a meeting duly held after regular call and notice, if a quorum
be present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
<PAGE>
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting, or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 9. Voting. The voting at all meetings of shareholders need not be
------
by ballot but any qualified shareholder before the voting begins may demand a
stock vote whereupon such stock vote shall be taken by ballot, each of which
shall state the name of the shareholder voting and the number of shares voted by
such shareholder, and if such ballot be cast by a proxy, it shall also state the
name of such proxy.
At any meeting of the shareholders, every shareholder having the right to
vote shall be entitled to vote in person, or by proxy appointed in a writing
subscribed by such shareholder an bearing a date not more than eleven months
prior to said meeting, unless the writing states that it is irrevocable and
satisfies Section 705(e) of the California Corporations Code, in which event it
is irrevocable for the period specified in said writing and said Section 705(e).
Section 10. Record Dates. In the event the Board of Directors fixes a day
------------
for the determination of shareholders of record entitled to vote as provided in
Section I of Article V of these Bylaws, then, subject to the provisions of the
General Corporation Law of the State of California, only persons in whose name
shares entitled to vote stand on the stock records of the Corporation at the
close of business on such d shall be entitled to vote.
If no record date is fixed:
The record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day notice is given or, if notice is waived, at
the close of business on the business day next preceding the day on which the
meeting is held;
The record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is necessary, shall be the day on which the first written consent
is given; and
The record date for determining shareholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto, or the 60th day prior to the date of such other
action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
but the Board of Directors shall fix a new record date if the meeting is
adjourned for more than 45 days.
Section 11. Cumulative Voting for Election of Directors. Provided the
-------------------------------------------
candidate's name has been placed in nomination prior to the voting and one or
more shareholders has given notice at the meeting prior to the voting of the
shareholder's intent to cumulate the shareholder's
<PAGE>
-4-
votes, every shareholder entitled to vote at any election for directors shall
have the right to cumulate such shareholder's votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which the shareholder's shares are normally entitled, or
distribute the shareholder's votes on the same principle among as many
candidates as the shareholder shall think fit. The candidates receiving the
highest number of votes of the shares entitled to be voted for them up to the
number of directors to be elected by such shares are elected.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section l. Powers. Subject to any limitations in the Articles of
------
Incorporation or these Bylaws and to any provision of the California
Corporations Code requiring shareholder authorization or approval for a
particular action, the business and affairs of the Corporation shall be managed
and all corporate powers shall be exercised by, or under the direction of, the
Board of Directors. The Board of Directors may delegate the management of the
day-to-day operation of the business of the Corporation to a management company
or other person provided that the business and affairs of the Corporation shall
be managed and all corporate powers shall be exercised, under the ultimate
direction of the Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors
---------------------------------
that shall constitute the whole board shall be not more than three nor fewer
than one. The exact number of directors may be fixed from time to time within
such limit by a duly adopted resolution of the Board of Directors or
shareholders. The exact number of directors presently authorized shall be one
until changed within the limits specified above by a duly adopted resolution of
the Board of Directors or shareholders. Directors need not be shareholders.
Directors shall hold office until the next annual meeting of shareholders
and until their respective successors are elected. If any such annual meeting
is not held, or the directors are not elected thereat, the directors may be
elected at any special meeting of shareholders held for that purpose.
Section 3. Regular Meeting. A regular annual meeting of the Board of
---------------
Director shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide for other regular meetings from time to time by
resolution.
Section 4. Special Meeting. Special meetings of the Board of Directors
---------------
may be called at any time by the Chairman of the Board, or the President or any
Vice President, or the Secretary or any two directors. Written notice of the
time and place of all special meetings of the Board of Directors shall be
delivered personally or by telephone, including a voice messaging system or
other system or technology designed to record and communicate messages,
telegraph, facsimile, electronic mail or other electronic means to each director
at least forty-eight hours before the meeting, or sent to each director by
first-class mail, postage prepaid, at least four days before the meeting. Such
notice need not specify the purpose of the meeting. Notice of any meeting of
the Board of Directors need not be given to any director who signs a waiver of
notice,
<PAGE>
-5-
whether before or after the meeting, or who attends the meeting without
protesting prior thereto or at its commencement, the lack of notice to such
director.
Section 5. Place of Meetings. Meetings of the Board of Directors may be
-----------------
held at any place within or without the State of California, which has been
designated in the notice, or if not stated in the notice or there is no notice,
the principal executive office of the Corporation or as designated by the
resolution duly adopted by the Board of Directors.
Section 6. Participation by Telephone. Members of the Board of Directors
--------------------------
may participate in a meeting through use of conference telephone, electronic
video screen communication, or other communications equipment. Participation in
a meeting through use of conference telephone constitutes presence in person at
the meeting as long as all members participating in such meeting can hear one
another. Participation in a meeting through the use of electronic video screen
communication or other communications equipment (other than conference
telephone) constitutes presence in person at that meeting if all of the
following apply: (a) each member participating in the meeting can communicate
with all of the other members concurrently, (b) each member is provided the
means of participating in all matters before the Board of Directors including,
without limitation, the capacity to propose, or to interpose an objection to, a
specific action to be taken by the Corporation, and (c) the Corporation adopts
and implements some means of verifying that (i) a person participating in the
meeting is a director or other person entitled to participate in the Board of
Directors meeting, and (ii) all actions of, or votes by, the Board of Directors
are taken or cast only by the directors and not be persons who are not
directors.
Section 7. Quorum. A majority of the Board of Directors shall constitute
------
a quorum at all meetings. In the absence of a quorum a majority of the directors
present may adjourn any meeting to another time and place. If a meeting is
adjourned for more than 24 hours, notice of any adjournment to another time or
place shall be given prior to the time of the reconvened meeting to the
directors who were not present at the time of adjournment.
Section 8. Action at Meeting. Every act or decision done or made by a
-----------------
majority of the directors present at a meeting duly held at which a quorum is
present is the act of the Board of Directors. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum for such meeting.
Section 9. Waiver of Notice. The transactions of any meeting of the Board
----------------
of Directors, however called and noticed or wherever held, are as valid as
though had at a meeting duly held after regular call and notice if a quorum is
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, a consent to holding the meeting, or
an approval of the minutes thereof. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 10. Action Without Me. Any action required or permitted to be
-----------------
taken by the Board of Directors may be taken without a meeting, if all members
of the Board individually or
<PAGE>
-6-
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board. Such action by
written consent shall have the same force and effect as a unanimous vote of such
directors.
Section 11. Removal. The Board of Directors may declare vacant the office
-------
of a director who has been declared of unsound mind by an order of court or who
has been convicted of a felony.
The entire Board of Directors or any individual director may be removed
from office without cause by a vote of shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors; provided,
however, that unless the entire Board is removed, no individual director may be
removed when the votes cast against removal, or not consenting in writing to
such removal, would be sufficient to elect such director if voted cumulatively
at an election at which the same total number of votes cast were cast (or, if
such action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of the director's most
recent election were then being elected.
In the event an office of a director is so declared vacant or in case the
Board or any one or more directors be so removed, new directors may be elected
at the same meeting.
Section 12. Resignations. Any director may resign effective upon giving
------------
notice to the Chairman of the Board, the President, the Secretary or the Board
of Directors of the Corporation, unless the notice specifies a later time for
the effectiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
Section 13. Vacancies. Except for a vacancy created by the removal of a
---------
director, all vacancies in the Board of Directors, whether caused by
resignation, death or otherwise, may be filled by a majority of the remaining
directors or, if the number of directors then in office is less than a quorum,
by (a) the unanimous written consent of the directors then in office, (b) the
affirmative vote of a majority of the directors then in office at a meeting held
pursuant to notice or waivers of notice complying with California Corporations
Code Section 307, or (c) a sole remaining director, and each director so elected
shall hold office until his successor is elected at annual, regular or special
meeting of the shareholders. Vacancies created by the removal of a director may
be filled only by approval of the shareholders. The shareholders may elect a
director at any time to fill any vacancy not filled by the directors. Any such
election by written consent requires the consent of a majority of the
outstanding shares entitled to vote.
Section 14. Compensation. No stated salary shall be paid directors, as
------------
such, for their services, but, by resolution of the Board of Directors, a fixed
sum and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of such Board; provided that nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
<PAGE>
-7-
Section 15. Committees. The Board of Directors may, by resolution adopted
----------
by a majority of the authorized number of directors, designate one or more
committees, each consisting of two or more directors, to serve at the pleasure
of the Board of Directors. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. The appointment of members or alternate
members of a committee requires the vote of a majority of the authorized number
of directors. Any such committee, to the extent provided in the resolution of
the Board of Directors, shall have all the authority of the Board of Directors
in the management of the business and affairs of the Corporation, except with
respect to (a) the approval of any action requiring shareholders' approval or
approval of the outstanding shares, (b) the filling of vacancies on the Board or
any committee, (c) the fixing of compensation of directors for serving on the
Board or any committee, (d) the adoption, amendment or repeal of Bylaws, (e) the
amendment or repeal of any resolution of the Board which by its express terms is
not so amendable or repealable, (f) a distribution to shareholders, except at a
rate or in a periodic amount or within a price range determined by the Board,
and (g) the appointment of other committees of the Board or the members thereof.
ARTICLE IV - OFFICERS
---------------------
Section 1. Number and Term. The officers of the Corporation shall be a
---------------
Chairman of the Board, a President, one or more Vice-Presidents, a Secretary and
a Chief Financial Officer, all of which shall be chosen by the Board of
Directors. In addition, the Board of Directors may appoint such other officers
as may be deemed expedient for the proper conduct of the business of the
Corporation, each of whom shall have such authority and person such duties as
the Board of Directors may from time to time determine. The officers to be
appointed by the Board of Directors shall be chosen annually at the regular
meeting of the Board of Directors held after the annual meeting of shareholders
and shall serve at the pleasure of the Board of Directors. If officers are not
chosen at such meeting of the Board of Directors, they shall be chosen as soon
thereafter as shall be convenient. Each officer shall hold office until his
successor shall have been duly chosen or until his removal or resignation.
Section 2. Inability to Act. In the case of absence or inability to act
----------------
of any officer of the Corporation and of any person herein authorized to act in
his place, the Board of Directors may from time to time delegate the powers or
duties of such officer to any other officer, or any director or other person
whom it may select.
Section 3. Removal and Resignation. Any officer chosen by the Board of
-----------------------
Director may be removed at any time, with or without cause, by the affirmative
vote of a majority of all the members of the Board of Directors.
Any officer chosen by the Board of Directors may resign at any time by
giving written notice of said resignation to the Corporation. Unless a
different time is specified therein, such resignation shall be effective upon
its receipt by the Chairman of the Board, the President, the Secretary or the
Board of Directors.
<PAGE>
-8-
Section 4. Vacancies. A vacancy in any office because of any cause may be
---------
filled by the Board of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the Board.
Section 6. President. The President shall be the general manager and
---------
chief executive officer of the Corporation, subject to the control of the Board,
and as such shall preside all meetings of shareholders, shall have general
supervision of the affairs of the Corporation, shall sign or countersign or
authorize another officer to sign all certificates, contracts and other
instruments of the Corporation as authorized by the Board, shall make reports to
the Board and shareholders, and shall perform all such other duties as are
incident to such office or are properly required by the Board.
Section 7. Vice President. In the absence of the President, or in the
--------------
event of such officer's death, disability or refusal to act, the Vice President,
or in the event there be more than one Vice President, the Vice Presidents in
the order designated at the time of their selection, or in the absence of such
designation, then in the order of their selection, shall perform the duties of
President, and when so acting, shall have all the powers and be subject to all
restrictions upon the President. Each Vice President shall have such powers and
discharge such duties as may be assigned from time to time by the President or
by the Board of Directors.
Section 8. Secretary. The Secretary shall see that notices for all
---------
meetings are given in accordance with the provisions of these Bylaws and as
required by law, shall keep minutes of all meetings, shall have charge of the
seal and the corporate books, and shall make such reports and perform such other
duties as are incident to such office, or as are properly required by the
President or by the Board of Directors.
The Assistant Secretary or the Assistant Secretaries, in the order of their
seniority, shall, in the absence or disability of the Secretary, or in the event
of such officer's refusal to act, perform the duties and exercise the powers and
discharge such duties as may be assigned from time to time by the President or
by the Board of Directors.
Section 9. Chief Financial Officer. The Chief Financial Officer may also
-----------------------
be designated by the alternate title of "Treasurer." The Chief Financial
Officer-shall have the custody of all moneys and securities of the Corporation
and shall keep regular books of account. Such officer shall disburse funds of
the Corporation in payment of the just demands against the Corporation, or as
may be ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the Board from time to time as may be required of such officer,
an account of all transactions as Chief Financial Officer and of the financial
condition of the Corporation. Such officer shall perform all duties incident to
such office or that are properly required by the President or by the Board. If
required by the Board of Directors, the Chief Financial Officer shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his
<PAGE>
-9-
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
The Assistant Treasurer or the Assistant Treasurers, in the order of their
seniority, shall, in the absence or disability of the Chief Financial Officer,
or in the event of such officer's refusal to act, perform the duties and
exercise the powers of the Chief Financial Officer, and shall have such powers
and discharge such duties as may be assigned from time to time by the President
or by the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed from
--------
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that such officer is also a director
of the corporation.
Section 11. Officers Holding More Than One Office. Any two or more
-------------------------------------
offices may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity.
Section 12. Approval of Loan to Officers. The Corporation may, upon the
----------------------------
approval of the Board of Directors alone, make loans or money or property to, or
guarantee the obligations of, any officer of the Corporation or its parent or
subsidiary, whether or not a director, or adopt an employee benefit plan or
plans authorizing such loans or guaranties provided that (i) the Board of
Directors determines that such a loan or guaranty or plan may reasonably be
expected to benefit the Corporation, (ii) the Corporation has outstanding shares
held of record by 100 or more persons (determined as provided in Section 605 of
the California Corporations Code) on the date of approval by the Board of
Directors, and (iii) the approval of the Board of Directors is by a vote
sufficient without counting the vote of an interested director or directors.
ARTICLE V - MISCELLANEOUS
-------------------------
Section 1. Record Date and Closing of Stock Books. The Board of Directors
--------------------------------------
may fix a time in the future as a record date for the determination of the
shareholders entitled to notice of and to vote at any meeting of shareholders or
entitled to receive payment of any dividend or distribution, or any allotment of
rights, or to exercise rights in respect to any other lawful action. The record
date so fixed shall not be more than sixty nor less than ten days prior to the
date of the meeting or event for the purposes of which it is fixed. When a
record date is so fixed, only shareholders of record at the close of business on
that date are entitled to notice of and to vote at the meeting or to receive the
dividend, distribution, or allotment of rights, or to exercise the rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
Corporation after the record date.
The Board of Directors may close the books of the Corporation against
transfers of shares during the whole or any part of a period of not more than
sixty days prior to the date of a
<PAGE>
-10-
shareholders' meeting, the date when the right to any dividend, distribution, or
allotment of rights vests, or the effective date of any change, conversion or
exchange of shares.
Section 2. Certificates. Certificates of stock shall be issued in
------------
numerical order and each shareholder shall be entitled to a certificate signed
in the name of the Corporation by the Chairman of the Board or the President or
a Vice President, and the Chief Financial Officer or the Secretary or an
Assistant Secretary, certifying to the number of shares owned by such
shareholder. Any or all of the signatures on the certificate may be facsimile.
Prior to the due presentment for registration of transfer in the stock transfer
book of the Corporation, the registered owner shall be treated as the person
exclusively entitled to vote, to receive notifications and otherwise to exercise
all the rights and powers of an owner, except as expressly provided otherwise by
the laws of the State of California.
Section 3. Representation of Shares in Other Corporations. Shares of
----------------------------------------------
other corporations standing in the name of this Corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
Corporation by the Chairman of the Board President or the Vice President and the
Chief Financial Officer or the Secretary or an Assistant Secretary.
Section 4. Fiscal Year. The fiscal year of the Corporation shall end on
-----------
[last day of fiscal year] of each year.
Section 5. Annual Reports. The Annual Report to shareholders, described in
--------------
the California Corporations Code, is expressly waived and dispensed with.
Section 6. Amendments. Bylaws may be adopted, amended, or repealed by
----------
the vote or the written consent of shareholders entitled to exercise a majority
of the voting power of the Corporation. Subject to the right of shareholders to
adopt, amend, or repeal Bylaws, Bylaws may be adopted, amended, or repealed by
the Board of Directors, except that a Bylaw amendment thereof changing the
authorized number of directors may be adopted by the Board of Directors only if
these Bylaws permit an indefinite number of directors and the Bylaw or amendment
thereof adopted by the Board of Directors changes the authorized number of
directors within the limits specified in these Bylaws.
Section 7. Indemnification of Corporate Agents. The Corporation shall
-----------------------------------
indemnify each of its agents against expenses, judgments, fines, settlements and
other amounts, actually and reasonably incurred by such person by reason of such
person's having been made or having been threatened to be made a party to a
proceeding to the fullest extent permissible under the California Corporations
Code and the Corporation shall advance the expenses reasonably expected to be
incurred by such agent in defending any such proceeding upon receipt of the
undertaking required by subdivision (f) of Section 317 of the California
Corporations Code. The terms "agent," "proceeding" and "expenses" made in this
Section 7 shall have the same meaning as such term in said Section 317.
<PAGE>
-11-
CERTIFICATE OF SECRETARY OF
APPLIED BUSINESS TELECOMMUNICATIONS
The undersigned, Shawn Portway, Secretary of Applied Business
Telecommunications(the "Corporation"), a California corporation, hereby
certifies that the attached document is a true and complete copy of the Bylaws
of the Corporation as in effect on the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
this
16 day of April, 1998.
/s/ Shawn Portway
_____________________________
Shawn Portway,
Secretary
<PAGE>
EXHIBIT 4.1
========================
ADVANSTAR COMMUNICATIONS INC.,
THE GUARANTORS LISTED HEREIN,
AND
THE BANK OF NEW YORK,
as Trustee
9 1/4% Senior Subordinated Notes due 2008
===========
INDENTURE
Dated as of April 30, 1998
===========
========================
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I
Definitions and Incorporation by Reference........................................... 1
------------------------------------------
SECTION 1.1. Definitions............................................................................. 1
-----------
SECTION 1.2. Other Definitions....................................................................... 19
-----------------
SECTION 1.3. Incorporation by Reference of Trust Indenture Act....................................... 20
-------------------------------------------------
SECTION 1.4. Rules of Construction................................................................... 21
---------------------
ARTICLE II
The Securities....................................................................... 21
--------------
SECTION 2.1. Form, Dating............................................................................ 21
------------
SECTION 2.2. Execution and Authentication............................................................ 28
----------------------------
SECTION 2.3. Registrar and Paying Agent.............................................................. 29
--------------------------
SECTION 2.4. Paying Agent To Hold Money in Trust..................................................... 30
-----------------------------------
SECTION 2.5. Securityholder Lists.................................................................... 30
--------------------
SECTION 2.6. Transfer and Exchange................................................................... 30
---------------------
SECTION 2.7. Form of Certificate to be Delivered in Connection with Transfers to Institutional
---------------------------------------------------------------------------------
Accredited Investors................................................................. 33
--------------------
SECTION 2.8. Form of Certificate to be Delivered in Connection with Transfers Pursuant to
----------------------------------------------------------------------------
Regulation S......................................................................... 35
------------
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities......................................... 36
-----------------------------------------------
SECTION 2.10. Outstanding Securities.................................................................. 37
----------------------
SECTION 2.11. Temporary Securities.................................................................... 37
--------------------
SECTION 2.12. Cancellation............................................................................ 38
------------
SECTION 2.13. Payment of Interest; Defaulted Interest................................................. 38
---------------------------------------
SECTION 2.14. Computation of Interest................................................................. 39
-----------------------
SECTION 2.15. CUSIP Numbers........................................................................... 39
-------------
ARTICLE III
Covenants............................................................................ 40
---------
SECTION 3.1. Payment of Securities................................................................... 40
---------------------
SECTION 3.2. SEC Reports and Available Information................................................... 40
-------------------------------------
SECTION 3.3. Limitation on Indebtedness.............................................................. 41
--------------------------
SECTION 3.4. Limitation on Layering.................................................................. 42
----------------------
SECTION 3.5. Limitation on Restricted Payments....................................................... 42
---------------------------------
SECTION 3.6. Limitation on Restrictions on Distributions from Restricted Subsidiaries................ 45
------------------------------------------------------------------------
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SECTION 3.7. Limitation on Sales of Assets and Subsidiary Stock...................................... 45
--------------------------------------------------
SECTION 3.8. Limitation on Affiliate Transactions.................................................... 48
------------------------------------
SECTION 3.9. Change of Control....................................................................... 49
-----------------
SECTION 3.10. Limitation on Dispositions of Capital Stock of Restricted Subsidiaries.................. 51
----------------------------------------------------------------------
SECTION 3.11. Limitation on Liens..................................................................... 51
-------------------
SECTION 3.12. Future Subsidiary Guarantors............................................................ 52
----------------------------
SECTION 3.13. Limitation on Lines of Business......................................................... 52
-------------------------------
SECTION 3.14. Limitation on Asset Swaps............................................................... 52
-------------------------
SECTION 3.15. Maintenance of Office or Agency......................................................... 52
-------------------------------
SECTION 3.16. Corporate Existence..................................................................... 53
-------------------
SECTION 3.17. Payment of Taxes and Other Claims....................................................... 53
---------------------------------
SECTION 3.18. Compliance Certificate.................................................................. 53
----------------------
SECTION 3.19. Further Instruments and Acts............................................................ 54
----------------------------
ARTICLE IV
Successor Company .......................................... 54
-----------------
SECTION 4.1. Merger and Consolidation................................................................ 54
------------------------
ARTICLE V
Redemption of Securities........................................ 55
------------------------
SECTION 5.1. Optional Redemption..................................................................... 55
-------------------
SECTION 5.2. Applicability of Article................................................................ 55
------------------------
SECTION 5.3. Election to Redeem; Notice to Trustee................................................... 55
-------------------------------------
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed....................................... 55
-------------------------------------------------
SECTION 5.5. Notice of Redemption.................................................................... 56
--------------------
SECTION 5.6. Deposit of Redemption Price............................................................. 57
---------------------------
SECTION 5.7. Notes Payable on Redemption Date........................................................ 57
--------------------------------
SECTION 5.8. Securities Redeemed in Part............................................................. 57
---------------------------
ARTICLE VI
Defaults and Remedies.......................................... 58
---------------------
SECTION 6.1. Events of Default....................................................................... 58
-----------------
SECTION 6.2. Acceleration............................................................................ 60
------------
SECTION 6.3. Other Remedies.......................................................................... 60
--------------
SECTION 6.4. Waiver of Past Defaults................................................................. 60
-----------------------
SECTION 6.5. Control by Majority..................................................................... 61
-------------------
SECTION 6.6. Limitation on Suits..................................................................... 61
-------------------
SECTION 6.7. Rights of Holders to Receive Payment.................................................... 61
------------------------------------
SECTION 6.8. Collection Suit by Trustee.............................................................. 62
--------------------------
</TABLE>
ii
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<S> <C>
SECTION 6.9. Trustee May File Proofs of Claim........................................................ 62
--------------------------------
SECTION 6.10. Priorities.............................................................................. 62
----------
SECTION 6.11. Undertaking for Costs................................................................... 62
---------------------
ARTICLE VII
Trustee.................................................. 63
-------
SECTION 7.1. Duties of Trustee....................................................................... 63
-----------------
SECTION 7.2. Rights of Trustee....................................................................... 64
-----------------
SECTION 7.3. Individual Rights of Trustee............................................................ 65
----------------------------
SECTION 7.4. Trustee's Disclaimer.................................................................... 65
--------------------
SECTION 7.5. Notice of Defaults...................................................................... 65
------------------
SECTION 7.6. Reports by Trustee to Holders........................................................... 65
-----------------------------
SECTION 7.7. Compensation and Indemnity.............................................................. 65
--------------------------
SECTION 7.8. Replacement of Trustee.................................................................. 66
----------------------
SECTION 7.9. Successor Trustee by Merger............................................................. 67
---------------------------
SECTION 7.10. Eligibility; Disqualification........................................................... 67
-----------------------------
SECTION 7.11. Preferential Collection of Claims Against Company....................................... 68
-------------------------------------------------
ARTICLE VIII
Discharge of Indenture; Defeasance..................................... 68
----------------------------------
SECTION 8.1. Discharge of Liability on Securities; Defeasance........................................ 68
------------------------------------------------
SECTION 8.2. Conditions to Defeasance................................................................ 69
------------------------
SECTION 8.3. Application of Trust Money.............................................................. 70
--------------------------
SECTION 8.4. Repayment to Company.................................................................... 70
--------------------
SECTION 8.5. Indemnity for U.S. Government Obligations............................................... 71
-----------------------------------------
SECTION 8.6. Reinstatement........................................................................... 71
-------------
ARTICLE IX
Amendments................................................. 71
----------
SECTION 9.1. Without Consent of Holders.............................................................. 71
--------------------------
SECTION 9.2. With Consent of Holders................................................................. 72
-----------------------
SECTION 9.3. Compliance with Trust Indenture Act..................................................... 73
-----------------------------------
SECTION 9.4. Revocation and Effect of Consents and Waivers........................................... 73
---------------------------------------------
SECTION 9.5. Notation on or Exchange of Securities................................................... 74
-------------------------------------
SECTION 9.6. Trustee To Sign Amendments.............................................................. 74
--------------------------
ARTICLE X
Subordination............................................... 74
-------------
SECTION 10.1. Agreement To Subordinate................................................................ 74
------------------------
</TABLE>
iii
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<TABLE>
<S> <C>
SECTION 10.2. Liquidation, Dissolution, Bankruptcy................................................... 74
------------------------------------
SECTION 10.3. Default on Senior Indebtedness......................................................... 75
------------------------------
SECTION 10.4. Acceleration of Payment of Securities.................................................. 75
-------------------------------------
SECTION 10.5. When Distribution Must Be Paid Over.................................................... 76
-----------------------------------
SECTION 10.6. Subrogation............................................................................ 76
-----------
SECTION 10.7. Relative Rights........................................................................ 76
---------------
SECTION 10.8. Subordination May Not Be Impaired by Company........................................... 76
--------------------------------------------
SECTION 10.9. Rights of Trustee and Paying Agent..................................................... 76
----------------------------------
SECTION 10.10. Distribution or Notice to Representative............................................... 77
----------------------------------------
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To Accelerate................ 77
-----------------------------------------------------------------------
SECTION 10.12. Trust Moneys Not Subordinated.......................................................... 77
-----------------------------
SECTION 10.13. Trustee Entitled To Rely............................................................... 77
------------------------
SECTION 10.14. Trustee To Effectuate Subordination.................................................... 78
-----------------------------------
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness............................... 78
--------------------------------------------------------
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions................. 78
-----------------------------------------------------------------------
ARTICLE XI
Guarantee................................................. 78
---------
SECTION 11.2. Limitation on Liability; Termination, Release and Discharge............................ 80
-----------------------------------------------------------
SECTION 11.3. Right of Contribution.................................................................. 80
---------------------
SECTION 11.4. No Subrogation......................................................................... 81
--------------
ARTICLE XII
Subordination of Note Guarantees...................................... 81
--------------------------------
SECTION 12.1. Agreement To Subordinate............................................................... 81
------------------------
SECTION 12.2. Liquidation, Dissolution, Bankruptcy................................................... 81
------------------------------------
SECTION 12.3. Default on Senior Indebtedness......................................................... 82
------------------------------
SECTION 12.4. Acceleration of Payment of Securities.................................................. 82
-------------------------------------
SECTION 12.5. When Distribution Must Be Paid Over.................................................... 83
-----------------------------------
SECTION 12.6. Subrogation............................................................................ 83
-----------
SECTION 12.7. Relative Rights........................................................................ 83
---------------
SECTION 12.8. Subordination May Not Be Impaired by Guarantor......................................... 83
----------------------------------------------
SECTION 12.9. Rights of Trustee and Paying Agent..................................................... 83
----------------------------------
SECTION 12.10. Distribution or Notice to Representative............................................... 84
----------------------------------------
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit Right To Accelerate.............. 84
-------------------------------------------------------------------------
SECTION 12.12. Trust Moneys Not Subordinated.......................................................... 84
-----------------------------
SECTION 12.13. Trustee Entitled To Rely............................................................... 84
------------------------
SECTION 12.14. Trustee To Effectuate Subordination.................................................... 85
-----------------------------------
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
SECTION 12.15. Trustee Not Fiduciary for Holders of Senior Indebtedness............................... 85
--------------------------------------------------------
SECTION 12.16. Reliance on Subordination Provisions................................................... 85
------------------------------------
ARTICLE XIII
Miscellaneous............................................... 86
-------------
SECTION 13.1. Trust Indenture Act Controls........................................................... 86
----------------------------
SECTION 13.2. Notices................................................................................ 86
-------
SECTION 13.3. Communication by Holders with other Holders............................................ 87
-------------------------------------------
SECTION 13.4. Certificate and Opinion as to Conditions Precedent..................................... 87
--------------------------------------------------
SECTION 13.5. Statements Required in Certificate or Opinion.......................................... 87
---------------------------------------------
SECTION 13.6. When Securities Disregarded............................................................ 87
---------------------------
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar........................................... 88
--------------------------------------------
SECTION 13.8. Legal Holidays......................................................................... 88
--------------
SECTION 13.9. GOVERNING LAW.......................................................................... 88
-------------
SECTION 13.10. No Recourse Against Others............................................................. 88
--------------------------
SECTION 13.11. Successors............................................................................. 88
----------
SECTION 13.12. Multiple Originals..................................................................... 88
------------------
SECTION 13.13. Variable Provisions.................................................................... 88
-------------------
SECTION 13.14. Qualification of Indenture............................................................. 88
--------------------------
SECTION 13.15. Table of Contents; Headings............................................................ 89
---------------------------
</TABLE>
v
<PAGE>
EXHIBIT A Form of the Initial Security
EXHIBIT B Form of the Exchange Security
vi
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1) ........................................................... 7.10
(a)(2) ........................................................... 7.10
(a)(3) ........................................................... N.A.
(a)(4) ........................................................... N.A.
(b) ........................................................... 7.8; 7.10
(c) ........................................................... N.A.
311(a) ........................................................... 7.11
(b) ........................................................... 7.11
(c) ........................................................... N.A.
312(a) ........................................................... 2.5
(b) ........................................................... 13.3
(c) ........................................................... 13.3
313(a) ........................................................... 7.6
(b)(1) ........................................................... N.A.
(b)(2) ........................................................... 7.6
(c) ........................................................... 7.6
(d) ........................................................... 7.6
314(a) ........................................................... 3.2; 13.2
(b) ........................................................... N.A.
(c)(1) ........................................................... 13.4
(c)(2) ........................................................... 13.4
(c)(3) ........................................................... N.A.
(d) ........................................................... N.A.
(e) ........................................................... 13.5
315(a) ........................................................... 7.1
(b) ........................................................... 7.5; 13.2
(c) ........................................................... 7.1
(d) ........................................................... 7.1
(e) ........................................................... 6.11
316(a)(last sentence) ........................................................... 13.6
(a)(1)(A) ........................................................... 6.5
(a)(1)(B) ........................................................... 6.4
(a)(2) ........................................................... N.A.
(b) ........................................................... 6.7
317(a)(1) ........................................................... 6.8
(a)(2) ........................................................... 6.9
(b) ........................................................... 2.4
318(a) ........................................................... 13.1
</TABLE>
N.A. means Not Applicable.
__________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
vii
<PAGE>
INDENTURE dated as of April 30, 1998, among ADVANSTAR COMMUNICATIONS,
INC., a New York corporation (the "Company"), THE GUARANTORS (as defined) and
-------
The Bank of New York (the "Trustee").
-------
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's 9 1/4% Senior
Subordinated Notes due 2008 (the "Initial Securities") and, if and when issued
------------------
in exchange for Initial Securities as provided in the Registration Rights
Agreement (as hereinafter defined), the Company's 9 1/4% Senior Subordinated
Notes due 2008 (the "Exchange Securities" and, together with the Initial
-------------------
Securities, the "Securities"):
----------
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION I.1. Definitions.
-----------
"Acquisitions" has the meaning set forth in the Company's Offering
Memorandum relating to the issuance of the Initial Securities dated April 27,
1998.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the Company; or (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary of the Company; provided, however, that, in the case of
clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged in a
Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AHI" means Advanstar Holdings, Inc., a Delaware corporation.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary Guarantor, (ii)
the sale of Cash Equivalents in the ordinary course of
<PAGE>
2
business, (iii) a disposition of inventory in the ordinary course of business,
(iv) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of
business, (v) transactions permitted under Section 4.1 of this Indenture, (vi)
-----------
an Asset Swap effected in compliance with Section 3.14 of this Indenture, and
------------
(vii) for purposes of Section 3.7 of this Indenture only, a disposition subject
-----------
to Section 3.5 of this Indenture.
-----------
"Asset Swap" means the execution of a definitive agreement, subject
only to customary closing conditions that the Company in good faith believes
will be satisfied, for a concurrent purchase and sale or exchange of Related
Business Assets, between the Company or any of its Restricted Subsidiaries and
another Person, and the consummation of such purchase and sale or exchange;
provided that any amendment to or waiver of any closing condition which
individually or in the aggregate is material to any Asset Swap shall be deemed
to be a new Asset Swap that must comply with Section 3.14.
------------
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on
the Issue Date or thereafter Incurred, payable by the Company under or in
respect of the Senior Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees, and any Interest Rate Agreement
entered into with a Lender (as defined in the Senior Credit Agreement) in
connection with the Senior Credit Agreement, including principal, premium, if
any, interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company at the rate
specified therein whether or not a claim for post filing interest is allowed in
such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banking institutions are authorized or required by law to
close in New York City.
<PAGE>
3
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's
Rating Group, or "A" or the equivalent thereof by Moody's Investors Service,
Inc., and having capital and surplus in excess of $500 million; (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (i), (ii) and (iii) entered into with any bank
meeting the qualifications specified in clause (iii) above; (v) commercial paper
rated at the time of acquisition thereof at least "A-2" or the equivalent
thereof by Standard & Poor's Rating Group or "P-2" or the equivalent thereof by
Moody's Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and in either case maturing within 270
days after the date of acquisition thereof; and (vi) interests in any investment
company which invests solely in instruments of the type specified in clauses (i)
through (v) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Advanstar Communications Inc. or a successor.
"Consolidated EBITDA" for any period means the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, plus (ii) Consolidated Interest
Expense, plus (iii) depreciation expense, plus (iv) amortization of intangibles,
(v) other non-cash charges, including, without limitation, any non-cash charge
reflecting compensation expense relating to employee stock option or similar
plans, reducing Consolidated Net Income (excluding any such non-cash charge to
the extent it represents an accrual of or reserve for cash charges in any future
period or
<PAGE>
4
amortization of a prepaid cash expense that was paid in a prior period not
included in the calculation), less (vi) non-cash items increasing Consolidated
Net Income (excluding any non-cash item to the extent it represents the reversal
of an accrual of, or a cash reserve for, anticipated cash charges in any prior
period). Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the interest, depreciation and amortization of, a
Restricted Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated EBITDA of such Person only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Subsidiaries, plus, to the
extent not included in such interest expense, (i) interest expense attributable
to Capitalized Lease Obligations and the interest portion of rent expense
associated with Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a capitalized lease in
accordance with GAAP, (ii) amortization of debt discount and debt issuance cost,
(iii) capitalized interest and accrued interest, (iv) non-cash interest expense,
(v) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (vi) interest actually paid
by the Company or any such Subsidiary under any Guarantee of Indebtedness or
other obligation of any other Person, (vii) net costs associated with Hedging
Obligations (including amortization of fees), (viii) dividends in respect of all
Disqualified Stock of the Company and all Preferred Stock of Subsidiaries, in
each case, held by Persons other than the Company or a Wholly-Owned Subsidiary
and (ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust; provided, however, that there shall
be excluded therefrom any such interest expense of any Unrestricted Subsidiary
to the extent the related Indebtedness is not Guaranteed or paid by the Company
or any Restricted Subsidiary. For purposes of the foregoing, total interest
expense shall be determined after giving effect to any net payments made or
received by the Company and its Subsidiaries with respect to Interest Rate
Agreements. Notwithstanding the foregoing, the Consolidated Interest Expense
with respect to any Restricted Subsidiary of the Company that was not a Wholly-
Owned Subsidiary shall be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Subsidiaries; provided, however, that there
shall be excluded for purposes of calculating Consolidated Net Income: (i) any
net income (loss) of any Person if such Person is not a Restricted Subsidiary,
except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person (other than an Unrestricted Subsidiary) for such
period will be included in determining such Consolidated Net Income to the
extent such loss has been
<PAGE>
5
funded with cash from the Company or a Restricted Subsidiary; (ii) any net
income (loss) of any Person acquired by the Company or a Subsidiary in a pooling
of interests transaction for any period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or indirectly,
to the Company, except that (A) subject to the limitations contained in (iv)
below the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such Restricted
Subsidiary during such period to the Company or another Restricted Subsidiary as
a dividend (subject, in the case of a dividend to another Restricted Subsidiary,
to the limitation contained in this clause) and (B) the Company's equity in a
net loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income; (iv) any gain (loss) realized upon the
sale or other disposition of any property, plant or equipment of the Company or
its consolidated Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which is not sold or otherwise disposed of in the ordinary course
of business and any gain (loss) realized upon the sale or other disposition of
any Capital Stock of any Person; (v) any extraordinary gain or loss and (vi) the
cumulative effect of a change in accounting principles.
"Consolidated Tangible Assets" means, as of any date of determination,
the total assets, less goodwill, deferred financing costs and other intangibles
(in each case net of accumulated amortization), shown on the balance sheet of
the Company and its Restricted Subsidiaries as of the most recent date for which
such balance sheet is available, determined on a consolidated basis in
accordance with GAAP.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.13.
------------
"Depositary" means The Depository Trust Company, its nominees and
their respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Designated Noncash Consideration" means noncash consideration
received by the Company or a Restricted Subsidiary in connection with an Asset
Disposition that is so designated as Designated Noncash Consideration pursuant
to an Officers' Certificate, setting forth the basis of determining the fair
market value thereof, executed by the principal executive officer and the
principal financial officer of the Company; provided, that in determining the
aggregate fair market value of Designated Noncash Consideration that is
outstanding from time to time, there shall be subtracted the aggregate amount of
cash or Cash Equivalents received in
<PAGE>
6
connection with a sale of any Designated Noncash Consideration (which sale shall
be deemed an Asset Disposition, and which cash or Cash Equivalents must be
applied in accordance with Section 3.7).
-----------
"Designated Senior Indebtedness" means (i) the Bank Indebtedness in
the case of the Company and (ii) any other Senior Indebtedness which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $25.0 million and is specifically designated in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding capital stock which is convertible or exchangeable
solely at the option of the Company or a Restricted Subsidiary) or (iii) is
redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the Stated Maturity of the Securities, provided, that only
the portion of Capital Stock which so matures or is mandatorily redeemable, is
so convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such Stated Maturity shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company, Holdings
or AHI of its respective common stock, or options, warrants or rights with
respect to its common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means, if and when issued in exchange for the
Initial Securities as provided in the Registration Rights Agreement, the
Company's 9 1/4% Senior Subordinated Notes due 2008.
"Foreign Subsidiary" means any Restricted Subsidiary that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or
<PAGE>
7
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit and
indemnities given by the Company or any of its Subsidiaries in connection with
exhibitions, in each case, in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means each of AHI and Holdings (or, if AHI and Holdings
are merged, the surviving entity of such merger) and each Subsidiary Guarantor.
"Guarantor Senior Indebtedness" means, with respect to a Guarantor,
the following obligations, whether outstanding on the date of this Indenture or
thereafter issued, without duplication: (i) any Guarantee of the Bank
Indebtedness by such Guarantor and all other Guarantees by such Guarantor of
Senior Indebtedness of the Company or Guarantor Senior Indebtedness for any
other Guarantor; and (ii) all obligations consisting of the principal of and
premium, if any, and accrued and unpaid interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Guarantor regardless of whether postfiling interest is allowed in such
proceeding) on, and fees and other amounts owing in respect of, all other
Indebtedness of the Guarantor, unless, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is expressly provided
that the obligations in respect of such Indebtedness are not senior in right of
payment to the obligations of such Guarantor under the Note Guarantee; provided,
however, that Guarantor Senior Indebtedness shall not include (1) any
obligations of a Subsidiary Guarantor to another Subsidiary Guarantor, (2) any
liability for Federal, state, local, foreign or other taxes owed or owing by a
Guarantor, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of a Subsidiary
Guarantor that is expressly subordinate in right of payment to any of the
Indebtedness of such Guarantor, including any Guarantor Senior Subordinated
Indebtedness and Guarantor Subordinated Obligations of such Guarantor or (5) any
Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means with respect to a
Guarantor, the obligations of such Guarantor under the Note Guarantee and any
other Indebtedness of such Guarantor that specifically provides that such
Indebtedness is to rank pari passu in right of payment with the obligations of
such Guarantor under the Note Guarantee and is not expressly subordinated by its
terms in right of payment to any Indebtedness of such Guarantor which is not
Guarantor Senior Indebtedness of such Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Guarantor, any Indebtedness of such Guarantor (whether outstanding on the Issue
Date or thereafter Incurred)
<PAGE>
8
which is expressly subordinate in right of payment to the obligations of such
Guarantor under its Note Guarantee pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered in the Note Register.
"Holdings" means AHI Holding Corp., a Delaware corporation.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto), other than (except
for purposes of the cross-acceleration provisions described in Section 6.1)
-----------
obligations in respect of the undrawn face amount of letters of credit that are
the functional equivalents of surety or performance bonds or that support self-
insurance programs to the extent that the aggregate amount of all such
obligations does not exceed $3.0 million; (iv) all obligations of such Person to
pay the deferred and unpaid purchase price of property or services (other than
trade payables arising and accrued expenses Incurred in the ordinary course of
business), which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto or the
completion of such services (if and to the extent any such obligation would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP); (v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person; (vi) the amount of all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary, any Preferred Stock (but
excluding, in each case, any accrued dividends); (vii) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, however, that the amount of
such Indebtedness shall be the lesser of (A) the fair market value of such asset
at such date of determination and (B) the amount of such Indebtedness of such
other Persons; (viii) all Indebtedness of other Persons to the extent Guaranteed
by such Person; and (ix) to the extent not otherwise included in this
definition, net obligations of such Person under Currency Agreements and
Interest Rate Agreements (the amount of any such obligations to be equal at any
time to the termination value of such agreement or arrangement giving rise to
such obligation that would be payable by such Person at such time). The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional
<PAGE>
9
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date; provided that the amount outstanding at any one time of any
Indebtedness issued with original issue discount is the principal amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP. Notwithstanding the foregoing, Indebtedness shall exclude (i) obligations
created, issued or incurred by any Person with respect to customer subscription
payments or customer deposits for trade shows and exhibitions and (ii) any
indemnification obligation of the Company to third parties in respect of
customary representations and warranties contained in stock purchase, asset
purchase or similar acquisition agreements to which the Company is a party, if
such indemnification obligation would not appear as a liability upon a balance
sheet of the Company prepared in accordance with GAAP.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent Appraiser" means, with respect to any transaction or
series of related transactions, an independent, nationally recognized appraisal
or investment banking firm or other expert with experience in evaluating or
appraising the terms and conditions of such transaction or series of related
transactions.
"Initial Securities" means the Company's 9 1/4% Senior Subordinated
Notes due 2008 issued under this Indenture.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by, such Person. For purposes
of Section 3.5, (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary) of the fair market value of the net assets of such
Restricted Subsidiary of the Company at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time that such
Subsidiary is so redesignated a Restricted
<PAGE>
10
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors of
the Company.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Legal Holiday" has the meaning ascribed to it in Section 13.8.
------------
"Leverage Ratio" as of any date of determination means, with respect
to any Person, the ratio of (i) the sum of the aggregate outstanding
Indebtedness of such Person and its Subsidiaries as of the date of calculation
on a consolidated basis in accordance with GAAP to (ii) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination;
provided, however, that (1) if since the beginning of such period the Company or
any Restricted Subsidiary will have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Leverage Ratio is an Asset
Disposition, the Consolidated EBITDA for such period will be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly attributable to
the assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated EBITDA (if negative) directly
attributable thereto for such period, (2) if since the beginning of such period
the Company or any Restricted Subsidiary (by merger or otherwise) will have made
an Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary or is merged with or into the Company) or an acquisition
of assets, including any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, Consolidated EBITDA for
such period will be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness and including the pro forma expenses and cost
reductions calculated in accordance with Regulation S-X promulgated by the SEC)
as if such Investment or acquisition occurred on the first day of such period
and (3) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) will have made any
Asset Disposition or any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (1) or (2) above if made by the
Company or a Restricted Subsidiary during such period, Consolidated EBITDA for
such period will be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness and including the pro forma expenses and cost
reductions calculated in accordance with Regulation S-X promulgated by the SEC)
as if such Asset Disposition or Investment occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto, the pro forma calculations will be determined in good faith by a
responsible financial or accounting officer of the Company. Notwithstanding
anything herein to the contrary, if at the time the calculation of the Leverage
Ratio is to be made, the Company does not have available consolidated financial
statements reflecting the consummation of the Acquisitions for a period of at
least four full fiscal quarters, all calculations required by the Leverage Ratio
shall be prepared on a pro forma basis in accordance with Regulation S-X
promulgated by the SEC, as though each of the Acquisitions (to the extent not
otherwise reflected in the consolidated financial statements of the Company) had
<PAGE>
11
occurred on the first day of the period of four fiscal quarters for which such
calculation is being made.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form whether or not constituting Designated
Noncash Consideration) therefrom, in each case net of (i) all legal, accounting,
investment banking, title and recording tax expenses, commissions and other fees
and expenses Incurred, and all Federal, state, provincial, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (iv)
the deduction of appropriate amounts to be provided by the seller as a reserve,
in accordance with GAAP, against any liabilities associated with the assets
disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually Incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
<PAGE>
12
"Non-U.S. Person" means a person who is not a U.S person, as defined
in Regulation S.
"Note Guarantee" means, individually, the guarantee of payment of the
Notes by Holdings and AHI (or, if they are merged, the surviving entity of such
merger) and the Subsidiary Guarantors set forth in Article XI and any additional
Guarantee of the Securities executed by any Subsidiary of the Company as
evidenced by a supplemental indenture.
"Note Register" means the register of Securities, maintained by the
Trustee, pursuant to Section 2.3.
-----------
"Obligations" has the meaning ascribed to it in Section 11.1.
------------
"Officer" means the Chairman of the Board, the President, Chief
Financial Officer, any Vice President, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Holders" means each of (i) AHI Advanstar L.L.C., a Delaware
limited liability company, and partnerships in which the ultimate managing
partner is controlled by, or (ii) other entities controlled by, members of
Hellman & Friedman LLC, a Delaware limited liability company, or any successor
entity, and shall in any event include Hellman and Friedman Capital Partners
III, L.P., H&F International Partners III, L.P., and H&F Orchard Partners III,
L.P.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person which will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) cash and Cash Equivalents; (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business not
exceeding in the aggregate, at any time, $1.0 million; (vii) stock, obligations
or securities received in settlement of debts created in the ordinary course of
business and owing to
<PAGE>
13
the Company or any Restricted Subsidiary or in satisfaction of judgments; (viii)
any Asset Swap made in accordance with Section 3.14 or any Investment in
------------
securities or other assets received in connection with an Asset Disposition made
in accordance with the provisions of Section 3.7; (ix) Investments made after
-----------
the Issue Date in a Related Business in the form of joint ventures, operating
agreements, partnership agreements or other similar or customary agreements,
interests or arrangements with unaffiliated third parties, the aggregate
outstanding amount of which does not exceed $25.0 million (which aggregate
amount outstanding will be reduced by returns of capital received by the Company
or any Restricted Subsidiary in respect of such Investments) at any time; (x)
Currency Agreements, Interest Rate Agreements and related Hedging Obligations,
which transactions or obligations are Incurred in compliance with Section 3.3;
-----------
and (xi) other Investments in an aggregate amount outstanding at any time not to
exceed $5.0 million.
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases
to which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits or cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
including carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due or being contested in good faith by appropriate proceedings; or
other Liens arising out of judgments or awards against such Person with respect
to which such Person shall then be proceeding with an appeal or other
proceedings for review; (c) Liens for taxes, assessments or other governmental
charges not yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided appropriate reserves
have been taken on the books of the Company; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the request of and for the
account of such Person in the ordinary course of its business; provided,
however, that such letters of credit do not constitute Indebtedness; (e)
encumbrances, easements or reservations of, or rights of others for, licenses,
rights of way, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real
properties or liens incidental to the conduct of the business of such Person or
to the ownership of its properties which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person; (f) Liens securing an Interest
Rate Agreement so long as the related Indebtedness is, and is permitted to be
under this Indenture, secured by a Lien on the same property securing the
Interest Rate Agreement; (g) leases and subleases of real property which do not
materially interfere with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries; (h) judgment Liens not giving rise to an
Event of Default so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired; (i) Liens for the purpose
of securing the payment (or the refinancing of the payment) of all or a part of
the purchase price of, or Capitalized Lease Obligations with respect to assets
or property acquired or constructed in the ordinary course of business provided
that (x) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred
<PAGE>
14
under this Indenture and shall not exceed the cost of the assets or property so
acquired or constructed and (y) such Liens are created within 180 days of
construction or acquisition of such assets or property and shall not encumber
any other assets or property of the Company or any Restricted Subsidiary other
than such assets or property and assets affixed or appurtenant thereto; (j)
Liens arising solely by virtue of any statutory or common law provision relating
to banker's Liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution; provided that (x) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Company in excess of those set forth by regulations promulgated by the Federal
Reserve Board, and (y) such deposit account is not intended by the Company or
any Restricted Subsidiary to provide collateral to the depository institution;
(k) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Company and its Restricted
Subsidiaries in the ordinary course of business (l) Liens existing on the Issue
Date; (m) Liens on property or shares of stock of a Person at the time such
Person becomes a Subsidiary; provided, however, that such Liens are not created,
Incurred or assumed in connection with, or in contemplation of, such other
Person becoming a Subsidiary; provided further, however, that any such Lien may
not extend to any other property owned by the Company or any Restricted
Subsidiary; (n) Liens on property at the time the Company or a Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into the Company or any Restricted Subsidiary; provided,
however, that such Liens are not created, Incurred or assumed in connection
with, or in contemplation of, such acquisition; provided further, however, that
such Liens may not extend to any other property owned by the Company or any
Restricted Subsidiary; (o) Liens securing Indebtedness or other obligations of a
Subsidiary owing to the Company or a Wholly-Owned Subsidiary; and (p) Liens
securing Refinancing Indebtedness Incurred to Refinance Indebtedness that was
previously so secured, provided that any such Lien is limited to all or part of
the same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which the original Lien arose, could secure) the
obligations to which such Liens relate.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision hereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall have the meaning set forth in the
Registration Rights Agreement.
A "Public Market" exists at any time with respect to the common stock
of the Company,
<PAGE>
15
Holdings or AHI, as the case may be, if (i) the common stock of the Company,
Holdings or AHI, as the case may be, is then registered with the Commission
pursuant to Section 12(b) or 12(g) of the Exchange Act and traded either on a
national securities exchange or in the National Association of Securities
Dealers Automated Quotation System and (ii) at least 15% of the total issued and
outstanding common stock of the Company, Holdings or AHI, as the case may be,
has been distributed prior to such time by means of an effective registration
statement under the Securities Act.
"Purchase Money Indebtedness" of any person means any Indebtedness of
such person to any seller or other person incurred to finance the acquisition or
construction (including in the case of a Capitalized Lease Obligation, the
lease) of any business or real or personal tangible property (or, in each case,
any interest therein) acquired or constructed after the Issue Date which, in the
reasonable good faith judgment of the Board of Directors of the Company is
related to a Related Business of the Company and which is incurred concurrently
with, or within 180 days of, such acquisition or the completion of such
construction and, if secured, is secured only by the assets so financed.
"QIB" means any "qualified institutional buyer" (as defined in Rule
144A under the Securities Act).
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, provided, however, that (i) (x) if the
Stated Maturity of the Indebtedness being refinanced is earlier than the Stated
Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced or (y)
if the Stated Maturity of the Indebtedness being refinanced is later than the
Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated
Maturity later than the Securities, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is equal
to or greater than the Average Life of the Indebtedness being refinanced, and
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding
(plus fees and expenses, including any premium and defeasance costs) of the
Indebtedness being refinanced.
"Registered Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement, dated April 30, 1998, among the Company, the Guarantors, Chase
Securities Inc. and Lehman Brothers Inc.
<PAGE>
16
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Related Business Assets" means assets used or useful in a Related
Business.
"Representative" means any trustee, agent or representative (if any)
of an issue of Senior Indebtedness.
"Restricted Period" means the 40 consecutive days beginning on and
including the later of (A) the day on which the Initial Securities are offered
to persons other than distributors (as defined in Regulation S under the
Securities Act) and (B) the Issue Date.
"Restricted Securities Legend" means the Private Placement Legend set
forth in clause (A) of Section 2.1(c) or the Regulation S Legend set forth in
--------------
clause (B) of Section 2.1(c), as applicable.
--------------
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the Global
Security (as appointed by the Depositary), or any successor Person thereto and
shall initially be the Trustee.
"Senior Credit Agreement" means (i) the amended and restated Senior
Secured Credit Agreement to be entered into on the Issue Date among the Company,
the guarantors parties thereto, The Chase Manhattan Bank, as Administrative
Agent, and the lenders parties thereto from time to time, as the same may be
amended, supplemented or otherwise modified from time to time and any guarantees
issued thereunder and (ii) any renewal, extension, refunding, restructuring,
replacement or refinancing thereof (whether with the original Administrative
Agent and lenders or another administrative agent or agents or other lenders,
whether provided under the original Senior Credit Agreement or any other credit
or other
<PAGE>
17
agreement or indenture and whether entered into concurrently with or subsequent
to the termination of the prior Senior Credit Agreement).
"Senior Indebtedness" means, whether outstanding on the Issue Date or
thereafter issued, created, incurred or assumed, the Bank Indebtedness and all
other Indebtedness of the Company, including accrued and unpaid interest thereon
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
in the documentation with respect thereto whether or not a claim for post filing
interest is allowed in such proceeding) and fees relating thereto, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that the obligations in respect of such Indebtedness
are not superior in right of, or are subordinate to, payment of the Securities;
provided, however, that Senior Indebtedness will not include (i) any obligation
of the Company to any Subsidiary, (ii) any liability for Federal, state,
foreign, local or other taxes owed or owing by the Company, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities), (iv) any Indebtedness, Guarantee or obligation of the Company that
is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Obligations or (v) any Capital
Stock.
"Senior Subordinated Indebtedness" means the Securities and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Securities in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsequent Series Securities" has the meaning ascribed to it in
Section 2.2.
- -----------
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless
<PAGE>
18
otherwise specified herein, each reference to a Subsidiary shall refer to a
Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment
of the Securities by a Subsidiary Guarantor pursuant to the terms of this
Indenture, and, collectively, all such Guarantees.
"Subsidiary Guarantor" means each Subsidiary of the Company (other
than a Foreign Subsidiary) in existence on the Issue Date and any Restricted
Subsidiary (other than a Foreign Subsidiary) created or acquired by the Company
after the Issue Date.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. (S)(S) 77aaa-77bbbb), as in effect on the date of this Indenture.
------
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" shall mean, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided,
however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under Section 3.5. The Board of Directors may designate any
-----------
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness pursuant to Section 3.3 (a) and (y) no Default
---------------
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America
<PAGE>
19
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of the United States of America is pledged and which are
not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, all of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly-Owned Subsidiary.
"Wholly-Owned Subsidiary Guarantor" means a Wholly-Owned Subsidiary
which is a Subsidiary Guarantor.
SECTION I.2. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction".................................... 3.8
"Agent Member"............................................. 2.1(d)
"Authenticating Agent"..................................... 2.2
"Bankruptcy Law"........................................... 6.1
"Blockage Notice".......................................... 10.3
"Change of Control"........................................ 3.9
"Change of Control Offer".................................. 3.9
"Change of Control Payment"................................ 3.9
"Change of Control Payment Date"........................... 3.9
"Company Order"............................................ 2.2
"covenant defeasance option"............................... 8.1(b)
"Custodian"................................................ 6.1
"Definitive Securities".................................... 2.1(e)
"Event of Default"......................................... 6.1
"Excess Proceeds".......................................... 3.7
"Exchange Global Note"..................................... 2.1
"Global Securities"........................................ 2.1(a)
"Institutional Accredited Investor Global Note"............ 2.1
"Institutional Accredited Investor Note"................... 2.1
"legal defeasance option".................................. 8.1(b)
"Offer".................................................... 3.7
"Offer Amount"............................................. 3.7
"Offer Period"............................................. 3.7
"pay the Securities"....................................... 10.3
</TABLE>
<PAGE>
20
<TABLE>
<S> <C>
"Paying Agent"............................................. 2.3
"Payment Blockage Period".................................. 10.3
"Private Placement Legend"................................. 2.1(c)
"Purchase Date"............................................ 3.7
"Registrar"................................................ 2.3
"Regulation S"............................................. 2.1(a)
"Regulation S Certificate"................................. 2.1
"Regulation S Global Note"................................. 2.1
"Regulation S Legend"...................................... 2.1
"Regulation S Note"........................................ 2.1
"Regulation S Permanent Global Note"....................... 2.1
"Regulation S Temporary Global Note"....................... 2.1
"Release Date"............................................. 2.1
"Resale Restriction Termination Date"...................... 2.6
"Restricted Payment"....................................... 3.5
"Rule 144A"................................................ 2.1(b)
"Rule 144A Global Note".................................... 2.1
"Rule 144A Note"........................................... 2.1
"Special Interest Payment Date"............................ 2.13
"Special Record Date"...................................... 2.13
"Successor Company"........................................ 4.1
</TABLE>
SECTION I.3. Incorporation by Reference of Trust Indenture Act. This
-------------------------------------------------
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
<PAGE>
21
SECTION I.4. Rules of Construction. Unless the context otherwise
---------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
--------------
SECTION II.1. Form, Dating and Terms. (a) The Initial Securities
----------------------
are being offered and sold by the Company pursuant to a Purchase Agreement,
dated April 27, 1998, among the Company, the Guarantors, Chase Securities Inc.
and Lehman Brothers Inc.
Initial Securities offered and sold to the qualified institutional
buyers (as defined in Rule 144A under the Securities Act ("Rule 144A")) in the
---------
United States of America (the "Rule 144A Note") will be issued on the Issue Date
--------------
in the form of a permanent global Security substantially in the form of Exhibit
-------
A, which is hereby incorporated by reference and made a part of this Indenture,
- -
together with appropriate legends as set forth in Section 2.1(c) (the "Rule
-------------- ----
144A Global Note"), deposited with the Trustee, as custodian for the Depositary,
- ----------------
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Rule 144A Global Note may be represented by more than one
certificate, if so required by the Depositary's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Rule 144A Global Note may from time to time be increased
or
<PAGE>
22
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Initial Securities offered and sold outside the United States of
America ("Regulation S Note") in reliance on Regulation S will be issued on the
-----------------
Issue Date in the form of a temporary global Security, without interest coupons,
substantially in the form set forth in Exhibit A, which are hereby incorporated
---------
by reference and made a part of this Indenture, together with appropriate
legends as set forth in Section 2.1(c) (a "Regulation S Temporary Global Note").
-------------- ----------------------------------
Beneficial interests in a Regulation S Temporary Global Note will be
exchangeable for beneficial interests in a single permanent global security (the
"Regulation S Permanent Global Note", together with the Regulation S Temporary
----------------------------------
Global Note, the "Regulation S Global Note") on or after the expiration of the
------------------------
Restricted Period (the "Release Date") upon the receipt by the Trustee or its
------------
agent of a certificate certifying that the Holder of the beneficial interest in
the Regulation S Temporary Global Note is a non-United States Person within the
meaning of Regulation S (a "Regulation S Certificate"), substantially in the
------------------------
form set forth in Section 2.8. Upon receipt by the Trustee or Paying Agent of a
-----------
Regulation S Certificate, (i) with respect to the first such Regulation S
Certificate, the Company shall execute and upon receipt of a Company Order for
authentication, the Authenticating Agent (as defined in Section 2.2) shall
-----------
authenticate and deliver to the custodian, the applicable Regulation S Permanent
Global Note and (ii) with respect to the first and all subsequent Regulation S
Certificates, the custodian shall exchange on behalf of the applicable
beneficial owners the portion of the applicable Regulation S Temporary Global
Note covered by such Regulation S Certificates for a comparable portion of the
applicable Regulation S Permanent Global Note. Upon any exchange of a portion
of a Regulation S Temporary Global Note for a comparable portion of a Regulation
S Permanent Global Note, the custodian shall endorse on the schedules affixed to
each of such Regulation S Global Note (or on continuations of such schedules
affixed to each of such Regulation S Global Note and made parts thereof)
appropriate notations evidencing the date of transfer and (x) with respect to
the applicable Regulation S Temporary Global Note, a decrease in the principal
amount thereof equal to the amount covered by the applicable certification and
(y) with respect to the applicable Regulation S Permanent Global Note, an
increase in the principal amount thereof equal to the principal amount of the
decrease in the applicable Regulation S Temporary Global Note pursuant to clause
(x) above. The Regulation S Global Note will be deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Regulation S Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Regulation S Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Securities resold to institutional "accredited investors" (as
defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) in the
United States of America (the "Institutional Accredited Investor Note") will be
--------------------------------------
issued in the form of a permanent global Security substantially in the form of
Exhibit A, which is hereby incorporated by reference and made a part of this
Indenture, together with appropriate legends as set forth in Section 2.1(c) (the
--------------
"Institutional Accredited Investor Global Note") deposited with the Trustee, as
---------------------------------------------
custodian for the
<PAGE>
23
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Institutional Accredited Investor Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Institutional Accredited
Investor Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, as hereinafter provided.
Exchange Securities exchanged for interests in the Rule 144A Note, the
Regulation S Note and the Institutional Accredited Investor Note will be issued
in the form of a permanent global Security substantially in the form of Exhibit
B, which is hereby incorporated by reference and made a part of this Indenture,
deposited with the Trustee as hereinafter provided, with the appropriate legend
set forth in Section 2.1(c) (the "Exchange Global Note"). The Exchange Global
-------------- --------------------
Note may be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be represented by a
single certificate.
The Rule 144A Global Note, the Regulation S Global Note, the Exchange
Global Note and the Institutional Accredited Investor Global Note are sometimes
collectively herein referred to as the "Global Securities."
-----------------
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose pursuant to Section 2.3; provided,
-----------
however, that, at the option of the Company, each installment of interest may be
paid by (i) check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Note Register or (ii) wire transfer to an account
located in the United States maintained by the payee.
The Private Exchange Securities shall be in the form of Exhibit A.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage, in addition to those set forth on Exhibits A and B
----------------
and in Section 2.1(c). The Company and the Trustee shall approve the forms of
--------------
the Securities and any notation, endorsement or legend on them. Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to
--------- ---------
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to be bound by such terms.
(b) Denominations. The Securities shall be issuable only in fully
-------------
registered form, without coupons, and only in denominations of $1,000 and any
integral multiple thereof.
(c) Restrictive Legends. Unless and until (i) an Initial Security is
-------------------
sold under an effective registration statement or (ii) an Initial Security is
exchanged for an Exchange Security in connection with an effective registration
statement, in each case pursuant to the Registration Rights Agreement, (A) such
Rule 144A Global Note and the Institutional Accredited Investor
<PAGE>
24
Global Note shall bear the following legend (the "Private Placement Legend") on
------------------------
the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION
INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF SECURITIES, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST
<PAGE>
25
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."; and
(B) the Regulation S Global Note shall bear the following legend (the
"Regulation S Legend") on the face thereof:
-------------------
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S.
PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S, (E) TO AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT
OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM AND IN THE CASE OF
<PAGE>
26
THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED
AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE
DAY ON WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS
(AS DEFINED IN REGULATION S) AND (B) THE DATE OF THE CLOSING OF THE
ORIGINAL OFFERING. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT."
The Global Securities, whether or not an Initial Security, shall bear
the following legend on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."
The Regulation S Temporary Global Note shall also bear the following
legend on the face thereof:
THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"). NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE
OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE
REFERRED TO BELOW.
<PAGE>
27
NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO
RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED
CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE.
(d) Book-Entry Provisions. (i) This Section 2.1(d) shall apply only
--------------------- --------------
to Global Securities deposited with the Trustee, as custodian for the
Depositary.
(ii) Each Global Security initially shall (x) be registered in the
name of the Depositary for such Global Security or the nominee of such
Depositary, (y) be delivered to the Trustee as custodian for such Depositary and
(z) bear legends as set forth in Section 2.1(c).
--------------
(iii) Members of, or participants in, the Depositary ("Agent
-----
Members") shall have no rights under this Indenture with respect to any Global
- -------
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.
(iv) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (e) of this Section to
beneficial owners who are required to hold Definitive Securities, the Security
Trustee shall reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Definitive Securities of like tenor and amount.
(v) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to subsection (e) of this Section, such Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in such Global Security, an equal aggregate principal amount
of Definitive Securities of authorized denominations.
(e) Definitive Securities. Except as provided below, owners of
---------------------
beneficial interests in Global Securities will not be entitled to receive
certificated Securities ("Definitive Securities"). If required to do so
---------------------
pursuant to any applicable law or regulation, beneficial owners may obtain
Definitive Securities in exchange for their beneficial interests in a Global
Security upon written request in accordance with the Depositary's and the
Registrar's procedures. In addition, Definitive Securities shall be transferred
to all beneficial owners in exchange for their beneficial interests in a Global
Security if (i) the Depositary notifies the Company that it is
<PAGE>
28
unwilling or unable to continue as Depositary for such Global Security or the
Depositary ceases to be a clearing agency registered under the Exchange Act, at
a time when the Depositary is required to be so registered in order to act as
Depositary, and in each case a successor depositary is not appointed by the
Company within 90 days of such notice or, (ii) the Company executes and delivers
to the Trustee and Registrar an Officers' Certificate stating that such Global
Security shall be so exchangeable or (iii) an Event of Default has occurred and
is continuing and the Registrar has received a request from the Depositary.
(f) Any Definitive Security delivered in exchange for an interest in
a Global Security pursuant to Section 2.1(d)(iv) or (v) shall, except as
-------------------------
otherwise provided by Section 2.6(c), bear the applicable legend regarding
--------------
transfer restrictions applicable to the Definitive Security set forth in Section
-------
2.1(c).
- ------
(g) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION II.2. Execution and Authentication. One Officer shall sign
----------------------------
the Securities for the Company by manual or facsimile signature. If an Officer
whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually authenticates the Security. The signature of the Trustee on a
Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Trustee shall authenticate and make available for delivery:
(1) Initial Securities for original issue on the Issue Date in an aggregate
principal amount of $150.0 million, (2) Exchange Securities for issue only in a
Registered Exchange Offer pursuant to the Registration Rights Agreement, and
only in exchange for Initial Securities of an equal principal amount, and (3)
additional series of notes which may be offered subsequent to the Issue Date
(the "Subsequent Series Securities") in an aggregate principal amount not to
exceed $100,000,000, in each case upon a written order of the Company signed by
two Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company (the "Company Order"). Such Company Order shall
-------------
specify the amount of the Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of notes which may be authenticated and delivered under this
Indenture is limited to $250.0 million outstanding except as provided in Section
-------
2.9. No Subsequent Series Securities may be authenticated and delivered in an
- ---
aggregate principal amount of less than $25,000,000. All Securities issued on
the Issue Date and all Subsequent Series Securities shall be identical in all
respects other than issue dates, the date from which interest accrues and any
changes relating thereto. Notwithstanding
<PAGE>
29
anything to the contrary contained in this Indenture, all notes issued under
this Indenture shall vote and consent together on all matters as one class and
no series of notes will have the right to vote or consent as a separate class on
any matter.
The Trustee may appoint an agent (the "Authenticating Agent")
--------------------
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.
In case the Company, pursuant to Article IV, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article IV, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of
the successor Person, shall authenticate and deliver Securities as specified in
such order for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon registration of
-----------
transfer of any Securities, such successor Person, at the option of the Holders
but without expense to them, shall provide for the exchange of all Securities at
the time outstanding for Securities authenticated and delivered in such new
name.
SECTION II.3. Registrar and Paying Agent. The Company shall maintain
--------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
---------
Securities may be presented for payment (the "Paying Agent"). The Company shall
------------
cause each of the Registrar and the Paying Agent to maintain an office or agency
in the Borough of Manhattan, The City of New York. The Registrar shall keep a
register of the Securities and of their transfer and exchange (the "Note
----
Register"). The Company may have one or more co-registrars and one or more
- --------
additional paying agents. The term "Paying Agent" includes any additional
paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.7.
-----------
The Company or
<PAGE>
30
any of its domestically incorporated Wholly-Owned Subsidiaries may act as Paying
Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent for the Securities.
SECTION II.4. Paying Agent To Hold Money in Trust. By at least 10:00
-----------------------------------
a.m (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying Agent
a sum sufficient to pay such principal or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that such
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by such Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee in writing of any
default by the Company or any Guarantor in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money delivered
to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with
respect to the Company, the Trustee shall serve as Paying Agent for the
Securities.
SECTION II.5. Securityholder Lists. The Trustee shall preserve in as
--------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, or to the extent otherwise required under the TIA, the Company shall
furnish to the Trustee, in writing at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION II.6. Transfer and Exchange.
---------------------
(a) The following provisions shall apply with respect to any proposed
transfer of a Rule 144A Note or an Institutional Accredited Investor Note prior
to the date which is two years after the later of the date of original issue and
the last date on which the Company or any affiliate of the Company was the owner
of such Securities (or any predecessor thereto) (the "Resale Restriction
------------------
Termination Date"):
- ----------------
(i) a transfer of an Institutional Accredited Investor Note or
a beneficial interest therein to a QIB shall be made upon the
representation of the transferee in the form of an assignment on the
reverse of the certificate that it is purchasing the Security for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the
<PAGE>
31
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A;
(ii) a transfer of a Rule 144A Note or a beneficial interest
therein to an institutional accredited investor shall be made upon receipt
by the Trustee or its agent of a certificate substantially in the form set
forth in Section 2.7 from the proposed transferee and, if requested by the
-----------
Company or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them; and
(iii) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a Non-U.S.
Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.8 from the
-----------
proposed transferee and, if requested by the Company or the Trustee, the
delivery of an opinion of counsel, certification and/or other information
satisfactory to each of them.
(b) The following provisions shall apply with respect to any proposed
transfer of a Regulation S Note prior to the expiration of the Restricted
Period:
(i) a transfer of a Regulation S Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee,
in the form of assignment on the reverse of the certificate, that it is
purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial interest
therein to an institutional accredited investor shall be made upon receipt
by the Trustee or its agent of a certificate substantially in the form set
forth in Section 2.7 from the proposed transferee and, if requested by the
-----------
Company or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them; and
After the expiration of the Restricted Period, interests in the
Regulation S Note shall be freely transferable.
(c) Restricted Securities Legend. Upon the transfer, exchange or
----------------------------
replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
<PAGE>
32
bear a Restricted Securities Legend unless there is delivered to the Registrar
an Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) The Company shall deliver to the Trustee an Officer's Certificate
setting forth the Resale Restriction Termination Date and the Restricted Period.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.1 or this Section 2.6.
----------- -----------
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
(e) Obligations with Respect to Transfers and Exchanges of
------------------------------------------------------
Securities.
- ----------
(i) To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this Article
II, execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to Sections 3.7, 3.9 or 9.5).
------------ --- ---
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period beginning
(1) 15 days before the mailing of a notice to redeem Securities and ending
at the close of business on the day of such mailing or (2) 15 days before
an interest payment date and ending on such interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the person in whose name a Security
is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(d) shall, except as
--------------
otherwise provided by Section 2.6(c), bear the applicable legend regarding
--------------
transfer restrictions applicable to the Definitive Security set forth in
Section 2.1(c).
--------------
<PAGE>
33
(vi) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee. (i) The Trustee shall have no
----------------------------
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption) or the payment of any amount or delivery of
any Securities (or other security or property) under or with respect to such
Securities. All notices and communications to be given to the Holders and all
payments to be made to Holders in respect of the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary.
The Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION II.7. Form of Certificate to be Delivered in Connection with
------------------------------------------------------
Transfers to Institutional Accredited Investors.
- -----------------------------------------------
[Date]
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 9 1/4% Senior Subordinated Notes due 2008 (the
"Securities") of Advanstar Communications Inc. (the "Company").
<PAGE>
34
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor," in each case in a minimum principal
amount of Securities of $250,000 or (f) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account or accounts be at all
times within our or their control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply subsequent
to the Resale Restriction Termination Date. If any resale or other transfer of
the Securities is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer prior to the Resale Termination
Date of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
<PAGE>
35
TRANSFEREE:_____________________
BY______________________________
Signature Medallion Guaranteed
SECTION II.8. Form of Certificate to be Delivered in Connection with
------------------------------------------------------
Transfers Pursuant to Regulation S.
- ----------------------------------
[Date]
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Advanstar Communications Inc.
9 1/4% Senior Subordinated Notes due 2008 (the "Securities")
------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(a) the offer of the Securities was not made to a person in the
United States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (ii) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such
<PAGE>
36
sale has been made in accordance with the applicable provisions of Rule
903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________________
_______________________________
Authorized Signature Signature Medallion Guaranteed
SECTION II.9. Mutilated, Destroyed, Lost or Stolen Securities. If a
-----------------------------------------------
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any co-
registrar from any loss which any of them may suffer if a Security is replaced,
and, in the absence of notice to the Company, any Subsidiary Guarantor or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
make available for delivery, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities,
<PAGE>
37
whether or not the mutilated, destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION II.10. Outstanding Securities. Securities outstanding at any
----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security ceases to be outstanding in the event
the Company or an Affiliate of the Company holds the Security provided, however,
that in determining whether the Trustee shall be protected in making a
determination whether the holders of the requisite principal amount of
outstanding Securities are present at a meeting of holders of Securities for
quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, or relying upon any such quorum, consent or vote, only Securities
which the Trustee actually knows to be held by the Company or an Affiliate of
the Company shall not be considered outstanding.
If a Security is replaced pursuant to Section 2.9, it ceases to be
-----------
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
SECTION II.11. Temporary Securities. Until definitive Securities are
--------------------
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities. After
the preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more Definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
holder of Definitive Securities.
<PAGE>
38
SECTION II.12. Cancellation. The Company at any time may deliver
------------
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
return to the Company all Securities surrendered for registration of transfer,
exchange, payment or cancellation. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation for
any reason other than in connection with a transfer or exchange.
SECTION II.13. Payment of Interest; Defaulted Interest. Interest on
---------------------------------------
any Security which is payable, and is punctually paid or duly provided for, on
any interest payment date shall be paid to the Person in whose name such
Security (or one or more predecessor Securities) is registered at the close of
business on the regular record date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 2.3.
-----------
Any interest on any Security which is payable, but is not paid when
the same becomes due and payable and such nonpayment continues for a period of
30 days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") shall be paid by the Company, at its election in
------------------
each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date (as defined below) for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Interest Payment Date"), and
-----------------------------
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a record date (the "Special Record Date") for the payment of such
-------------------
Defaulted Interest which shall be not more than 15 days and not less than
10 days prior to the Special Interest Payment Date and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date, and in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date and Special Interest Payment Date therefor to be given in the
manner provided for in Section 13.2, not less than 10 days prior to such
------------
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date and Special Interest Payment Date
therefor having been so given, such Defaulted Interest shall be
<PAGE>
39
paid on the Special Interest Payment Date to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION II.14. Computation of Interest. Interest on the Securities
-----------------------
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION II.15. CUSIP Numbers. The Company in issuing the Securities
-------------
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such CUSIP
numbers.
<PAGE>
40
In the event that the Company shall issue and the Trustee shall
authenticate any Subsequent Series Securities pursuant to Section 2.2, the
Company shall use its best efforts to obtain the same CUSIP number for such
Subsequent Series Securities as is printed on the Securities outstanding at such
time; provided, however, that if any series of Subsequent Series Securities is
--------
determined, pursuant to an Opinion of Counsel, to be a different class of
security than the Securities outstanding at such time for federal income tax
purposes, the Company may obtain a CUSIP number for such series of Subsequent
Series Securities that is different from the CUSIP number printed on the
Securities then outstanding.
ARTICLE III
Covenants
---------
SECTION III.1. Payment of Securities. The Company shall promptly pay
---------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION III.2. SEC Reports and Available Information.
-------------------------------------
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13(a) or 15(d) of the Exchange Act, to the extent
permitted by the Exchange Act, the Company will file with the SEC, and provide,
within 15 days after the Company is or would be required to file the same with
the SEC, the Trustee and the holders of Securities with the annual reports and
the information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may, by rules and regulations prescribe), that are
specified in Sections 13 and 15(d) of the Exchange Act. In the event that the
Company is not permitted to file such reports, documents and information with
the SEC pursuant to the Exchange Act, the Company will nevertheless deliver such
Exchange Act information to the Trustee and the holders of the Securities as if
the Company were subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. In addition, for so long as any of the Securities remain
outstanding the Company shall make available to any prospective purchaser of the
Securities or beneficial owner of the Securities in connection with any sale
thereof the information required by Rule 144A(d)(4) under the
<PAGE>
41
Securities Act. The Company shall also comply with the other provisions of TIA
(S) 314(a). Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION III.3. Limitation on Indebtedness. (a) The Company shall
--------------------------
not, and shall not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness; provided, however, that the Company and its Restricted
Subsidiaries which are Subsidiary Guarantors may Incur Indebtedness if on the
date thereof, after giving pro forma effect to the incurrence of such
Indebtedness, the Leverage Ratio for the Company and its Restricted Subsidiaries
is less than (i) 6.50 to 1.00, if such Indebtedness is Incurred on or prior to
the second anniversary of the Issue Date, and (ii) 6.00 to 1.00, if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a) the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to the Senior Credit Agreement of (x) up to $210.0 million in
term loan borrowings outstanding at any time and (y) up to $60.0 million in
revolving credit borrowings outstanding at any time; (ii) the Subsidiary
Guarantees and Guarantees of Indebtedness Incurred pursuant to paragraph (a) or
clause (i) of this paragraph (b); (iii) Indebtedness of the Company owing to and
held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly-Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness represented by (x) $150.0 million aggregate principal amount
of the Securities, (y) any Indebtedness (other than the Indebtedness described
in clauses (i), (ii) and (iii)) outstanding on the Issue Date and (z) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in
this clause (iv) or clause (v) or Incurred pursuant to paragraph (a) above; (v)
Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on
which such Restricted Subsidiary was acquired by the Company; provided, however,
that at the time such Restricted Subsidiary is acquired by the Company, the
Company would have been able to Incur $1.00 of additional Indebtedness pursuant
to paragraph (a) above after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (v); (vi) Indebtedness under Currency
Agreements and Interest Rate Agreements; provided, however, that in the case of
Currency Agreements and Interest Rate Agreements, such Currency Agreements and
Interest Rate Agreements are entered into for bona fide hedging purposes of the
Company or its Restricted Subsidiaries (as determined in good faith by the Board
of Directors or senior management of the Company) and correspond in terms of
notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Restricted Subsidiaries Incurred without
violation of this Indenture or to business transactions of the Company or its
Restricted Subsidiaries on customary terms entered into in the ordinary course
of business; and (vii) Indebtedness (other than Indebtedness described in
clauses (i) - (vi)) in a principal amount
<PAGE>
42
which, when taken together with the principal amount of all other Indebtedness
Incurred pursuant to this clause (vii) and then outstanding, will not exceed
$20.0 million.
(c) Neither the Company nor any Restricted Subsidiary shall Incur any
Indebtedness under Section 3.3(b) if the proceeds thereof are used, directly or
--------------
indirectly, to refinance any Subordinated Obligations of the Company unless such
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations. No Subsidiary Guarantor shall incur any
Indebtedness under Section 3.3(b) if the proceeds thereof are used, directly or
--------------
indirectly to refinance any Guarantor Subordinated Obligations of such
Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Obligations.
(d) For purposes of determining compliance with, and the outstanding
principal amount of, any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 3.3, in the event that Indebtedness meets the
-----------
criteria of more than one of the types of Indebtedness described in Section
-------
3.3(b), the Company, in its sole discretion, shall classify such item of
- ------
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
(e) The Company will not permit any Unrestricted Subsidiary to Incur
any Indebtedness other than Non-Recourse Debt.
SECTION III.4. Limitation on Layering. The Company shall not Incur
----------------------
any Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to Senior Subordinated Indebtedness. No Subsidiary Guarantor shall Incur any
Indebtedness if such Indebtedness is contractually subordinate or junior in
ranking in any respect to any Guarantor Senior Indebtedness of such Subsidiary
Guarantor unless such Indebtedness is Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor or is contractually subordinated in right of
payment to Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor.
SECTION III.5. Limitation on Restricted Payments. (a) The Company
---------------------------------
shall not, and shall not permit any of its Restricted Subsidiaries, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) except (A) dividends or distributions payable in its Capital Stock
(other than Disqualified Stock) or in options, warrants or other rights to
purchase such Capital Stock and (B) dividends or distributions payable to the
Company or a Restricted Subsidiary of the Company (and if such Restricted
Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of Capital
Stock on a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company held by Persons other than a
Restricted Subsidiary of the Company or any Capital Stock of a Restricted
Subsidiary of the Company held by any Affiliate of the Company, other than
another Restricted Subsidiary (in either case, other than in
<PAGE>
43
exchange for its Capital Stock (other than Disqualified Stock)), (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase or acquisition) or (iv)
make any Investment (other than a Permitted Investment) in any Person (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to in clauses (i)
through (iv) as a "Restricted Payment"), if at the time the Company or such
------------------
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the Company shall
not be able to incur an additional $1.00 of Indebtedness pursuant to Section
-------
3.3(a); or (3) the aggregate amount of such Restricted Payments and all other
- ------
Restricted Payments declared or made subsequent to the Issue Date would exceed
the sum of: (A) (i) Consolidated EBITDA accrued during the period (treated as
one accounting period) from the Issue Date to the end of the most recent fiscal
quarter ending prior to the date of such Restricted Payment as to which
financial results are available (or, in case such Consolidated EBITDA is a
deficit, minus 100% of such deficit) less (ii) 150% of Consolidated Interest
Expense for such period; (B) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock (other than Disqualified
Stock) or other capital contributions subsequent to the Issue Date (other than
net proceeds to the extent (x) used to redeem Securities or (y) received from an
issuance or sale of such Capital Stock to a Subsidiary of the Company or an
employee stock ownership plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by loans from or
guaranteed by the Company or any Restricted Subsidiary unless such loans have
been repaid with cash on or prior to the date of determination); (C) the amount
by which Indebtedness of the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date of any Indebtedness of the Company convertible or
exchangeable for Capital Stock of the Company (less the amount of any cash, or
other property, distributed by the Company upon such conversion or exchange);
(D) the amount equal to the net reduction in Investments (other than Permitted
Investments) made by the Company or any of its Restricted Subsidiaries in any
Person resulting from (i) repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an unaffiliated
purchaser, repayments of loans or advances or other transfers of assets as a
return of capital or similar payment (excluding by way of dividend or
distribution) by such Person to the Company or any Restricted Subsidiary of the
Company or (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments (excluding Permitted Investments) previously made by the Company or
any Restricted Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments; provided,
however, that no amount shall be included under this clause (D) to the extent it
is already included in Consolidated Net Income.
(b) The provisions of Section 3.5(a) shall not prohibit: (i) any
--------------
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for,
<PAGE>
44
or out of the proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary or an employee stock ownership plan or similar trust to
the extent such sale to an employee stock ownership plan or similar trust is
financed by loans from or guaranteed by the Company or any Restricted Subsidiary
unless such loans have been repaid with cash on or prior to the date of
determination); provided, however, that (A) such purchase or redemption shall be
excluded in subsequent calculations of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale shall be excluded from clause (3) (B) of
paragraph (a); (ii) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations of the Company; provided, however,
that such purchase or redemption shall be excluded in subsequent calculations of
the amount of Restricted Payments; (iii) any purchase or redemption of
Subordinated Obligations from Net Available Cash to the extent permitted under
Section 3.7; provided, however, that such purchase or redemption shall be
- -----------
excluded in subsequent calculations of the amount of Restricted Payments; (iv)
dividends paid within 60 days after the date of declaration if at such date of
declaration such dividend would have complied with this provision; provided,
however, that such dividends shall be included in subsequent calculations of the
amount of Restricted Payments; (v) cash dividends to AHI or Holdings for the
purpose of, and in amounts equal to, amounts required to permit AHI or Holdings
(A) to redeem or repurchase Capital Stock of AHI or Holdings (or pay dividends
to AHI Advanstar L.L.C. for the purpose of redeeming or repurchasing membership
interests in AHI Advanstar L.L.C. pursuant to the operating agreement of AHI
Advanstar L.L.C.) from existing or former employees or management of AHI,
Holdings, the Company or any Subsidiary or their assigns, estates or heirs, in
each case in connection with the repurchase provisions under employee stock
option or stock purchase agreements or other agreements to compensate management
employees; provided, however, that such dividends shall be included in
subsequent calculations of the amount of Restricted Payments; and (B) to make
loans or advances to employees or directors of the Company or any Subsidiary the
proceeds of which are used to purchase Capital Stock of AHI or Holdings or
membership interests in AHI Advanstar L.L.C.; provided, however, that such
dividends shall be included in subsequent calculations of the amount of
Restricted Payments; (C) to pay any Federal, state or local income taxes to the
extent that such income taxes are attributable to the income of the Company and
its Subsidiaries, pay franchise taxes and other fees required to maintain its
legal existence, corporate overhead expenses Incurred in the ordinary course of
business, and salaries or other compensation of employees who perform services
for both Holdings and the Company; provided, however, that such dividends will
be excluded in subsequent calculations of the amount of Restricted Payments and
(D) so long as no Default or Event of Default shall have occurred and be
continuing, in an amount not to exceed $100,000 in any fiscal year to enable AHI
or Holdings to make payments to holders of its Capital Stock in lieu of the
issuance of fractional shares of its Capital Stock; provided, however, that such
dividends will be excluded in subsequent calculations of the amount of
Restricted Payments; provided further, however, that the aggregate amount of
dividends paid to AHI or Holdings pursuant to this clause (v) shall not exceed
$3.0 million in any fiscal year; and (vi) repurchases of Capital Stock deemed to
occur upon the exercise of stock options if such Capital Stock represents a
portion of the exercise price thereof; provided, however, that such repurchases
shall be excluded from the calculation of the amount of Restricted Payments.
<PAGE>
45
SECTION III.6. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company will not, and will not permit any
- -----------------------
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (ii) make any loans or advances to the Company or (iii) transfer any of
its property or assets to the Company, except (a) any encumbrance or restriction
pursuant to an agreement in effect at or entered into on the date of this
Indenture (including, without limitation, the Senior Credit Agreement); (b) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Indebtedness Incurred by a Restricted Subsidiary on
or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred as consideration in, or to provide all
or any portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (c) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement effecting a refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clause (a) or (b) of this Section 3.6 or
-----------
this clause (c) or contained in any amendment to an agreement referred to in
clause (a) or (b) of this Section 3.6 or this clause (c); provided, however,
-----------
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement or amendment are no less favorable to
Holders of the Securities than encumbrances and restrictions contained in such
agreements; (d) in the case of clause (iii) above, any encumbrance or
restriction (A) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease, license or
similar contract, or the assignment or transfer of any such lease, license or
other contract, (B) by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the Company or
any Restricted Subsidiary not otherwise prohibited by this Indenture, (C)
contained in mortgages, pledges or other security agreements securing
Indebtedness of a Restricted Subsidiary to the extent such encumbrance or
restrictions restrict the transfer of the property subject to such mortgages,
pledges or other security agreements or (D) pursuant to customary provisions
restricting dispositions of real property interests set forth in any reciprocal
easement agreements of the Company or any Restricted Subsidiary; (e) any
restriction with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; and (f)
encumbrances or restrictions arising or existing by reason of applicable law.
SECTION III.7. Limitation on Sales of Assets and Subsidiary Stock.
--------------------------------------------------
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good faith
by the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition, (ii)
at least 85% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or Cash
<PAGE>
46
Equivalents. With respect to any Asset Disposition occurring on or after the
Issue Date from which the Company or any Restricted Subsidiary receives Net
Available Cash, the Company or such Restricted Subsidiary shall apply an amount
equal to 100% of the Net Available Cash from such Asset Disposition at its
election, to either (i) prepay, repay or purchase Senior Indebtedness or
Indebtedness (other than any Preferred Stock) of a Wholly Owned Subsidiary (in
each case other than Indebtedness owed to the Company or an Affiliate of the
Company) within 365 days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; (ii) invest in Additional Assets within
365 days from the later of the date of such Asset Disposition or the receipt of
such Net Available Cash; or (iii) make an offer pursuant to Section 3.7(b) to
--------------
purchase the Notes and other Senior Subordinated Indebtedness outstanding with
similar provisions requiring the Company to make an offer to purchase such
Indebtedness with the proceeds from any Asset Disposition ("Pari Passu Notes")
at 100% of the principal amount thereof (or 100% of the accreted value of such
Pari Passu Notes so tendered if such Pari Passu Notes were issued at a discount)
plus accrued and unpaid interest, if any, to the date of purchase; provided,
however, that, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (i) above, the Company or such Restricted
Subsidiary will retire such Indebtedness and will cause the related loan
commitment (if any), unless such commitment is for the provision of a revolving
credit facility, to be permanently reduced in an amount equal to the principal
amount so prepaid, repaid or purchased. Notwithstanding the foregoing
provisions, the Company and its Restricted Subsidiaries will not be required to
apply any Net Available Cash in accordance herewith except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this covenant exceed $1.0 million. Any Net Available
Cash from an Asset Disposition that is not invested or applied as provided and
within the time period set forth in clauses (i) and (ii) of the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds."
For the purposes of this Section 3.7 and for no other purpose, the
-----------
following will be deemed to be cash: (x) the assumption by the transferee of
Senior Indebtedness of the Company or Indebtedness of any Restricted Subsidiary
of the Company and the release of the Company or such Restricted Subsidiary from
all liability on such Senior Indebtedness or Indebtedness in connection with
such Asset Disposition (in which case the Company will, without further action,
be deemed to have applied such assumed Indebtedness in accordance with clause
(i) of the preceding paragraph); (y) securities received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash; and (z) the
fair market value, as determined by the Board of Directors of the Company in
good faith, of any Designated Noncash Consideration received by the Company or
any of its Restricted Subsidiaries in any Asset Disposition, taken together with
the fair market value, as determined by the Board of Directors of the Company in
good faith, of all other Designated Noncash Consideration received pursuant to
this clause (z) that is at that time outstanding, not to exceed $25.0 million at
the time of the receipt of such Designated Noncash Consideration (with the fair
market value of each item of Designated Noncash Consideration being measured at
the time received and without giving effect to subsequent changes in value), in
which case such Designated Noncash Consideration shall not constitute Net
Available Cash.
<PAGE>
47
(b) When the aggregate amount of Excess Proceeds exceeds $5.0 million
(with lesser amounts to be carried forward for purposes of determining whether
an Offer (as defined) is required with respect to the Excess Proceeds from any
subsequent Asset Disposition), the Company will be required to apply such Excess
Proceeds to the repayment of the Notes and any Pari Passu Notes as follows: (A)
the Company will make an offer to purchase (an "Offer") within ten days of such
-----
time from all Holders in accordance with the procedures set forth in this
Indenture in the maximum principal amount (expressed as a multiple of $1,000) of
Securities that may be purchased out of an amount (the "Note Amount") equal to
-----------
the product of such Excess Proceeds multiplied by a fraction, the numerator of
which is the outstanding principal amount of the Securities and the denominator
of which is the sum of the outstanding principal amount of the Securities and
the outstanding principal amount (or accreted value, as the case may be) of the
Pari Passu Notes at a purchase price of 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase and (B) the
Company will make an offer to purchase any Pari Passu Notes (a "Pari Passu
----------
Offer") in an amount equal to the excess of the Excess Proceeds over the Note
- -----
Amount at a purchase price of 100% of the principal amount (or accreted value,
as the case may be) thereof plus accrued and unpaid interest, if any, to the
date of purchase in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the documentation governing such Pari
Passu Notes with respect to the Pari Passu Offer. If the aggregate purchase
price of the Notes and Pari Passu Notes tendered pursuant to the Offer and the
Pari Passu Offer is less than the Excess Proceeds, the remaining Excess Proceeds
will be available to the Company to fund other corporate purposes not otherwise
prohibited by this Indenture.
(c) (1) Promptly, and in any event within 10 days after the Company
is required to make an Offer, the Company will deliver to the Trustee and send,
by first-class mail to each Holder, a written notice stating that the Holder may
elect to have his Securities purchased by the Company either in whole or in part
(subject to prorating as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
--------
Date").
- ----
(2) Not later than the date upon which such written notice of an
Offer is delivered to the Trustee and the Holders, the Company will deliver to
the Trustee an Officers' Certificate setting forth (i) the amount of the Offer
(the "Offer Amount"), (ii) the allocation of the Net Available Cash from the
------------
Asset Dispositions as a result of which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 3.7(a). Upon the
--------------
expiration of the period (the "Offer Period") for which the Offer remains open,
------------
the Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
(3) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form entitled "Option of Holder to
Elect Purchase" duly completed, to the Company at the address specified in the
notice prior to the expiration of the
<PAGE>
48
Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a facsimile transmission or overnight mail from
such Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.7, the Company will
-----------
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION III.8. Limitation on Affiliate Transactions. (a) The Company
------------------------------------
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless: (i) the terms of
---------------------
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $1 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors of the
Company and by a majority of the members of such Board having no personal stake
in such transaction, if any (and such majority or majorities, as the case may
be, determines that such Affiliate Transaction satisfies the criteria in (i)
above); and (iii) in the event such Affiliate Transaction involves an aggregate
amount in excess of $5.0 million, the Company has received a written opinion
from an independent investment banking firm of nationally recognized standing
that such Affiliate Transaction is not materially less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate; provided, however,
that this clause (iii) will not apply to any Affiliate Transaction with any
joint venture or similar entity in which the Permitted Holders do not have any
direct or indirect interests other than the interests of the Company and its
Restricted Subsidiaries in such joint venture or similar entity.
(b) The foregoing paragraph (a) shall not apply to (i) any Restricted
Payment permitted to be made pursuant to Section 3.5, (ii) any issuance of (A)
-----------
securities to any of the Permitted Holders or (B) securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors of the Company, (iii) loans or advances to
<PAGE>
49
employees in the ordinary course of business of the Company or any of its
Restricted Subsidiaries or (iv) any transaction between the Company and a
Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries.
SECTION III.9. Change of Control. Upon the occurrence of any of the
-----------------
following events (each a "Change of Control"), unless the Company shall have
-----------------
exercised its right to redeem the Securities as described in Section 5.1, each
-----------
holder will have the right to require the Company to repurchase all or any part
of such holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date) (the "Change
------
of Control Payment"):
- ------------------
(i) (A) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 35% (or if there is a Public
Market at the time such person is or is deemed to have beneficial
ownership, more than 50%) of the total voting power of the Voting Stock of
the Company, Holdings or AHI (or its successor by merger, consolidation or
other business combination) (for the purposes of this clause, such person
shall be deemed to beneficially own any Voting Stock of the Company,
Holdings or AHI held by a parent corporation, if such person "beneficially
owns" (as defined above), directly or indirectly, more than 35% of the
voting power of the Voting Stock of such parent corporation); and (B) if
there is no Public Market, the Permitted Holders "beneficially own" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of the Company, Holdings or AHI (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of the Company or such successor (for
the purposes of this clause, such other person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such other person "beneficially owns" (as defined in
clause (A) above), directly or indirectly, more than 35% of the voting
power of the Voting Stock of such parent corporation and the Permitted
Holders "beneficially own" (as defined in this clause (B)), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent corporation);
or
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company, Holdings or AHI or Holdings (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company, Holdings or AHI, as
<PAGE>
50
the case may be, was approved by a vote of at least a majority of the
directors of the Company, Holdings or AHI then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved or is a designee of the
Permitted Holders or was nominated or elected by such Permitted Holders or
any of their designees) cease for any reason to constitute a majority of
the Board of Directors of the Company, Holdings or AHI then in office; or
(iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
other than a Permitted Holder; or
(iv) the adoption by the stockholders of a plan for the liquidation
or dissolution of the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Securities in
connection with such Change of Control as described in Section 5.1, the Company
-----------
shall mail a notice to each holder with a copy to the Trustee stating: (i) that
a Change of Control has occurred and that such holder has the right to require
the Company pursuant to this Section 3.9 to purchase such holder's Securities
-----------
(the "Change of Control Offer") at a purchase price in cash equal to 101% of the
-----------------------
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on a record date to
receive interest on the relevant interest payment date); (ii) the repurchase
date (which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed); (iii) that any Security not tendered shall continue
to accrue interest, if any; (iv) that, unless the Company defaults in the
payment of principal or interest, all Securities accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest, if any, after the
Change of Control Payment Date; (v) that holders electing to have any Securities
purchased pursuant to a Change of Control Offer shall be required to surrender
the Securities to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day preceding the date of
purchase for the Change of Control Payment Date; (vi) that holders shall be
entitled to withdraw their election if the Paying Agent receives, not later than
the close of business on the second Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter setting forth the name of the
holder, the principal amount of Securities delivered for purchase, and a
statement that such holder is withdrawing his election to have the Securities
purchased; and (vii) that holders whose Securities are being purchased only in
part shall be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof.
On a Business Day that is no earlier than 30 days nor later than 60
days from the date that the Company mails or causes to be mailed notice of the
Change of Control to the holders (the "Change of Control Payment Date"), the
------------------------------
Company shall, to the extent lawful, (i) accept for payment all Securities or
portions thereof properly tendered pursuant to the Change of
<PAGE>
51
Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change
of Control Payment in respect of all the Securities or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee the
Securities so accepted together with an Officers' Certificate stating the
aggregate principal amount of such Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
the Securities so tendered the Change of Control Payment for such Securities,
and the Trustee shall promptly authenticate and mail (or cause to be transferred
by book-entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided that each
such new Security shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 3.9. To the extent that the provisions of any securities laws or
- -----------
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
SECTION III.10. Limitation on Dispositions of Capital Stock of
----------------------------------------------
Restricted Subsidiaries. The Company (i) will not, and will not permit any
- -----------------------
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Restricted Subsidiary to any
Person (other than the Company or a Wholly Owned Subsidiary), unless (A) such
transfer, conveyance, sale, lease or other disposition is a sale of the common
stock of such Restricted Subsidiary and, after giving effect to the consummation
thereof, the Company owns (x) more than 50% of the outstanding common stock of
such Restricted Subsidiary or (y) none of the outstanding common stock of such
Restricted Subsidiary and (B) the cash net proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 3.7; and (ii) will not permit any Restricted Subsidiary to issue any of
- -----------
its Capital Stock (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly-Owned Subsidiary, unless such issuance is an issuance of the
common stock of such Restricted Subsidiary and, after giving effect to the
consummation thereof, the Company owns (x) more than 50% of the outstanding
common stock of such Restricted Subsidiary or (y) none of the outstanding common
stock of such Restricted Subsidiary.
SECTION III.11. Limitation on Liens. The Company will not, and will
-------------------
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, Incur or suffer to exist any Lien (other than Permitted Liens and Liens
securing Senior Indebtedness and Guarantees of Senior Indebtedness) upon any of
its property or assets (including Capital Stock), whether owned on the date of
this Indenture or thereafter acquired, securing any Indebtedness, unless
contemporaneously therewith effective provision is made to secure the
Indebtedness due under this Indenture and the Securities or, in respect of Liens
on any Restricted Subsidiary's property or assets, any Subsidiary Guarantee of
such Restricted Subsidiary, equally and ratably with (or prior
<PAGE>
52
to in the case of Liens with respect to Subordinated Obligations) the
Indebtedness secured by such Lien for so long as such Indebtedness is so
secured.
SECTION III.12. Future Subsidiary Guarantors. After the Issue Date,
----------------------------
the Company will cause each Restricted Subsidiary (other than a Foreign
Subsidiary) created or acquired by the Company to execute and deliver to the
Trustee a supplemental indenture (which supplemental indenture shall also be
executed and delivered by the Company and the Trustee) pursuant to which such
Subsidiary Guarantor will become a party to this Indenture and thereby
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any and interest on the Securities on a
senior subordinated basis.
SECTION III.13. Limitation on Lines of Business. The Company will
-------------------------------
not, nor will it permit any of its Subsidiaries to, engage in any line of
business, other than a Related Business.
SECTION III.14. Limitation on Asset Swaps. The Company will not, and
--------------------------
will not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless:
(i) at the time of entering into such Asset Swap and immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (ii) in the event
such Asset Swap involves the transfer by the Company or any Restricted
Subsidiary of assets having an aggregate fair market value, as determined by the
Board of Directors of the Company in good faith, in excess of $1.0 million, the
terms of such Asset Swap have been approved by a majority of the members of the
Board of Directors of the Company and (iii) in the event such Asset Swap
involves an aggregate amount in excess of $10.0 million, the Company has
received a written opinion from an independent investment banking firm of
nationally recognized standing that such Asset Swap is fair to the Company or
such Restricted Subsidiary, as the case may be, from a financial point of view.
SECTION III.15. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York, an office or agency
where the Securities may be presented or surrendered for payment, where, if
applicable, the Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The principal corporate trust
office (the "Corporate Trust Office") of the Trustee shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or
<PAGE>
53
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in The City of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
any change in the location of any such other office or agency.
SECTION III.16. Corporate Existence.
-------------------
Subject to Article IV and Section 11.2, the Company will do or cause
---------- ------------
to be done all things necessary to preserve and keep in full force and effect
the corporate existence and that of each Restricted Subsidiary and the corporate
rights (charter and statutory) licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such existence (except the Company), right, license or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof
is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION III.17. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (ii)
all lawful claims for labor, materials and supplies, which, if unpaid, might by
law become a material liability or lien upon the property of the Company or any
Restricted Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Company), are being
maintained in accordance with GAAP or where the failure to effect such payment
will not be disadvantageous to the Holders.
SECTION III.18. Compliance Certificate. The Company shall deliver to
----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If they
do, the certificate shall describe the Default or Event of Default, its status
and what action the Company is taking or proposes to take with respect thereto.
The Company also shall comply with TIA (S) 314(a)(4).
SECTION III.19. Further Instruments and Acts. Upon request of the
----------------------------
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
<PAGE>
54
ARTICLE IV
Successor Company
-----------------
SECTION IV.1. Merger and Consolidation. The Company shall not
------------------------
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
---------
Company") shall be a corporation, partnership, trust, limited liability
-------
company or other similar entity organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
and the Successor Company (if not the Company) shall expressly assume, by
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of Section 3.3 of this Indenture;
-----------
and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the
Securities. Solely for the purpose of computing amounts described in clause
3(A) of Section 3.5(a), the Successor Company shall only be deemed to have
--------------
succeeded and be substituted for the Company with respect to periods subsequent
to the effective time of such merger, consolidation, combination or transfer of
assets.
Notwithstanding clauses (ii) and (iii) of the first sentence of this
Section 4.1: (i) any Restricted Subsidiary of the Company may consolidate with,
- -----------
merge into or transfer all or part of its properties and assets to the Company
and (ii) the Company may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Company in another jurisdiction to realize tax or
other benefits.
<PAGE>
55
ARTICLE V
Redemption of Securities
------------------------
SECTION V.1. Optional Redemption. The Securities may or shall, as the
-------------------
case may be, be redeemed, as a whole or from time to time in part, subject to
the conditions and at the Redemption Prices specified in the form of Securities
set forth in Exhibits A and B hereto, which are hereby incorporated by reference
----------------
and made a part of this Indenture, together with accrued and unpaid interest to
the redemption date.
SECTION V.2. Applicability of Article. Redemption of Securities at
------------------------
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION V.3. Election to Redeem; Notice to Trustee. The election of
-------------------------------------
the Company to redeem any Securities pursuant to Section 5.1 shall be evidenced
-----------
by a Board Resolution. In case of any redemption at the election of the
Company, the Company shall, upon not less than 45 and not more than 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 5.4.
-----------
SECTION V.4. Selection by Trustee of Securities to Be Redeemed. If
-------------------------------------------------
less than all the Securities are to be redeemed at any time pursuant to an
optional redemption, the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
outstanding Securities not previously called for redemption, in compliance with
the requirements of the principal securities exchange, if any, on which such
Securities are listed, or, if such Securities are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements)
and which may provide for the selection for redemption of portions of the
principal of the Securities; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Security not redeemed to
less than $1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
<PAGE>
56
SECTION V.5. Notice of Redemption. Notice of redemption shall be
--------------------
given in the manner provided for in Section 13.2 not less than 30 nor more than
------------
60 days prior to the Redemption Date, to each Holder of Notes to be redeemed.
The Trustee shall give notice of redemption in the Company's name and at the
Company's expense; provided, however, that the Company shall deliver to the
Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to
the Redemption Date payable as provided in Section 5.7, if any,
-----------
(3) if less than all outstanding Securities are to be redeemed,
the identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be Outstanding
after such partial redemption,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the holder will receive,
without charge, a new Security or Securities of authorized denominations
for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and
accrued interest, if any, to the Redemption Date payable as provided in
Section 5.7) will become due and payable upon each such Security, or the
-----------
portion thereof, to be redeemed, and, unless the Company defaults in making
the redemption payment, that interest on Securities called for redemption
(or the portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest, if
any,
(7) the name and address of the Paying Agent,
(8) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to
the accuracy or correctness of the CUSIP number, if any, listed in such
notice or printed on the Securities, and
<PAGE>
57
(10) the paragraph of the Securities pursuant to which the
Securities are to be redeemed.
SECTION V.6. Deposit of Redemption Price. Prior to any Redemption
---------------------------
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money sufficient to pay the Redemption
-----------
Price of, and accrued interest on, all the Securities which are to be redeemed
on that date.
SECTION V.7. Notes Payable on Redemption Date. Notice of redemption
--------------------------------
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified (together with accrued interest, if any, to the Redemption Date), and
from and after such date (unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business on
the relevant Regular Record Date or Special Record Date, as the case may be,
according to their terms and the provisions of Section 2.13.
------------
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
SECTION V.8. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 3.15 (with, if the
------------
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Security at the expense of the
Company, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered, provided, that each such new Security will be in a principal amount
of $1,000 or integral multiple thereof.
<PAGE>
58
ARTICLE VI
Defaults and Remedies
---------------------
SECTION VI.1. Events of Default. An "Event of Default" occurs if:
-----------------
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article X of this Indenture, and such default continues for a
period of 30 days;
(2) the Company defaults in the payment of the principal or premium,
if any, of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment shall be prohibited
by Article X of this Indenture;
(3) the Company fails to comply with Article IV of this Indenture;
----------
(4) the Company fails to comply with any of Sections 3.2, 3.3, 3.4,
------------ --- ---
3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, and 3.17
--- --- --- --- --- ---- ---- ---- ---- ---- ---- ---- ----
(in each case other than a failure to repurchase Securities when required
pursuant to Sections 3.7 or 3.9, which failure shall constitute an Event of
------------ ---
Default under Section 6.1(2)) and such failure continues for 30 days after
--------------
the notice specified below;
(5) the Company defaults in the performance of or a breach by the
Company of any other covenant or agreement in this Indenture or under the
Securities (other than those referred to in (1), (2), (3) or (4) above) and
such default continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Restricted Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof and the total amount of such unpaid or
accelerated Indebtedness exceeds $5.0 million or its foreign currency
equivalent at the time;
(7) the Company or a Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian (as defined
below) of it or for any substantial part of its property; or
<PAGE>
59
(D) makes a general assignment for the benefit of its
creditors; or takes any comparable action under any foreign laws relating
to insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or
any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of $5.0
million or its foreign currency equivalent at the time is rendered against
the Company or a Significant Subsidiary if such judgment or decree remains
undischarged or unstayed for a period of 60 days following such judgment or
decree becomes final and non-appealable; or
(10) the failure of any Note Guarantee by a Guarantor (if any) to be
in full force and effect (except as contemplated by the terms hereof) or
the denial or disaffirmation by any such Guarantor of its obligations under
any Guarantee.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
-------------- ------------------
similar Federal or state law for the relief of debtors. The term "Custodian"
---------
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or (5) of
this Section 6.1 will not constitute an Event of Default until the Trustee or
-----------
the Holders of more than 25% in principal amount of the outstanding Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified in said clause (4) or (5) after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
<PAGE>
60
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default under clauses (3), (4), (5), (6), (9) or (10) of
this Section 6.1.
-----------
SECTION VI.2. Acceleration. If an Event of Default (other than an
------------
Event of Default specified in Section 6.1(7) or (8) with respect to the Company)
-------------- ---
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in outstanding principal amount of the Securities by notice to
the Company and the Trustee, may, and the Trustee at the request of such Holders
shall, declare the principal of, premium, if any, and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal, premium and interest shall, subject to Section 10.4 of this
------------
Indenture, be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in Section 6.1(6) above has
--------------
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default or payment default
triggering such Event of Default pursuant to Section 6.1(6) shall be remedied or
--------------
cured by the Company and/or the relevant Significant Subsidiaries or waived by
the holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in Section
-------
6.1(7) or (8) with respect to the Company occurs, the principal of, premium and
- ------ ---
accrued and unpaid interest on all the Securities will become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holders. The Holders of a majority in principal amount of the Securities
by notice to the Trustee may waive all past defaults (except with respect to
nonpayment of principal, premium or interest) and rescind an acceleration with
respect to the Securities and its consequences if (i) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all existing Events of Default, other than the nonpayment of principal or
interest that has become due solely because of such acceleration, have been
cured or waived. No such rescission shall affect any subsequent Default or
Event of Default or impair any right consequent thereto.
SECTION VI.3. Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION VI.4. Waiver of Past Defaults. The Holders of a majority in
-----------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal of or interest on a Security
or (ii) a Default or Event of Default in respect of a provision
<PAGE>
61
that under Section 9.2 cannot be amended without the consent of each
-----------
Securityholder affected. When a Default or Event of Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any consequent right.
SECTION VI.5. Control by Majority. The Holders of a majority in
-------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Sections 7.1 and 7.2, that the Trustee determines is unduly
--------------------
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION VI.6. Limitation on Suits. A Securityholder may not pursue
-------------------
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal amount of
the Securities make a request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense (including reasonable
attorneys' fees and expenses);
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
Subject to certain restrictions, the holders of a majority in
principal amount of the outstanding Securities are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that conflicts with law or
the Indenture or that the Trustee determines is unduly prejudicial to the rights
of any other holder or that would involve the Trustee in personal liability.
Prior to taking any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION VI.7. Rights of Holders to Receive Payment. Notwithstanding
------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium (if any) or interest on the Securities held by
such Holder, on or after the respective due
<PAGE>
62
dates expressed in the Securities, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION VI.8. Collection Suit by Trustee. If an Event of Default
--------------------------
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee may
-------------- ---
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
-------
7.7.
- ---
SECTION VI.9. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries or
its or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
-----------
SECTION VI.10. Priorities. If the Trustee collects any money or
----------
property pursuant to this Article VI, it shall pay out the money or property in
----------
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
-----------
SECOND: to holders of Senior Indebtedness to the extent required by
Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION VI.11. Undertaking for Costs. In any suit for the
---------------------
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party
<PAGE>
63
litigant. This Section does not apply to a suit by the Trustee, a suit by the
Company, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more
-----------
than 10% in outstanding principal amount of the Securities.
ARTICLE VII
Trustee
-------
SECTION VII.1. Duties of Trustee. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine whether
or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
-----------
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
<PAGE>
64
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses (including
reasonable attorneys' fees and expenses) and liabilities that might be incurred
by it in compliance with such request or direction.
SECTION VII.2. Rights of Trustee. Subject to Section 7.1, (a) The
----------------- -----------
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
<PAGE>
65
SECTION VII.3. Individual Rights of Trustee. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
------------- ----
SECTION VII.4. Trustee's Disclaimer. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION VII.5. Notice of Defaults. If a Default or Event of Default
------------------
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of, premium (if any), or interest on
any Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION VII.6. Reports by Trustee to Holders. As promptly as
-----------------------------
practicable after each April 15 beginning with the April 15 following the date
of this Indenture, and in any event prior to June 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such April 15 that
complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S)
313(b). The Trustee shall also transmit by mail all reports required by TIA (S)
313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION VII.7. Compensation and Indemnity. The Company shall pay to
--------------------------
the Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder as the Company and the Trustee shall from time
to time agree in writing. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Securityholders and reasonable costs of counsel retained
by the Trustee in connection with the delivery of an Opinion of Counsel or
otherwise, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall
<PAGE>
66
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees and expenses) incurred by it without negligence or
bad faith on its part in connection with the administration of this trust and
the performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 7.7) and of defending itself
-----------
against any claims (whether asserted by any Securityholder, the Company or
otherwise). The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel provided that the Company shall not be
required to pay such fees and expenses if it assumes the Trustee's defense, and,
in the reasonable judgement of outside counsel to the Trustee, there is no
conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
-----------
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(7) or (8) with respect to
-------------- ---
the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION VII.8. Replacement of Trustee. The Trustee may resign at any
----------------------
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
------------
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
<PAGE>
67
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
-----------
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the Company's
expense, any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
------------
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
-----------
benefit of the retiring Trustee.
SECTION VII.9. Successor Trustee by Merger. If the Trustee
---------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION VII.10. Eligibility; Disqualification. The Trustee shall at
-----------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION VII.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA
<PAGE>
68
(S) 311(a), excluding any creditor relationship listed in TIA (S) 311(b). A
Trustee who has resigned or been removed shall be subject to TIA (S) 311(a) to
the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
----------------------------------
SECTION VIII.1. Discharge of Liability on Securities; Defeasance.
------------------------------------------------
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.9) for cancellation or
-----------
(ii) all outstanding Securities have become due and payable, whether at maturity
or upon redemption and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities
(other than Securities replaced pursuant to Section 2.9), including interest
-----------
thereon to maturity or such redemption date, and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.1(c), cease to be of further effect. The Trustee shall
--------------
acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at the
cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any time may
--------------- ---
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option"), and after giving effect to such legal defeasance,
-----------------------
any omission to comply with such obligations shall no longer constitute a
Default or Event of Default or (ii) its obligations under Sections 3.2, 3.3,
------------ ---
3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17,
- --- --- --- --- --- --- ---- ---- ---- ---- ---- ---- ---- ----
and 4.1(iii) and the Company may omit to comply with and shall have no liability
--------
in respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall no longer constitute a Default or an Event of Default under Section 6.1(3)
--------------
and 6.1(4) ("covenant defeasance option"), but except as specified above, the
------ --------------------------
remainder of this Indenture and the Securities shall be unaffected thereby. The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If the Company exercises its
covenant defeasance option, the Company may, by written notice to the Trustee
prior to the delivery of the Opinion of Counsel referred to in Section 8.2(8),
--------------
elect to have any Subsidiary Guarantees in effect at such time terminate.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of any event that, in the absence of
such legal defeasance, would have constituted an Event of Default, and the Note
Guarantees in effect at such time shall terminate. If the Company exercises its
covenant defeasance option, the events specified in Sections 6.1(4), 6.1(6),
--------------- ------
6.1(7) (but only with respect to a Significant Subsidiary), 6.1(8) (but only
- ------ ------
with respect to a Significant Subsidiary), 6.1(9) and 6.1(10) will no longer
------ -------
constitute an Event of
<PAGE>
69
Default, and payment of the Securities may not be accelerated because of the
occurrence of any such event or because of the failure of the Company to comply
with Sections 4.1(iii).
-----------------
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b), the
--------------- ---
Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.9, 7.7, 7.8, 8.4,
------------ --- --- --- --- --- --- --- ---
8.5 and 8.6 shall survive until the Securities have been paid in full.
- --- ---
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
------------ --- ---
survive.
SECTION VIII.2. Conditions to Defeasance. The Company may exercise
------------------------
its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee for
the benefit of the Holders money in U.S. dollars or U.S. Government
Obligations or a combination thereof for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default with respect to the Indenture resulting from the incurrence of
Indebtedness, all or a portion of which will be used to defease the
Securities concurrently with such incurrence);
(4) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (A) the Securities and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the
91st day following the deposit and that no Holder of the Securities is an
insider of the Company, after 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' right
generally;
<PAGE>
70
(6) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(7) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(8) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Securityholders will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance had
not occurred;
(9) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States to
the effect that the Securityholders will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and
(10) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities and this Indenture as
contemplated by this Article VIII have been complied with.
SECTION VIII.3. Application of Trust Money. The Trustee shall hold
--------------------------
in trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
SECTION VIII.4. Repayment to Company. The Trustee and the Paying
--------------------
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal of or interest on the Securities that remains unclaimed
for two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.
<PAGE>
71
SECTION VIII.5. Indemnity for U.S. Government Obligations. The
-----------------------------------------
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION VIII.6. Reinstatement. If the Trustee or Paying Agent is
-------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
----------
SECTION IX.1. Without Consent of Holders. The Company, the
--------------------------
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article IV in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities or to secure the
Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
<PAGE>
72
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
will have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Securities, as
a single issue of securities.
An amendment under this Section may not make any change that adversely
affects the rights under Article X of any holder of Senior Indebtedness or under
Article XII of any holder of Guarantor Senior Indebtedness then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION IX.2. With Consent of Holders. The Company, the Guarantors
-----------------------
and the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent of
each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption or repurchase of
any Security or change the time at which any Security may or shall be
redeemed or repurchased in accordance with this Indenture;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Holder to receive payment of principal of
and interest on such Holder's Securities on or after the due dates therefor
or to institute suit for the enforcement of any payment on or with respect
to such Holder's Securities;
(7) make any change to the amendment provisions which require each
Holder's consent or to the waiver provisions.
<PAGE>
73
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article X or Article XII of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION IX.3. Compliance with Trust Indenture Act. Every amendment
-----------------------------------
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION IX.4. Revocation and Effect of Consents and Waivers. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
An amendment or waiver shall become effective upon receipt by the Trustee of the
requisite number of written consents under Section 9.1 or 9.2 as applicable.
----------- ---
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
SECTION IX.5. Notation on or Exchange of Securities. If an amendment
-------------------------------------
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall
<PAGE>
74
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Security shall not affect the validity of
such amendment.
SECTION IX.6. Trustee To Sign Amendments. The Trustee shall sign any
--------------------------
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
--------------------
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
ARTICLE X
Subordination
-------------
SECTION X.1. Agreement To Subordinate. The Company agrees, and each
------------------------
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities and other obligations relating to the Securities are
subordinated in right of payment, to the extent and in the manner provided in
this Article X, to the prior payment when due in cash or Cash Equivalents of all
Senior Indebtedness and that the subordination is for the benefit of and
enforceable by the holders of Senior Indebtedness. The Securities shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of the
---- -----
Company and only Indebtedness of the Company which is Senior Indebtedness will
rank senior to the Securities in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
-------------
SECTION X.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets or securities of the Company upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its respective properties:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full in cash or Cash Equivalents of the Senior
Indebtedness (including interest accruing after, or which would accrue but
for, the commencement of any proceeding at the rate specified in the
applicable Senior Indebtedness, whether or not a claim for such interest
would be allowed) before Securityholders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect to the
Securities; and
(2) until the Senior Indebtedness is paid in full in cash or Cash
Equivalents, any payment or distribution to which Securityholders would be
entitled but for this Article X shall be made to holders of Senior
Indebtedness as their respective interests may appear.
SECTION X.3. Default on Senior Indebtedness. The Company shall not
------------------------------
pay the principal of, premium (if any) or interest on or other amounts with
respect to the Securities or make any deposit pursuant to Section 8.1 or
-----------
repurchase, redeem or otherwise retire any Securities
<PAGE>
75
("pay the Securities") if (i) any Senior Indebtedness of the Company is not paid
------------------
when due in cash or Cash Equivalents or (ii) any other default on Senior
Indebtedness of the Company occurs and the maturity of such Senior Indebtedness
of the Company is accelerated in accordance with its terms unless, in either
case, (x) the default has been cured or waived and any such acceleration has
been rescinded in writing or (y) such Senior Indebtedness of the Company has
been paid in full in cash or Cash Equivalents; provided, however, that the
Company may pay the Securities without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness of the Company with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred or is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
-------
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
- ---------------
Company) of written notice (a "Blockage Notice") of such default from the
---------------
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has been
repaid in full in cash or Cash Equivalents). Notwithstanding the provisions of
the immediately preceding sentence, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after the end of such Payment Blockage Period. Not more than
one Blockage Notice may be given in any consecutive 360-day period, irrespective
of the number of defaults with respect to Designated Senior Indebtedness during
such period.
SECTION X.4. Acceleration of Payment of Securities. If payment of
-------------------------------------
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration; provided, however, that the
Company and the Trustee shall be obligated to notify such a Representative only
if such Representative has delivered or caused to be delivered to the Company
and the Trustee an address for service of such a notice (and the Company and the
Trustee shall only be obligated to deliver the notice to the address so
specified). If any Designated Senior Indebtedness is outstanding, the Company
shall not pay the Securities until five Business Days after the holders or
Representative of such Designated Senior Indebtedness receives notice of such
acceleration and, thereafter, may pay the Securities only if this Article X
otherwise permits payments at that time.
SECTION X.5. When Distribution Must Be Paid Over. If a payment or
-----------------------------------
distribution is made to the Trustee or Securityholders that because of this
Article X should not have been made to them, the Trustee or the Securityholders
who receive the payment or distribution shall hold it in trust for holders of
Senior Indebtedness and promptly pay it over to them as their respective
interests may appear.
<PAGE>
76
SECTION X.6. Subrogation. After all Senior Indebtedness is paid in
-----------
full in cash or Cash Equivalents and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
payment or distribution made under this Article X to holders of Senior
Indebtedness which otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company of Senior
Indebtedness.
SECTION X.7. Relative Rights. This Article X defines the relative
---------------
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive payments and
distributions otherwise payable to Securityholders.
SECTION X.8. Subordination May Not Be Impaired by Company. No right
--------------------------------------------
of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by the failure of any of them to comply with this
Indenture.
SECTION X.9. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 10.3, the Trustee or Paying Agent may continue to make payments on the
- ------------
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than one
Business Day prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article X. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if an issue of Senior Indebtedness has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7. Each Paying Agent shall have the same
-----------
rights and obligations under this Article X as does the Trustee.
SECTION X.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
payment or distribution is to be made or a notice given to holders of Senior
Indebtedness, the payment or distribution may be made and the notice given to
their Representative (if any).
<PAGE>
77
SECTION X.11. Article X Not To Prevent Events of Default or Limit
---------------------------------------------------
Right To Accelerate. The failure to make a payment in respect of the Securities
- -------------------
by reason of any provision in this Article X shall not be construed as
preventing the occurrence of a Default or Event of Default. Nothing in this
Article X shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION X.12. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article X, and none of the Securityholders shall
be obligated to pay over any such amount to the Company, any holder of Senior
Indebtedness of the Company, or any other creditor of the Company.
SECTION X.13. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
------------
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article X, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment. The provisions of Sections 7.1
------------
and 7.2 shall be applicable to all actions or omissions of actions by the
---
Trustee pursuant to this Article X.
SECTION X.14. Trustee To Effectuate Subordination. Each
-----------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION X.15. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Senior Indebtedness and, subject to Section 10.9, shall not be liable
to any such holders if it shall mistakenly pay over or
<PAGE>
78
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of Senior Indebtedness shall be entitled by virtue
of this Article X or otherwise.
SECTION X.16. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Securityholder by accepting a Security
- ------------------------
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
Guarantee
---------
SECTION XI.1. Guarantee. Each Guarantor hereby fully,
---------
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally with each other Guarantor, to each Holder of the
Securities the full and punctual payment when due, whether at maturity, by
acceleration, by redemption or otherwise, of the principal of, premium, if any,
and interest on the Securities (all the foregoing being hereinafter collectively
called the "Obligations"). Each Guarantor further agrees (to the extent
permitted by law) that the Obligations may be extended or renewed, in whole or
in part, without notice or further assent from it, and that it will remain bound
under this Article XI notwithstanding any extension or renewal of any
Obligation. Notwithstanding anything to the contrary contained herein, AHI and
Holdings may merge with or consolidate into one another, so long as the
surviving Person Guarantees the full and prompt payment of the principal of,
premium, if any, and interest on the Securities on a senior subordinated basis.
Each Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of each Guarantor hereunder
shall not be affected by (a) the failure of any Holder to assert any claim or
demand or to enforce any right or remedy against the Company or any other person
under the Indenture, the Securities or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Indenture, the Securities
or any other agreement; (d) the release of any security held by any Holder or
the Trustee for the Obligations or any of them; (e) the failure of any Holder to
exercise any right or remedy against any other Guarantor; or (f) any change in
the ownership of the Company.
Each Guarantor further agrees that its Note Guarantee herein
constitutes a Guarantee of payment when due (and not a Guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Obligations.
<PAGE>
79
The Note Guarantee of each Guarantor is, to the extent and in the
manner set forth in Article XII, subordinated and subject in right of payment to
the prior payment in full of all Guarantor Senior Indebtedness of such Guarantor
and the Note Guarantee is made subject to such provisions of such Guarantees.
The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
payment of the Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor herein shall not be discharged or impaired or otherwise affected by
the failure of any Holder to assert any claim or demand or to enforce any remedy
under the Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any Guarantor or would otherwise
operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Note Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any of the
Obligations is rescinded or must otherwise be restored by any Holder upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Company to pay any of the Obligations when and
as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Guarantor hereby promises to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in
cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such
Obligations then due and owing and (ii) accrued and unpaid interest on such
Obligations then due and owing (but only to the extent not prohibited by law).
Each Guarantor further agrees that, as between such Guarantor, on the
one hand, and the Holders, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in the Indenture
for the purposes of the Note Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby and (y) in the event of any such declaration of
acceleration of such Obligations, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor for the
purposes of this Note Guarantee.
Each Guarantor also agrees to pay any and all reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or the
Holders in enforcing any rights under this Section.
<PAGE>
80
SECTION XI.2. Limitation on Liability; Termination, Release and
-------------------------------------------------
Discharge. The obligations of each Guarantor hereunder will be limited to the
- ---------
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any Guarantees
under the Senior Credit Agreement) and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Note Guarantee or pursuant to its
contribution obligations under the Indenture or as set forth below, result in
the obligations of the Guarantor under this Note Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell
its assets to the Company or another Wholly-Owned Subsidiary Guarantor without
limitation. Each Subsidiary Guarantor may consolidate with or merge into or sell
all or substantially all its assets to a corporation, partnership, trust,
limited partnership, limited liability company or other similar entity other
than the Company or a Wholly-Owned Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor), except that if the surviving
corporation of any such merger or consolidation is a Subsidiary of the Company,
such Subsidiary shall not be a Foreign Subsidiary. Upon the sale or disposition
of a Subsidiary Guarantor (by merger, consolidation, the sale of its Capital
Stock or the sale of all or substantially all of its assets) to a Person
(whether or not an Affiliate of the Subsidiary Guarantor) which is not a
Subsidiary of the Company, which sale or disposition is otherwise in compliance
with this Indenture (including Section 3.7), such Subsidiary Guarantor shall be
deemed released from all its obligations under this Indenture and its Subsidiary
Guarantee and such Subsidiary Guarantee shall terminate; provided, however, that
any such termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under the Senior Credit Agreement and all of its Guarantees
of, and under all of its pledges of assets or other security interests which
secure, any other Indebtedness of the Company shall also terminate upon such
release, sale or transfer.
SECTION XI.3. Right of Contribution. Each Guarantor hereby agrees
----------------------
that to the extent that any Guarantor shall have paid more than its
proportionate share of any payment made on the obligations under the Note
Guarantees, such Guarantor shall be entitled to seek and receive contribution
from and against the Company or any other Guarantor who has not paid its
proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 3.6. The provisions of
this Section 11.3 shall in no respect limit the obligations and liabilities of
each Guarantor to the Trustee and the Holders and each Guarantor shall remain
liable to the Trustee and the Holders for the full amount guaranteed by such
Guarantor hereunder.
SECTION XI.4. No Subrogation. Notwithstanding any payment or
--------------
payments made by each Guarantor hereunder, no Guarantor shall be entitled to be
subrogated to any of the rights of the Trustee or any Holder against the Company
or any other Guarantor or any collateral security or guarantee or right of
offset held by the Trustee or any Holder for the payment of the Obligations, nor
shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Trustee and the
Holders by the Company on
<PAGE>
81
account of the Obligations are paid in full. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Trustee and the Holders, segregated from other funds
of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Trustee in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Trustee, if required), to be applied against
the Obligations.
ARTICLE XII
Subordination of Note Guarantees
--------------------------------
SECTION XII.1. Agreement To Subordinate. Each Guarantor agrees, and
------------------------
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by each Note Guarantee and other obligations relating to the
Securities are subordinated in right of payment, to the extent and in the manner
provided in this Article XII, to the prior payment when due in cash or Cash
Equivalents of all Guarantor Senior Indebtedness and that the subordination is
for the benefit of and enforceable by the holders of Guarantor Senior
Indebtedness. Each Note Guarantee shall in all respects rank pari passu with
---- -----
all other Guarantor Senior Subordinated Indebtedness of such Guarantor and only
Indebtedness of the Guarantor which is Guarantor Senior Indebtedness will rank
senior to such Note Guarantee in accordance with the provisions set forth
herein. All provisions of this Article XII shall be subject to Section 12.12.
SECTION XII.2. Liquidation, Dissolution, Bankruptcy. Upon any
------------------------------------
payment or distribution of the assets or securities of any Guarantor upon a
total or partial liquidation or a total or partial dissolution of a Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to any Guarantor or its respective properties:
(1) holders of Guarantor Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents of the Guarantor Senior
Indebtedness (including interest accruing after, or which would accrue but
for, the commencement of any proceeding at the rate specified in the
applicable Guarantor Senior Indebtedness, whether or not a claim for such
interest would be allowed) before Securityholders shall be entitled to
receive any payment of principal of, premium, if any, or interest on or
other amounts with respect to the Securities; and
(2) until the Guarantor Senior Indebtedness is paid in full in cash
or Cash Equivalents, any payment or distribution to which Securityholders
would be entitled but for this Article XII shall be made to holders of
Guarantor Senior Indebtedness as their respective interests may appear.
SECTION XII.3. Default on Senior Indebtedness. No Guarantor shall
------------------------------
pay the principal of, premium (if any) or interest on or other amounts with
respect to the Securities or make any deposit pursuant to Section 8.1 or pay the
Securities if (i) any Guarantor Senior Indebtedness or Senior Indebtedness of
the Company is not paid when due in cash or Cash
<PAGE>
82
Equivalents or (ii) any other default on Guarantor Senior Indebtedness or Senior
Indebtedness of the Company occurs and the maturity of such Guarantor Senior
Indebtedness or Senior Indebtedness of the Company is accelerated in accordance
with its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded in writing or (y) such Guarantor
Senior Indebtedness or Senior Indebtedness of the Company has been paid in full
in cash or Cash Equivalents; provided, however, that a Guarantor may pay the
Securities without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of the
Guarantor Senior Indebtedness or the Senior Indebtedness of the Company with
respect to which either of the events set forth in clause (i) or (ii) of this
sentence has occurred or is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the Guarantor may not pay the Securities for a
Payment Blockage Period commencing upon the receipt by the Trustee (with a copy
to the Company) of a Blockage Notice of such default from the Representative of
the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness or
the Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, a Guarantor may resume payments on the
Securities after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
SECTION XII.4. Acceleration of Payment of Securities. If payment of
-------------------------------------
the Securities is accelerated because of an Event of Default and if any
Designated Senior Indebtedness is outstanding, no Guarantor shall pay the
Securities until five Business Days after the holders or Representative of the
Designated Senior Indebtedness receives notice of such acceleration as provided
in the Indenture and, thereafter, Guarantors may pay the Securities only if this
Article XII otherwise permits payments at that time.
SECTION XII.5. When Distribution Must Be Paid Over. If a payment or
-----------------------------------
distribution is made to the Trustee or Securityholders that because of this
Article XII should not have been made to them, the Trustee or the
Securityholders who receive the payment or distribution shall hold it in trust
for holders of Guarantor Senior Indebtedness and promptly pay it over to them as
their respective interests may appear.
SECTION XII.6. Subrogation. After all Guarantor Senior Indebtedness
-----------
is paid in full in cash or Cash Equivalents and the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Guarantor Senior
Indebtedness to receive distributions
<PAGE>
83
applicable to Guarantor Senior Indebtedness. A payment or distribution made
under this Article XII to holders of Guarantor Senior Indebtedness which
otherwise would have been made to Securityholders is not, as between a Guarantor
and Securityholders, a payment by such Guarantor of Guarantor Senior
Indebtedness.
SECTION XII.7. Relative Rights. This Article XII defines the
---------------
relative rights of Holders and holders of Guarantor Senior Indebtedness.
Nothing in the Note Guarantee shall:
(1) impair, as between a Guarantor and Holders, the obligation of a
Guarantor which is absolute and unconditional, to pay the Obligations in
accordance with the terms of the Note Guarantee; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Guarantor Senior Indebtedness to receive payments and
distributions otherwise payable to Securityholders.
SECTION XII.8. Subordination May Not Be Impaired by Guarantor. No
----------------------------------------------
right of any holder of Guarantor Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Note Guarantee shall be
impaired by any act or failure to act by a Guarantor or by the failure of any of
them to comply with the Note Guarantee or this Indenture.
SECTION XII.9. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 12.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than one
Business Day prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XII. A Guarantor, the Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness of the Company
or Guarantor Senior Indebtedness may give the notice; provided, however, that,
if an issue of Senior Indebtedness of the Company or Guarantor Senior
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Guarantor
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article XII with respect to any Guarantor Senior Indebtedness which may at any
time be held by it, to the same extent as any other holder of Guarantor Senior
Indebtedness; and nothing in Article VII shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article XII shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.7. Each Paying Agent
shall have the same rights and obligations under this Article XII as does the
Trustee.
SECTION XII.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
payment or distribution is to be made or a notice given to holders of Guarantor
Senior
<PAGE>
84
Indebtedness, the payment or distribution may be made and the notice given to
their Representative (if any).
SECTION XII.11. Article XII Not To Prevent Events of Default or Limit
-----------------------------------------------------
Right To Accelerate. The failure to make a payment in respect of the Securities
- -------------------
by reason of any provision in this Article XII shall not be construed as
preventing the occurrence of a Default or Event of Default. Nothing in this
Article XII shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION XII.12. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Guarantor Senior Indebtedness or
subject to the restrictions set forth in this Article XII, and none of the
Securityholders shall be obligated to pay over any such amount to a Guarantor,
any holder of Guarantor Senior Indebtedness or Senior Indebtedness of the
Company, or any other creditor of a Guarantor or the Company.
SECTION XII.13. Trustee Entitled To Rely. Upon any payment or
------------------------
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Guarantor
Senior Indebtedness or Senior Indebtedness of the Company for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Guarantor Senior Indebtedness or Senior
Indebtedness and other Indebtedness of the Company or a Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XII. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Guarantor Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article XII, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
7.1 and 7.2 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article XII.
SECTION XII.14. Trustee To Effectuate Subordination. Each
-----------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Guarantor Senior Indebtedness and Senior Indebtedness of the Company as provided
in this Article XII and appoints the Trustee as attorney-in-fact for any and all
such purposes.
<PAGE>
85
SECTION XII.15. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Guarantor Senior Indebtedness or Senior Indebtedness of the Company
and, subject to Section 12.9, shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise.
SECTION XII.16. Reliance on Subordination Provisions. Each
------------------------------------
Securityholder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Guarantor Senior Indebtedness, whether
such Guarantor Senior Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold, or to continue to
hold, such Guarantor Senior Indebtedness and such holder of Guarantor Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Guarantor Senior Indebtedness.
ARTICLE XIII
Miscellaneous
-------------
SECTION XIII.1. Trust Indenture Act Controls. If any provision of
----------------------------
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. Each Guarantor in addition to performing its obligations
under the Note Guarantee shall perform such other obligations as may be imposed
upon it with respect to this Indenture under the TIA.
SECTION XIII.2. Notices. Any notice or communication shall be in
-------
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Advanstar Communications Inc.
7500 Old Oak Boulevard
Cleveland, Ohio 44130-3369
Attention: David M. Montgomery
With a copy to:
Testa, Hurwitz & Thibeault LLP
High Street Tower
125 High Street
Boston, MA 02110
Attention: George Davitt
<PAGE>
86
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION XIII.3. Communication by Holders with other Holders.
-------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Trustee shall comply with TIA (S) 312(b) with respect to any
such communication. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA (S) 312(c).
SECTION XIII.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION XIII.5. Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
<PAGE>
87
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officer's Certificate or on certificates of public officials.
SECTION XIII.6. When Securities Disregarded. In determining whether
---------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION XIII.7. Rules by Trustee, Paying Agent and Registrar. The
--------------------------------------------
Trustee may make reasonable rules for action by, or a meeting of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION XIII.8. Legal Holidays. A "Legal Holiday" is a Saturday, a
-------------- -------------
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
SECTION XIII.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
-------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION XIII.10. No Recourse Against Others. An incorporator,
--------------------------
director, officer, employee, stockholder or controlling person, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a
<PAGE>
88
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION XIII.11. Successors. All agreements of the Company in this
----------
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION XIII.12. Multiple Originals. The parties may sign any number
------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION XIII.13. Variable Provisions. The Company initially appoints
-------------------
the Trustee as Paying Agent and Registrar and custodian with respect to any
Global Securities.
SECTION XIII.14. Qualification of Indenture. The Company shall
--------------------------
qualify this Indenture under the TIA in accordance with the terms and conditions
of the Registration Rights Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees and expenses for the Company, the Trustee
and the Holders) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION XIII.15. Table of Contents; Headings. The table of contents,
---------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
89
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
ADVANSTAR COMMUNICATIONS INC.
By: /s/ Robert L. Krakoff
--------------------------
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
AHI HOLDING CORP.
By: /s/ Robert L. Krakoff
--------------------------
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
ADVANSTAR HOLDINGS, INC.
By: /s/ Robert L. Krakoff
--------------------------
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
THE MEN'S GUILD IN CALIFORNIA, INC.
By: /s/ Robert L. Krakoff
--------------------------
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
ART EXPOSITIONS INTERNATIONAL INC.
By: /s/ Robert L. Krakoff
--------------------------
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
<PAGE>
90
EXPOCON MANAGEMENT ASSOCIATES, INC.
By: /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
ON DEMAND MARKETING, INC.
By: /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
TECHNOLOGY EVENTS COMPANY, LLC
By: /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
MAGIC KIDS, INC.
By: /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
BANK OF NEW YORK
By: /s/ Mary Jane Schmalzel
______________________________
Name: Mary Jane Schmalzel
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
No. [___] Principal Amount $[______________]
CUSIP NO. ____________
9 1/4% Senior Subordinated Notes due 2008
Advanstar Communications Inc., a New York corporation, promises to pay
to [___________], or registered assigns, the principal sum of
[__________________] Dollars on May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
<PAGE>
Additional provisions of this Security are set forth on the other side
of this Security.
ADVANSTAR COMMUNICATIONS INC.
By:______________________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
Authorized Signatory Date: _____________, 1998
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of
each year commencing November 1, 1998. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from April 30, 1998. The Company shall pay
interest on overdue principal or premium, if any (plus interest on such interest
to the extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized
and existing under the laws of the State of New York (the "Trustee"), will act
as Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April
30, 1998 (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), between the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations
of the Company limited to $150.0 million aggregate principal amount (subject to
Section 2.9 of the Indenture). The aggregate principal amount of notes which
- -----------
may be authenticated and delivered under the Indenture, including the
Securities, is limited to $250.0 million (subject to Section 2.9 of the
-----------
Indenture). This Security is one of the Initial Securities referred to in the
Indenture. The Securities include the Initial Securities and any Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture and the Registration Rights Agreement. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on: the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries, the Incurrence of
Indebtedness by the Company and its Subsidiary Guarantors if subordinate or
junior in any respect to any Senior Indebtedness or Guarantor Senior
Indebtedness, respectively, the payment of dividends and other distributions on
the Capital Stock of the Company and its Restricted Subsidiaries, the purchase
or redemption of Capital Stock of the Company and Capital Stock of such
Restricted Subsidiaries, certain purchases or redemptions of Subordinated
Indebtedness, the Incurrence of Liens by the Company or its Restricted
Subsidiaries, the entering into of Asset Swaps by the Company or its Restricted
Subsidiaries, the sale or transfer of assets and Capital Stock of Restricted
Subsidiaries, the issuance or sale of Capital Stock of Restricted Subsidiaries,
the business activities and investments of the Company and its Restricted
Subsidiaries and, transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Restricted Subsidiaries to restrict
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if
any, and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
5. Redemption
----------
Except as set forth below, the Securities will not be redeemable at
the option of the Company prior to May 1, 2003. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior
<PAGE>
notice mailed by first-class mail to each holder's registered address, at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
<PAGE>
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2003 104.625 %
2004 103.083 %
2005 101.542 %
2006 and thereafter 100.000 %
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001,
the Company may redeem in the aggregate up to 35% of the original principal
amount of the Securities with the proceeds of one or more Equity Offerings
received by, or invested in, the Company so long as there is a Public Market at
the time of such redemption, at a redemption price (expressed as a percentage of
principal amount) of 109.250% plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 65% of the original principal amount of the
Securities must remain outstanding after each such redemption; provided further,
however, that each such redemption occurs within 90 days of the date of closing
of such Equity Offering.
At any time on or prior to May 1, 2003, the Securities may also be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 30 days after the occurrence of such Change of Control) mailed
by first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at May 1, 2003 (such redemption price being
described under "Optional Redemption") plus (2) all required interest payments
due on such Security through May 1, 2003, computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over (B) the principal amount of such
Note.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the
<PAGE>
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
(1) Upon a Change of Control, unless the Company has exercised its
right to redeem the Securities as described under Section 5 hereof, any Holder
of Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales permitted by the Indenture, when the aggregate amount of Excess Proceeds
equals or exceeds $5.0 million, the Company shall make an Offer for all
outstanding Securities pro rata up to a maximum principal amount (expressed as a
multiple of $1,000) of Securities equal to such Excess Proceeds, at a purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the date of purchase in accordance with the
procedures set forth in Section 3.7 of the Indenture.
-----------
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note
Guarantees are subordinated to Guarantor Senior Indebtedness, each as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
<PAGE>
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of
it for all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Securities
and the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment) or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder, or to provide for the issuance of Exchange
Securities.
<PAGE>
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture, (iv) failure by the Company
----------
to comply for 30 days after notice with any of its obligations under the
covenants described under Section 3.9 of the Indenture or under other covenants
-----------
specified in the Indenture (in each case, other than a failure to purchase
Securities, which shall constitute an Event of Default under clause (ii) above),
(v) the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $5.0 million is rendered against the Company or a Significant Subsidiary and
such judgment or decree shall remain undischarged or unstayed for a period of 60
days after such judgment becomes final and non-appealable (the "judgment default
provision") or (ix) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Guarantor denies
or disaffirms its obligations under the Indenture or its Note Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of more than 25% in principal amount of
the outstanding Securities notify the Company of the default and the Company
does not cure such default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
<PAGE>
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [_] acquired for the undersigned's own account, without transfer; or
2 [_] transferred to the Company; or
3 [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"); or
4 [_] transferred pursuant to an effective registration statement under
the Securities Act; or
<PAGE>
5 [_] transferred pursuant to and in compliance with Regulation S under
the Securities Act; or
6 [_] transferred to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act),
that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter
appears as Section 2.7 of the Indenture); or
-----------
7 [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
______________________________
Signature
Signature Guarantee:
______________________________ ______________________________
(Signature must be guaranteed) Signature
____________________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
<PAGE>
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
____________________________
Dated:
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal Amount of Signature of authorized
Exchange Principal Amount of Principal Amount of this Global Security signatory of Trustee or
this Global Security this Global Security following such decrease Securities Custodian
or increase
<S> <C> <C> <C> <C>
___________ ______________________ _________________ _________________ ______________________
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ________________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
9 1/4% Senior Subordinated Notes due 2008
Advanstar Communications Inc., a New York corporation, promises to pay
to [______________], or registered assigns, the principal sum of
[_______________] Dollars on May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side
of this Security.
ADVANSTAR COMMUNICATIONS INC.
By:____________________________________
By:____________________________________
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
Authorized Signatory Date:
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of
each year commencing November 1, 1998. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from April 30, 1998. The Company shall pay
interest on overdue principal or premium, if any (plus interest on such interest
to the extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of the
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized
and existing under the laws of the State of New York (the "Trustee"), will act
as Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April
30, 1998 (as it may be amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), between the Company and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations
of the Company limited to $150.0 million aggregate principal amount (subject to
Section 2.9 of the Indenture). The aggregate principal amount of notes which
- -----------
may be authenticated and delivered under the Indenture, including the
Securities, is limited to $250.0 million (subject to Section 2.9 of the
-----------
Indenture). This Security is one of the Exchange Securities referred to in the
Indenture. The Securities include the Initial Securities and any Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture and the Registration Rights Agreement. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on: the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries, the Incurrence of
Indebtedness by the Company and its Subsidiary Guarantors if subordinate or
junior in any respect to any Senior Indebtedness or Guarantor Senior
Indebtedness, respectively, the payment of dividends and other distributions on
the Capital Stock of the Company and its Restricted Subsidiaries, the purchase
or redemption of Capital Stock of the Company and Capital Stock of such
Restricted Subsidiaries, certain purchases or redemptions of Subordinated
Indebtedness, the Incurrence of Liens by the Company or its Restricted
Subsidiaries, the entering into of Asset Swaps by the Company or its Restricted
Subsidiaries, the sale or transfer of assets and Capital Stock of Restricted
Subsidiaries, the issuance or sale of Capital Stock of Restricted Subsidiaries,
the business activities and investments of the Company and its Restricted
Subsidiaries, and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Subsidiaries to restrict distributions
and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if
any, and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
5. Optional Redemption
-------------------
Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to May 1, 2003. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each holder's registered address, at the following
redemption prices (expressed in
<PAGE>
percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
<PAGE>
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2003 104.625 %
2004 103.083 %
2005 101.542 %
2006 and thereafter 100.000 %
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Securities with the proceeds of one or more Equity Offerings received by,
or invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities must remain
outstanding after each such redemption; provided further, that each such
redemption occurs within 90 days of the date of closing of such Equity Offering.
At any time on or prior to May 1, 2003, the Securities may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 30 days after the occurrence of such Change of Control) mailed
by first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Security and (ii)
the excess of (A) the present value at such time of (1) the redemption price of
such Security at May 1, 2003 (such redemption price being described under
"Optional Redemption") plus (2) all required interest payments due on such
Security through May 1, 2003, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
<PAGE>
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
.1 Upon a Change of Control, unless the Company has exercised its
right to redeem the Securities as described under Section 5 hereof, any Holder
of Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales permitted by the Indenture, when the aggregate amount of Excess Proceeds
equals or exceeds $5.0 million, the Company shall make an Offer for all
outstanding Securities pro rata up to a maximum principal amount (expressed as a
multiple of $1,000) of Securities equal to such Excess Proceeds, at a purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the date of purchase in accordance with the
procedures set forth in Section 3.7 of the Indenture.
-----------
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note
Guarantees are subordinated to Guarantor Senior Indebtedness, each as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
<PAGE>
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or for a
period beginning 15 days before the mailing of a notice of Securities to be
redeemed and ending on the date of such mailing or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of
it for all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Securities
and the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment) or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.
<PAGE>
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture (iv) failure by the Company to
----------
comply for 30 days after notice with any of its obligations under the covenants
described under Section 3.9 of the Indenture or under other covenants specified
-----------
in the Indenture (in each case, other than a failure to purchase Securities,
which shall constitute an Event of Default under clause (ii) above), (v) the
failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
(the "cross acceleration provision"), (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or a Significant Subsidiary (the
"bankruptcy provisions"), (viii) any judgment or decree for the payment of money
in excess of $5.0 million is rendered against the Company or a Significant
Subsidiary and such judgment or decree shall remain undischarged or unstayed for
a period of 60 days after such judgment becomes final and non-appealable (the
"judgment default provision") or (ix) any Note Guarantee ceases to be in full
force and effect (except as contemplated by the terms of the Indenture) or any
Guarantor denies or disaffirms its obligations under the Indenture or its Note
Guarantee. However, a default under clauses (iv) and (v) will not constitute an
Event of Default until the Trustee or the holders of more than 25% in principal
amount of the outstanding Securities notify the Company of the default and the
Company does not cure such default within the time specified in clauses (iv) and
(v) hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
<PAGE>
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with,
the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
_______________________________________________________________________________
Date: _______________ Your Signature ____________________
Signature Guarantee: ____________________________________
(Signature must be guaranteed)
_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature: _____________________________
(Sign exactly as your name appears on the other side of
the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT 4.2
SUPPLEMENTAL INDENTURE
THIS SUPPLEMENTAL INDENTURE, dated as of May 19, 1998, among Advanstar
Communications Inc., a New York corporation (the "Company"), Applied Business
teleCommunications, a California corporation and a wholly-owned subsidiary of
the Company (the "New Subsidiary Guarantor"), and The Bank of New York (the
"Trustee").
WHEREAS, the Company, the Guarantors listed therein and the Trustee entered
into an Indenture dated as of April 30, 1998 (together with this Supplemental
Indenture, the "Indenture") to provide, among other things, for the
authentication, delivery and administration of the Company's 9 1/4% Senior
Subordinated Notes due 2008 (the "Notes") which evidence certain indebtedness of
the Company;
WHEREAS, pursuant to a Stock Purchase Agreement dated as of May 7, 1998 by
and among the Company, the New Subsidiary Guarantor, Patrick S. Portway and
Shawn Portway, the Company acquired all of the outstanding capital stock of the
New Subsidiary Guarantor; and
WHEREAS, pursuant to Section 3.12 of the Indenture, the Company has agreed,
and agreed to cause each Restricted Subsidiary after created or acquired, to
enter into a supplemental indenture pursuant to which such Restricted Subsidiary
will become a party to the Indenture and thereby unconditionally Guarantee, on a
joint and several basis, the full and prompt payment of the principal of,
premium, if any and interest on the Securities on a senior subordinated basis.
NOW, THEREFORE, the Company, the Subsidiary Guarantor and the Trustee agree
as follows:
1. Defined Terms. All capitalized terms not defined herein shall have the
-------------
meaning as set forth in the Indenture.
2. Amendment of Indenture. The Company, the New Subsidiary Guarantor and
----------------------
the Trustee hereby agree that the Indenture shall be amended by this
Supplemental Indenture to include the New Subsidiary Guarantor as a party
thereto and that, for purposes of the Indenture, the New Subsidiary Guarantor
shall be a Restricted Subsidiary and a Subsidiary Guarantor. The New Subsidiary
Guarantor hereby agrees to bound by the Indenture as a Subsidiary Guarantor for
all purposes as if the New Subsidiary Guarantor were a party to the original
Indenture, including, without limitation, to Guarantee unconditionally, on a
joint and several basis, the full and prompt payment of the principal of,
premium, if any and interest on the Securities on a senior subordinated basis.
3. Continuation of Provisions. Except as amended hereby, all of the terms
--------------------------
and conditions of the Indenture shall continue in full force and effect and are
hereby in all respects ratified and confirmed.
<PAGE>
-2-
4. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. COUNTERPARTS. This Supplemental Indenture may be executed in any
------------
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
6. HEADINGS. The headings of the Sections of this Supplemental Indenture
--------
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall not modify or restrict any of the terms or provisions
hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-3-
IN WITNESS WHEREOF, each party hereto has caused this Supplemental
Indenture to be duly executed, all as of the date first written above.
ADVANSTAR COMMUNICATIONS INC.
By: /s/ Robert L. Krakoff
_______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
APPLIED BUSINESS TELECOMMUNICATIONS
By: /s/ Robert L. Krakoff
_______________________________
Name: Robert L. Krakoff
Title: President
THE BANK OF NEW YORK
as Trustee
By: /s/ Mary Jane Schmalzel
_______________________________
Name: Mary Jane Schmalzel
Title: Chairman & Chief Executive Officer
<PAGE>
EXHIBIT 4.3
-----------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN BEHALF
AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF SECURITIES, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
<PAGE>
2
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
No. R-1 Principal Amount $______________
CUSIP NO. 00758RAA2
---------
9 1/4% Senior Subordinated Notes due 2008
ADVANSTAR COMMUNICATIONS INC., a New York corporation, promises to pay to
__________, or registered assigns, the principal sum of________________Dollars
on May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side of this
Security.
ADVANSTAR COMMUNICATIONS INC.
By:______________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
Authorized Signatory Date: _____________, 1998
<PAGE>
[REVERSE SIDE OF INITIAL SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of each
year commencing November 1, 1998. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from April 30, 1998. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any principal
of or interest on any Security is due and payable, the Company shall irrevocably
deposit with the Trustee or the Paying Agent money sufficient to pay such
principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized and
existing under the laws of the State of New York (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
2
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April 30,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations of the
Company limited to $150.0 million aggregate principal amount (subject to Section
-------
2.9 of the Indenture). The aggregate principal amount of notes which may be
- ---
authenticated and delivered under the Indenture, including the Securities, is
limited to $250.0 million (subject to Section 2.9 of the Indenture). This
-----------
Security is one of the Initial Securities referred to in the Indenture. The
Securities include the Initial Securities and any Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture and the
Registration Rights Agreement. The Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on: the Incurrence of Indebtedness by the
Company and its Restricted Subsidiaries, the Incurrence of Indebtedness by the
Company and its Subsidiary Guarantors if subordinate or junior in any respect to
any Senior Indebtedness or Guarantor Senior Indebtedness, respectively, the
payment of dividends and other distributions on the Capital Stock of the Company
and its Restricted Subsidiaries, the purchase or redemption of Capital Stock of
the Company and Capital Stock of such Restricted Subsidiaries, certain purchases
or redemptions of Subordinated Indebtedness, the Incurrence of Liens by the
Company or its Restricted Subsidiaries, the entering into of Asset Swaps by the
Company or its Restricted Subsidiaries, the sale or transfer of assets and
Capital Stock of Restricted Subsidiaries, the issuance or sale of Capital Stock
of Restricted Subsidiaries, the business activities and investments of the
Company and its Restricted Subsidiaries and, transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Restricted
Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if any,
and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
<PAGE>
3
5. Redemption
----------
Except as set forth below, the Securities will not be redeemable at the option
of the Company prior to May 1, 2003. On and after such date, the Securities
will be redeemable, at the Company's option, in whole or in part, at any time
upon not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each holder's registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid interest
to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ -----------------
<S> <C>
2003 104.625%
2004 103.083%
2005 101.542%
2006 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Securities with the proceeds of one or more Equity Offerings received by,
or invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities must remain
outstanding after each such redemption; provided further, however, that each
such redemption occurs within 90 days of the date of closing of such Equity
Offering.
At any time on or prior to May 1, 2003, the Securities may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 30 days after the occurrence of such Change of Control) mailed by first-
class mail to each holder's registered address, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, the date of redemption (the "Redemption
Date") (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Security and (ii) the
excess of (A) the
<PAGE>
4
present value at such time of (1) the redemption price of such Security at May
1, 2003 (such redemption price being described under "Optional Redemption") plus
(2) all required interest payments due on such Security through May 1, 2003,
computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
a. Upon a Change of Control, unless the Company has exercised its right to
redeem the Securities as described under Section 5 hereof, any Holder of
Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales
permitted by the Indenture, when the aggregate amount of Excess Proceeds equals
or exceeds $5.0 million, the Company shall make an Offer for all outstanding
Securities pro rata up to a maximum principal amount (expressed as a multiple of
$1,000) of Securities equal to such Excess Proceeds, at a purchase price in cash
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of purchase in accordance with the procedures set
forth in Section 3.7 of the Indenture.
-----------
<PAGE>
5
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note Guarantees
are subordinated to Guarantor Senior Indebtedness, each as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of it for
all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
6
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or
the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder, or to provide for the issuance of Exchange
Securities.
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture, (iv) failure by the Company
----------
to comply for 30 days after notice with any of its obligations under the
covenants described under Section 3.9 of the Indenture or under other covenants
-----------
specified in the Indenture (in each case, other than a failure to purchase
Securities, which shall constitute an Event of Default under clause (ii) above),
(v) the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $5.0 million is rendered against the Company or a Significant Subsidiary and
such judgment or decree shall remain undischarged or unstayed for a period of 60
days after such judgment becomes final and non-appealable (the "judgment default
provision") or (ix) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Guarantor denies
or disaffirms its obligations under the Indenture or its Note Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of more than 25% in principal amount of
the outstanding Securities notify the Company of the default and the Company
does not cure such default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.
<PAGE>
7
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent acting on its behalf) manually signs the certificate
of authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
<PAGE>
8
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with, the laws
of the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
<PAGE>
9
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [_] acquired for the undersigned's own account, without transfer;
or
2 [_] transferred to the Company; or
3 [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act");
or
4 [_] transferred pursuant to an effective registration statement
under the Securities Act; or
<PAGE>
10
5 [_] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6 [_] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act), that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter appears as Section 2.7 of the Indenture); or
-----------
7 [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
______________________________
Signature
Signature Guarantee:
______________________________ ______________________________
(Signature must be guaranteed) Signature
____________________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
<PAGE>
11
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal Amount of Signature of
Exchange in Principal Amount in Principal Amount this Global authorized
of this Global of this Global Security following signatory of
Security Security such decrease or Trustee or
increase Securities Custodian
__________ ______________ __________ ____________ ______________
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant
to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT 4.4
-----------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT
("REGULATION S"), (2) BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S,
(E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND IN THE
CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER 40
CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH
THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN
REGULATION S) AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER
THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN
MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE
REFERRED TO BELOW.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
No. R-1 Principal Amount $
--------------
CUSIP NO. U0080JAA6
---------------
ISIN NO. USU0080JAA61
---------------
Common Code NO. 8662754
---------------
9 1/4% Senior Subordinated Notes due 2008
ADVANSTAR COMMUNICATIONS INC., a New York corporation, promises to pay
to , or registered assigns, the principal sum of Dollars on
------ --------------
May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side of this
Security.
ADVANSTAR COMMUNICATIONS INC.
By:
--------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
Authorized Signatory Date: _____________, 1998
<PAGE>
2
[REVERSE SIDE OF INITIAL SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of each
year commencing November 1, 1998. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from April 30, 1998. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any principal
of or interest on any Security is due and payable, the Company shall irrevocably
deposit with the Trustee or the Paying Agent money sufficient to pay such
principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized and
existing under the laws of the State of New York (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
3
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April 30,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations of the
Company limited to $150.0 million aggregate principal amount (subject to Section
-------
2.9 of the Indenture). The aggregate principal amount of notes which may be
- ---
authenticated and delivered under the Indenture, including the Securities, is
limited to $250.0 million (subject to Section 2.9 of the Indenture). This
-----------
Security is one of the Initial Securities referred to in the Indenture. The
Securities include the Initial Securities and any Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture and the
Registration Rights Agreement. The Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on: the Incurrence of Indebtedness by the
Company and its Restricted Subsidiaries, the Incurrence of Indebtedness by the
Company and its Subsidiary Guarantors if subordinate or junior in any respect to
any Senior Indebtedness or Guarantor Senior Indebtedness, respectively, the
payment of dividends and other distributions on the Capital Stock of the Company
and its Restricted Subsidiaries, the purchase or redemption of Capital Stock of
the Company and Capital Stock of such Restricted Subsidiaries, certain purchases
or redemptions of Subordinated Indebtedness, the Incurrence of Liens by the
Company or its Restricted Subsidiaries, the entering into of Asset Swaps by the
Company or its Restricted Subsidiaries, the sale or transfer of assets and
Capital Stock of Restricted Subsidiaries, the issuance or sale of Capital Stock
of Restricted Subsidiaries, the business activities and investments of the
Company and its Restricted Subsidiaries and, transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Restricted
Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if any,
and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
<PAGE>
4
5. Redemption
----------
Except as set forth below, the Securities will not be redeemable at the option
of the Company prior to May 1, 2003. On and after such date, the Securities
will be redeemable, at the Company's option, in whole or in part, at any time
upon not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each holder's registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid interest
to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2003 104.625
%
2004 103.083
%
2005 101.542
%
2006 and thereafter 100.000
%
</TABLE>
<PAGE>
5
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Securities with the proceeds of one or more Equity Offerings received by,
or invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities must remain
outstanding after each such redemption; provided further, however, that each
such redemption occurs within 90 days of the date of closing of such Equity
Offering.
At any time on or prior to May 1, 2003, the Securities may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 30 days after the occurrence of such Change of Control) mailed by first-
class mail to each holder's registered address, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, the date of redemption (the "Redemption
Date") (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Security and (ii) the
excess of (A) the
<PAGE>
6
present value at such time of (1) the redemption price of such Security at May
1, 2003 (such redemption price being described under "Optional Redemption") plus
(2) all required interest payments due on such Security through May 1, 2003,
computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
a. Upon a Change of Control, unless the Company has exercised its right to
redeem the Securities as described under Section 5 hereof, any Holder of
Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
<PAGE>
7
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales
permitted by the Indenture, when the aggregate amount of Excess Proceeds
equals or exceeds $5.0 million, the Company shall make an Offer for all
outstanding Securities pro rata up to a maximum principal amount (expressed
as a multiple of $1,000) of Securities equal to such Excess Proceeds, at a
purchase price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of purchase in
accordance with the procedures set forth in Section 3.7 of the Indenture.
-----------
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note Guarantees
are subordinated to Guarantor Senior Indebtedness, each as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.
<PAGE>
8
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of it for
all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or
the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder, or to provide for the issuance of Exchange
Securities.
<PAGE>
9
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture, (iv) failure by the Company
----------
to comply for 30 days after notice with any of its obligations under the
covenants described under Section 3.9 of the Indenture or under other covenants
-----------
specified in the Indenture (in each case, other than a failure to purchase
Securities, which shall constitute an Event of Default under clause (ii) above),
(v) the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $5.0 million is rendered against the Company or a Significant Subsidiary and
such judgment or decree shall remain undischarged or unstayed for a period of 60
days after such judgment becomes final and non-appealable (the "judgment default
provision") or (ix) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Guarantor denies
or disaffirms its obligations under the Indenture or its Note Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of more than 25% in principal amount of
the outstanding Securities notify the Company of the default and the Company
does not cure such default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
<PAGE>
10
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent acting on its behalf) manually signs the certificate
of authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with, the laws
of the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
- -------------------------------------------------------------------------------
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [_] acquired for the undersigned's own account, without transfer; or
2 [_] transferred to the Company; or
3 [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"); or
4 [_] transferred pursuant to an effective registration statement
under the Securities Act; or
<PAGE>
12
5 [_] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6 [_] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act), that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter appears as Section 2.7 of the Indenture); or
-----------
7 [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
_________________________
Signature
Signature Guarantee:
______________________________ _________________________
(Signature must be guaranteed) Signature
____________________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
<PAGE>
13
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal Amount of Signature of
Exchange in Principal Amount in Principal Amount this Global authorized
of this Global of this Global Security following signatory of
Security Security such decrease or Trustee or
increase Securities
Custodian
_______ ______________ __________ ____________ ______________
</TABLE>
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant
to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT 4.5
-----------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN BEHALF
AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF SECURITIES, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
No. R-1 Principal Amount $
---------------
CUSIP NO. 00758RAB0
-----------------------
9 1/4% Senior Subordinated Notes due 2008
ADVANSTAR COMMUNICATIONS INC., a New York corporation, promises to pay
to , or registered assigns, the principal sum of Dollars on
------ --------------
May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side of this
Security.
ADVANSTAR COMMUNICATIONS INC.
By:
--------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
Authorized Signatory Date: _____________, 1998
<PAGE>
2
[REVERSE SIDE OF INITIAL SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of each
year commencing November 1, 1998. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from April 30, 1998. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any principal
of or interest on any Security is due and payable, the Company shall irrevocably
deposit with the Trustee or the Paying Agent money sufficient to pay such
principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized and
existing under the laws of the State of New York (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
3
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April 30,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations of the
Company limited to $150.0 million aggregate principal amount (subject to Section
-------
2.9 of the Indenture). The aggregate principal amount of notes which may be
- ---
authenticated and delivered under the Indenture, including the Securities, is
limited to $250.0 million (subject to Section 2.9 of the Indenture). This
-----------
Security is one of the Initial Securities referred to in the Indenture. The
Securities include the Initial Securities and any Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture and the
Registration Rights Agreement. The Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on: the Incurrence of Indebtedness by the
Company and its Restricted Subsidiaries, the Incurrence of Indebtedness by the
Company and its Subsidiary Guarantors if subordinate or junior in any respect to
any Senior Indebtedness or Guarantor Senior Indebtedness, respectively, the
payment of dividends and other distributions on the Capital Stock of the Company
and its Restricted Subsidiaries, the purchase or redemption of Capital Stock of
the Company and Capital Stock of such Restricted Subsidiaries, certain purchases
or redemptions of Subordinated Indebtedness, the Incurrence of Liens by the
Company or its Restricted Subsidiaries, the entering into of Asset Swaps by the
Company or its Restricted Subsidiaries, the sale or transfer of assets and
Capital Stock of Restricted Subsidiaries, the issuance or sale of Capital Stock
of Restricted Subsidiaries, the business activities and investments of the
Company and its Restricted Subsidiaries and, transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Restricted
Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if any,
and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
<PAGE>
4
5. Redemption
----------
Except as set forth below, the Securities will not be redeemable at the option
of the Company prior to May 1, 2003. On and after such date, the Securities
will be redeemable, at the Company's option, in whole or in part, at any time
upon not less than 30 nor more than 60 days prior notice mailed by first-class
mail to each holder's registered address, at the following redemption prices
(expressed in percentages of principal amount), plus accrued and unpaid interest
to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2003 104.625
%
2004 103.083
%
2005 101.542
%
2006 and thereafter 100.000
%
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Securities with the proceeds of one or more Equity Offerings received by,
or invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities must remain
outstanding after each such redemption; provided further, however, that each
such redemption occurs within 90 days of the date of closing of such Equity
Offering.
At any time on or prior to May 1, 2003, the Securities may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 30 days after the occurrence of such Change of Control) mailed by first-
class mail to each holder's registered address, at a redemption price equal to
100% of the principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, the date of redemption (the "Redemption
Date") (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Security and (ii) the
excess of (A) the
<PAGE>
5
present value at such time of (1) the redemption price of such Security at May
1, 2003 (such redemption price being described under "Optional Redemption") plus
(2) all required interest payments due on such Security through May 1, 2003,
computed using a discount rate equal to the Treasury Rate plus 50 basis points,
over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
a. Upon a Change of Control, unless the Company has exercised its right to
redeem the Securities as described under Section 5 hereof, any Holder of
Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales
permitted by the Indenture, when the aggregate amount of Excess Proceeds
equals or exceeds $5.0 million, the Company shall make an Offer for all
outstanding Securities pro rata up to a maximum principal amount (expressed
as a multiple of $1,000) of Securities equal to such Excess Proceeds, at a
purchase price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of purchase in
accordance with the procedures set forth in Section 3.7 of the Indenture.
-----------
<PAGE>
6
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note Guarantees
are subordinated to Guarantor Senior Indebtedness, each as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of it for
all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
7
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or
the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder, or to provide for the issuance of Exchange
Securities.
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture, (iv) failure by the Company
----------
to comply for 30 days after notice with any of its obligations under the
covenants described under Section 3.9 of the Indenture or under other covenants
-----------
specified in the Indenture (in each case, other than a failure to purchase
Securities, which shall constitute an Event of Default under clause (ii) above),
(v) the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $5.0 million is rendered against the Company or a Significant Subsidiary and
such judgment or decree shall remain undischarged or unstayed for a period of 60
days after such judgment becomes final and non-appealable (the "judgment default
provision") or (ix) any Note Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Guarantor denies
or disaffirms its obligations under the Indenture or its Note Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of more than 25% in principal amount of
the outstanding Securities notify the Company of the default and the Company
does not cure such default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.
<PAGE>
8
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent acting on its behalf) manually signs the certificate
of authentication on the other side of this Security.
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
<PAGE>
9
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with, the laws
of the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
<PAGE>
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
- -------------------------------------------------------------------------------
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [_] acquired for the undersigned's own account, without transfer;
or
2 [_] transferred to the Company; or
3 [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act"); or
4 [_] transferred pursuant to an effective registration statement
under the Securities Act; or
<PAGE>
11
5 [_] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6 [_] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act), that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter appears as Section 2.7 of the Indenture); or
-----------
7 [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
_________________________
Signature
Signature Guarantee:
______________________________ _________________________
(Signature must be guaranteed) Signature
____________________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
<PAGE>
12
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal Amount of Signature of
Exchange in Principal Amount in Principal Amount this Global authorized
of this Global of this Global Security following signatory of
Security Security such decrease or Trustee or
increase Securities
Custodian
_______ ______________ __________ ____________ ______________
</TABLE>
<PAGE>
13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant
to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT 4.6
[FORM OF FACE OF EXCHANGE SECURITY]
No. [_____] Principal Amount $[____________]
CUSIP NO. 00758R A C 8
9 1/4% Senior Subordinated Notes due 2008
Advanstar Communications Inc., a New York corporation, promises to pay
to [______________], or registered assigns, the principal sum of
[_______________] Dollars on May 1, 2008.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other side
of this Security.
ADVANSTAR COMMUNICATIONS INC.
By:__________________________
By:__________________________
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
Authorized Signatory Date:
B-2
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
9 1/4% Senior Subordinated Note due 2008
1. Interest
--------
Advanstar Communications Inc., a New York corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1 of each
year commencing November 1, 1998. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from April 30, 1998. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of the
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a banking corporation duly organized and
existing under the laws of the State of New York (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically incorporated Wholly-Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
B-3
<PAGE>
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of April 30,
1998 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
------
(S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated obligations of the
Company limited to $150.0 million aggregate principal amount (subject to Section
-------
2.9 of the Indenture). The aggregate principal amount of notes which may be
- ---
authenticated and delivered under the Indenture, including the Securities, is
limited to $250.0 million (subject to Section 2.9 of the Indenture). This
-----------
Security is one of the Exchange Securities referred to in the Indenture. The
Securities include the Initial Securities and any Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture and the
Registration Rights Agreement. The Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on: the Incurrence of Indebtedness by the
Company and its Restricted Subsidiaries, the Incurrence of Indebtedness by the
Company and its Subsidiary Guarantors if subordinate or junior in any respect to
any Senior Indebtedness or Guarantor Senior Indebtedness, respectively, the
payment of dividends and other distributions on the Capital Stock of the Company
and its Restricted Subsidiaries, the purchase or redemption of Capital Stock of
the Company and Capital Stock of such Restricted Subsidiaries, certain purchases
or redemptions of Subordinated Indebtedness, the Incurrence of Liens by the
Company or its Restricted Subsidiaries, the entering into of Asset Swaps by the
Company or its Restricted Subsidiaries, the sale or transfer of assets and
Capital Stock of Restricted Subsidiaries, the issuance or sale of Capital Stock
of Restricted Subsidiaries, the business activities and investments of the
Company and its Restricted Subsidiaries, and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium, if any,
and interest on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
B-4
<PAGE>
5. Optional Redemption
-------------------
Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to May 1, 2003. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- -----------------------
<S> <C>
2003 104.625%
2004 103.083%
2005 101.542%
2006 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time prior to May 1, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Securities with the proceeds of one or more Equity Offerings received by,
or invested in, the Company so long as there is a Public Market at the time of
such redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.250% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities must remain
outstanding after each such redemption; provided further, that each such
redemption occurs within 90 days of the date of closing of such Equity Offering.
At any time on or prior to May 1, 2003, the Securities may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 30 days after the occurrence of such Change of Control) mailed
by first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Security at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Security and (ii)
the excess of (A)
B-5
<PAGE>
the present value at such time of (1) the redemption price of such Security at
May 1, 2003 (such redemption price being described under "Optional Redemption")
plus (2) all required interest payments due on such Security through May 1,
2003, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to May 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Securities of $1,000 in original principal amount or
less will be redeemed in part. If any Security is to be redeemed in part only,
the notice of redemption relating to such Security shall state the portion of
the principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.
6. Repurchase Provisions
---------------------
1. Upon a Change of Control, unless the Company has exercised its
right to redeem the Securities as described under Section 5 hereof, any Holder
of Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date) as provided in, and subject to the terms of, the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any
Asset Sales permitted by the Indenture, when the aggregate amount of Excess
Proceeds equals or exceeds $5.0 million, the Company shall make an Offer for all
outstanding Securities pro rata up to a maximum principal amount (expressed as a
multiple of $1,000) of Securities equal to such Excess Proceeds, at a purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest
B-6
<PAGE>
thereon, if any, to the date of purchase in accordance with the procedures set
forth in Section 3.7 of the Indenture.
-----------
7. Subordination
-------------
The Securities are subordinated to Senior Indebtedness and the Note
Guarantees are subordinated to Guarantor Senior Indebtedness, each as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose. The Securities will
in all respects rank pari passu with all other Senior Subordinated Indebtedness.
8. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or for a
period beginning 15 days before the mailing of a notice of Securities to be
redeemed and ending on the date of such mailing or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
9. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of it
for all purposes.
10. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Defeasance
----------
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the
B-7
<PAGE>
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
12. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.
13. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon required
repurchase or upon redemption pursuant to paragraphs 5 and 6 of the Securities,
upon declaration or otherwise; (iii) the failure by the Company to comply with
its obligations under Article IV of the Indenture (iv) failure by the Company to
----------
comply for 30 days after notice with any of its obligations under the covenants
described under Section 3.9 of the Indenture or under other covenants specified
-----------
in the Indenture (in each case, other than a failure to purchase Securities,
which shall constitute an Event of Default under clause (ii) above), (v) the
failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary if not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
(the "cross acceleration provision"), (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or a Significant Subsidiary (the
"bankruptcy provisions"), (viii) any judgment or decree for the payment of money
in excess of $5.0 million is rendered against the Company or a Significant
Subsidiary and such judgment or decree shall remain undischarged or unstayed for
a period of 60 days after such judgment becomes final and non-appealable (the
"judgment default provision") or (ix) any Note Guarantee ceases to be in full
force and effect (except as contemplated by the terms of the Indenture) or any
B-8
<PAGE>
Guarantor denies or disaffirms its obligations under the Indenture or its Note
Guarantee. However, a default under clauses (iv) and (v) will not constitute an
Event of Default until the Trustee or the holders of more than 25% in principal
amount of the outstanding Securities notify the Company of the default and the
Company does not cure such default within the time specified in clauses (iv) and
(v) hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
14. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
15. No Recourse Against Others
--------------------------
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting
a Security, each Securityholder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
16. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
B-9
<PAGE>
17. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. Governing Law
-------------
This Security shall be governed by, and construed in accordance with, the
laws of the State of New York but without giving effect to applicable principles
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
B-10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
_______________________________________________________________________________
Date: _______________ Your Signature ____________________
Signature Guarantee: ____________________________________
(Signature must be guaranteed)
_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.7 or 3.9 of the Indenture, check either box:
----------- ---
[_] [_]
3.7 3.9
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, state the amount in
----------- ---
principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side of
the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-12
<PAGE>
EXHIBIT 5.1
June 18, 1998
Advanstar Communications Inc.
7500 Old Oak Boulevard
Cleveland, Ohio 44130-3369
Dear Ladies and Gentlemen:
We are counsel to Advanstar Communications Inc., a New York corporation
(the "Company") in connection with the registration on a Registration Statement
on Form S-4 (the "Registration Statement") and the prospectus forming a part
thereof (the "Prospectus") under the Securities Act of 1933, as amended, of
$150,000,000 aggregate principal amount of the Company's 9-1/4% Senior
Subordinated Notes due 2008 (the "Exchange Notes") and the related guarantees
(the "Guarantees") of certain of the Company's subsidiaries named in the
Registration Statement (the "Guarantors"). The Exchange Notes and the Guarantees
are proposed to be issued under an indenture dated as of April 30, 1998 (the
"Indenture") between the Company and the Bank of New York, as trustee, and the
related Exchange and Registration Rights Agreement (the "Registration Rights
Agreement"), dated April 30, 1998, among the Company, the Guarantors and the
Initial Purchasers (as defined in the Registration Rights Agreement) in exchange
for the Company's 9-1/4% Senior Subordinated Notes Due 2008 and related
guarantees (the "Original Notes").
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. We have assumed that the Exchange
Notes and the Guarantees will be executed and delivered as set forth in the
Registration Statement, the Prospectus and the Letter of Transmittal set forth
as an exhibit to the Registration Statement. We have assumed the genuineness of
all signatures and the conformity to original documents of all copies of
documents submitted to us as copies, whether certified or not. We have assumed
the conformity of the certificates for the Exchange Notes and the Guarantees to
the specimens of the certificates, which are included as an exhibit to the
Registration Statement. We have assumed that the Exchange Notes, the Guarantees
and the Indenture have been duly authorized, executed and authenticated in
accordance with the terms of the Indenture by each of the parties thereto. Our
opinion expressed herein with respect to the validly and binding effect of the
Exchange Notes and the Guarantees is qualified to the extent that the validity
and binding effect thereof may be limited by (i) applicable bankruptcy,
reorganization, arrangements, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights generally as at the time in effect and (ii)
general principles of equity (whether considered in a proceeding of law or in
equity).
We are members only of the bar of the Commonwealth of Massachusetts and
therefore do not hold ourselves out as experts in, and express no opinion as to,
the laws of any other state or
<PAGE>
Advanstar Communications Inc.
June 18, 1998
Page 2
jurisdiction other than the laws of the Commonwealth of Massachusetts and the
federal laws of the United States of America. The Indenture and the Exchange
Notes provide that each is governed by the laws of the State of New York,
without giving effect to the conflict of laws provisions thereof. We have
assumed for purposes of this opinion that the substantive laws of the State of
New York are the same as the substantive laws of the Commonwealth of
Massachusetts. We have also assumed that the choice of law provisions of the
Indenture and the Exchange Notes would be given effect.
Based upon and subject to the foregoing, we are of the opinion that the
Exchange Notes and the Guarantees, when duly executed and authenticated in
accordance with the terms of the Indenture and delivered in exchange for the
Original Notes as contemplated in the Prospectus, will be valid and binding
obligations of the Company.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
EXHIBIT 10.1
ADVANSTAR COMMUNICATIONS INC.
$150,000,000
9 1/4% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
------------------
April 27, 1998
CHASE SECURITIES INC.
LEHMAN BROTHERS INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Advanstar Communications Inc., a New York corporation (the "Company"),
-------
proposes to issue and sell $150,000,000 aggregate principal amount of its 9 1/4%
Senior Subordinated Notes due 2008 (the "Notes"), which Notes will be
-----
unconditionally guaranteed (the "Guarantees", and, together with the Notes, the
----------
"Securities"), on a senior subordinated basis, by (i) each subsidiary of the
----------
Company existing on the Closing Date (as defined in Section 4), including The
Men's Apparel Guild in California, Inc. ("MAGIC") and MAGIC Kids, Inc. ("MAGIC
-----
Kids"), and each subsidiary (other than foreign subsidiaries and Unrestricted
Subsidiaries) created or acquired after the Closing Date (collectively, the
"Subsidiary Guarantors") and (ii) AHI Holding Corp. ("AHI") and Advanstar
---------------------
Holdings, Inc. ("Holdings"). AHI, Holdings and each Subsidiary Guarantor party
--------
to this Agreement are referred to collectively as the "Current Guarantors". The
------------------
Current Guarantors, MAGIC and MAGIC Kids are referred to collectively as the
"Guarantors". The Securities will be issued pursuant to an Indenture to be
----------
dated as of April 30, 1998 (the "Indenture") among the Company, each Guarantor
---------
and The Bank of New York, as trustee (the "Trustee"). The Company hereby
-------
confirms its agreement with Chase Securities Inc. ("CSI") and Lehman Brothers
---
Inc. (together with CSI, the "Initial Purchasers") concerning the purchase of
------------------
the Securities from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
--------------
prepared a preliminary offering memorandum dated April 9, 1998 (the "Preliminary
-----------
Offering Memorandum") and will prepare an offering memorandum dated the date
- -------------------
hereof (the "Offering Memorandum") setting forth information concerning the
-------------------
Company and the Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the Company to
the Initial Purchasers pursuant to the terms of this Agreement. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto, unless otherwise
noted. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum (until completion of the Final Memorandum) and
the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with Section 3.
<PAGE>
2
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Company and
-----------------------------
the Guarantors will agree to file with the Securities and Exchange Commission
(the "Commission") (i) a registration statement under the Securities Act (the
----------
"Exchange Offer Registration Statement") registering an issue of senior
-------------------------------------
subordinated notes of the Company which are unconditionally guaranteed on a
senior subordinated basis by the Guarantors (the "Exchange Securities") and
-------------------
which are identical in all material respects to the Securities (except that the
Exchange Securities will not contain terms with respect to transfer
restrictions) and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration
------------------
Statement").
- ---------
On March 6, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with respect to the acquisition by the Company
----------------
of all of the outstanding capital stock of MAGIC (the "MAGIC Acquisition").
-----------------
Upon consummation of the MAGIC Acquisition on the Closing Date, MAGIC will
become a wholly-owned subsidiary of the Company.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
I. Representations, Warranties and Agreements of the Company and the
-----------------------------------------------------------------
Current Guarantors. The Company and each Current Guarantor represent and
- ------------------
warrant to, and agree with, the several Initial Purchasers on and as of the date
hereof and the Closing Date (provided, that references to subsidiaries of the
Company in this Article I shall not in any event be deemed to include MAGIC and
its subsidiaries) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
--------
Company and the Current Guarantors make no representation or warranty as to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in conformity
with written information relating to the Initial Purchasers furnished to
the Company and the Current Guarantors by or on behalf of any Initial
Purchaser specifically for use therein (the "Initial Purchasers'
-------------------
Information").
-----------
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 3 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
-----
Indenture Act").
-------------
(d) AHI, Holdings, the Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold
their respective properties and to conduct the businesses in which they are
<PAGE>
3
engaged, except where the failure to so qualify or have such power or
authority would not, singularly or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of AHI, Holdings, the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
-----------------------
(e) The Company has an authorized capitalization as set forth in the
Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; and
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Offering Memorandum. All of the
outstanding shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party (other than liens
securing Senior Debt (as such term is defined in the Offering Memorandum)
or liens, encumbrances and minority interests permitted under Senior Debt).
All of the outstanding shares of capital stock of AHI and Holdings have
been duly and validly authorized and issued and are fully paid and non-
assessable.
(f) The Company and each Current Guarantor has full right, power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement and the Securities (collectively, the
"Transaction Documents") and to perform their obligations hereunder and
---------------------
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and each Current Guarantor and constitutes a valid and
legally binding agreement of the Company and each Current Guarantor,
enforceable against the Company and each Current Guarantor in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(h) The Registration Rights Agreement has been duly authorized by the
Company and each Current Guarantor and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will constitute a
valid and legally binding agreement of the Company and each Current
Guarantor, enforceable against the Company and each Current Guarantor in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(i) The Indenture has been duly authorized by the Company and each
Current Guarantor and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each Current Guarantor,
enforceable against the Company and each Current Guarantor in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law). On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
<PAGE>
4
(j) The Notes have been duly authorized by the Company and, when duly
executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of
the Company, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
The Guarantees have been duly authorized by each Current
Guarantor and, when the Indenture is duly executed and delivered by the
Company, each Guarantor and the Trustee on the Closing Date, will
constitute valid and legally binding obligations of each Current Guarantor,
enforceable against each Current Guarantor in accordance with their terms
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(k) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(l) The execution, delivery and performance by the Company and each
Current Guarantor of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each Current Guarantor with the terms thereof and the
consummation by the Company and each Current Guarantor of the transactions
contemplated by the Transaction Documents will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of AHI, Holdings,
the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which AHI, Holdings, the Company or any of its subsidiaries is a party or
by which AHI, Holdings, the Company or any of its subsidiaries is bound or
to which any of the property or assets of AHI, Holdings, the Company or any
of its subsidiaries is subject, except such as would not, individually or
in the aggregate, have a Material Adverse Effect, nor will such actions
result in any violation of (i) the provisions of the charter or by-laws of
AHI, Holdings, the Company or any of its subsidiaries or (ii) any statute
or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over AHI,
Holdings, the Company or any of its subsidiaries or any of their properties
or assets, except, with respect to this clause (ii), any such violations
which would not, individually or in the aggregate, have a Material Adverse
Effect; and no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or
body under any such statute, judgment, order, decree, rule or regulation is
required for the execution, delivery and performance by the Company and
each Current Guarantor of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each Current Guarantor with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals, authorizations, filings, registrations
or qualifications (i) which shall have been obtained or made prior to the
Closing Date, (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement or (iii) which if not obtained would not,
individually or in the aggregate, have a Material Adverse Effect.
(m) Arthur Andersen LLP are independent certified public accountants
with respect to AHI, Holdings, the Company and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its interpretations
-----
and rulings thereunder. The historical financial statements (including the
related notes)
<PAGE>
5
contained in the Offering Memorandum comply in all material respects with
the requirements applicable to a registration statement on Form S-1 under
the Securities Act (except that certain supporting schedules are omitted);
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated; and the financial information contained in the Offering
Memorandum under the headings "Summary--Summary Historical Consolidated
Financial and Other Data of Advanstar Communications Inc.",
"Capitalization", "Selected Historical Consolidated Financial and Other
Data of Advanstar Communications Inc.", "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Advanstar" and
"Management--Executive Compensation" are derived from the accounting
records of the Company and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum has been prepared on a
basis consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
--------
Act"), to reflect the transactions described in the Offering Memorandum,
---
gives effect to assumptions made on a reasonable basis and fairly presents
the historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents. The other historical financial
and statistical information and data included in the Offering Memorandum
are, in all material respects, fairly presented.
(n) There are no legal or governmental proceedings pending to which
AHI, Holdings, the Company or any of its subsidiaries is a party or of
which any property or assets of AHI, Holdings, the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if
determined adversely to AHI, Holdings, the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and to the best knowledge of the Company and each Current
Guarantor, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(o) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any United States governmental
agency or body which prevents the issuance of the Securities or suspends
the sale of the Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to AHI, Holdings, the Company or
any of its subsidiaries which would prevent or suspend the issuance or sale
of the Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company and each Current
Guarantor, threatened against or affecting AHI, Holdings, the Company or
any of its subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably be
expected to interfere with or adversely affect the issuance of the
Securities or in any manner impair the validity or enforceability of any of
the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to be
included in the Preliminary Offering Memorandum and the Offering
Memorandum.
(p) None of AHI, Holdings, the Company or any of its subsidiaries is
(i) in violation of its charter or by-laws, (ii) in default, and no event
has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is
<PAGE>
6
subject, in each case other than such as would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in violation of any
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject, in each case other than such as
would not, individually or in the aggregate, have a Material Adverse
Effect.
(q) AHI, Holdings, the Company and each of its subsidiaries possess
all material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate federal,
state or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the conduct
of their respective businesses as described in the Offering Memorandum,
except where the failure to possess or make the same would not, singularly
or in the aggregate, have a Material Adverse Effect, and none of AHI,
Holdings, the Company or any of its subsidiaries has received notification
of any revocation or modification of any such license, certificate,
authorization or permit or has any reason to believe that any such license,
certificate, authorization or permit will not be renewed in the ordinary
course.
(r) AHI, Holdings, the Company and each of its subsidiaries have
filed all material federal, state, local and foreign income and franchise
tax returns required to be filed through the date hereof and have paid all
taxes due thereon, and no tax deficiency has been determined adversely to
AHI, Holdings, the Company or any of its subsidiaries which remains unpaid
and has had (nor does AHI, Holdings, the Company or any of its subsidiaries
have any knowledge of any tax deficiency which, if determined adversely to
AHI, Holdings, the Company or any of its subsidiaries, could reasonably be
expected to have) a Material Adverse Effect.
(s) None of AHI, Holdings, the Company or any of its subsidiaries is
(i) an "investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations of
----------------------
the Commission thereunder or (ii) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(t) AHI, Holdings, the Company and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(u) AHI, Holdings, the Company and each of its subsidiaries have
insurance covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks as are believed by AHI, Holdings the Company and its subsidiaries
to be adequate to protect AHI, Holdings, the Company and its subsidiaries
and their respective businesses. None of AHI, Holdings, the Company or any
of its subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance.
(v) AHI, Holdings, the Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct
of their respective businesses as described in the Offering
<PAGE>
7
Memorandum; and the conduct of their respective businesses as described in
the Offering Memorandum will not conflict with, and the Company and its
subsidiaries have not received any notice of any claim of conflict with,
any such rights of others, in each case other than such as would not,
individually or in the aggregate, have a Material Adverse Effect.
(w) AHI, Holdings, the Company and each of its subsidiaries have good
and marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of AHI, Holdings, the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except such as (i) do not materially interfere with
the use made and proposed to be made of such property by AHI, Holdings, the
Company and its subsidiaries, (ii) could not reasonably be expected to
have a Material Adverse Effect or (iii) secure Senior Debt or are otherwise
permitted or incurred under the Senior Credit Agreement (as such term is
defined in the Offering Memorandum).
(x) No labor disturbance by or dispute with the employees of AHI,
Holdings, the Company or any of its subsidiaries exists or, to the best
knowledge of the Company and each Current Guarantor, is contemplated or
threatened, in each case which reasonably could be expected to have a
Material Adverse Effect.
(y) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
-----
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
----
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan (other than a multiemployer plan) of AHI,
Holdings, the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit plan
(other than a multiemployer plan) is in compliance in all material respects
with applicable law, including ERISA and the Code; AHI, Holdings, the
Company and each of its subsidiaries have not incurred and do not expect to
incur liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which AHI, Holdings, the Company
or any of its subsidiaries would have any liability; and each such pension
plan that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to cause
the loss of such qualification.
(z) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
AHI, Holdings, the Company or any of its subsidiaries (or, to the best
knowledge of the Company and each Current Guarantor, any other entity
(including any predecessor) for whose acts or omissions AHI, Holdings, the
Company or any of its subsidiaries is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by AHI,
Holdings, the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation,
order, judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability which could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge,
emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company or any Current
Guarantor has knowledge, except for any such disposal, discharge, emission
or other release of any kind which could not
<PAGE>
8
reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Effect.
(aa) None of the Company or any Current Guarantor nor, to the best
knowledge of the Company and each Current Guarantor, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any Current Guarantor has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(bb) On and immediately after the Closing Date, the Company and
each Current Guarantor (after giving effect to the issuance of the
Securities and to the other transactions related thereto as described in
the Offering Memorandum) will be Solvent. As used in this paragraph, the
term "Solvent" with respect to any Person means, with respect to a
particular date, that on such date (i) the present fair market value (or
present fair saleable value) of the assets of such Person is not less than
the total amount required to pay the probable liabilities of such Person on
its total existing debts and liabilities (including contingent liabilities)
as they become absolute and matured, (ii) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal
course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum, such Person is
not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) such Person is not engaged in any business
or transaction, and is not about to engage in any business or transaction,
for which its property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in
which such Person is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(cc) Except as described in the Offering Memorandum, there are no
outstanding material subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in AHI,
Holdings, the Company or any of its subsidiaries.
(dd) None of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin securities" as that term is defined in Regulations G and U of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
---------------
Board"), for the purpose of reducing or retiring any indebtedness which was
-----
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
(ee) None of AHI, Holdings, the Company or any of its subsidiaries is
a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company, any Current Guarantor
or the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities other
than this Agreement.
(ff) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
<PAGE>
9
(gg) None of the Company, any of its affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied and will comply with
------------
the offering restrictions requirement of Regulation S to the extent
applicable.
(hh) Neither the Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as such term is defined
in the Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(ii) None of the Company or any of its affiliates or any other person
acting on its or their behalf has engaged, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(jj) There are no securities of the Company registered under the
Exchange Act or listed on a national securities exchange or quoted in a
U.S. automated inter-dealer quotation system.
(kk) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(ll) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in
good faith.
(mm) None of AHI, Holdings, the Company or any of its subsidiaries
does business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(nn) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of the Company
or any Current Guarantor, whether or not arising in the ordinary course of
business, (ii) the Company and each Current Guarantor has not incurred any
material liability or obligation, direct or contingent, other than in the
ordinary course of business, (iii) the Company and each Current Guarantor
has not entered into any material transaction other than in the ordinary
course of business and (iv) there has not been any change in the capital
stock or long-term debt of the Company or any Current Guarantor, or any
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
2. Representations, Warranties and Agreements regarding MAGIC and
--------------------------------------------------------------
MAGIC Kids by the Company. The Company represents and warrants to, and agrees
- -------------------------
with, the several Initial Purchasers on and as of the date hereof and the
Closing Date that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact with respect to MAGIC or omit to state a material fact with respect to
MAGIC required to be stated therein or necessary in order to make the
statements with respect to MAGIC therein, in the light of the circumstances
under which they were made, not misleading; provided that neither the
--------
Company nor MAGIC makes any representation or warranty as to the Initial
Purchasers' Information.
<PAGE>
10
(b) MAGIC and its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in which
their ownership or lease of property or the conduct of their businesses
require such qualification, and have all power and authority necessary to
own or hold their properties and to conduct the businesses in which they
are engaged, except where the failure to so qualify or have such power or
authority would not, singularly or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of MAGIC and its subsidiaries taken as a
whole (a "MAGIC Material Adverse Effect").
-----------------------------
(c) All of the outstanding shares of capital stock of MAGIC and its
subsidiaries have been duly and validly authorized and issued and are fully
paid and non-assessable.
(d) MAGIC and MAGIC Kids have full right, power and authority to
execute and deliver the Indenture, the Registration Rights Agreement and
their respective Guarantees (the "MAGIC Guarantees") (collectively, the
----------------
"MAGIC Transaction Documents") and to perform their obligations hereunder
---------------------------
and thereunder; and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the MAGIC
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly and validly taken.
(e) The Registration Rights Agreement has been duly authorized by
MAGIC and MAGIC Kids and, when duly executed and delivered in accordance
with its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of MAGIC and MAGIC Kids, enforceable against each
of them in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(f) The Indenture has been duly authorized by MAGIC and MAGIC Kids
and, when duly executed and delivered in accordance with its terms by each
of the parties thereto, will constitute a valid and legally binding
agreement of MAGIC and MAGIC Kids, enforceable against each of them in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(g) The MAGIC Guarantees have been duly authorized by MAGIC and MAGIC
Kids and, when the Indenture is duly executed and delivered by the Company,
each Guarantor and the Trustee on the Closing Date, will constitute a valid
and legally binding obligation of MAGIC and MAGIC Kids, enforceable against
each of them in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or laws affecting
creditors' rights generally, and (ii) rights of acceleration, if
applicable, and the availability of remedies may be limited by equitable
principles of general applicability.
(h) The execution, delivery and performance by MAGIC and MAGIC Kids
of each of the MAGIC Transaction Documents, the issuance, authentication,
sale and delivery of the MAGIC Guarantees and compliance by MAGIC and MAGIC
Kids with the terms thereof and the consummation of the transactions
contemplated by the MAGIC Transaction Documents will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of MAGIC or any of
its subsidiaries pursuant to, any indenture, mortgage, deed of
<PAGE>
11
trust, loan agreement or other agreement or instrument to which MAGIC or
its subsidiaries is a party or by which MAGIC or any of its subsidiaries is
bound or to which any of the property or assets of MAGIC or any of its
subsidiaries is subject, except such as would not, individually or in the
aggregate, have a MAGIC Material Adverse Effect, nor will such actions
result in any violation of (i) the provisions of the charter or by-laws of
MAGIC or any of its subsidiaries or (ii) any statute or any judgment,
order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over MAGIC or any of its
subsidiaries or any of their properties or assets, except, with respect to
this clause (ii), any such violations which would not, individually or in
the aggregate, have a MAGIC Material Adverse Effect; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by MAGIC or MAGIC Kids of each of the
MAGIC Transaction Documents, the issuance, authentication, sale and
delivery of the MAGIC Guarantees and compliance by MAGIC and MAGIC Kids
with the terms thereof and the consummation of the transactions
contemplated by the MAGIC Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications (i)
which shall have been obtained or made prior to the Closing Date, (ii) as
may be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration Rights
Agreement or (iii) which if not obtained would not, individually or in the
aggregate, have a MAGIC Material Adverse Effect.
(i) The historical financial statements (including the related notes)
of MAGIC contained in the Offering Memorandum comply in all material
respects with the requirements applicable to a registration statement on
Form S-1 under the Securities Act (except that certain supporting schedules
are omitted); such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered thereby and fairly present the financial
position of the entities purported to be covered thereby at the respective
dates indicated and the results of their operations and their cash flows
for the respective periods indicated; and the financial information
contained in the Offering Memorandum under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
MAGIC" are derived from the accounting records of MAGIC and its subsidiary
and fairly present the information purported to be shown thereby. The
other historical financial and statistical information and data included in
the Offering Memorandum, and pertaining to MAGIC are, in all material
respects, fairly presented.
(j) There are no legal or governmental proceedings pending to which
MAGIC or any of its subsidiaries is a party or of which any property or
assets of MAGIC or any of its subsidiaries is the subject which, singularly
or in the aggregate, if determined adversely to MAGIC or any of its
subsidiaries, could reasonably be expected to have a MAGIC Material Adverse
Effect; and to the best knowledge of the Company, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(k) No injunction, restraining order or order of any nature by any
federal or state court of competent jurisdiction has been issued with
respect to MAGIC or any of its subsidiaries which would prevent or suspend
the issuance or sale of the Securities or the use of the Preliminary
Offering Memorandum or the Offering Memorandum in any jurisdiction; no
action, suit or proceeding is pending against or, to the best knowledge of
the Company, threatened against or affecting MAGIC or any of its
subsidiaries before any court or arbitrator or any governmental agency,
body or official, domestic or foreign, which could reasonably be expected
to interfere with or adversely affect the issuance of the Securities or in
any manner impair the validity or enforceability of any of the MAGIC
Transaction Documents or any action taken or to be taken pursuant thereto;
and MAGIC has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included in
the Preliminary Offering Memorandum and the Offering Memorandum.
<PAGE>
12
(l) Neither MAGIC nor any of its subsidiaries is (i) in violation of
its charter or by-laws, (ii) in default, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which
it is bound or to which any of its property or assets is subject, except
such as would not, individually or in the aggregate, have a MAGIC Material
Adverse Effect, or (iii) in violation of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject, except such as would not, individually or in the aggregate,
have a MAGIC Material Adverse Effect.
(m) MAGIC and its subsidiaries possess all material licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies which are necessary or desirable for the
ownership of their properties or the conduct of their businesses as
described in the Offering Memorandum, except where the failure to possess
or make the same would not, singularly or in the aggregate, have a MAGIC
Material Adverse Effect, and neither MAGIC nor any of its subsidiaries have
received notification of any revocation or modification of any such
license, certificate, authorization or permit or has any reason to believe
that any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(n) MAGIC and its subsidiaries have filed all material federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to MAGIC or any of its
subsidiaries which remains unpaid and has had (nor does the Company, MAGIC
or any of its subsidiaries have any knowledge of any tax deficiency which,
if determined adversely to MAGIC or any of its subsidiaries, could
reasonably be expected to have) a MAGIC Material Adverse Effect.
(o) Neither MAGIC nor any of its subsidiaries is (i) an "investment
company" or a company "controlled by" an investment company within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
----------
Company Act"), and the rules and regulations of the Commission thereunder
-----------
or (ii) a "holding company" or a "subsidiary company" of a holding company
or an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(p) MAGIC and its subsidiaries each maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(q) MAGIC and its subsidiaries each have insurance covering its
properties, operations, personnel and businesses, which insurance is in
amounts and insures against such losses and risks as are believed by the
Company to be adequate to protect MAGIC and its subsidiaries and their
respective businesses. Neither MAGIC nor its subsidiaries have received
notice from any insurer or agent of such insurer that capital improvements
or other expenditures are required or necessary to be made in order to
continue such insurance.
(r) MAGIC and its subsidiaries each own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other
unpatented
<PAGE>
13
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses as
described in the Offering Memorandum; and the conduct of their respective
businesses as described in the Offering Memorandum will not conflict with,
and MAGIC and its subsidiaries have not received any notice of any claim of
conflict with, any such rights of others, except such as would not,
individually or in the aggregate, have a MAGIC Material Adverse Effect.
(s) MAGIC and its subsidiaries each have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all items of
real and personal property which are material to the business of MAGIC and
its subsidiaries, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title except such as (i) do not
materially interfere with the use made and proposed to be made of such
property by MAGIC and its subsidiaries, (ii) could not reasonably be
expected to have a MAGIC Material Adverse Effect or (iii) are permitted
under the Senior Credit Agreement.
(t) No labor disturbance by or dispute with the employees of MAGIC or
its subsidiaries exists or, to the best knowledge of the Company, is
contemplated or threatened, in each case which could reasonably be expected
to have a MAGIC Material Adverse Effect.
(u) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
-----
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
----
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan (other than a multiemployer plan) of MAGIC or any
of its subsidiaries which could reasonably be expected to have a MAGIC
Material Adverse Effect; each such employee benefit plan (other than a
multiemployer plan) is in compliance in all material respects with
applicable law, including ERISA and the Code; MAGIC and its subsidiaries
have not incurred and do not expect to incur liability under Title IV of
ERISA with respect to the termination of, or withdrawal from, any pension
plan for which MAGIC or its subsidiary would have any liability; and each
such pension plan that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could reasonably be expected
to cause the loss of such qualification.
(v) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of
toxic or other wastes or other hazardous substances by, due to or caused by
MAGIC or any of its subsidiaries (or, to the best knowledge of the Company,
any other entity (including any predecessor) for whose acts or omissions
MAGIC or any of its subsidiaries is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by MAGIC
or any of its subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit, give
rise to any liability, except for any violation or liability which could
not reasonably be expected to have, singularly or in the aggregate with all
such violations and liabilities, a MAGIC Material Adverse Effect; and there
has been no disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which
the Company has knowledge, except for any such disposal, discharge,
emission or other release of any kind which could not reasonably be
expected to have, singularly or in the aggregate with all such discharges
and other releases, a MAGIC Material Adverse Effect.
<PAGE>
14
(w) Neither MAGIC nor MAGIC Kids nor, to the best knowledge of the
Company, any director, officer, agent, employee or other person associated
with or acting on behalf of MAGIC has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(x) There are no outstanding subscriptions, rights, warrants, calls
or options to acquire, or instruments convertible into or exchangeable for,
or agreements or understandings with respect to the sale or issuance of,
any shares of capital stock of or other equity or other ownership interest
in MAGIC, other than the Merger Agreement.
(aa) Neither MAGIC nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company, MAGIC or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
(bb) None of MAGIC, any of its affiliates or any person acting on its
or their behalf has engaged or will engage in any directed selling efforts
(as such term is defined in Regulation S), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(cc) Neither MAGIC nor any of its affiliates has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the Securities
under the Securities Act.
(dd) None of MAGIC or any of its affiliates or any other person
acting on its or their behalf has engaged, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(ee) There are no securities of MAGIC or MAGIC Kids registered under
the Exchange Act, or listed on a national securities exchange or quoted in
a U.S. automated inter-dealer quotation system.
(ff) Each of MAGIC and MAGIC Kids has not taken and will not take,
directly or indirectly, any action prohibited by Regulation M under the
Exchange Act in connection with the offering of the Securities.
(gg) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Preliminary Offering Memorandum or the Offering Memorandum with respect to
MAGIC or MAGIC Kids has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(hh) Neither MAGIC nor any of its subsidiaries do business with the
government of Cuba or with any person or affiliate located in Cuba within
the meaning of Florida Statutes Section 517.075.
(ii) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of MAGIC,
whether or not arising in the ordinary
<PAGE>
15
course of business, (ii) MAGIC has not incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) MAGIC has not entered into any material transaction other
than in the ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of MAGIC, or any dividend or
distribution of any kind declared, paid or made by MAGIC on any class of
its capital stock.
3. Purchase and Resale of the Securities. (a) On the basis of the
-------------------------------------
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.00% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they propose
to offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that (i) it is
purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
------------
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of their initial offering, only (A) within the United
States to persons whom it reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers"), as defined in Rule 144A under the
------------------------------
Securities Act ("Rule 144A"), or if any such person is buying for one or more
---------
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) outside the United States to
persons other than U.S. persons in reliance on and compliance with Regulation S
under the Securities Act ("Regulation S").
------------
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) The Securities have not been registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the registration
requirements of the Securities Act.
(ii) Such Initial Purchaser has offered and sold the
Securities, and will offer and sell the Securities, (A) as part of their
distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering of the Securities and the Closing Date,
only in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.
(iii) None of such Initial Purchaser or any of its affiliates
or any other person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and
all such persons have complied and will comply with the offering
restrictions requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any
Securities sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling
<PAGE>
16
concession, fee or other remuneration that purchase Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date
of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of the
Securities, except with its affiliates or with the prior written consent of
the Company.
Terms used in this Section 3(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
(g) No initial purchaser will offer or sell Securities in any
jurisdiction where their offer or sale pursuant to and in the manner
contemplated by the Offering Memorandum would be unlawful or would, to the
knowledge of the Initial Purchasers, reasonably be expected to require any
registration or qualification of such offer or sale by the Company.
<PAGE>
17
4. Delivery of and Payment for the Securities. (a) Delivery of and
------------------------------------------
payment for the Securities shall be made at the offices of Simpson Thacher &
Bartlett, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
April 30, 1998, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
------------
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI on behalf of the Initial Purchasers in New York,
New York at least 24 hours prior to the Closing Date.
5. Further Agreements of the Company and the Current Guarantors. The
------------------------------------------------------------
Company and the Current Guarantors agree with each of the several Initial
Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of any
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and counsel
for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
counsel for the Initial Purchasers and not to effect any such amendment or
supplement to which the Initial Purchasers shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to
<PAGE>
18
promptly prepare such amendment or supplement as may be necessary to
correct such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to and in compliance with Section 13 or 15(d) of the Exchange Act;
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K, 10-
Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such United States
jurisdictions as the Initial Purchasers may designate and to continue such
qualifications in effect for so long as required for the resale of the
Securities; and to arrange for the determination of the eligibility for
investment of the Securities under the laws of such jurisdictions as the
Initial Purchasers may reasonably request; provided that the Company and
--------
its subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
------
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
----
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
---
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the Offering Memorandum,
not to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or
<PAGE>
19
guaranteed by the Company or any of its subsidiaries (other than the
Securities or the Exchange Securities) without the prior written consent of
the Initial Purchasers;
(l) during the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
not to, and not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to, resell any of the Securities that have been
reacquired by them, except for Securities purchased by the Company or any
of its affiliates and resold in a transaction registered under the
Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed by
it under this Agreement that are within its control prior to or after the
Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(r) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 5(d);
(t) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the Company or any Guarantor, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and the Guarantors
and of which the Initial Purchasers are notified), without the prior
written consent of the Initial Purchasers, unless in the judgment of the
Company and its counsel, and after notification to the Initial Purchasers,
such press release or communication is required by law; and
<PAGE>
20
(u) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
6. Conditions of Initial Purchasers' Obligations. The respective
---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Current Guarantors
contained herein, to the accuracy of the statements of the Company and the
Current Guarantors and their respective officers made in any certificates
delivered pursuant hereto, to the performance by the Company and the Current
Guarantors of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchasers
may agree; and no stop order suspending the sale of the Securities in any
United States jurisdiction shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) Testa, Hurwitz & Thibeault, LLP, Heller Ehrman White & McAuliffe,
Cohen & Wolf, P.C. and Squire, Sanders & Dempsey L.L.P., as counsel to the
Company and the Guarantors, shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annexes B-1, B-2, B-3 and B-4 hereto.
(e) The Initial Purchasers shall have received from Simpson Thacher &
Bartlett, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and each Guarantor shall
have furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers
letters (the "Initial Letters") of Arthur Andersen LLP and Coopers &
---------------
Lybrand LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance satisfactory to the Initial Purchasers.
(g) The Company shall have furnished to the Initial Purchasers a
letter (the "Bring-Down Letter") of Arthur Andersen LLP, addressed to the
-----------------
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified
<PAGE>
21
financial information is given in the Offering Memorandum, as of a date not
more than three business days prior to the date of the Bring-Down Letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its chief executive officer and its
chief financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
since the date of the Offering Memorandum, no event has occurred which
should have been set forth in a supplement or amendment to the Offering
Memorandum so that the Offering Memorandum (as so amended or supplemented)
would not include any untrue statement of a material fact and would not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing Date,
the representations and warranties of the Company and each Guarantor in
this Agreement are true and correct, the Company and each Guarantor has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date, and
subsequent to the date of the most recent financial statements contained in
the Offering Memorandum, there has been no material adverse change in the
financial position or results of operation of the Company or any of its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company, its subsidiaries and the
Guarantors taken as a whole, except as set forth in the Offering
Memorandum.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and each Guarantor.
(j) The Indenture shall have been duly executed and delivered by the
Company, each Guarantor and the Trustee, and the Securities shall have been
duly executed and delivered by the Company and each Guarantor and duly
authenticated by the Trustee.
(k) On or prior to the Closing Date, (i) the Company shall have
delivered to the Initial Purchasers a true copy of the amended Senior
Credit Agreement which shall have been executed and delivered by the
Company and the banks party thereto, (ii) all conditions to the
transactions contemplated by the Merger Agreement shall have been satisfied
or waived such that the transactions contemplated by the Merger Agreement
will be consummated contemporaneously with the closing of the sale of the
Securities and (iii) the HFCP Equity Investment (as such term is defined in
the Offering Memorandum) shall have been effected.
(l) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(m) If any event shall have occurred that requires the Company under
Section 5(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
<PAGE>
22
(n) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchasers would materially
impair the ability of the Initial Purchasers to purchase, hold or effect
resales of the Securities as contemplated hereby.
(o) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of AHI, Holdings, MAGIC, MAGIC Kids, the Company and its
subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the reasonable judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by this Agreement and the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(p) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any United States
governmental agency or body which would, as of the Closing Date, prevent
the issuance or sale of the Securities; and no injunction, restraining
order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance or sale of the Securities.
(q) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Securities or
any of the Company's other debt securities or preferred stock by any
"nationally recognized statistical rating organization", as such term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act and (ii) no such
organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a
possible upgrading), its rating of the Securities or any of the Company's
other debt securities or preferred stock.
(r) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended or (ii) any moratorium on commercial banking activities
shall have been declared by federal or New York state authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv), is, in
the judgment of the Initial Purchasers, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or the delivery of
the Securities on the terms and in the manner contemplated by this
Agreement and in the Offering Memorandum (exclusive of any amendment or
supplement thereto).
(s) The Initial Purchasers shall have received on the Closing Date an
Officer's Certificate from Joseph Loggia, President and Chief Executive
Officer of MAGIC, addressed to the Initial Purchasers and dated the Closing
Date, in form of Annex C hereto.
<PAGE>
23
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
7. Termination. The obligations of the Initial Purchasers hereunder
-----------
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
6(m), (n), (o), (p) or (q) shall have occurred and be continuing.
8. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
-----------------------------
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the non-
defaulting Initial Purchasers, but if no such arrangements are made within 36
hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Sections 9 and 13 and except that the
provisions of Sections 9 and 10 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 8, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or the Current Guarantors
or any non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Securities of a defaulting
Initial Purchaser, either the non-defaulting Initial Purchasers or the Company
may postpone the Closing Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Initial Purchasers may be necessary in the Offering Memorandum or in any
other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
9. Reimbursement of Initial Purchasers' Expenses. If (a) this
---------------------------------------------
Agreement shall have been terminated pursuant to Section 7 or 8, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchasers for such out-of-
pocket expenses (including reasonable fees and disbursements of counsel) as
shall have been reasonably incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase and resale of the Securities. If this
Agreement is terminated pursuant to Section 8 by reason of the default of one or
more of the Initial Purchasers, the Company shall not be obligated to reimburse
any defaulting Initial Purchaser on account of such expenses.
10. Indemnification. (a) The Company and the Current Guarantors,
---------------
jointly and severally, shall indemnify and hold harmless each Initial Purchaser,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 10(a) and Section 11 as an Initial Purchaser), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which that Initial Purchaser may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto
<PAGE>
24
or in any information provided by the Company or any Guarantor pursuant to
Section 5(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
--------
however, that the Company and the Guarantors shall not be liable in any such
- -------
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further, that
-------- -------
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 10(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company or
any Current Guarantor with Section 5(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates (including the
Guarantors), their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 10(b) and Section 11 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or a Guarantor may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Initial Purchasers'
Information, and shall reimburse the Company and the Current Guarantors for any
legal or other expenses reasonably incurred by the Company or the Current
Guarantors in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 10(a) or 10(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 10 except to the extent
that it has been materially prejudiced (such as through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
-------- -------
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 10. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
<PAGE>
25
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
--------
however, that an indemnified party shall have the right to employ its own
- -------
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 10(a) and 10(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
The obligations of the Company, the Current Guarantors and the Initial
Purchasers in this Section 10 and in Section 11 are in addition to any other
liability that the Company, the Current Guarantors or the Initial Purchasers, as
the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
11. Contribution. If the indemnification provided for in Section 10
------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 10(a) or 10(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Current Guarantors
on the one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Current Guarantors on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Current Guarantors on the one hand and the
Initial Purchasers on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Current Guarantors, on the one hand, and
the total discounts and commissions received by the Initial Purchasers with
respect to the Securities purchased under this Agreement, on the other, bear to
the total gross proceeds from the sale of the Securities under this Agreement,
in each case as set forth in the table on the cover page of the
<PAGE>
26
Offering Memorandum. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to the
Company or any Current Guarantor or information supplied by the Company or any
Current Guarantors on the one hand or to any Initial Purchasers' Information on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Current Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contributions pursuant to this
Section 11 were to be determined by pro rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 11 shall be deemed to include, for purposes of
this Section 11, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this Section
11, no Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total discounts and commissions received by such Initial
Purchaser with respect to the Securities purchased by it under this Agreement
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 11 are several in proportion to their respective
purchase obligations and not joint.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and the Current Guarantors and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 10 and 11 with respect to affiliates, officers,
directors, employees, representatives, agents and controlling persons of the
Company, the Current Guarantors and the Initial Purchasers. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 12, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
13. Expenses. The Company agrees with the Initial Purchasers to pay
--------
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company and the Guarantors
under this Agreement which are not otherwise specifically provided for in this
Section 13; provided, however, that except as provided in this Section 13 and
-------- -------
Section 9, the Initial Purchasers shall pay their own costs and expenses.
14. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company, the Current
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, the Current Guarantors or the Initial Purchasers
pursuant
<PAGE>
27
to this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
15. Notices, etc. All statements, requests, notices and agreements
-------------
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Legal Dept., 40th Floor (telecopier no.:
(212) 270-7481); or
(b) if to the Company or the Current Guarantors, shall be delivered
or sent by mail or telecopy transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Chief Financial Officer
(telecopier no.: 440-826-2833);
provided that any notice to an Initial Purchaser pursuant to Section 10(c) shall
- --------
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Current Guarantors shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers
by CSI.
16. Definition of Terms. For purposes of this Agreement, (a) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
17. Initial Purchasers' Information. The parties hereto acknowledge
-------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchasers;
(ii) the legend on the inside front cover page concerning over-allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the first sentence of the third
paragraph, the fifth paragraph, the seventh paragraph, the twelfth paragraph and
the thirteenth paragraph under the heading "Plan of Distribution".
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
20. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
21. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Guarantors and
the several Initial Purchasers in accordance with its terms.
Very truly yours,
ADVANSTAR COMMUNICATIONS INC.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
AHI HOLDING CORP.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
ADVANSTAR HOLDINGS, INC.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
ART EXPOSITIONS INTERNATIONAL INC.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
EXPOCON MANAGEMENT ASSOCIATES, INC.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
ON DEMAND MARKETING, INC.
By /s/ Robert L. Krakoff
_____________________________
Name: Robert L. Krakoff
Title: Chairman &
Chief Executive Officer
<PAGE>
29
TECHNOLOGY EVENTS COMPANY, LLC
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief Executive Officer
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 10(c):
270 Park Avenue, 40th Floor
New York, New York 10017
Attention: Legal Department
LEHMAN BROTHERS INC.
By____________________________
Authorized Signatory
Address for notices pursuant to Section 10(c):
3 World Financial Center
New York, NY 10285
Attention: Legal Department
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
<S> <C>
Chase Securities Inc. $ 75,000,000
Lehman Brothers Inc. $ 75,000,000
------------
Total $150,000,000
</TABLE>
<PAGE>
ANNEX A
Form of Exchange and Registration Rights Agreement
A-1
<PAGE>
ANNEX B-1
Form of Opinion of Testa, Hurwitz & Thibeault, LLP
B-1
<PAGE>
ANNEX B-2
Form of Opinion of Heller Ehrman White & McAuliffe
B-2
<PAGE>
ANNEX B-3
Form of Opinion of Cohen & Wolf, P.C.
B-3
<PAGE>
ANNEX B-4
Form of Opinion of Squire, Sanders & Dempsey L.L.P.
B-4
<PAGE>
ANNEX C
The undersigned, Joseph Loggia, in his capacity as President of
the Men's Apparel Guild in California, Inc., a California corporation ("MAGIC"),
a wholly-owned subsidiary of Advanstar Communications Inc., a New York
corporation ("Advanstar"), does hereby certify in the name of and on behalf of
MAGIC, pursuant to Section 6(s) of the Purchase Agreement, dated April 27, 1998
(the "Purchase Agreement"), among Advanstar, certain of the Guarantors, Chase
Securities Inc. and Lehman Brothers Inc., relating to the Company's $150,000,000
in aggregate principal amount of 9 1/4% Senior Subordinated Notes due 2008, as
follows (capitalized terms used herein without definition have the meanings
assigned to them in the Purchase Agreement):
(i) I have reviewed the Offering Memorandum;
(ii) in my opinion, the Offering Memorandum, as of the date hereof, does
not include any untrue statement of a material fact regarding MAGIC and does not
omit to state a material fact regarding MAGIC required to be stated therein or
necessary in order to make the statements therein regarding MAGIC, in the light
of the circumstances under which they were made, not misleading; and
(iii) as of the date hereof, there has been no material adverse change in
the financial position or results of operation of MAGIC or any of its
subsidiaries, or any material adverse development including a prospectively
material adverse change, in or affecting the condition (financial or otherwise),
results of operations, business or prospects of MAGIC and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
C-1
<PAGE>
IN WITNESS WHEREOF, the I have executed this Officer's Certificate and
caused it to be delivered as of this 30th day of April, 1998.
_____________________
Name: Joseph Loggia
Title: President
C-2
<PAGE>
EXHIBIT 10.2
ADVANSTAR COMMUNICATIONS INC.
$150,000,000
9 1/4% Senior Subordinated Notes due 2008
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
April 30, 1998
CHASE SECURITIES INC.
LEHMAN BROTHERS INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Advanstar Communications Inc., a New York corporation (the "Company"),
-------
proposes to issue and sell to Chase Securities Inc. ("CSI") and Lehman Brothers
---
Inc. (together with CSI, the "Initial Purchasers"), upon the terms and subject
------------------
to the conditions set forth in a purchase agreement dated April 27, 1998 (the
"Purchase Agreement"), $150,000,000 aggregate principal amount of its 9 1/4%
------------------
Senior Subordinated Notes due 2008 (the "Notes"), which Notes will be
-----
unconditionally guaranteed (the "Guarantees", and, together with the Notes, the
----------
"Securities"), on a senior subordinated basis, by (i) each subsidiary of the
----------
Company existing on the Closing Date and each subsidiary (other than foreign
subsidiaries and Unrestricted Subsidiaries) created or acquired after the
Closing Date (the "Subsidiary Guarantors") and (ii) AHI Holding Corp. ("AHI")
---------------------
and Advanstar Holdings, Inc. ("Holdings", and, together with the Subsidiary
--------
Guarantors and AHI, the "Guarantors"). Capitalized terms used but not defined
----------
herein shall have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Company and each Guarantor agrees with the Initial
Purchasers, for the benefit of the holders (including the Initial Purchasers) of
the Securities, the Exchange Securities (as defined herein) and the Private
Exchange Securities (as defined herein) (collectively, the "Holders"), as
-------
follows:
1. Registered Exchange Offer. The Company and the Guarantors shall
-------------------------
(i) prepare and, not later than 60 days following the date of original issuance
of the Securities (the "Issue Date"), file with the Commission a registration
----------
statement (the "Exchange Offer Registration Statement") on an appropriate form
-------------------------------------
under the Securities Act with respect to a proposed offer to the Holders of the
Securities (the "Registered Exchange Offer") to issue and deliver to such
-------------------------
Holders, in exchange for
<PAGE>
2
the Securities, a like aggregate principal amount of debt securities of the
Company unconditionally guaranteed, on a senior subordinated basis, by the
Guarantors (the "Exchange Securities") that are identical in all material
-------------------
respects to the Securities, except for the transfer restrictions relating to the
Securities, (ii) use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 150 days after the Issue Date and the Registered Exchange Offer to be
consummated no later than 185 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities will be issued
----------------------------------
under the Indenture or an indenture (the "Exchange Securities Indenture") among
-----------------------------
the Company, the Guarantors and the Trustee or such other bank or trust company
that is reasonably satisfactory to the Initial Purchasers, as trustee (the
"Exchange Securities Trustee"), such indenture to be identical in all material
---------------------------
respects to the Indenture, except for the transfer restrictions relating to the
Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) acquires the Exchange
Securities in the ordinary course of such Holder's business and (c) has no
arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Guarantors, the
Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, each Holder that is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market-making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
-----------------
required to deliver a prospectus containing substantially the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Company shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "Private Exchange"), a like aggregate
----------------
principal amount of debt securities of the Company guaranteed by the Guarantors
(the "Private Exchange Securities") that are identical in all material respects
---------------------------
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange
<PAGE>
3
Securities will be issued under the same indenture as the Exchange Securities,
and the Company shall use its reasonable best efforts to cause the Private
Exchange Securities to bear the same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company and the
Guarantors shall:
(a) mail to each Holder a copy of the prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York City time, on the last business
day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Company and the
Guarantors shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Company and the Guarantors shall use their reasonable best efforts
to keep the Exchange Offer Registration Statement effective and to amend and
supplement the prospectus contained therein in order to permit such prospectus
to be used by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided that (i) in
--------
the case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer, such period shall be the lesser of 180 days
and the date on which all Exchanging Dealers have sold all Exchange Securities
held by them and (ii) the Company and the Guarantors shall make such
<PAGE>
4
prospectus and any amendment or supplement thereto available to any broker-
dealer for use in connection with any resale of any Exchange Securities for a
period of not less than 90 days after the consummation of the Registered
Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or,
if it is such an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain 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 and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
------------------
applicable interpretations thereof by the Commission's staff the Company and the
Guarantors are not permitted to effect the Registered Exchange Offer as
contemplated by Section 1 hereof, or (ii) for any other reason the Registered
Exchange Offer is not consummated within 185 days after the Issue Date, or (iii)
any Initial Purchaser so requests with respect to Securities or Private Exchange
Securities not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following the consummation of the
Registered Exchange Offer, or (iv) any Holder so requests because any applicable
law or interpretations do not permit such Holder to participate in the
Registered Exchange Offer, or (v) any Holder so requests because such Holder
participated in the Registered Exchange Offer and did not receive freely
transferable Exchange
<PAGE>
5
Securities in exchange for tendered Securities, or (vi) the Company so elects,
then the following provisions shall apply:
(a) The Company and the Guarantors shall use their reasonable best
efforts to file as promptly as practicable (but in no event more than 45 days
after so required or requested pursuant to this Section 2) with the Commission,
and thereafter shall use their reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities by the Holders thereof from time to time in accordance with the
methods of distribution set forth in such registration statement (hereafter, a
"Shelf Registration Statement" and, together with any Exchange Offer
----------------------------
Registration Statement, a "Registration Statement").
----------------------
(b) The Company and the Guarantors shall use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective in order
to permit the prospectus forming part thereof to be used by Holders of Transfer
Restricted Securities for a period of two years from the Issue Date or such
shorter period that will terminate when all the Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold pursuant thereto (in
any such case, such period being called the "Shelf Registration Period"). The
-------------------------
Company and the Guarantors shall be deemed not to have used their reasonable
best efforts to keep the Shelf Registration Statement effective during the
requisite period if any of them voluntarily takes any action (other than any
action permitted by this Agreement in connection with a Suspension) that would
result in Holders of Transfer Restricted Securities covered thereby not being
able to offer and sell such Transfer Restricted Securities during that period,
unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included therein
in reliance upon or in conformity with written information furnished to the
Company and the Guarantors by or on behalf of any Holder specifically for use
therein (the "Holders' Information")) does not, when it becomes effective,
--------------------
contain 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 and (iii) any prospectus forming part of any Shelf Registration
Statement, and any supplement to such prospectus (in either case, other than
with respect to Holders' Information), does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the
------------------
Holders of Transfer Restricted Securities will suffer damages if the Company and
the Guarantors fail to fulfill its obligations under Section 1 or Section 2, as
applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the applicable Registration Statement is not filed
with the Commission on or prior to 60 days after the Issue Date, (ii) the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is
<PAGE>
6
not declared effective within 150 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of Commission's staff, if later, within 45
days after publication of the change in law or interpretation or, in the case of
clauses (iv) and (v) of the first paragraph of Article 2, within 45 days of the
receipt of a request from a Holder), (iii) the Registered Exchange Offer is not
consummated on or prior to 185 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 150 days after the
Issue Date (or in the case of a Shelf Registration Statement required to be
filed in response to a change in law or the applicable interpretations of
Commission's staff, if later, within 45 days after publication of the change in
law or interpretation) but shall thereafter cease to be effective (at any time
that the Company and the Guarantors are obligated to maintain the effectiveness
thereof) without being succeeded within 45 days by an additional Registration
Statement filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"; provided, that a Suspension (as
--------------------
defined) shall not in any event constitute a Registration Default), the Company
will be obligated to pay liquidated damages to each Holder of Transfer
Restricted Securities, during the period of one or more such Registration
Defaults, in an amount equal to $ 0.192 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder until (i) the applicable
Registration Statement is filed, (ii) the Exchange Offer Registration Statement
is declared effective and the Registered Exchange Offer is consummated, (iii)
the Shelf Registration Statement is declared effective or (iv) the Shelf
Registration Statement again becomes effective, as the case may be. Following
the cure of all Registration Defaults, the accrual of liquidated damages will
cease. As used herein, the term "Transfer Restricted Securities" means (i) each
------------------------------
Security until the date on which such Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Security or Private Exchange Security until the date on which it has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) each Security or Private Exchange
Security until the date on which it is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act. Notwithstanding anything to the contrary in this Section
3(a), the Company shall not be required to pay liquidated damages to a Holder of
Transfer Restricted Securities if such Holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company and the Guarantors shall notify the Trustee and the
Paying Agent under the Indenture immediately upon the happening of each and
every Registration Default. The Company shall pay the liquidated damages due on
the Transfer Restricted Securities by depositing with the Paying Agent (which
may not be the Company or a Guarantor for these purposes), in trust, for the
benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the
next interest payment date specified by the Indenture and the Securities, sums
sufficient to pay the liquidated damages then due. The liquidated damages due
shall be payable on each interest payment date specified by the Indenture and
the Securities to the record holder entitled to receive the interest payment to
be made on such date. Each obligation to pay liquidated damages shall be deemed
to accrue from and including the date of the applicable Registration Default.
<PAGE>
7
(c) The parties hereto agree that the liquidated damages provided for
in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
-----------------------
Statement, the following provisions shall apply:
(a) The Company and the Guarantors shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement, if any,
to the prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such comments
as any Initial Purchaser may reasonably propose; (ii) include the information
set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange
Offer Procedures" section and the "Purpose of the Exchange Offer" section and in
Annex C hereto in the "Plan of Distribution" section of the prospectus forming a
part of the Exchange Offer Registration Statement, and include the information
set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to
the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Company and the Guarantors shall advise each Initial
Purchaser, each Exchanging Dealer and the Holders (if applicable) and, if
requested by any such person, confirm such advice in writing (which advice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any post-
effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities, the Exchange
Securities or the Private Exchange Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein in
order
<PAGE>
8
that the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Company and the Guarantors will make every reasonable effort
to obtain the withdrawal at the earliest possible time of any order suspending
the effectiveness of any Registration Statement.
(d) The Company and the Guarantors will furnish to each Holder of
Transfer Restricted Securities included within the coverage of any Shelf
Registration Statement, without charge, at least one conformed copy of such
Shelf Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company and the Guarantors will, during the Shelf
Registration Period, promptly deliver to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto by
each of the selling Holders of Transfer Restricted Securities in connection with
the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.
(f) The Company and the Guarantors will furnish to each Initial
Purchaser and each Exchanging Dealer, and to any other Holder who so requests,
without charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging Dealer or
any such Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(g) The Company and the Guarantors will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as applicable, promptly
deliver to each Initial Purchaser, each Exchanging Dealer and such other persons
that are required to deliver a prospectus following the Registered Exchange
Offer, without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement or the Shelf Registration Statement and
any amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer
or other persons may reasonably request; and the Company and each Guarantor
consents to the use of such prospectus or any amendment or supplement thereto by
any such Initial Purchaser, Exchanging Dealer or other persons, as applicable,
as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company and the Guarantors will use their reasonable best efforts to register or
qualify, or cooperate with the Holders of Securities, Exchange Securities or
Private Exchange Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities, Exchange
Securities or Private Exchange Securities for offer and sale under the
securities or blue sky laws
<PAGE>
9
of such United States jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities, Exchange Securities
or Private Exchange Securities covered by such Registration Statement; provided
--------
that the Company and each Guarantor will not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(i) The Company and the Guarantors will cooperate with the Holders
of Securities, Exchange Securities or Private Exchange Securities to facilitate
the timely preparation and delivery of certificates representing Securities,
Exchange Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as the Holders thereof may request in writing prior
to sales of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company and the Guarantors are required to
maintain an effective Registration Statement, the Company and the Guarantors
will promptly prepare and file with the Commission a post-effective amendment to
the Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a Holder,
the prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary contained in this Agreement, the
Company may issue a notice (a "Suspension Notice") to the Holders stating that a
Shelf Registration Statement may not be used; a Suspension Notice may be given
by the Company pending the announcement of material information by the Company
which the Board of Directors of the Company has determined, based upon an
opinion of counsel, would be required to be disclosed in such Registration
Statement in order to make the statements therein not misleading, and may issue
any Suspension Notice suspending use of the Shelf Registration Statement
required under applicable securities laws to be issued (a "Suspension"). In the
event that the aggregate number of days in any consecutive twelve-month period
for which all such Suspension Notices are issued and effective exceeds 45 days
in the aggregate, then the Company will be obligated to pay liquidated damages
to each Holder of Transfer Restricted Securities, during the period of one or
more such Suspension, in an amount equal to $0.192 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder.
(k) Not later than the effective date of the applicable Registration
Statement, the Company and the Guarantors will provide a CUSIP number for the
Securities, the Exchange Securities and the Private Exchange Securities, as the
case may be, and provide the applicable trustee with printed certificates for
the Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
<PAGE>
10
(l) The Company and the Guarantors will comply with all applicable
rules and regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earning statement satisfying the provisions
of Section 11(a) of the Securities Act; provided that in no event shall such
--------
earning statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the applicable Registration Statement, which statement shall cover such 12-
month period.
(m) The Company and the Guarantors will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act as required by applicable law in a timely manner.
(n) The Company and the Guarantors may require each Holder of
Transfer Restricted Securities to be registered pursuant to any Shelf
Registration Statement to furnish to the Company and the Guarantors such
information concerning the Holder and the distribution of such Transfer
Restricted Securities as the Company and the Guarantors may from time to time
reasonably require for inclusion in such Shelf Registration Statement, and the
Company and the Guarantors may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (v) or upon receipt
of a Suspension Notice, such Holder will discontinue disposition of such
Transfer Restricted Securities until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(j) or until advised
in writing (the "Advice") by the Company and the Guarantors that the use of the
------
applicable prospectus may be resumed. If the Company and the Guarantors shall
give any notice under Section 4(b)(ii) through (v) or give any Suspension Notice
during the period that the Company is required to maintain an effective
Registration Statement (the "Effectiveness Period"), such Effectiveness Period
--------------------
shall be extended by the number of days during such period from and including
the date of the giving of such notice or Suspension Notice, as the case may be,
to and including the date when each seller of Transfer Restricted Securities
covered by such Registration Statement shall have received (x) the copies of the
supplemental or amended prospectus contemplated by Section 4(j) (if an amended
or supplemental prospectus is required) or (y) the Advice (if no amended or
supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all such other
action, if any, as Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold or
the managing underwriters (if any) shall reasonably request in order to
facilitate any disposition of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Shelf Registration Statement.
<PAGE>
11
(q) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall (i) make reasonably available for inspection by a
representative of, and Special Counsel (as defined below) acting for, Holders of
a majority in aggregate principal amount of the Securities, Exchange Securities
and Private Exchange Securities being sold and any underwriter participating in
any disposition of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Company
and its subsidiaries and (ii) use its reasonable best efforts to have its
officers, directors, employees, accountants and counsel supply all relevant
information reasonably requested by such representative, Special Counsel or any
such underwriter (an "Inspector") in connection with such Shelf Registration
---------
Statement.
(r) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall, if requested by Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold, their Special Counsel or the managing underwriters (if
any) in connection with such Shelf Registration Statement, use its reasonable
best efforts to cause (i) its counsel to deliver an opinion relating to the
Shelf Registration Statement and the Securities, Exchange Securities or Private
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold, their Special Counsel or
the managing underwriters (if any) and (iii) its independent public accountants
to provide a comfort letter in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
5. Registration Expenses. The Company and the Guarantors will bear
---------------------
all expenses incurred in connection with the performance of their obligations
under Sections 1, 2, 3 and 4 and the Company and the Guarantors will reimburse
the Initial Purchasers and the Holders for the reasonable fees and disbursements
of one firm of attorneys (in addition to any local counsel) chosen by the
Holders of a majority in aggregate principal amount of the Securities, the
Exchange Securities and the Private Exchange Securities to be sold pursuant to
each Registration Statement (the "Special Counsel") acting for the Initial
---------------
Purchasers or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
---------------
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Guarantors shall indemnify and hold harmless
each Holder (including, without limitation, any such Initial Purchaser or
Exchanging Dealer), its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the Securities
Act, the Exchange Act, any other federal or state statutory law or
<PAGE>
12
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Holder promptly upon demand for
any legal or other expenses reasonably incurred by that Holder in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
-------- -------
the Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information; and provided, further, that with respect to any such untrue
-------- -------
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any
Holder from whom the person asserting any such loss, claim, damage, liability or
action received Securities, Exchange Securities or Private Exchange Securities
to the extent that such loss, claim, damage, liability or action of or with
respect to such Holder results from the fact that both (A) a copy of the final
prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Securities, Exchange Securities or Private
Exchange Securities to such person and (B) the untrue statement in or omission
from the related preliminary prospectus was corrected in the final prospectus
unless, in either case, such failure to deliver the final prospectus was a
result of non-compliance by the Company or a Guarantor with Section 4(d), 4(e),
4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Company, its affiliates (including the
Guarantors), their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act (collectively referred to for purposes
of this Section 6(b) and Section 7 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or a Guarantor may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information
furnished to the Company and the Guarantors by such Holder, and shall reimburse
the Company and the Guarantors for any legal or other expenses reasonably
incurred by the Company and the Guarantors in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or
<PAGE>
13
action as such expenses are incurred; provided, however, that no such Holder
-------- -------
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf Registration
Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
-------- -------
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any
<PAGE>
14
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
------------
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors from the offering and sale
of the Securities, on the one hand, and a Holder with respect to the sale by
such Holder of Securities, Exchange Securities or Private Exchange Securities,
on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors on the one hand and such Holder on the
other with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Guarantors on the one hand and a Holder on the other with
respect to such offering and such sale shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities (before
deducting expenses) received by or on behalf of the Company and the Guarantors
as set forth in the table on the cover of the Offering Memorandum, on the one
hand, bear to the total proceeds received by such Holder with respect to its
sale of Securities, Exchange Securities or Private Exchange Securities, on the
other. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Company or
a Guarantor or information supplied by the Company or a Guarantor on the one
hand, or to any Holders' Information supplied by such Holder on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 7 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7 shall be deemed to include, for
purposes of this Section 7, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 7, an indemnifying party that is a Holder of Securities, Exchange
Securities or Private Exchange Securities shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Securities, Exchange Securities or Private Exchange Securities sold by such
indemnifying party to any purchaser exceeds the amount of any damages which such
indemnifying party has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or
<PAGE>
15
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Rules 144 and 144A. The Company shall use its reasonable best efforts
------------------
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the written request of any Holder of
Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Company and each Guarantor covenants that it will take such
further action as any Holder of Transfer Restricted Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Transfer Restricted Securities, the Company and
the Guarantors shall deliver to such Holder a written statement as to whether
they have complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company or a Guarantor
to register any of its securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company and the
Guarantors (which shall not be unreasonably withheld or delayed), and such
Holders shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of this
------------- ----------------------
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
and the Guarantors have obtained the written consent of Holders of a majority in
aggregate principal amount of the Securities, the Exchange Securities and the
Private Exchange Securities, taken as a single class. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders whose Securities,
Exchange Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the
<PAGE>
16
Securities, the Exchange Securities and the Private Exchange Securities being
sold by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in
like manner to Chase Securities Inc. and Lehman Brothers Inc.;
(ii) if to an Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(iii) if to the Company or a Guarantor, initially at the address of
the Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
----------------------
Company, the Guarantors and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (i) the
-------------------
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (ii) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (iii) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company, a Guarantor
--------
or by any Holder of any of their obligations under this Agreement, each Holder
or the Company and the Guarantors, as the case may be, in addition to being
entitled to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Company or a Guarantor
of its obligations under Sections 1 or 2 hereof for which liquidated damages
have been
<PAGE>
17
paid pursuant to Section 3 hereof), will be entitled to specific performance of
its rights under this Agreement. The Company, the Guarantors and each Holder
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(i) No Inconsistent Agreements. The Company and each Guarantor
--------------------------
represents, warrants and agrees that (i) it has not entered into, shall not, on
or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person and (iii)
without limiting the generality of the foregoing, without the written consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Securities, it shall not grant to any person the right to
request the Company or any Guarantor to register any debt securities of the
Company or any Guarantor (or any guarantees of such debt securities) under the
Securities Act unless the rights so granted are not in conflict or inconsistent
with the provisions of this Agreement.
(j) No Piggyback on Registrations. The Company, the Guarantor and
-----------------------------
their respective security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall not have the right to include any securities
of the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(k) Severability. The remedies provided herein are cumulative and not
------------
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) No Foreign Registration. Nothing in this Agreement shall be
-----------------------
construed to require the Company or any Guarantor to offer any Exchange
Securities in any non-U.S. jurisdiction where such offer would be unlawful or
require registration or qualification. Securities are "freely transferable" for
purposes of this Agreement if they are freely transferable in the United States,
regardless of whether they may transfered within any foreign jurisdiction.
<PAGE>
18
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
ADVANSTAR COMMUNICATIONS INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
AHI HOLDING CORP.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
ADVANSTAR HOLDINGS, INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
THE MEN'S GUILD IN CALIFORNIA, INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
ART EXPOSITIONS INTERNATIONAL INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
<PAGE>
19
EXPOCON MANAGEMENT ASSOCIATES, INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
ON DEMAND MARKETING, INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
TECHNOLOGY EVENTS COMPANY, LLC
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
MAGIC KIDS, INC.
By /s/ Robert L. Krakoff
______________________________
Name: Robert L. Krakoff
Title: Chairman & Chief
Executive Officer
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
LEHMAN BROTHERS INC.
By____________________________
Authorized Signatory
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
B-1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
199_, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
_______________
// In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
C-1
<PAGE>
ANNEX D
o CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
D-1
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
among
ADVANSTAR COMMUNICATIONS INC.,
as Borrower
ADVANSTAR HOLDINGS, INC.,
as Company
AHI HOLDING CORP.,
as Parent Guarantor
SUBSIDIARY GUARANTORS REFERRED TO HEREIN
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
CHASE SECURITIES INC.,
as Arranger
Dated as of May 31, 1996,
as amended and restated as of April 30, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached but
is inserted for convenience of reference only.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions and Accounting Matters.................................. 1
1.01 Certain Defined Terms............................................. 2
1.02 Accounting Terms and Determinations............................... 20
1.03 Classes and Types of Loans........................................ 21
1.04 References to Parent Guarantor and Company........................ 21
Section 2. Commitments, Loans, Notes and Prepayments........................... 21
2.01 Loans............................................................. 21
2.02 Borrowings........................................................ 22
2.03 Letters of Credit................................................. 22
2.04 Changes of Commitments............................................ 26
2.05 Commitment Fee.................................................... 26
2.06 Lending Offices................................................... 26
2.07 Several Obligations; Remedies Independent......................... 26
2.08 Evidence of Loans; Notes.......................................... 26
2.09 Optional Prepayments and Conversions or Continuations of Loans.... 28
2.10 Mandatory Prepayments............................................. 28
Section 3. Payments of Principal and Interest.................................. 30
3.01 Repayment of Loans................................................ 30
3.02 Interest.......................................................... 31
Section 4. Payments; Pro Rata Treatment; Computations; Etc..................... 32
4.01 Payments.......................................................... 32
4.02 Pro Rata Treatment................................................ 33
4.03 Computations...................................................... 33
4.04 Minimum Amounts................................................... 33
4.05 Certain Notices................................................... 33
4.06 Non-Receipt of Funds by the Administrative Agent.................. 34
4.07 Sharing of Payments, Etc.......................................... 35
Section 5. Yield Protection, Etc............................................... 36
5.01 Additional Costs.................................................. 36
5.02 Limitation on Types of Loans...................................... 37
5.03 Illegality........................................................ 38
5.04 Treatment of Affected Loans....................................... 38
5.05 Compensation...................................................... 38
5.06 Additional Costs in Respect of Letters of Credit.................. 39
5.07 U.S. Taxes........................................................ 39
5.08 Replacement of Lenders............................................ 41
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6. Guarantee........................................................... 41
6.01 The Guarantee..................................................... 41
6.02 Obligations Unconditional......................................... 42
6.03 Reinstatement..................................................... 42
6.04 Subrogation....................................................... 43
6.05 Remedies.......................................................... 43
6.06 Instrument for the Payment of Money............................... 43
6.07 Continuing Guarantee.............................................. 43
6.08 Rights of Contribution............................................ 43
6.09 General Limitation on Guarantee Obligations....................... 43
6.10 Waiver............................................................ 44
Section 7. Conditions Precedent................................................ 44
7.01 Amendment/Restatement Effective Date.............................. 44
7.02 Initial and Subsequent Extensions of Credit....................... 48
7.03 Permitted Acquisitions............................................ 48
Section 8. Representations and Warranties...................................... 49
8.01 Corporate Existence............................................... 49
8.02 Financial Condition............................................... 49
8.03 Litigation........................................................ 50
8.04 No Breach......................................................... 50
8.05 Action............................................................ 50
8.06 Approvals......................................................... 50
8.07 ERISA............................................................. 51
8.08 Taxes............................................................. 51
8.09 Investment Company Act............................................ 51
8.10 Public Utility Holding Company Act................................ 51
8.11 Material Agreements and Liens; Ownership of Property; Insurance... 51
8.12 Environmental Matters............................................. 52
8.13 Capitalization.................................................... 53
8.14 Subsidiaries, Etc................................................. 54
8.15 True and Complete Disclosure...................................... 54
8.16 MAGIC Transaction Documents....................................... 54
8.17 Regulation H...................................................... 54
8.18 Security Documents................................................ 55
8.19 Intellectual Property Rights...................................... 55
8.20 Federal Regulations............................................... 55
8.21 Year 2000 Matters................................................. 55
Section 9. Covenants of the Borrower, the Company and the Parent Guarantor..... 56
9.01 Financial Statements Etc.......................................... 56
9.02 Litigation........................................................ 58
9.03 Existence, Etc.................................................... 58
9.04 Insurance......................................................... 59
9.05 Prohibition of Fundamental Changes................................ 59
9.06 Limitation on Liens............................................... 60
9.07 Indebtedness...................................................... 61
9.08 Investments....................................................... 62
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.09 Dividend Payments................................................. 63
9.10 Certain Financial Covenants....................................... 64
9.11 Certain Net Available Proceeds.................................... 64
9.12 Interest Rate Protection Agreements............................... 64
9.13 Lines of Business................................................. 65
9.14 Transactions with Affiliates...................................... 65
9.15 Use of Proceeds................................................... 65
9.16 Certain Obligations Respecting Domestic Subsidiaries.............. 65
9.17 Ownership of the Company and the Borrower......................... 67
9.18 Certain Payments and Modifications................................ 67
9.19 Special Purpose Company........................................... 67
Section 10. Events of Default.................................................. 68
Section 11. The Administrative Agent........................................... 71
11.01 Appointment, Powers and Immunities............................... 71
11.02 Reliance by Administrative Agent................................. 72
11.03 Defaults......................................................... 72
11.04 Rights as a Lender............................................... 73
11.05 Indemnification.................................................. 73
11.06 Non-Reliance on Administrative Agent and Other Lenders........... 73
11.07 Failure to Act................................................... 74
11.08 Resignation or Removal of Administrative Agent................... 74
11.09 Consents under Other Loan Documents.............................. 74
Section 12. Miscellaneous...................................................... 74
12.01 Waiver........................................................... 74
12.02 Notices.......................................................... 75
12.03 Expenses, Etc.................................................... 76
12.04 Amendments, Etc.................................................. 77
12.05 Successors and Assigns........................................... 78
12.06 Assignments and Participations................................... 79
12.07 Survival......................................................... 81
12.08 Captions......................................................... 82
12.09 Counterparts..................................................... 82
12.10 Governing Law; Submission to Jurisdiction........................ 82
12.11 WAIVER OF JURY TRIAL............................................. 82
12.12 Treatment of Certain Information; Confidentiality................ 82
</TABLE>
-iii-
<PAGE>
ANNEX A - Commitments
SCHEDULE I - Material Agreements and Liens
SCHEDULE II - Subsidiaries
SCHEDULE III - Real Property
SCHEDULE IV - Consents
SCHEDULE V - Intellectual Property
SCHEDULE VI - Sources and Uses for MAGIC Transaction
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Tranche A Term Loan Note
EXHIBIT A-3 - Form of Tranche B Term Loan Note
EXHIBIT B-1 - Form of Security Agreement
EXHIBIT B-2 - Form of Conditional Assignment of and Security Interest
in Trademark Rights
EXHIBIT B-3 - Form of Conditional Assignment of and Security Interest
in Copyrights
EXHIBIT C-1 - Form of Opinion of Counsel to the Obligors
EXHIBIT C-2 - Form of Opinion of Special New York Counsel to the
Borrower
EXHIBIT D - Form of Confidentiality Agreement
EXHIBIT E - Form of Assignment and Acceptance
EXHIBIT F - Form of Acknowledgment and Confirmation of Security
Agreement
EXHIBIT G - Form of Mortgage
EXHIBIT H - Form of Additional Obligor Addendum
EXHIBIT I - Form of Addendum
-iv-
<PAGE>
EXHIBIT 10.3
CREDIT AGREEMENT, dated as of May 31, 1996, as amended and restated as
of April 30, 1998, among:
ADVANSTAR COMMUNICATIONS INC., a New York corporation (the
"Borrower");
--------
ADVANSTAR HOLDINGS, INC., a Delaware corporation and the parent
corporation of the Borrower (the "Company");
-------
AHI HOLDING CORP., a Delaware corporation and the parent corporation
of the Company (the "Parent Guarantor");
----------------
each of the Subsidiaries of the Borrower identified under the caption
"SUBSIDIARY GUARANTORS" on the signature pages hereto and each Subsidiary
of the Borrower that becomes a "Subsidiary Guarantor" on or after the
Amendment/Restatement Effective Date (as defined below) pursuant to Section
9.16(a) hereof (individually, a "Subsidiary Guarantor" and, collectively,
--------------------
the "Subsidiary Guarantors"); and, together with the Parent Guarantor and
---------------------
the Company, the "Guarantors"; and the Guarantors collectively with the
----------
Borrower, the "Obligors");
--------
each of the lenders listed on Annex A hereto and each lender that
becomes a "Lender" after the Amendment/Restatement Effective Date pursuant
to Section 12.06(b) hereof (individually, a "Lender" and, collectively, the
------
"Lenders"); and
-------
THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H :
-------------------
WHEREAS, the Obligors, the Lenders and the Administrative Agent are
parties to the Credit Agreement, dated as of May 31, 1996, as amended and
restated as of January 17, 1997 (as so amended and restated, the "Existing
--------
Credit Agreement");
- ----------------
WHEREAS, the Obligors have requested that the Existing Credit
Agreement be amended and restated as hereinafter provided;
WHEREAS, such amendment and restatement has been approved in
accordance with the Existing Credit Agreement; and
WHEREAS, it is the intent of the parties hereto that this Agreement
not constitute a novation of the obligations and liabilities existing under the
Existing Credit Agreement or evidence repayment of all or any of such
obligations and liabilities and that this Agreement amend and restate in its
entirety the Existing Credit Agreement and re-evidence the obligations of the
Obligors outstanding thereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree that, effective on
the Amendment and Restatement Effective Date (as hereinafter defined), the
Existing Credit Agreement will be amended and restated in its entirety as
follows:
Section 1. Definitions and Accounting Matters.
----------------------------------
<PAGE>
2
1.01 Certain Defined Terms. As used herein, the following terms
---------------------
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
---- -----
"Acknowledgment and Confirmation of Security Agreement" shall mean the
-----------------------------------------------------
Acknowledgment and Confirmation of Security Agreement made by each Obligor in
favor of the Administrative Agent for the ratable benefit of the Lenders,
substantially in the form of Exhibit F, as the same may be amended, supplemented
or otherwise modified from time to time.
"Acquired Working Capital" shall have the meaning assigned to such
------------------------
term in Section 2.10(g).
"Administrative Agent" shall have the meaning assigned to such term in
--------------------
the recitals hereto.
"Affiliate" shall mean any Person that directly or indirectly
---------
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
-------
"controlled by" and "under common control with") shall mean possession, directly
------------- -------------------------
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
--------
Person that owns directly or indirectly securities having 5% or more of the
voting power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee of the Parent Guarantor or any of its
Subsidiaries if such individual holds ownership interests in the Parent
Guarantor of less than 5% and (b) none of the Wholly Owned Subsidiaries of the
Company shall be Affiliates.
"Agreement" shall mean this Credit Agreement, as amended, amended and
---------
restated, supplemented or otherwise modified from time to time.
"Amendment/Restatement Effective Date" shall mean the date on which
------------------------------------
each of the conditions precedent specified in Section 7.01 shall have been
satisfied, which date is April 30, 1998.
"Applicable Lending Office" shall mean, for each Lender and for each
-------------------------
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan in an administrative questionnaire
delivered to the Administrative Agent or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Borrower as the office by which its Loans of such
Type are to be made and maintained.
"Applicable Margin" shall mean: (a) with respect to Base Rate Loans,
-----------------
1.25% per annum (in the case of Revolving Credit Loans and Tranche A Term
Loans) and 1.50% per annum (in the case of Tranche B Term Loans); and (b) with
respect to Eurodollar Loans, 2.25% per annum (in the case of Revolving Credit
Loans and Tranche A Term Loans) and 2.50% per annum (in the case of Tranche B
Term Loans); provided that, if the Total Leverage Ratio as at the last day of
--------
any fiscal quarter of the Company (commencing with the fiscal quarter ending
June 30, 1998) shall fall within any of the ranges
<PAGE>
3
set forth below then, subject to the delivery to the Administrative Agent of a
certificate of a Responsible Officer of the Borrower demonstrating such fact
prior to the end of the next succeeding fiscal quarter, the "Applicable Margin"
for each Loan shall be changed to the per annum rate for the respective Class
and Type of Loan set forth below opposite such range during the period
commencing on the date that is three Business Days after the date of receipt of
such certificate to but not including the next date on which the Applicable
Margin changes in accordance with this definition:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable Eurodollar Applicable Eurodollar Applicable Base Rate Applicable Base Rate
Margin Margin Margin Margin
Revolving Credit Revolving Credit Tranche B
Leverage Ratio Loans/Tranche Tranche B Term Loans/Tranche A Term Term
A Term Loans Loans Loans Loans
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Greater than or equal to 2.25% 2.50% 1.25% 1.50%
5.50 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 5.00 to 1.0 2.00% 2.50% 1.00% 1.50%
and less than 5.50 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.50 to 1.0 2.00% 2.50% 1.00% 1.50%
and less than 5.00 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.00 to 1.0 1.75% 2.25% 0.75% 1.25%
and less than 4.50 to 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.0 1.50% 2.25% 0.50% 1.25%
and less than 4.00 to 1.0
Less than 3.50 to 1.0 1.25% 2.00% 0.25% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
---------------
amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to the
---------
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based
---------------
upon the Base Rate.
"Basle Accord" shall mean the proposals for risk-based capital
------------
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
"Borrower" shall have the meaning assigned to such term in the
--------
recitals hereto.
<PAGE>
4
"Business Day" shall mean any day that is not a Saturday or Sunday or
------------
any other day (a) on which commercial banks are not authorized or required to
close in New York City and (b) if such day relates to a borrowing of, a payment
or prepayment of principal of or interest on, a Conversion of or into, or an
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such borrowing, payment, prepayment, Conversion or Interest Period, that
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Capital Expenditures" shall mean, for any period, expenditures
--------------------
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of its
Consolidated Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
repairs) during such period that are required to be capitalized in accordance
with GAAP.
"Capital Lease Obligations" shall mean, for any Person, all
-------------------------
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Casualty Event" shall mean, with respect to any Property of any
--------------
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank, a New York banking
-----
corporation, and its successors.
"CIGAM" shall mean CIGAM Merger Corp.
-----
"Class" shall have the meaning assigned to such term in Section 1.03
-----
hereof.
"Closing Date" shall mean the date upon which the initial extension of
------------
credit hereunder was made, which occurred on May 31, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Collateral Account" shall have the meaning assigned to such term in
------------------
Section 4.01 of the Security Agreement.
"Commitments" shall mean the Revolving Credit Commitments, the Tranche
-----------
A Term Loan Commitments and the Tranche B Term Loan Commitments.
"Company" shall have the meaning assigned to such term in the recitals
-------
hereto, subject to Section 1.04 hereof.
"Consolidated Current Assets" shall mean, as to the Company at any
---------------------------
time, the current assets (other than cash and Permitted Investments) of the
Company and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to the Company at
--------------------------------
any time, the current liabilities of the Company and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP, but
excluding the current portion of any long-term Indebtedness of the
<PAGE>
5
Company and its Consolidated Subsidiaries (including the Revolving Credit Loans
during the twelve-month period preceding the Revolving Credit Commitment
Termination Date), to the extent otherwise included therein.
"Consolidated Net Income" shall mean, for any period, the net income
-----------------------
of the Company and its Consolidated Subsidiaries for such period as determined
on a consolidated basis in accordance with GAAP, provided that, to the extent
--------
that any dividends shall be paid, by the Borrower, directly or indirectly, to
the Parent Guarantor pursuant to Section 9.09(b)(i) or 9.09(c)(i) hereof for
purposes set forth therein in respect of such period, such net income shall be
net of such dividends.
"Consolidated Subsidiary" shall mean, for any Person, each Subsidiary
-----------------------
of such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of such Person in accordance with GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Continuing Directors" shall mean the directors of the Parent
--------------------
Guarantor on the Amendment/Restatement Effective Date, after giving effect to
the MAGIC Transaction and the other transactions contemplated hereby, and each
other director, if, in each case, such other director's nomination for election
to the board of directors of the Parent Guarantor is recommended by at least 66-
2/3% of the then Continuing Directors or such other director receives the
affirmative vote of the H&F Affiliated Parties in his or her election by the
shareholders of the Parent Guarantor.
"Contractual Obligation" shall mean as to any Person, any provision of
----------------------
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Convert", "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.09 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Lender (at its sole discretion) of
a Loan from one Applicable Lending Office to another.
"Copyright Assignment" shall mean each Conditional Assignment of and
--------------------
Security Interest in Copyrights to be executed and delivered by certain Obligors
parties thereto, substantially in the form of Exhibit B-3, as the same may be
amended, supplemented or otherwise modified from time to time.
"Debt Issuance" shall mean the incurrence after the
-------------
Amendment/Restatement Effective Date by the Parent Guarantor or any of its
Subsidiaries, of any Indebtedness, whether through the issuance of debt
securities, the borrowing of money from a bank or other financial institution,
or otherwise, provided that such term shall not include any incurrence of
--------
Indebtedness to the Lenders under the Loan Documents or any incurrence of
Indebtedness permitted under Section 9.07 hereof.
"Default" shall mean an Event of Default or an event that with notice
-------
or lapse of time or both would become an Event of Default.
"Disposition" shall mean any sale, assignment, transfer or other
-----------
disposition of any Property (whether now owned or hereafter acquired) by the
Borrower or any of its Subsidiaries to any other Person other than any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms.
<PAGE>
6
"Dividend Payment" shall mean dividends (in cash, Property or
----------------
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Parent Guarantor, the Company or the Borrower, as the case
may be, or of any warrants, options or other rights to acquire the same (or to
make any payments to any Person, such as "phantom stock" payments, where the
amount thereof is calculated with reference to the fair market or equity value
of the Parent Guarantor or any of its Subsidiaries), but excluding (a) dividends
payable solely in shares of common stock of the Parent Guarantor, the Company or
the Borrower, as the case may be and (b) payments due to former equity holders
of the Company pursuant to the Merger Agreement (including payments pursuant to
dissenters' rights).
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower which
-------------------
is organized under the laws of a State within the United States.
"EBITDA" shall mean for any period, Consolidated Net Income for such
------
period adjusted to exclude the following items (without duplication) of income
or expense to the extent that such items are included in the calculation of
Consolidated Net Income: (a) Interest Expense (net of interest income and other
similar cash payments received by the Company and its Subsidiaries from third
parties during such period in respect of investments), (b) total income tax
expense, (c) depreciation expense, (d) the expense associated with amortization
of intangible and other assets, (e) non-cash provisions for reserves for
discontinued operations, (f) any extraordinary, unusual or non-cash non-
recurring gains or losses or charges (including any restructuring charges) or
credits, (g) any severance charges for the 1997 fiscal year, (h) the excess of
the expense in respect of post-retirement benefits accrued under Statement of
Financial Accounting Standards No. 106 over the cash expense in respect of such
post-retirement benefits, (i) non-cash charges reflecting compensation expense
relating to employee stock option or similar plans and (j) $400,000 in
compensation expense of the Borrower incurred in connection with the MAGIC
Transaction and paid in each of the 1998 and 1999 fiscal years, provided that,
--------
for purposes of the calculation only of the Total Leverage Ratio, EBITDA of
MAGIC (in the case of calculations for any period ending on or prior to March
31, 1999) and EBITDA of any other Person acquired by the Company or any of its
Subsidiaries during the relevant calculation period shall be included, on a pro
---
forma basis, in EBITDA of the Company as if MAGIC or such Person, as the case
- -----
may be, had been acquired on the first day of the calculation period.
"Environmental Claim" shall mean, with respect to any Person, any
-------------------
written notice, claim, demand or other communication (collectively, a "claim")
-----
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
------------------
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
<PAGE>
7
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"Equity Issuance" shall mean (a) any issuance or sale by the Parent
---------------
Guarantor or any of its Subsidiaries after the Amendment/Restatement Effective
Date of (i) any of its capital stock, (ii) any warrants or options exercisable
in respect of its capital stock (other than any warrants or options issued to
directors, officers or employees of the Parent Guarantor or any of its
Subsidiaries pursuant to any incentive compensation plans, employment agreements
and employee benefit plans established in the ordinary course of business and
any capital stock of the Parent Guarantor or any of its Subsidiaries issued upon
the exercise of such warrants or options) or (iii) any other security or
instrument representing an equity interest (or the right to obtain any equity
interest) in the Parent Guarantor or any of its Subsidiaries or (b) the receipt
by the Parent Guarantor or any of its Subsidiaries after the
Amendment/Restatement Effective Date of any capital contribution (whether or not
evidenced by any equity security issued by the recipient of such contribution);
provided that Equity Issuance shall not include (v) any issuance or sale by the
- --------
Parent Guarantor of any of its common stock to directors, officers or employees
of the Parent Guarantor or any of its Subsidiaries, (w) any such issuance or
sale by any Subsidiary of the Parent Guarantor to the Company or any Wholly
Owned Subsidiary of the Parent Guarantor, (x) any capital contribution by the
Parent Guarantor or any Subsidiary of the Parent Guarantor to any Wholly Owned
Subsidiary of the Parent Guarantor, (y) any such issuance or sale by the Parent
Guarantor to H&F Affiliated Parties or (z) any such issuance or sale by the
Parent Guarantor which constitutes a portion of the Purchase Price of, or which
finances, a Permitted Acquisition, provided that the capital stock of the Parent
--------
Guarantor issued or sold to Persons other than the H&F Affiliated Parties for
any such Permitted Acquisition, together with the capital stock of the Parent
Guarantor so issued or sold in previous Permitted Acquisitions in reliance of
this clause (z), shall not exceed 25% of the capital stock of the Parent
Guarantor (after giving effect to such issuance or sale).
"Equity Rights" shall mean, with respect to any Person, any
-------------
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
---------------
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Company or any of its Subsidiaries is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Company or any of its Subsidiaries is a member.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loan
--------------------
for any Interest Period therefor, the rates per annum quoted by Chase at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) on
the date two Business Days prior to the first day of such Interest Period for
the offering by Chase to leading banks in the London interbank market of Dollar
deposits having a term comparable to such Interest Period and in an amount
approximately comparable to the principal amount of the Eurodollar Loan to be
made by Chase for such Interest Period. If Chase is not
<PAGE>
8
participating in any Eurodollar Loans during any Interest Period therefor, the
Eurodollar Base Rate for such Loans for such Interest Period shall be determined
by reference to the amount of such Loans that Chase would have made or had
outstanding had it been participating in such Loan during such Interest Period.
"Eurodollar Loans" shall mean Loans that bear interest at rates based
----------------
on rates referred to in the definition of "Eurodollar Base Rate" in this Section
1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest
---------------
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent to be equal to the
Eurodollar Base Rate for such Loan for such Interest Period divided by 1 minus
the Reserve Requirement (if any) for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 10 hereof.
"Excess Cash Flow" shall mean, for any fiscal year, the excess of (a)
----------------
the sum, without duplication, of (i) EBITDA for such fiscal year and (ii) cash
generated (if any) by the decrease (if any) in Working Capital of the Company
for such fiscal year, over (b) the sum, without duplication, of (i) Fixed
Charges for such fiscal year, (ii) the aggregate amount of cash used for
Permitted Acquisitions made by the Borrower and its Subsidiaries during such
fiscal year that were financed by cash other than from proceeds of Dispositions,
Loans, Equity Issuances and any capital contribution by or equity issuances to
H&F Affiliated Parties, and (iii) the aggregate amount of payments or
prepayments of the Revolving Credit Loans during such fiscal period made
pursuant to Section 2.09 hereof (to the extent such payments are accompanied by
reduction to the Revolving Credit Commitments) and (iv) the increase (if any) in
Working Capital of the Company for such fiscal year.
"Existing Credit Agreement" shall have the meaning assigned to such
-------------------------
term in the recitals hereto.
"Expocon" shall mean Expocon Management Associates, Inc.
-------
"Federal Funds Rate" shall mean, for any day, the rate per annum
------------------
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
--------
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"Fixed Charges" shall mean, for any period, the sum for the Company
-------------
and its Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of the following: (a) Capital Expenditures
made during such period (except for any such Capital Expenditures to the extent
financed with the proceeds of Indebtedness or Capital Lease Obligations incurred
as permitted by Section 9.07(d) hereof during such period) plus (b) all
----
regularly scheduled payments of principal of Indebtedness (including, without
limitation, the principal component of any payments in respect of Capital Lease
Obligations) made during such period plus (c) all Interest Expense paid for such
----
period plus (d) the aggregate amount of Federal, state and local income taxes
----
paid or payable in respect of such period.
<PAGE>
9
"Fixed Charges Coverage Ratio" shall mean, as at the last day of any
----------------------------
fiscal quarter, the ratio of (a) EBITDA for the period of four consecutive
fiscal quarters of the Company ending on such date to (b) Fixed Charges for such
period, provided, that for the purposes of determining the Fixed Charges
--------
Coverage Ratio for the fiscal quarters of the Company ending June 30, 1998,
September 30, 1998 and December 31, 1998, Fixed Charges for the relevant period
shall be deemed to equal Fixed Charges less Interest Expense in respect of the
Senior Subordinated Notes for such fiscal quarter (and, in the case of the
latter two such determinations, each previous fiscal quarter ending after the
Amendment/Restatement Effective Date) multiplied by 4, 2 and 4/3, respectively
-------------
plus, (i) in the case of the fiscal quarter of the Company ending September 30,
- ----
1998, 50% of the Interest Expense in respect of the Senior Subordinated Notes
payable during the fiscal quarter of the Company ending December 31, 1998 and,
(ii) in the case of the fiscal quarter of the Company ending December 31, 1998,
100% of the Interest Expense in respect of the Senior Subordinated Notes payable
during the fiscal quarter of the Company ending December 31, 1998.
"Foreign Subsidiary" shall mean any Subsidiary of the Borrower
------------------
organized under the laws of any jurisdiction outside the United States of
America.
"GAAP" shall mean generally accepted accounting principles in the
----
United States applied on a basis consistent with those that, in accordance with
the last sentence of Section 1.02(a) hereof, are to be used in making the
calculations for purposes of determining compliance with this Agreement.
"Governmental or Regulatory Authority" shall mean any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any subdivision.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
---------
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit and indemnities
given by the Company or any of its Subsidiaries in connection with exhibitions,
in each case, in the ordinary course of business. The terms "Guarantee" and
---------
"Guaranteed" used as a verb shall have a correlative meaning.
----------
"Guarantors" shall have the meaning assigned to such term in the
----------
recitals hereto.
"H&F Affiliated Parties" shall mean (a) AHI Advanstar, L.L.C., a
----------------------
Delaware limited liability company, and partnerships in which the ultimate
managing general partner is controlled by, or (b) other entities controlled by,
members of Hellman & Friedman LLC, a Delaware limited liability company, or any
successor entity, and shall in any event include Hellman and Friedman Capital
Partners III, L.P., H&F International Partners III, L.P., and H&F Orchard
Partners III, L.P.
"Hazardous Material" shall mean, collectively, (a) any petroleum or
------------------
petroleum products, flammable materials, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, and transformers or other equipment
that contain polychlorinated biphenyls ("PCB's"), (b) any chemicals or other
-----
materials or substances that are now or hereafter become defined as or included
in the definition of
<PAGE>
10
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants", "pollutants" or words of similar import under any
Environmental Law and (c) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated under any
Environmental Law.
"Indebtedness" shall mean, for any Person: (a) obligations created,
------------
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 120 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for the account of such Person, other
than (except for purposes of Section 10(b) hereof) obligations in respect of the
undrawn face amount of letters of credit that are the functional equivalents of
surety or performance bonds or that support self-insurance programs to the
extent that the aggregate amount of all such obligations does not exceed
$3,000,000; (e) Capital Lease Obligations of such Person; and (f) Indebtedness
of others Guaranteed by such Person. Notwithstanding the foregoing,
Indebtedness shall exclude (i) obligations created, issued or incurred by any
Person with respect to customer subscription payments or customer deposits for
trade shows and exhibitions, (ii) indemnities in respect of obligations not
otherwise constituting Indebtedness and (iii) obligations to pay purchase price
adjustments based on financial performance of an acquired entity.
"Interest Expense" shall mean, for any period, for the Company and its
----------------
Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), all interest in respect of Indebtedness
(including, without limitation, the interest component of any payments in
respect of Capital Lease Obligations) accrued or capitalized during such period
(whether or not actually paid during such period).
"Interest Period" shall mean, with respect to any Eurodollar Loan,
---------------
each period commencing on the date such Eurodollar Loan is made or Converted
from a Base Rate Loan or (in the event of a Continuation) the last day of the
next preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select as provided in Section 4.05 hereof,
except that each Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period for any Tranche
A Term Loan may commence before and end after any Tranche A Principal Payment
Date unless, after giving effect thereto, the aggregate principal amount of the
Tranche A Term Loans having Interest Periods that end after such Tranche A
Principal Payment Date shall be equal to or less than the aggregate principal
amount of the Tranche A Term Loans scheduled to be outstanding after giving
effect to the payments of principal required to be made on such Tranche A
Principal Payment Date; (ii) no Interest Period for any Tranche B Term Loan may
commence before and end after any Tranche B Principal Payment Date unless, after
giving effect thereto, the aggregate principal amount of the Tranche B Term
Loans having Interest Periods that end after such Tranche B Principal Payment
Date shall be equal to or less than the aggregate principal amount of the
Tranche B Term Loans scheduled to be outstanding after giving effect to the
<PAGE>
11
payments of principal required to be made on such Tranche B Principal Payment
Date; (iii) each Interest Period that would otherwise end on a day that is not a
Business Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding Business Day); and (iv) notwithstanding clauses (i) and (ii) above, no
Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter period,
such Loan shall not be available hereunder for such period.
"Interest Rate Protection Agreement" shall mean, for any Person, an
----------------------------------
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
"Interim Financing" shall mean up to $75,000,000 of Indebtedness
-----------------
incurred by the Borrower pursuant to loans made to it by one or more H&F
Affiliated Parties.
"Investment" shall mean, for any Person: (a) the acquisition (whether
----------
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
sale); (b) the making of any deposit with, or advance, loan or other extension
of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person), but excluding (i) any such advance, loan
or extension of credit having a term not exceeding 90 days arising in connection
with the sale of inventory, supplies or services by such Person in the ordinary
course of business and (ii) any such deposits that are customary and necessary
in the ordinary course of business; (c) the entering into of any Guarantee of,
or other contingent obligation with respect to, Indebtedness or other liability
of any other Person and (without duplication) any amount committed to be
advanced, lent or extended to such Person (other than indemnities given by the
Company or any of its Subsidiaries in connection with exhibitions in the
ordinary course of business); or (d) the entering into of any Interest Rate
Protection Agreement.
"Issuing Lender" shall mean Chase (or its designated Affiliates), as
--------------
the issuer of Letters of Credit under Section 2.03 hereof, together with its
successors and assigns in such capacity.
"Lenders" shall have the meaning assigned to such term in the recitals
-------
hereto.
"Letter of Credit" shall have the meaning assigned to such term in
----------------
Section 2.03 hereof.
"Letter of Credit Documents" shall mean, with respect to any Letter of
--------------------------
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"Letter of Credit Interest" shall mean, for each Revolving Credit
-------------------------
Lender, such Lender's participation interest (or, in the case of the Issuing
Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations.
<PAGE>
12
"Letter of Credit Liability" shall mean, without duplication, at any
--------------------------
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit plus (b) the aggregate unpaid principal amount
of all Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Revolving Credit Lender (other than the Issuing Lender) shall be
deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.03
hereof, and the Issuing Lender shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the Revolving Credit Lenders
other than the Issuing Lender of their participation interests under said
Section 2.03.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Loan Documents, a Person
shall be deemed to own subject to a Lien any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.
"Loan Documents" shall mean, collectively, this Agreement, any Notes,
--------------
the Letters of Credit, the Security Documents and the Acknowledgment and
Confirmation of Security Agreement.
"Loans" shall mean the Revolving Credit Loans and the Term Loans.
-----
"MAGIC" shall mean Men's Apparel Guild in California, Inc.
-----
"MAGIC Merger Agreement" shall mean the agreement and plan of merger,
----------------------
dated as of March 6, 1998, as amended as of March 23, 1998, by and among the
Borrower, CIGAM and MAGIC.
"MAGIC Transaction" shall mean a transaction consisting of (a) the
-----------------
issuance by the Parent Guarantor to certain H&F Affiliated Parties of capital
stock, followed by successive contributions of common equity by the Parent
Guarantor to the Company, by the Company to the Borrower and by the Borrower to
CIGAM and (b) the merger of CIGAM with and into MAGIC, pursuant to the MAGIC
Merger Agreement, such that, after giving effect to such merger, MAGIC will be a
wholly owned subsidiary of the Borrower.
"MAGIC Transaction Documents" shall mean, collectively, the MAGIC
---------------------------
Merger Agreement and all other agreements, legal opinions and instruments
(together with any and all exhibits, annexes and schedules thereto) executed and
delivered in connection with the MAGIC Transaction.
"Majority Lenders" shall mean, subject to the last paragraph of
----------------
Section 12.04 hereof, Lenders having at least 51% of the sum of (a) the
aggregate outstanding principal amount of the Term Loans, or if no Term Loans
have been made, the aggregate outstanding principal amount of the Term Loan
Commitments plus (b) the sum of (i) the aggregate unused amount, if any, of the
----
Revolving Credit Commitments at such time plus (ii) the aggregate outstanding
----
principal amount of the Revolving Credit Loans at such time plus (c) the
aggregate amount of all Letter of Credit Liabilities.
"Majority Revolving Credit Lenders" shall mean Revolving Credit
---------------------------------
Lenders having at least 51% of the aggregate amount of the Revolving Credit
Commitments or, if the Revolving Credit Commitments shall have terminated,
Lenders holding at least 51% of the sum of (a) the aggregate unpaid principal
amount of the Revolving Credit Loans plus (b) the aggregate amount of all Letter
of Credit Liabilities.
<PAGE>
13
"Majority Tranche A Lenders" shall mean Tranche A Lenders holding at
--------------------------
least 51% of the aggregate outstanding principal amount of the Tranche A Term
Loans or, if the Tranche A Term Loans shall not have been made, at least 51% of
the Tranche A Term Loan Commitments.
"Majority Tranche B Lenders" shall mean Tranche B Lenders holding at
--------------------------
least 51% of the aggregate outstanding principal amount of the Tranche B Term
Loans or, if the Tranche B Term Loans shall not have been made, at least 51% of
the Tranche B Term Loan Commitments.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the Property, business, operations, financial condition, prospects, liabilities
or capitalization of the Company and its Subsidiaries taken as a whole, (b) the
ability of any Obligor to perform its obligations under any of the Loan
Documents or the MAGIC Transaction Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents or the MAGIC Transaction
Documents, (d) the rights and remedies of the Lenders and the Administrative
Agent under any of the Loan Documents or (e) the timely payment of the principal
of or interest on the Loans or the Reimbursement Obligations or other amounts
payable in connection therewith.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated
----------------
as of April 12, 1996 by and among AHI Acquisition II Corp., the Company and the
Parent Guarantor, in which AHI Acquisition II Corp. merged with and into the
Company and the Company became a Wholly Owned Subsidiary of the Parent
Guarantor.
"Mortgage" shall mean each Mortgage executed and delivered, or to be
--------
executed and delivered, by the Borrower or any other Obligor, substantially in
the form of Exhibit G or in such other form as shall be reasonably acceptable to
the Administrative Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Mortgaged Property" shall mean the real properties acquired or owned
------------------
by the Obligors as specified on Schedule III hereto.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
------------------
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate and that is covered by Title IV of ERISA.
"Net Available Proceeds" shall mean:
----------------------
(a) in the case of any Disposition, the amount of Net Cash
Payments received in connection with such Disposition;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Company and its Subsidiaries in respect of such Casualty Event net
of (A) reasonable expenses incurred by the Company and its Subsidiaries in
connection therewith and (B) contractually required repayments of
Indebtedness to the extent secured by a Lien on such Property and any
income and transfer taxes payable by the Company or any of its Subsidiaries
in respect of such Casualty Event; and
(c) in the case of any Debt Issuance or Equity Issuance, the
aggregate amount of all cash received by the Parent Guarantor and its
Subsidiaries in respect of such Debt Issuance or Equity Issuance, as the
case may be, net of reasonable expenses incurred by the Parent Guarantor
and its Subsidiaries in connection therewith.
<PAGE>
14
"Net Cash Payments" shall mean, with respect to any Disposition, the
-----------------
aggregate amount of all cash payments received by the Company and its
Subsidiaries directly or indirectly in connection with such Disposition
(including any cash payments on Investments arising out of such Disposition,
which Investments are permitted by Section 9.08(j)); provided that (a) Net Cash
--------
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Company and its
Subsidiaries in connection with such Disposition and (ii) any Federal, state and
local income or other taxes estimated to be payable by the Company and its
Subsidiaries within two years as a result of such Disposition (but only to the
extent that such estimated taxes are in fact paid to the relevant Federal, state
or local governmental authority when due) and (b) Net Cash Payments shall be net
of any repayments by the Company or any of its Subsidiaries of Indebtedness to
the extent that (i) such Indebtedness is secured by a Lien on the Property that
is the subject of such Disposition and (ii) the transferee of (or holder of a
Lien on) such Property requires that such Indebtedness be repaid as a condition
to the purchase of such Property.
"Notes" shall mean the Revolving Credit Notes, the Tranche A Term Loan
-----
Notes and the Tranche B Term Loan Notes.
"Obligors" shall have the meaning assigned to such term in the
--------
recitals hereto.
"On Demand" shall mean On Demand Marketing, Inc.
---------
"Parent Guarantor" shall have the meaning assigned to such term in the
----------------
recitals hereto, subject to Section 1.04 hereof.
"Participant" shall have the meaning assigned to such term in Section
-----------
12.06(c) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" shall mean any acquisition of (i) all or
---------------------
substantially all of the assets of, or (ii) capital stock or other equity
interests (collectively, "Equity Interests") in, a Person or division or line of
----------------
business of a Person; provided that (a) after giving effect to such acquisition,
--------
the aggregate Purchase Price of all such acquisitions since the
Amendment/Restatement Effective Date attributable to acquisitions of foreign
Persons or of assets that are principally located outside of the United States
shall not exceed $40,000,000; (b) all transactions related thereto shall be
consummated in all material respects in accordance with applicable laws; (c)
such acquisition shall be effected in such manner so that the acquired assets or
Equity Interests are owned either by the Company or a Wholly Owned Subsidiary of
the Company and, if effected by merger or consolidation involving the Company or
the Borrower, the Company or the Borrower, as the case may be, shall be the
continuing or surviving entity; (d) such acquisition (if by purchase of Equity
Interests) shall be effected in such manner so that, after giving effect
thereto, the Company directly or indirectly owns at least 85% of each class of
Equity Interests of the acquired entity; and (e) the conditions set forth in
Section 7.03 shall have been satisfied.
"Permitted Investments" shall mean: (a) direct obligations of the
---------------------
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than one year from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than one year from the date of acquisition
thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's
Ratings Services or Moody's Investors Services, Inc., respectively, maturing not
more than 270 days from the date of acquisition
<PAGE>
15
thereof; and (d) interests in any money market mutual fund registered under the
Investment Company Act of 1940, as amended, the portfolio of which is limited to
obligations described in the foregoing clauses (a), (b) and (c) that satisfy the
proviso set forth below, and so long as such fund has total assets of at least
$1,000,000,000 and is rated at least Am or A by Standard & Poor's Ratings
Services or Moody's Investors Services, Inc., respectively; provided that in
each case referred to in the preceding clauses (a), (b) and (c), the respective
investments (x) provide for the payment of principal and interest (and not
principal alone or interest alone) and (y) are not subject to any contingency
regarding the payment of principal or interest.
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, limited liability company, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
----
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean: (a) in respect of any principal of
-----------------
any Loan that is not paid when due (whether at stated maturity, by acceleration,
by optional or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 2% plus the interest rate for such Loan as
----
provided in Section 3.02(a) or 3.02(b) hereof (as the case may be) and (b) in
respect of any other amount under this Agreement, any Note or any other Loan
Document that is not paid when due (whether at stated maturity, by acceleration,
by optional or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 2% plus the Base Rate as in effect from time to
----
time plus the Applicable Margin for Base Rate Loans which are Revolving Credit
----
Loans.
"Prime Rate" shall mean the rate of interest from time to time
----------
announced by Chase at the Principal Office as its prime commercial lending rate.
"Principal Office" shall mean the principal office of Chase, located
----------------
on the Amendment/Restatement Effective Date at 270 Park Avenue, New York, New
York 10017.
"Property" shall mean any right or interest in or to property of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price" shall mean with respect to any Permitted Acquisition,
--------------
an amount equal to the sum of (a) the aggregate consideration, whether cash,
Property or securities, paid or delivered by the Borrower and its Subsidiaries
in connection with such Permitted Acquisition plus (b) the aggregate amount of
liabilities of the acquired business (net of current assets of the acquired
business) that would be reflected on a balance sheet (if such were to be
prepared) of the Borrower and its Subsidiaries after giving effect to such
Permitted Acquisition.
"Qualified Foreign Lender" shall have the meaning assigned to such
------------------------
term in Section 2.08(f) hereof.
"Quarterly Dates" shall mean the last Business Day of March, June,
---------------
September and December in each year, the first of which shall be the first such
day after the Amendment/Restatement Effective Date.
<PAGE>
16
"Register" shall have the meaning assigned to such term in Section
--------
12.06(g) hereof.
"Registered Note" shall have the meaning assigned to such term in
---------------
Section 2.08(f) hereof.
"Regulatory Change" shall mean, with respect to any Lender, any change
-----------------
after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Reimbursement Obligations" shall mean, at any time, the obligations
-------------------------
of the Borrower then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Lender in respect of any drawings under a Letter of Credit.
"Release" shall mean any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Relevant Parties" shall have the meaning assigned to such term in
----------------
Section 10(b) hereof.
"Relevant Permitted Acquisition" shall have the meaning assigned to
------------------------------
such term in Section 7.03(b) hereof.
"Reserve Requirement" shall mean, for any Interest Period for any
-------------------
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.
"Responsible Officer" shall mean, as to any Person, any of the
-------------------
following officers of such Person: (a) for all purposes hereunder, the chief
executive officer, the president or the chief financial officer of such Person
and, with respect to financial matters, the treasurer or the controller of such
Person and (b) any vice president of such Person or, with respect to financial
matters, any assistant treasurer or assistant controller of such Person, who has
been designated in writing to the Administrative Agent as a Responsible Officer
by such chief executive officer, president or chief financial officer of such
Person.
"Revolving Credit Commitment" shall mean, as to each Revolving Credit
---------------------------
Lender, the obligation of such Lender to make Revolving Credit Loans, and to
issue or participate in Letters of Credit pursuant to Section 2.03 hereof, in an
aggregate principal or face amount at any one time outstanding up to but not
exceeding the amount set opposite the name of such Lender on Annex A under the
caption "Revolving Credit Commitment" or, in the case of a Person that becomes a
Revolving Credit Lender pursuant to an assignment permitted under Section
12.06(b) hereof, as specified in the respective instrument of assignment
pursuant to which such assignment is effected (as the same may be reduced
<PAGE>
17
from time to time pursuant to Section 2.04 or 2.10 hereof). The aggregate
principal amount of the Revolving Credit Commitments on the
Amendment/Restatement Effective Date is $60,000,000.
"Revolving Credit Commitment Percentage" shall mean, with respect to
--------------------------------------
any Revolving Credit Lender, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the aggregate amount of the Revolving Credit
Commitments of all of the Lenders.
"Revolving Credit Commitment Termination Date" shall mean October 31,
--------------------------------------------
2003.
"Revolving Credit Lenders" shall mean (a) on the Amendment/Restatement
------------------------
Effective Date, the Lenders having Revolving Credit Commitments hereunder and
(b) thereafter, the Lenders from time to time holding Revolving Credit Loans and
Revolving Credit Commitments after giving effect to any assignments thereof
permitted by Section 12.06(b) hereof.
"Revolving Credit Loans" shall have the meaning assigned to such term
----------------------
in Section 2.01(a) hereof.
"Revolving Credit Notes" shall mean the promissory notes provided for
----------------------
by Section 2.08(a) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time. The term "Revolving Credit Notes" shall
include any Registered Notes evidencing Revolving Credit Loans executed and
delivered pursuant to Section 2.08(f) hereof.
"Security Agreement" shall mean a Security Agreement substantially in
------------------
the form of Exhibit B-1 hereto between the Borrower, the Guarantors and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"Security Documents" shall mean, collectively, the Security Agreement,
------------------
the Mortgages, the Copyright Assignments, the Trademark Assignments and all
Uniform Commercial Code financing statements required by the Security Agreement
to be filed with respect to the security interests in personal Property created
pursuant to the Security Agreement.
"Senior Subordinated Note Indenture" shall mean the Indenture entered
----------------------------------
into by the Borrower and certain Guarantors in connection with the issuance of
the Senior Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower or such Guarantors in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 9.18 hereof.
"Senior Subordinated Notes" shall mean (a) up to $150,000,000 of
-------------------------
senior subordinated notes issued by the Borrower on the Amendment/Restatement
Effective Date in a public offering or Rule 144A private placement and (b)
subject to compliance with Section 9.07(g), up to an additional $100,000,000 of
additional senior subordinated notes issued by the Borrower on substantially
identical terms under the Senior Subordinated Note Indenture (in each case
including any senior subordinated notes of the Borrower issued in exchange
therefor pursuant to the exchange offer procedure described in the Senior
Subordinated Note Indenture).
"Solvent" and "Solvency" shall mean, with respect to any Person on a
------- --------
particular date, the condition that, on such date, (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does
<PAGE>
18
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature, and
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small amount of capital.
"Specified Change of Control" shall mean a "Change of Control" as
---------------------------
defined in the Senior Subordinated Note Indenture.
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. References herein to Subsidiaries shall, unless the context
otherwise requires, in each case be deemed to include MAGIC and its
Subsidiaries. Notwithstanding the foregoing, the ventures set forth in Section
9.16(d) shall not be deemed to be Subsidiaries of the Borrower for purposes of
this Agreement.
"Subsidiary Guarantors" shall have the meaning assigned to such term
---------------------
in the recitals hereto.
"TEC" shall mean Technology Events Company, LLC.
---
"Term Loan Commitments" shall mean, collectively, the Tranche A Term
---------------------
Loan Commitments and the Tranche B Term Loan Commitments.
"Term Loans" shall mean, collectively, the Tranche A Term Loans and
----------
the Tranche B Term Loans.
"Total Debt" shall mean, as at any date, all Indebtedness (other than
----------
clauses (c) and (d) of the definition thereof) of the Company and its
Consolidated Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) on such date.
"Total Leverage Ratio" shall mean, as at any date, the ratio of (a)
--------------------
Total Debt on such date to (b) EBITDA for the most recently ended period of four
consecutive fiscal quarters of the Company on or prior to such date.
"Trademark Assignment" shall mean each Conditional Assignment of and
--------------------
Security Interest in Trademarks to be executed and delivered by certain Obligors
parties thereto, substantially in the form of Exhibit B-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"Tranche A Lenders" shall mean (a) on the Amendment/Restatement
-----------------
Effective Date, the Lenders having Tranche A Term Loan Commitments hereunder and
(b) thereafter, the Lenders from time to time holding Tranche A Term Loans and
Tranche A Term Loan Commitments after giving effect to any assignments thereof
permitted by Section 12.06(b) hereof.
"Tranche A Principal Payment Dates" shall mean the Quarterly Dates
---------------------------------
falling on or nearest to the dates specified in the table set forth in Section
3.01(b) hereof.
<PAGE>
19
"Tranche A Term Loan Commitment" shall mean, as to each Tranche A
------------------------------
Lender, the obligation of such Tranche A Lender to make a Tranche A Term Loan in
a principal amount up to but not exceeding the amount set opposite the name of
such Tranche A Lender in Annex A under the caption "Tranche A Term Loan
Commitment" or, in the case of a Person that becomes a Tranche A Lender pursuant
to an assignment permitted under Section 12.06(b) hereof, as specified in the
respective instrument of assignment pursuant to which such assignment is
effected (as the same may be reduced from time to time pursuant to Section 2.04
or 2.10 hereof). The original aggregate principal amount of the Tranche A Term
Loan Commitments is $85,000,000.
"Tranche A Term Loan Notes" shall mean the promissory notes provided
-------------------------
for by Section 2.08(b) hereof and all promissory notes delivered in substitution
or exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time. The term "Tranche A Term Loan
Notes" shall include any Registered Notes evidencing Tranche A Term Loans
executed and delivered pursuant to Section 2.08(f) hereof.
"Tranche A Term Loans" shall have the meaning assigned to such term in
--------------------
Section 2.01(b) hereof.
"Tranche B Lenders" shall mean (a) on the Amendment/Restatement
-----------------
Effective Date, the Lenders having Tranche B Term Loan Commitments hereunder and
(b) thereafter, the Lenders from time to time holding Tranche B Term Loans and
Tranche B Term Loan Commitments after giving effect to any assignments thereof
permitted by Section 12.06(b) hereof.
"Tranche B Principal Payment Dates" shall mean the Quarterly Dates
---------------------------------
falling on or nearest to the dates specified in the table set forth in Section
3.01(c) hereof.
"Tranche B Term Loan Commitment" shall mean, as to each Tranche B
------------------------------
Lender, the obligation of such Tranche B Lender to make a Tranche B Term Loan in
a principal amount up to but not exceeding the amount set opposite the name of
such Lender in Annex A under the caption "Tranche B Term Loan Commitment" or, in
the case of a Person that becomes a Tranche B Lender pursuant to an assignment
permitted under Section 12.06(b) hereof, as specified in the respective
instrument of assignment pursuant to which such assignment is effected (as the
same may be reduced from time to time pursuant to Section 2.04 or 2.10 hereof).
The original aggregate principal amount of the Tranche B Term Loan Commitments
is $125,000,000.
"Tranche B Term Loan Notes" shall mean the promissory notes provided
-------------------------
for by Section 2.08(c) hereof and all promissory notes delivered in substitution
or exchange therefor, in each case as the same shall be modified and
supplemented and in effect from time to time. The term "Tranche B Term Loan
Notes" shall include any Registered Notes evidencing Tranche B Term Loans
executed and delivered pursuant to Section 2.08(f) hereof.
"Tranche B Term Loans" shall have the meaning assigned to such term in
--------------------
Section 2.01(c) hereof.
"Type" shall have the meaning assigned to such term in Section 1.03
----
hereof.
"U.S. Person" shall mean a citizen or resident of the United States of
-----------
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America or any State thereof, or any
estate or trust that is subject to Federal income taxation regardless of the
source of its income.
<PAGE>
20
"U.S. Taxes" shall mean any present or future tax, assessment or other
----------
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof.
"Wholly Owned Subsidiary" shall mean, with respect to any Person, any
-----------------------
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
"Working Capital" shall mean the excess of Consolidated Current Assets
---------------
over Consolidated Current Liabilities.
1.02 Accounting Terms and Determinations.
-----------------------------------
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Lenders hereunder (or, if no such financial
statements have yet been delivered under Section 9.01 hereof, with those used in
the preparation of the relevant financial statements referred to in Section 8.02
hereof). All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders pursuant to Section 9.01 hereof
(or, if no such financial statements have yet been delivered under Section 9.01
hereof, with those used in the preparation of the relevant financial statements
referred to in Section 8.02 hereof) unless (i) the Borrower shall have objected
to determining such compliance on such basis at the time of delivery of such
financial statements or (ii) the Majority Lenders shall so object in writing
within 30 days after delivery of such financial statements, in either of which
events such calculations shall be made on a basis consistent with those used in
the preparation of the latest financial statements as to which such objection
shall not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 9.01 hereof, shall mean the
relevant financial statements referred to in Section 8.02 hereof).
(b) The Borrower shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 9.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 9 hereof, the Borrower will not change
the last day of its fiscal year from December 31, or the last days of the first
three fiscal quarters in each of its fiscal years from March 31, June 30 and
September 30 of each year, respectively.
1.03 Classes and Types of Loans. Loans hereunder are distinguished
--------------------------
by "Class" and by "Type". The "Class" of a Loan (or of a Commitment to make a
Loan) refers to whether such Loan is a
<PAGE>
21
Revolving Credit Loan, a Tranche A Term Loan or a Tranche B Term Loan, each of
which constitutes a Class. The "Type" of a Loan refers to whether such Loan is a
Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type. Loans may
be identified by both Class and Type.
1.04 References to Parent Guarantor and Company. If the Parent
------------------------------------------
Guarantor and the Company merge, each reference in this Agreement or in any
other Loan Document to the "Parent Guarantor", the "Company", "the Parent
Guarantor and the Company" or "the Parent Guarantor or the Company" (or any
differently-worded reference having like effect), with respect to any time after
the consummation of such merger, shall be deemed to be a reference to the
surviving entity of such merger.
Section 2. Commitments, Loans, Notes and Prepayments.
-----------------------------------------
2.01 Loans.
-----
(a) Revolving Credit Loans. Each Revolving Credit Lender severally
----------------------
agrees, on the terms and conditions of this Agreement, to make loans to the
Borrower in Dollars during the period from and including the
Amendment/Restatement Effective Date to but not including the Revolving Credit
Commitment Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Revolving Credit
Commitment of such Lender as in effect from time to time (such Loans being
herein called "Revolving Credit Loans"), provided that in no event shall the
---------------------- --------
aggregate principal amount of all Revolving Credit Loans, together with the
aggregate amount of all Letter of Credit Liabilities, exceed the aggregate
amount of the Revolving Credit Commitments as in effect from time to time.
Subject to the terms and conditions of this Agreement, during such period the
Borrower may borrow, repay and reborrow the amount of the Revolving Credit
Commitments by means of Base Rate Loans and Eurodollar Loans and may Convert
Revolving Credit Loans of one Type into Revolving Credit Loans of another Type
(as provided in Section 2.09 hereof) or Continue Revolving Credit Loans of one
Type as Revolving Credit Loans of the same Type (as provided in Section 2.09
hereof).
(b) Tranche A Term Loans. Each Tranche A Lender severally agrees, on
--------------------
the terms and conditions of this Agreement, to make a term loan to the Borrower
in Dollars on the Amendment/Restatement Effective Date in the principal amount
of the Tranche A Term Loan Commitment of such Lender. Thereafter the Borrower
may Convert Tranche A Term Loans of one Type into Tranche A Term Loans of
another Type (as provided in Section 2.09 hereof) or Continue Tranche A Term
Loans of one Type as Tranche A Term Loans of the same Type (as provided in
Section 2.09 hereof).
(c) Tranche B Term Loans. Each Tranche B Lender severally agrees, on
--------------------
the terms and conditions of this Agreement, to make a term loan to the Borrower
in Dollars on the Amendment/Restatement Effective Date in the principal amount
of the Tranche B Term Loan Commitment of such Lender. Thereafter the Borrower
may Convert Tranche B Term Loans of one Type into Tranche B Term Loans of
another Type (as provided in Section 2.09 hereof) or Continue Tranche B Term
Loans of one Type as Tranche B Term Loans of the same Type (as provided in
Section 2.09 hereof).
(d) Limit on Eurodollar Loans. No more than six separate Interest
-------------------------
Periods in respect of Eurodollar Loans of a Class from each Lender may be
outstanding at any one time. No Loans may be outstanding as Eurodollar Loans
prior to the date that is three Business Days after the Amendment/Restatement
Effective Date.
<PAGE>
22
2.02 Borrowings. The Borrower shall give the Administrative Agent
----------
notice of each borrowing hereunder as provided in Section 4.05 hereof. Not
later than 1:00 p.m. New York time on the date specified for each borrowing
hereunder, each Lender shall make available the amount of the Loan or Loans to
be made by it on such date to the Administrative Agent at the Principal Office,
in immediately available funds, for account of the Borrower. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower designated by the
Borrower and maintained with the Administrative Agent at the office of the
Administrative Agent specified in Section 12.02 hereof.
2.03 Letters of Credit. Subject to the terms and conditions of this
-----------------
Agreement, the Revolving Credit Commitments may be utilized, upon the request of
the Borrower, in addition to the Revolving Credit Loans provided for by Section
2.01(a) hereof, by the issuance by the Issuing Lender of letters of credit
(collectively, "Letters of Credit") for account of the Borrower or any of its
-----------------
Subsidiaries (as specified by the Borrower), provided that in no event shall (i)
--------
the aggregate amount of all Letter of Credit Liabilities, together with the
aggregate principal amount of the Revolving Credit Loans, exceed the aggregate
amount of the Revolving Credit Commitments as in effect from time to time, (ii)
the outstanding aggregate amount of all Letter of Credit Liabilities exceed
$3,000,000 and (iii) the expiration date of any Letter of Credit extend beyond
the earlier of five Business Days prior to the Revolving Credit Commitment
Termination Date and the date twelve months following the issuance of such
Letter of Credit. Letters of Credit issued under the Existing Credit Agreement
which are outstanding on the Amendment/Restatement Effective Date shall be
deemed to be Letters of Credit issued under this Agreement on the
Amendment/Restatement Effective Date. The following additional provisions shall
apply to Letters of Credit:
(a) The Borrower shall give the Administrative Agent at least three
Business Days' irrevocable prior notice (effective upon receipt) specifying
the Business Day (which shall be no later than 30 days preceding the
Revolving Credit Commitment Termination Date) each Letter of Credit is to
be issued and the account party or parties therefor and describing in
reasonable detail the proposed terms of such Letter of Credit (including
the beneficiary thereof) and the nature of the transactions or obligations
proposed to be supported thereby (including whether such Letter of Credit
is to be a commercial letter of credit or a standby letter of credit).
Upon receipt of any such notice, the Administrative Agent shall advise the
Issuing Lender of the contents thereof.
(b) On each day during the period commencing with the issuance by the
Issuing Lender of any Letter of Credit and until such Letter of Credit
shall have expired or been terminated, the Revolving Credit Commitment of
each Revolving Credit Lender shall be deemed to be utilized for all
purposes of this Agreement in an amount equal to such Lender's Revolving
Credit Commitment Percentage of the then undrawn face amount of such Letter
of Credit. Each Revolving Credit Lender (other than the Issuing Lender)
agrees that, upon the issuance of any Letter of Credit hereunder, it shall
automatically acquire a participation in the Issuing Lender's liability
under such Letter of Credit in an amount equal to such Lender's Revolving
Credit Commitment Percentage of such liability, and each Revolving Credit
Lender (other than the Issuing Lender) thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to the Issuing Lender to pay
and discharge when due, its Revolving Credit Commitment Percentage of the
Issuing Lender's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Lender shall
promptly notify the Borrower (through the Administrative Agent) of the
amount to be paid by the Issuing Lender as a result of
<PAGE>
23
such demand and the date on which payment is to be made by the Issuing
Lender to such beneficiary in respect of such demand. Notwithstanding the
identity of the account party of any Letter of Credit, the Borrower hereby
unconditionally agrees to pay and reimburse the Administrative Agent for
account of the Issuing Lender for the amount of each demand for payment
under such Letter of Credit that is in substantial compliance with the
provisions of such Letter of Credit at or prior to the date on which
payment is to be made by the Issuing Lender to the beneficiary thereunder,
without presentment, demand, protest or other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in paragraph
(c) of this Section 2.03, the Borrower shall advise the Administrative
Agent whether or not the Borrower intends to borrow hereunder to finance
its obligation to reimburse the Issuing Lender for the amount of the
related demand for payment and, if it does, submit a notice of such
borrowing as provided in Section 4.05 hereof.
(e) Each Revolving Credit Lender (other than the Issuing Lender)
shall pay to the Administrative Agent for account of the Issuing Lender at
the Principal Office in Dollars and in immediately available funds, the
amount of such Lender's Revolving Credit Commitment Percentage of any
payment under a Letter of Credit upon notice by the Issuing Lender (through
the Administrative Agent) to such Revolving Credit Lender requesting such
payment and specifying such amount. Each such Revolving Credit Lender's
obligation to make such payment to the Administrative Agent for account of
the Issuing Lender under this paragraph (e), and the Issuing Lender's right
to receive the same, shall be absolute and unconditional and shall not be
affected by any circumstance whatsoever, including, without limitation, the
failure of any other Revolving Credit Lender to make its payment under this
paragraph (e), the financial condition of the Borrower (or any other
account party), the existence of any Default or the termination of the
Commitments. Each such payment to the Issuing Lender shall be made without
any offset, abatement, withholding or reduction whatsoever. If any
Revolving Credit Lender shall default in its obligation to make any such
payment to the Administrative Agent for account of the Issuing Lender, for
so long as such default shall continue the Administrative Agent may at the
request of the Issuing Lender withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of such
Revolving Credit Lender the amount so in default and, to the extent so
withheld, pay the same to the Issuing Lender in satisfaction of such
defaulted obligation.
(f) Upon the making of each payment by a Revolving Credit Lender to
the Issuing Lender pursuant to paragraph (e) above in respect of any Letter
of Credit, such Lender shall, automatically and without any further action
on the part of the Administrative Agent, the Issuing Lender or such Lender,
acquire (i) a participation in an amount equal to such payment in the
Reimbursement Obligation owing to the Issuing Lender by the Borrower
hereunder and under the Letter of Credit Documents relating to such Letter
of Credit and (ii) a participation in a percentage equal to such Lender's
Revolving Credit Commitment Percentage in any interest or other amounts
payable by the Borrower hereunder and under such Letter of Credit Documents
in respect of such Reimbursement Obligation (other than the commissions,
charges, costs and expenses payable to the Issuing Lender pursuant to
paragraph (g) of this Section 2.03). Upon receipt by the Issuing Lender
from or for account of the Borrower of any payment in respect of any
Reimbursement Obligation or any such interest or other amount (including by
way of setoff or application of proceeds of any collateral security) the
Issuing Lender shall promptly pay to the Administrative Agent for account
of each Revolving Credit Lender entitled thereto, such Revolving Credit
Lender's Revolving Credit Commitment Percentage of such payment, each such
payment by the Issuing Lender to be made in the same money and funds in
which received
<PAGE>
24
by the Issuing Lender. In the event any payment received by the Issuing
Lender and so paid to the Revolving Credit Lenders hereunder is rescinded
or must otherwise be returned by the Issuing Lender, each Revolving Credit
Lender shall, upon the request of the Issuing Lender (through the
Administrative Agent), repay to the Issuing Lender (through the
Administrative Agent) the amount of such payment paid to such Lender, with
interest at the rate specified in paragraph (j) of this Section 2.03.
(g) The Borrower shall pay to the Administrative Agent for account of
each Revolving Credit Lender (ratably in accordance with their respective
Revolving Credit Commitment Percentages) a letter of credit fee on the
daily average undrawn face amount of such Letter of Credit at a rate per
annum equal to the Applicable Margin for Revolving Credit Loans that are
Eurodollar Loans for the period from and including the date of issuance of
such Letter of Credit (i) in the case of a Letter of Credit that expires in
accordance with its terms, to and including such expiration date and (ii)
in the case of a Letter of Credit that is drawn in full or is otherwise
terminated other than on the stated expiration date of such Letter of
Credit, to but excluding the date such Letter of Credit is drawn in full or
is terminated (such fee to be non-refundable, to be paid in arrears on each
Quarterly Date and on the Revolving Credit Commitment Termination Date and
to be calculated for any day after giving effect to any payments made under
such Letter of Credit on such day). In addition, the Borrower shall pay to
the Administrative Agent for account of the Issuing Lender a fronting fee
in respect of each Letter of Credit in an amount equal to 1/4 of 1% per
annum of the daily average undrawn face amount of such Letter of Credit for
the period from and including the date of issuance of such Letter of Credit
(i) in the case of a Letter of Credit that expires in accordance with its
terms, to and including such expiration date and (ii) in the case of a
Letter of Credit that is drawn in full or is otherwise terminated other
than on the stated expiration date of such Letter of Credit, to but
excluding the date such Letter of Credit is drawn in full or is terminated
(such fee to be non-refundable, to be paid in arrears on each Quarterly
Date and on the Revolving Credit Commitment Termination Date and to be
calculated for any day after giving effect to any payments made under such
Letter of Credit on such day) plus all commissions, charges, costs and
expenses in the amounts customarily charged by the Issuing Lender from time
to time in like circumstances with respect to the issuance of each Letter
of Credit and drawings and other transactions relating thereto.
(h) Promptly following the end of each calendar quarter, the Issuing
Lender shall deliver (through the Administrative Agent) to each Revolving
Credit Lender and the Borrower a notice describing the aggregate amount of
all Letters of Credit outstanding at the end of such quarter. Upon the
request of any Revolving Credit Lender from time to time, the Issuing
Lender shall deliver any other information reasonably requested by such
Lender with respect to each Letter of Credit then outstanding.
(i) The issuance by the Issuing Lender of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 7
hereof, be subject to the conditions precedent that (i) such Letter of
Credit shall be in such form, contain such terms and support such
transactions as shall be satisfactory to the Issuing Lender consistent with
its then current practices and procedures with respect to letters of credit
of the same type and (ii) the Borrower shall have executed and delivered
such applications, agreements and other instruments relating to such Letter
of Credit as the Issuing Lender shall have reasonably requested consistent
with its then current practices and procedures with respect to letters of
credit of the same type, provided that in the event of any conflict between
--------
any such application, agreement or other instrument and the provisions of
this Agreement or any Security Document, the provisions of this Agreement
and the Security Documents shall control.
<PAGE>
25
(j) To the extent that any Lender shall fail to pay any amount
required to be paid pursuant to paragraph (e) or (f) of this Section 2.03
on the due date therefor, such Lender shall pay interest to the Issuing
Lender (through the Administrative Agent) on such amount from and including
such due date to but excluding the date such payment is made at a rate per
annum equal to the Federal Funds Rate, provided that if such Lender shall
--------
fail to make such payment to the Issuing Lender within three Business Days
of such due date, then, retroactively to the due date, such Lender shall be
obligated to pay interest on such amount at the Post-Default Rate.
(k) The issuance by the Issuing Lender of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.03 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (i) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (ii) each
Revolving Credit Lender shall have consented thereto.
The Borrower hereby indemnifies and holds harmless each Revolving Credit Lender
and the Administrative Agent from and against any and all claims and damages,
losses, liabilities, costs or expenses that such Lender or the Administrative
Agent may incur (or that may be claimed against such Lender or the
Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Lender under any Letter of Credit; provided that the Borrower shall
--------
not be required to indemnify any Lender or the Administrative Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (x) the willful misconduct or gross negligence of the
Issuing Lender in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit or (y) in the case of
the Issuing Lender, such Lender's failure to pay under any Letter of Credit
after the presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit unless it is prohibited from doing so by an
injunction or other order of any court. Nothing in this Section 2.03 is
intended to limit the other obligations of the Borrower, any Lender or the
Administrative Agent under this Agreement.
2.04 Changes of Commitments. The Borrower shall have the right at
----------------------
any time or from time to time (i) so long as no Revolving Credit Loans or
Letter of Credit Liabilities are outstanding, to terminate the Revolving Credit
Commitments and (ii) to reduce the aggregate unused amount of the Revolving
Credit Commitments (for which purpose use of the Revolving Credit Commitments
shall be deemed to include the aggregate amount of Letter of Credit
Liabilities); provided that (x) the Borrower shall give notice of each such
--------
termination or reduction as provided in Section 4.05 hereof and (y) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000 (or a
larger multiple of $1,000,000). The Commitments once terminated or reduced may
not be reinstated.
2.05 Commitment Fee. The Borrower shall pay to the Administrative
--------------
Agent for the account of each Lender a commitment fee on the daily average
unused amount of such Lender's Revolving Credit Commitment (for which purpose
the aggregate amount of any Letter of Credit Liabilities shall be deemed to be a
pro rata (based on the Revolving Credit Commitments) use of each Lender's
- --- ----
Revolving Credit Commitment) for the period from and including the
Amendment/Restatement Effective Date to but not including the earlier of the
date such Revolving Credit Commitment is terminated and the Revolving Credit
Commitment Termination Date, at a rate per annum equal to (a) 1/2 of 1%, at any
time when the Applicable Margin in respect of Eurodollar Loans that are
Revolving Credit Loans is 1.75% or higher or (b) 3/8 of 1%, at any other time.
Accrued commitment fees shall be payable on each Quarterly Date and on the
earlier of the date the relevant Commitments are terminated and the Revolving
Credit Commitment Termination Date.
<PAGE>
26
2.06 Lending Offices. The Loans of each Type made by each Lender
---------------
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.07 Several Obligations; Remedies Independent. The failure of any
-----------------------------------------
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender, and
(except as otherwise provided in Section 4.06 hereof) no Lender shall have any
obligation to the Administrative Agent or any other Lender for the failure by
such Lender to make any Loan required to be made by such Lender. The amounts
payable by the Borrower at any time hereunder and under any Notes to each Lender
shall be a separate and independent debt and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and any Notes, and
it shall not be necessary for any other Lender or the Administrative Agent to
consent to, or be joined as an additional party in, any proceedings for such
purposes.
2.08 Evidence of Loans; Notes.
------------------------
(a) The Borrower agrees that, upon the request to the Administrative
Agent by any Revolving Credit Lender made on or prior to the
Amendment/Restatement Effective Date or in connection with any assignment
pursuant to Section 12.06 hereof, in order to evidence such Lender's Revolving
Credit Loans, the Borrower will execute and deliver to such Lender a single
promissory note of the Borrower substantially in the form of Exhibit A-1 hereto,
dated the Amendment/Restatement Effective Date, payable to such Lender in a
principal amount equal to the amount of its Revolving Credit Commitment as
originally in effect and otherwise duly completed.
(b) The Borrower agrees that, upon the request to the Administrative
Agent by any Tranche A Lender made on or prior to the Amendment/Restatement
Effective Date or in connection with any assignment pursuant to Section 12.06
hereof, in order to evidence such Lender's Tranche A Term Loans, the Borrower
will execute and deliver to such Lender a single promissory note of the Borrower
substantially in the form of Exhibit A-2 hereto, dated the Amendment/Restatement
Effective Date, payable to such Lender in a principal amount equal to the amount
of its Tranche A Term Loan Commitment as originally in effect and otherwise duly
completed.
(c) The Borrower agrees that, upon the request to the Administrative
Agent by any Tranche B Lender made on or prior to the Amendment/Restatement
Effective Date or in connection with any assignment pursuant to Section 12.06
hereof, in order to evidence such Lender's Tranche B Term Loans, the Borrower
will execute and deliver to such Lender a single promissory note of the Borrower
substantially in the form of Exhibit A-3 hereto, dated the Amendment/Restatement
Effective Date, payable to such Lender in a principal amount equal to the amount
of its Tranche B Term Loan Commitment as originally in effect and otherwise duly
completed.
(d) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of each Class made by such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement. The Administrative Agent shall record
in the Register, with separate subaccounts therein for each Lender, (i) the
amount of each Loan of each Class made hereunder, the Type thereof, and, in the
case of Eurodollar Loans, each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) both the amount of any
payment received by the Administrative Agent hereunder from the Borrower and
each Lender's share thereof, if any. The entries made in the Register and the
accounts of each Lender maintained pursuant to this Section 2.08(d)
<PAGE>
27
shall, to the extent permitted by applicable law, be prima facie evidence of the
----- -----
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
- --------
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) any Loan of any Class made to the Borrower by such Lender in
accordance with the terms of this Agreement.
(e) No Lender shall be entitled to have its Notes substituted or
exchanged for any reason, or subdivided for promissory notes of lesser
denominations, except in connection with a permitted assignment of all or any
portion of such Lender's relevant Commitment, Loans and Notes pursuant to
Section 12.06 hereof and except as provided in clause (f) below (and, if
requested by any Lender, the Borrower agrees to so exchange any Note).
(f) Notwithstanding the foregoing, any Lender that is not a U.S.
Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and that has made a written request to the Borrower (through the
Administrative Agent) for a promissory note and any direct or indirect assignee
of such Lender (such Lender and any such assignee, a "Qualified Foreign Lender")
------------------------
shall receive a promissory note in registered form to evidence its Loans (i.e.
containing the optional registered note language as indicated in Exhibits A-1,
A-2 or A-3 hereto, as the case may be) (herein, a "Registered Note"), dated the
---------------
Amendment/Restatement Effective Date, payable to such Lender or registered
assigns and otherwise duly completed. Once issued, Registered Notes (i) shall
be deemed to and shall be "Notes" and "Tranche A Term Notes," "Tranche B Term
Notes" or "Revolving Credit Notes," as the case may be, for all purposes under
this Agreement, the Security Documents and the other Loan Documents, (ii) may
not be exchanged for Revolving Credit Notes, Tranche A Term Notes or Tranche B
Term Notes, notwithstanding anything to the contrary in this Agreement, and
(iii) shall at all times thereafter be Registered Notes, including, without
limitation, following any transfer or assignment thereof.
(g) Each Lender that is a "Lender" under the Existing Credit
Agreement shall return to the Borrower for cancellation any notes held by it
thereunder promptly after the Amendment/Restatement Effective Date.
2.09 Optional Prepayments and Conversions or Continuations of Loans.
--------------------------------------------------------------
Subject to Section 4.04 hereof, the Borrower shall have the right to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type, at any time or from time to time,
provided that: (a) the Borrower shall give the Administrative Agent notice of
- --------
each such prepayment, Conversion or Continuation as provided in Section 4.05
hereof (and, upon the date specified in any such notice of prepayment, the
amount to be prepaid shall become due and payable hereunder); (b) Eurodollar
Loans may be prepaid or Converted only on the last day of an Interest Period for
such Loans; (c) prepayments of the Term Loans shall be applied ratably to the
Tranche A Term Loans and the Tranche B Term Loans and, in the case of each such
Class, to the installments of the Term Loans in direct order of their scheduled
maturities; and (d) any Conversion or Continuation of Eurodollar Loans shall be
subject to the provisions of Section 2.01(d) hereof. Notwithstanding the
foregoing, and without limiting the rights and remedies of the Lenders under
Section 10 hereof, in the event that any Event of Default shall have occurred
and be continuing, the Administrative Agent may (and at the request of the
Majority Lenders shall) suspend the right of the Borrower to Convert any Loan
into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in which
event all Loans shall be Converted (on the last day(s) of the respective
Interest Periods therefor) or Continued, as the case may be, as Base Rate Loans.
<PAGE>
28
2.10 Mandatory Prepayments.
---------------------
(a) Casualty Events. Upon the first anniversary of the receipt by
---------------
the Borrower or any of its Subsidiaries of the proceeds of insurance,
condemnation award or other compensation in respect of any Casualty Event
affecting any Property of the Borrower or any of its Subsidiaries (or upon such
earlier date as the Borrower or such Subsidiary, as the case may be, shall have
determined not to repair or replace the Property affected by such Casualty
Event), the Borrower shall prepay the Term Loans, and the Term Loan Commitments
shall be automatically reduced in an aggregate amount, if any, equal to 100% of
the Net Available Proceeds of such Casualty Event not theretofore applied to the
repair or replacement of such Property, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in paragraph (f)
of this Section 2.10. Nothing in this paragraph (a) shall be deemed to limit
any obligation of the Borrower or any of its Subsidiaries pursuant to any of the
Security Documents to remit to a collateral or similar account (including,
without limitation, the Collateral Account) maintained by the Administrative
Agent pursuant to any of the Security Documents the proceeds of insurance,
condemnation award or other compensation received in respect of any Casualty
Event.
(b) Debt Issuance. Upon any Debt Issuance, the Borrower shall prepay
-------------
the Term Loans in an amount equal to 100% of the Net Available Proceeds thereof,
with such prepayment to be made on the date of receipt of any such Net Available
Proceeds.
(c) Equity Issuance. Upon any Equity Issuance, the Borrower shall
---------------
prepay the Term Loans in an aggregate amount equal to 50% of the Net Available
Proceeds thereof, such prepayment to be effected in each case in the manner and
to the extent specified in paragraph (f) of this Section 2.10.
(d) Excess Cash Flow. Not later than the 30 days after the receipt
----------------
by the Administrative Agent of the annual audited consolidated and consolidating
financial statements of the Company and its Subsidiaries in accordance with
Section 9.01(b) hereof (or, if such consolidated and consolidating financial
statements are not received by the last day on which they are required to be
delivered, not later than 30 days after the last day on which such financial
statements are required by said Section 9.01(b) to be so delivered) in respect
of each fiscal year of the Company ending on or after December 31, 1999, the
Borrower shall prepay the Term Loans in an aggregate amount equal to the excess
of (A) 50% of Excess Cash Flow for such fiscal year over (B) the aggregate
amount of prepayments of Term Loans made during such fiscal year pursuant to
Section 2.09 hereof, such prepayment to be effected in each case in the manner
and to the extent specified in paragraph (f) of this Section 2.10.
(e) Sale of Assets. Without limiting the obligation of the Borrower
--------------
to obtain the consent of the Majority Lenders pursuant to Section 9.05 hereof to
any Disposition not otherwise permitted hereunder, in the event that the Net
Available Proceeds of any Disposition (herein, the "Current Disposition"), and
-------------------
of all prior Dispositions as to which a prepayment has not yet been made under
this Section 2.10(e), but excluding the amount of any Reinvestable Proceeds (as
defined below), shall exceed $1,000,000 then, no later than five Business Days
after the occurrence of the Current Disposition, the Borrower will deliver to
the Lenders a statement, certified by a Responsible Officer of the Borrower, in
form and detail satisfactory to the Administrative Agent, of the amount of the
Net Available Proceeds of the Current Disposition and of all such prior
Dispositions and will prepay the Term Loans in an aggregate amount equal to 100%
of the Net Available Proceeds of the Current Disposition and such prior
Dispositions, but excluding the amount of any Reinvestable Proceeds, such
prepayment to be effected in each case in the manner and to the extent specified
in paragraph (f) of this Section 2.10. In the event that the Borrower
determines that it plans to use a portion of the Net Available Proceeds of any
Disposition (the "Reinvestable Proceeds" of such Disposition) to repair or
---------------------
replace any of its Properties, it may so use
<PAGE>
29
such portion within 270 days of such Disposition; provided that (i) if it fails
--------
so to use such portion, such portion shall cease to be Reinvestable Proceeds on
such 270th day and shall be deemed to be Net Available Proceeds of a Disposition
that has occurred on such day and (ii) if after giving effect to such
determination the then aggregate amount of Reinvestable Proceeds that have not
been used to so repair or replace Properties shall be in excess of $10,000,000,
such aggregate amount shall be promptly deposited in a cash collateral account
established at Chase to be held as collateral in favor of the Administrative
Agent for the benefit of the Lenders on terms reasonably satisfactory to the
Administrative Agent and shall remain on deposit in such cash collateral account
until such aggregate amount (or, with respect to any portion thereof, such
portion) shall be used to so repair or replace Properties or as provided in
clause (i) of this Section 2.10(e).
(f) Application. Prepayments described in the above paragraphs of
-----------
this Section 2.10 (each, a "Reduction") shall be effected as follows: (i) the
---------
Tranche A Amount (as defined below) of such Reduction shall be applied to the
prepayment of installments of the Tranche A Term Loans then outstanding pro rata
--- ----
in accordance with the respective amounts of such installments and (ii) the
Tranche B Amount (as defined below) of such Reduction shall be applied to the
prepayment of the installments of the Tranche B Term Loans then outstanding pro
---
rata in accordance with the respective amounts of such installments. For the
- ----
purposes of this Section 2.10(f), with respect to any Reduction, (A) "Tranche A
---------
Amount" shall mean the amount of such Reduction minus the Tranche B Amount and
- ------ -----
(B) "Tranche B Amount" shall mean the product of the amount of such Reduction
----------------
multiplied by a fraction the numerator of which is the aggregate principal
amount of the Tranche B Term Loans then outstanding and the denominator of which
is the aggregate principal amount of the Term Loans then outstanding; provided
--------
that, so long as and to the extent that any Tranche A Term Loans are
outstanding, if any Tranche B Lender so advises the Administrative Agent on or
before the date of such Reduction, such Lender's pro rata portion of the Tranche
--- ----
B Amount for such Reduction shall be zero.
(g) Payments in Connection With MAGIC Transaction. As soon as
---------------------------------------------
practicable after the Amendment/Restatement Effective Date, the Borrower shall
reduce any outstanding Revolving Credit Loans (but not the Revolving Credit
Commitments) by an amount equal to the cash component of the working capital
acquired pursuant to the MAGIC Transaction (the "Acquired Working Capital").
------------------------
Section 3. Payments of Principal and Interest.
----------------------------------
3.01 Repayment of Loans.
------------------
(a) The Borrower hereby promises to pay to the Administrative Agent
for account of each Lender the entire outstanding principal amount of such
Lender's Revolving Credit Loans, and each Revolving Credit Loan shall mature, on
the Revolving Credit Commitment Termination Date. In addition, if at any time
the aggregate principal amount of the Revolving Credit Loans, together with the
aggregate amount of all Letter of Credit Liabilities, shall exceed the Revolving
Credit Commitments, the Borrower shall, first, pay Revolving Credit Loans and,
second, provide cover for Letter of Credit Liabilities, in an aggregate amount
equal to such excess. In the event that the Borrower shall be required pursuant
to this Section 3.01(a) to provide cover for Letter of Credit Liabilities, the
Borrower shall effect the same by paying to the Administrative Agent immediately
available funds in an amount equal to the required amount, which funds shall be
retained by the Administrative Agent in the Collateral Account (as provided
therein as collateral security in the first instance for the Letter of Credit
Liabilities) until such time as the Letters of Credit shall have been terminated
and all of the Letter of Credit Liabilities paid in full.
<PAGE>
30
(b) The Borrower hereby promises to pay to the Administrative Agent
for account of the Tranche A Lenders the aggregate principal amount of the
Tranche A Term Loans in quarterly installments payable on the Tranche A
Principal Payment Dates as follows:
<TABLE>
<CAPTION>
Principal Payment Date
Falling on or Nearest to: Amount of Installment:
------------------------- ----------------------
<S> <C>
September 30, 1998 $ 625,000
December 31, 1998 $ 625,000
March 31, 1999 $ 625,000
June 30, 1999 $ 625,000
September 30, 1999 $ 2,500,000
December 31, 1999 $ 2,500,000
March 31, 2000 $ 2,500,000
June 30, 2000 $ 2,500,000
September 30, 2000 $ 3,750,000
December 31, 2000 $ 3,750,000
March 31, 2001 $ 3,750,000
June 30, 2001 $ 3,750,000
September 30, 2001 $ 4,250,000
December 31, 2001 $ 4,250,000
March 31, 2002 $ 4,250,000
June 30, 2002 $ 4,250,000
September 30, 2002 $ 5,000,000
December 31, 2002 $ 5,000,000
March 31, 2003 $ 5,000,000
June 30, 2003 $ 5,000,000
September 30, 2003 $10,250,000
October 31, 2003 $10,250,000
</TABLE>
(c) The Borrower hereby promises to pay to the Administrative Agent
for account of the Tranche B Lenders the aggregate principal amount of the
Tranche B Term Loans in quarterly installments payable on the Tranche B
Principal Payment Dates as follows:
<TABLE>
<CAPTION>
Principal Payment Date
Falling on or Nearest to: Amount of Installment:
------------------------- ----------------------
<S> <C>
September 30, 1998 $ 125,000
December 31, 1998 $ 125,000
March 31, 1999 $ 125,000
June 30, 1999 $ 125,000
September 30, 1999 $ 250,000
December 31, 1999 $ 250,000
March 31, 2000 $ 250,000
June 30, 2000 $ 250,000
September 30, 2000 $ 250,000
December 31, 2000 $ 250,000
March 31, 2001 $ 250,000
June 30, 2001 $ 250,000
September 30, 2001 $ 250,000
December 31, 2001 $ 250,000
</TABLE>
<PAGE>
31
<TABLE>
<S> <C>
March 31, 2002 $ 250,000
June 30, 2002 $ 250,000
September 30, 2002 $ 250,000
December 31, 2002 $ 250,000
March 31, 2003 $ 250,000
June 30, 2003 $ 250,000
September 30, 2003 $ 250,000
December 31, 2003 $ 250,000
March 31, 2004 $ 250,000
June 30, 2004 $ 250,000
September 30, 2004 $29,875,000
December 31, 2004 $29,875,000
March 31, 2005 $29,875,000
April 30, 2005 $29,875,000
</TABLE>
3.02 Interest. The Borrower hereby promises to pay to the
--------
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) plus the Applicable Margin and
----
(b) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period plus the Applicable Margin.
----
Notwithstanding the foregoing, the Borrower hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable Post-
Default Rate on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount payable by
the Borrower hereunder or under any Notes held by such Lender to or for account
of such Lender, that shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Accrued interest on each Loan shall be payable (i) in the case of
a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of a
Eurodollar Loan, on the last day of each Interest Period therefor and, if such
Interest Period is longer than three months, at three-month intervals following
the first day of such Interest Period, and (iii) in the case of any Eurodollar
Loan, upon the payment or prepayment thereof or the Conversion of such Loan to a
Loan of another Type (but only on the principal amount so paid, prepaid or
Converted), except that interest payable at the Post-Default Rate shall be
payable from time to time on demand. Promptly after the determination of any
interest rate provided for herein or any change therein, the Administrative
Agent shall give notice thereof to the Lenders to which such interest is payable
and to the Borrower.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
------------------------------------------------
4.01 Payments.
--------
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made by
the Borrower under this Agreement and any Notes, and, except to the extent
otherwise provided therein, all payments to be made by the Obligors
<PAGE>
32
under any other Loan Document, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at the Principal Office, not later than 1:00 p.m. New York
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).
(b) Any Lender for whose account any such payment is to be made may
(but shall not be obligated to) debit the amount of any such payment that is not
made by such time as required hereunder to any ordinary deposit account of the
Borrower with such Lender (with notice to the Borrower and the Administrative
Agent), provided that such Lender's failure to give such notice shall not affect
--------
the validity thereof.
(c) The Borrower shall, at the time of making each payment under this
Agreement or any Note for account of any Lender, specify to the Administrative
Agent (which shall so notify the intended recipient(s) thereof) the Loans,
Reimbursement Obligations or other amounts payable by the Borrower hereunder to
which such payment is to be applied (and in the event that the Borrower fails to
so specify, or if such payment is equal to the then aggregate amounts due and
owing hereunder, the Administrative Agent may distribute such payment to the
Lenders for application in such ratable manner as it, subject to Section 4.02
hereof, may reasonably determine to be appropriate).
(d) Except to the extent otherwise provided in the last sentence of
Section 2.03(e) hereof, each payment received by the Administrative Agent under
this Agreement or any Note for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(e) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (a) each borrowing of Loans of a particular Class from the Lenders
under Section 2.01 hereof shall be made from the relevant Lenders, each payment
of commitment fee under Section 2.05 hereof in respect of Commitments of a
particular Class shall be made for account of the relevant Lenders, and each
termination or reduction of the amount of the Commitments of a particular Class
under Section 2.04 hereof shall be applied to the respective Commitments of such
Class of the relevant Lenders, pro rata according to the amounts of their
--- ----
respective Commitments of such Class; (b) except as otherwise provided in
Section 5.04 hereof, Eurodollar Loans of any Class having the same Interest
Period shall be allocated pro rata among the relevant Lenders according to the
--- ----
amounts of their respective Revolving Credit and Term Loan Commitments (in the
case of the making of Loans) or their respective Revolving Credit and Term Loans
(in the case of Conversions and Continuations of Loans); (c) each payment or
prepayment of principal of Revolving Credit Loans or Term Loans by the Borrower
shall be made for account of the relevant Lenders pro rata in accordance with
--- ----
the respective unpaid principal amounts of the Loans of such Class held by them;
and (d) each payment of interest on Revolving Credit Loans and Term Loans by the
Borrower shall be made for account of the relevant Lenders pro rata in
--- ----
accordance with the amounts of interest on such Loans then due and payable to
the respective Lenders.
4.03 Computations. Interest on Eurodollar Loans and commitment fee
------------
and letter of credit fees shall be computed on the basis of a year of 360 days
and actual days elapsed (including the first day but, except as otherwise
provided in Section 2.03(g) hereof, excluding the last day) occurring in the
period for which payable and interest on Base Rate Loans and Reimbursement
Obligations shall be
<PAGE>
33
computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Notwithstanding the foregoing, for
each day that the Base Rate is calculated by reference to the Federal Funds
Rate, interest on Base Rate Loans and Reimbursement Obligations shall be
computed on the basis of a year of 360 days and actual days elapsed.
4.04 Minimum Amounts. Except for mandatory prepayments made pursuant
---------------
to Section 2.10 hereof and Conversions or prepayments made pursuant to Section
5.04 hereof, (a) in the case of Base Rate Loans, each borrowing, Conversion and
partial prepayment of principal shall be in an aggregate amount at least equal
to $500,000 or a larger multiple of $100,000 and (b) in the case of Eurodollar
Loans, each borrowing shall be in an aggregate amount at least equal to
$1,000,000 or a larger multiple of $500,000 and each Conversion or partial
prepayment shall be in an aggregate amount at least equal to $1,000,000 or a
larger multiple of $500,000 (borrowings, Conversions or prepayments of or into
Loans of different Types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each Type or
Interest Period), and, if any Eurodollar Loans would otherwise be in a lesser
principal amount for any period, such Loans shall be Base Rate Loans during such
period.
4.05 Certain Notices. Notices by the Borrower to the Administrative
---------------
Agent of terminations or reductions of the Commitments, of borrowings,
Conversions, Continuations and optional prepayments of Loans and of Classes of
Loans, of Types of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
not later than 11:00 a.m. New York time on the number of Business Days prior to
the date of the relevant termination, reduction, borrowing, Conversion,
Continuation or prepayment or the first day of such Interest Period specified
below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
----- ----------
<S> <C>
Termination or reduction of Commitments 3
Borrowing or prepayment of, or Conversions into,
Base Rate Loans 1
Borrowing or prepayment of, Conversions into, Continuations
as, or duration of Interest Period for, Eurodollar Loans 3
</TABLE>
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify (i) the
Class of Loans to be borrowed, Converted, Continued or prepaid, (ii) the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and (iii) the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice. In the event that the
Borrower fails to select the Type of Loan, or the duration of any Interest
Period for any Eurodollar Loan, within the time period and otherwise as provided
in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.
<PAGE>
34
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Lender or the Borrower (the
"Payor") prior to the date on which the Payor is to make payment to the
-----
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Borrower) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
----------------
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
------------
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
--------
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be
made by the Borrower to the Lenders, the Borrower and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay interest
in respect of the Required Payment at the Post-Default Rate (without
duplication of the obligation of the Borrower under Section 3.02 hereof to
pay interest on the Required Payment at the Post-Default Rate), it being
understood that the return by the recipient(s) of the Required Payment to
the Administrative Agent shall not limit such obligation of the Borrower
under said Section 3.02 to pay interest at the Post-Default Rate in respect
of the Required Payment and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Lenders to the Borrower, the Payor and the Borrower shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment pursuant to whichever of the rates
specified in Section 3.02 hereof is applicable to the Type of such Loan, it
being understood that the return by the Borrower of the Required Payment to
the Administrative Agent shall not limit any claim the Borrower may have
against the Payor in respect of such Required Payment.
4.07 Sharing of Payments, Etc.
-------------------------
(a) Each Obligor agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be entitled, at its option (to the fullest extent
permitted by law), to set off and apply any deposit (general or special, time or
demand, provisional or final), or other indebtedness, held by it for the credit
or account of such Obligor at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans,
Reimbursement Obligations or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such deposit or other
indebtedness are then due to such Obligor), in which case it shall promptly
notify such Obligor and the Administrative Agent thereof, provided that such
--------
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan of any Class or Letter of Credit Liability
owing to it or payment of any other amount under
<PAGE>
35
this Agreement or any other Loan Document through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise (other than
from the Administrative Agent as provided herein), and, as a result of such
payment, such Lender shall have received a greater percentage of the principal
of or interest on the Loans of such Class or Letter of Credit Liabilities or
such other amounts then due hereunder or thereunder by such Obligor to such
Lender than the percentage received by any other Lender, it shall promptly
purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans of such Class or Letter
of Credit Liabilities or such other amounts, respectively, owing to such other
Lenders (or in interest due thereon, as the case may be) in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid principal of and/or
--- ----
interest on the Loans of such Class or Letter of Credit Liabilities or such
other amounts, respectively, owing to each of the Lenders. To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(c) Each Obligor agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
----------------------
5.01 Additional Costs.
----------------
(a) The Borrower shall pay directly to each Lender from time to time
such amounts as such Lender may determine to be necessary to compensate such
Lender for any costs that such Lender determines are attributable to its making
or maintaining of any Eurodollar Loans or its obligation to make any Eurodollar
Loans hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
----------
Costs"), resulting from any Regulatory Change that:
- -----
(i) shall subject any Lender (or its Applicable Lending Office
for any of such Loans) to any tax, duty or other charge in respect of such
Loans or its Notes or changes the basis of taxation of any amounts payable
to such Lender under this Agreement or its Notes in respect of any of such
Loans (excluding changes in the rate of tax on the overall net income of
such Lender or of such Applicable Lending Office by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
<PAGE>
36
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender (including,
without limitation, the Commitments of such Lender hereunder); or
(iii) imposes any other condition affecting this Agreement or
its Notes (or any of such extensions of credit or liabilities) or its
Commitments.
If any Lender requests compensation from the Borrower under this Section
5.01(a), the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender thereafter to make
or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar
Loans, until the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 5.04 hereof shall be
applicable), provided that such suspension shall not affect the right of such
--------
Lender to receive the compensation so requested.
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Borrower shall pay directly to each
Lender from time to time on request such amounts as such Lender may determine to
be necessary to compensate such Lender (or, without duplication, the bank
holding company of which such Lender is a Subsidiary) for any costs that it
determines are attributable to the maintenance by such Lender (or any Applicable
Lending Office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any Regulatory Change
or (ii) implementing any risk-based capital guideline or other requirement
(whether or not having the force of law and whether or not the failure to comply
therewith would be unlawful) hereafter issued by any government or governmental
or supervisory authority implementing at the national level the Basle Accord, of
capital in respect of its Commitments or Loans (such compensation to include,
without limitation, an amount equal to any reduction of the rate of return on
assets or equity of such Lender (or any Applicable Lending Office or such bank
holding company) to a level below that which such Lender (or any Applicable
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request).
(c) Each Lender shall notify the Borrower of any event occurring
after the date hereof entitling such Lender to compensation under paragraph (a)
or (b) of this Section 5.01 as promptly as practicable, but in any event within
45 days, after such Lender obtains actual knowledge thereof; provided that (i)
--------
if any Lender fails to give such notice within 45 days after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any costs resulting from
such event, only be entitled to payment under this Section 5.01 for costs
incurred from and after the date 45 days prior to the date that such Lender does
give such notice and (ii) each Lender will designate a different Applicable
Lending Office for the Loans of such Lender affected by such event if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, be disadvantageous to such
Lender, except that such Lender shall have no obligation to designate an
Applicable Lending Office located in the United States of America. Each Lender
will furnish to the Borrower a certificate setting forth the basis and amount of
each request by such Lender for compensation under paragraph (a) or (b) of this
Section 5.01. Determinations and allocations by any Lender for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) of
this Section 5.01, or of the effect of capital maintained pursuant to paragraph
(b) of this Section 5.01, on its costs or rate of return of maintaining Loans or
its obligation to make Loans, or on amounts receivable by it in respect of
Loans, and of the amounts required to compensate such Lender under this Section
5.01, shall be conclusive, provided that such determinations and allocations are
--------
made on a reasonable basis.
<PAGE>
37
5.02 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if, on or prior to the determination of any Eurodollar Base
Rate for any Interest Period:
(a) the Administrative Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) if the related Loans are Revolving Credit Loans, the Majority
Revolving Credit Lenders or, if the related Loans are Term Loans, the
Majority Term Lenders determine, which determination shall be conclusive,
and notify the Administrative Agent that the relevant rates of interest
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Eurodollar Loans
for such Interest Period is to be determined are not likely adequately to
cover the cost to such Lenders of making or maintaining Eurodollar Loans
for such Interest Period;
then the Administrative Agent shall give the Borrower and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof.
5.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
the Borrower thereof (with a copy to the Administrative Agent) and such Lender's
obligation to make or Continue, or to Convert Loans of any other Type into,
Eurodollar Loans shall be suspended until such time as such Lender may again
make and maintain Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 Treatment of Affected Loans. If the obligation of any Lender to
---------------------------
make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof,
such Lender's Eurodollar Loans shall be automatically Converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a Conversion resulting from a circumstance described
in Section 5.03 hereof, on such earlier date as such Lender may specify to the
Borrower with a copy to the Administrative Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 5.01 or 5.03 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such
<PAGE>
38
Lender that would otherwise be Converted into Eurodollar Loans shall remain
as Base Rate Loans.
If such Lender gives notice to the Borrower with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans of the same
Class made by other Lenders are outstanding, such Lender's Base Rate Loans of
such Class shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the
extent necessary so that, after giving effect thereto, all Base Rate and
Eurodollar Loans of such Class are allocated among the Lenders ratably (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments of such Class.
5.05 Compensation. The Borrower shall pay to the Administrative
------------
Agent for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of a
Eurodollar Loan made by such Lender for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10 hereof) on
a date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a Eurodollar Loan from such
Lender on the date for such borrowing specified in the relevant notice of
borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender).
5.06 Additional Costs in Respect of Letters of Credit. Without
------------------------------------------------
limiting the obligations of the Borrower under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Lender hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from
<PAGE>
39
such event), then, not later than five Business Days following demand by such
Lender or Lenders (through the Administrative Agent), the Borrower shall pay to
the Administrative Agent for account of such Lender or Lenders, from time to
time as specified by such Lender or Lenders (through the Administrative Agent),
such additional amounts as shall be sufficient to compensate such Lender or
Lenders (through the Administrative Agent) for such increased costs or
reductions in amount. A statement as to such increased costs or reductions in
amount incurred by any such Lender or Lenders, submitted by such Lender or
Lenders to the Borrower shall be conclusive in the absence of manifest error as
to the amount thereof.
5.07 U.S. Taxes.
----------
(a) The Borrower agrees to pay to each Lender that is not a U.S.
Person such additional amounts as are necessary in order that the net payment of
any amount due to such non-U.S. Person hereunder after deduction for or
withholding in respect of any U.S. Taxes imposed with respect to such payment
(or in lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), will
not be less than the amount stated herein to be then due and payable, provided
--------
that the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to any Lender hereunder (other than to any
Qualified Foreign Lender) unless such Lender is, on the
Amendment/Restatement Effective Date (or on the date it becomes a Lender
hereunder as provided in Section 12.06(b) hereof) and on the date of any
change in the Applicable Lending Office of such Lender, either entitled to
submit a Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all interest to be received by it hereunder
in respect of the Loans) or Form 4224 (relating to all interest to be
received by such Lender hereunder in respect of the Loans),
(ii) to any payment to any Qualified Foreign Lender hereunder in
respect of its Loan, unless such Qualified Foreign Lender (or, if such
Qualified Foreign Lender is not the beneficial owner of such Loan, the
beneficial owner thereof) is, on the Amendment/Restatement Effective Date
(or on the date such Qualified Foreign Lender becomes a Lender as provided
in Section 12.06(b) hereof) and on the date of any change in the Applicable
Lending Office of such Lender, entitled to submit a Form W-8, together with
an annual certificate stating that such Qualified Foreign Lender (or
beneficial owner, as the case may be) is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code, and such Qualified Foreign Lender (or
beneficial owner, as the case may be) shall promptly notify the Borrower if
at any time, such Qualified Foreign Lender (or beneficial owner, as the
case may be) determines that it is no longer in a position to provide such
certificate to the Borrower (or any other form of certification adopted by
the relevant taxing authorities of the United States of America for such
purposes), or
(iii) to any U.S. Taxes imposed solely by reason of the failure
by such non-U.S. Person (or, if such non-U.S. Person is not the beneficial
owner of the relevant Loan, such beneficial owner) to comply with
applicable certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or connections
with the United States of America of such non-U.S. Person (or beneficial
owner, as the case may be) if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Taxes.
For the purposes of this Section 5.07(a), (A) "Form 1001" shall mean Form 1001
---------
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (B) "Form 4224" shall mean Form 4224
---------
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department
<PAGE>
40
of the Treasury of the United States of America (or in relation to either such
Form such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates) and (C) "Form W-8" shall mean Form W-8 (Certificate
--------
of Foreign Status of the Department of Treasury of the United States of
America). Each of the Forms referred to in the foregoing clauses (A), (B) and
(C) shall include such successor and related forms as may from time to time be
adopted by the relevant taxing authorities of the United States of America to
document a claim to which such Form relates.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Lender from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, the Borrower
shall deliver to the Administrative Agent for delivery to such non-U.S. Person
evidence satisfactory to such Person of such deduction, withholding or payment
(as the case may be).
(c) Each such non-U.S. Person that is entitled to submit a Form 1001,
Form 4224 or Form W-8, together with a certificate stating that such Qualified
Foreign Lender (or beneficial owner, as the case may be) is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and such Qualified Foreign
Lender (or beneficial owner, as the case may be) shall promptly notify the
Borrower if at any time, such Qualified Foreign Lender (or beneficial owner, as
the case may be) determines that it is no longer in a position to provide such
certificate to the Borrower (or any other form of certification adopted by the
relevant taxing authorities of the United States of America for such purposes),
shall submit the same to the Administrative Agent and to the Borrower on the
Amendment/Restatement Effective Date (or on the date it becomes a Lender
hereunder as provided in Section 12.06(b) hereof) and annually thereafter.
5.08 Replacement of Lenders. If any Lender requests compensation
----------------------
pursuant to Section 5.01, 5.06 or 5.07 hereof, or any Lender's obligation to
make or Continue, or to Convert Loans of any Type into, the other Type of Loan
shall be suspended pursuant to Section 5.01 or 5.03 hereof (any such Lender
requesting such compensation, or whose obligations are so suspended, being
herein called a "Requesting Lender"), the Borrower, upon three Business Days
-----------------
notice, may require that such Requesting Lender transfer all of its right, title
and interest under this Agreement and such Requesting Lender's Notes to any bank
or other financial institution (a "Proposed Lender") identified by the Borrower
---------------
that is satisfactory to the Administrative Agent and the Issuing Lender (i) if
such Proposed Lender agrees to assume all of the obligations of such Requesting
Lender hereunder, and to purchase all of such Requesting Lender's Loans
hereunder for consideration equal to the aggregate outstanding principal amount
of such Requesting Lender's Loans, together with interest thereon to the date of
such purchase, and satisfactory arrangements are made for payment to such
Requesting Lender of all other amounts payable hereunder to such Requesting
Lender on or prior to the date of such transfer (including any fees accrued
hereunder and any amounts that would be payable under Section 5.05 hereof as if
all of such Requesting Lender's Loans were being prepaid in full on such date)
and (ii) if such Requesting Lender has requested compensation pursuant to
Section 5.01, 5.06 or 5.07 hereof, such Proposed Lender's aggregate requested
compensation, if any, pursuant to said Section 5.01, 5.06 or 5.07 with respect
to such Requesting Lender's Loans is lower than that of the Requesting Lender.
Subject to the provisions of Section 12.06(b) hereof, such Proposed Lender shall
be a "Lender" for all purposes hereunder. Without prejudice to the survival of
any other agreement of the Borrower hereunder the agreements of the Borrower
contained in Sections 5.01, 5.06, 5.07 and 12.03 hereof (without duplication of
any payments made to such Requesting Lender by the Borrower or the Proposed
Lender) shall survive for the benefit of such Requesting Lender under this
Section 5.08 with respect to the time prior to such replacement.
<PAGE>
41
Section 6. Guarantee.
---------
6.01 The Guarantee. The Guarantors hereby jointly and severally
-------------
guarantee to each Lender and the Administrative Agent and their respective
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and interest on the
Loans made by the Lenders to, and any Notes held by each Lender of, the Borrower
and all other amounts from time to time owing to the Lenders or the
Administrative Agent by the Borrower under this Agreement and under any Notes
and by any Obligor under any of the other Loan Documents, and all obligations of
the Borrower or any of its Subsidiaries to any Lender in respect of any Interest
Rate Protection Agreement, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the "Guaranteed
----------
Obligations"). The Guarantors hereby further jointly and severally agree that
- -----------
if the Borrower shall fail to pay in full when due (whether at stated maturity,
by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors
will promptly pay the same, without any demand or notice whatsoever, and that in
the case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal.
6.02 Obligations Unconditional. The obligations of the Guarantors
-------------------------
under Section 6.01 hereof are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower under this Agreement, any Notes or any other
agreement or instrument referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 6.02 that the obligations of the Guarantors
hereunder shall be absolute and unconditional, joint and several, under any and
all circumstances. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of the Guarantors hereunder which shall remain absolute
and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of
this Agreement or any Notes or any other agreement or instrument referred
to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or any Notes or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor
of, the Administrative Agent or any Lender or Lenders as security for any
of the Guaranteed Obligations shall fail to be perfected.
<PAGE>
42
The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or any Notes or any other agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations. Anything
herein to the contrary notwithstanding, the maximum liability of each Subsidiary
Guarantor hereunder shall in no event exceed the amount which can be guaranteed
by such Subsidiary Guarantor under applicable federal and state laws relating to
the insolvency of debtors (after giving effect to the right of contribution
established in Section 6.08 hereof).
6.03 Reinstatement. The obligations of the Guarantors under this
-------------
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise and the Guarantors jointly and severally agree
that they will indemnify the Administrative Agent and each Lender on demand for
all reasonable costs and expenses (including, without limitation, fees of
counsel) incurred by the Administrative Agent or such Lender in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
6.04 Subrogation. The Guarantors hereby jointly and severally agree
-----------
that until the payment and satisfaction in full of all Guaranteed Obligations
and the expiration and termination of the Commitments of the Lenders under this
Agreement they shall not exercise any right or remedy arising by reason of any
performance by them of their guarantee in Section 6.01 hereof, whether by
subrogation or otherwise, against the Borrower or any other guarantor of any of
the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.
6.05 Remedies. The Guarantors jointly and severally agree that, as
--------
between the Guarantors and the Lenders, the obligations of the Borrower under
this Agreement and any Notes may be declared to be forthwith due and payable as
provided in Section 10 hereof (and shall be deemed to have become automatically
due and payable in the circumstances provided in said Section 10) for purposes
of Section 6.01 hereof notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower and that, in the event of such declaration
(or such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantors for purposes of said Section
6.01.
6.06 Instrument for the Payment of Money. Each Guarantor hereby
-----------------------------------
acknowledges that the guarantee in this Section 6 constitutes an instrument for
the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
6.07 Continuing Guarantee. The guarantee in this Section 6 is a
--------------------
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
6.08 Rights of Contribution. Each Subsidiary Guarantor hereby agrees
----------------------
that to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment.
<PAGE>
43
Each Subsidiary Guarantor's right of contribution shall be subject to the terms
and conditions of Section 6.04 hereof. The provisions of this Section 6.08 shall
in no respect limit the obligations and liabilities of any Subsidiary Guarantor
to the Administrative Agent and the Lenders, and each Subsidiary Guarantor shall
remain liable to the Administrative Agent and the Lenders for the full amount
guaranteed by such Subsidiary Guarantor hereunder.
6.09 General Limitation on Guarantee Obligations. In any action or
-------------------------------------------
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 6.01 hereof would otherwise, taking into account the provisions of
Section 6.08 hereof, be held or determined to be void, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under said Section 6.01, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by such Subsidiary Guarantor, any Lender, the Administrative
Agent or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
6.10 Waiver. Each Guarantor waives all rights and defenses arising
------
out of an election of remedies by any Lender or the Administrative Agent, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a Guaranteed Obligation, has destroyed such Guarantor's right of
subrogation and reimbursement against the Borrower by the operation of Section
580d of the California Code of Civil Procedure or otherwise. The provisions of
this Section 6.10 shall apply to each of the Loan Documents as if fully set
forth therein.
Section 7. Conditions Precedent.
--------------------
7.01 Amendment/Restatement Effective Date. The effectiveness of the
------------------------------------
amendment and restatement of the Existing Credit Agreement pursuant to this
Agreement shall be subject to the satisfaction of the following conditions
precedent on or prior to May 31, 1998:
(a) Agreement, Notes, etc. The Administrative Agent shall have
---------------------
received (i) this Agreement, executed and delivered by a duly authorized
officer of each Obligor, (ii) an Addendum, substantially in the form of
Exhibit I, executed and delivered by each Lender listed on Annex A hereto,
(iii) for the account of each of the Lenders which has requested one or
more Notes, each such Note, conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Borrower, (iv)
the Acknowledgment and Confirmation of Security executed and delivered by a
duly authorized officer of each Obligor party thereto, (v) an instrument in
the form attached hereto as Exhibit H hereto executed and delivered by a
duly authorized officer of MAGIC and each of its Subsidiaries and (vi) the
Trademark Assignment, executed and delivered by a duly authorized officer
of each Obligor party thereto.
(b) MAGIC Transaction. (i) The MAGIC Transaction shall have been
-----------------
consummated for an aggregate cash purchase price (including the Acquired
Working Capital but excluding fees and expenses with respect to the MAGIC
Transaction) not exceeding $230,200,000 plus the amount, if any, by which
----
the Acquired Working Capital exceeds $11,000,000, and the Administrative
Agent shall have received, with a copy for each Lender, (i) a certified
copy of each of the MAGIC Transaction Documents and (ii) a certificate of a
Responsible Officer to the effect that all conditions precedent and other
material transactions contemplated by the MAGIC Transaction Documents have
been satisfied or consummated, as the case may be, without amendment,
waiver or modification of the terms thereof without the prior consent of
the
<PAGE>
44
Administrative Agent, which shall not be unreasonably withheld. The
aggregate amount of the fees and expenses with respect to the MAGIC
Transaction shall not have exceeded $8,000,000.
(ii) The respective amounts of the sources and uses for the MAGIC
Transaction shall be substantially consistent with the table attached as
Schedule VI hereto (the "Table"). The capitalization and structure of the
-----
Obligors after giving effect to the MAGIC Transaction shall be consistent
with the Table.
(c) Capitalization; Total Leverage Ratio. (i) On or prior to the
------------------------------------
Amendment/Restatement Effective Date, (A) H&F Affiliated Parties shall have
made a cash equity investment in the Borrower of at least $70,000,000 on
terms and conditions reasonably satisfactory to the Administrative Agent,
(B) the Borrower shall have received the amount referred to in clause (A)
above in cash by capital contribution from the Parent Guarantor through the
Company and (C) the Borrower shall have received either (x) at least
$149,500,000 in gross cash proceeds from the issuance of the Senior
Subordinated Notes or (y) at least $75,000,000 in gross cash proceeds from
the Interim Financing, as the case may be, in each case on terms and
conditions reasonably satisfactory to the Administrative Agent. The
Administrative Agent shall have received a certificate of a Responsible
Officer of the Borrower, stating that after giving effect to the
consummation of the MAGIC Transaction and on a pro forma basis, the Total
--- -----
Leverage Ratio (calculated, for the purpose of this paragraph, after giving
effect to the payment of Revolving Credit Loans effected by application of
any of the Acquired Working Capital) shall be equal to or less than 6.25 to
1.0 as of March 31, 1998 (assuming that the Loans borrowed or outstanding
on the Amendment/Restatement Effective Date were outstanding on March 31,
1998 and assuming that MAGIC had been a Subsidiary of the Borrower for, and
any other "Permitted Acquisition" made under and as defined in the Existing
Credit Agreement after March 31, 1997 had been consummated on the first day
of, the period of four consecutive fiscal quarters ended on such date).
(ii) The capitalization of the Parent Guarantor, the Company and the
Borrower and each of their Subsidiaries after the MAGIC Transaction shall
be reasonably satisfactory to the Lenders in all respects.
(d) Pledged Stock. The Administrative Agent shall have received
-------------
certificates representing all of the capital stock of MAGIC and its
Subsidiaries, together with undated stock powers endorsed in blank for each
stock certificate (or any equivalent thereof) representing such pledged
stock.
(e) Corporate Proceedings of the Obligors. The Administrative Agent
-------------------------------------
shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors or duly authorized committee of each
Obligor (including, without limitation, MAGIC) authorizing (i) the
execution, delivery and performance of this Agreement, the Acknowledgement
and Confirmation of Security Documents and the MAGIC Transaction Documents
to which it is a party, (ii) in the case of the Borrower, the borrowings
contemplated hereunder and (iii) the transactions contemplated by the MAGIC
Transaction (to the extent applicable to such Person), certified by the
Secretary or an Assistant Secretary of such Obligor as of the
Amendment/Restatement Effective Date, which certificate shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded and shall be in form and substance reasonably satisfactory to
the Administrative Agent.
<PAGE>
45
(f) Incumbency Certificates. The Administrative Agent shall have
-----------------------
received, with a copy for each Lender, a certificate of the Secretary or an
Assistant Secretary (or comparable officer) of each Obligor (including,
without limitation, MAGIC and its Subsidiaries), dated the
Amendment/Restatement Effective Date, as to the incumbency and signature of
the officers of such Person executing each Loan Document to which it is a
party and each MAGIC Transaction Document to which it is a party and any
certificate or other document to be delivered by it pursuant hereto and
thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(g) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a counterpart for each Lender, true and complete copies of
the certificate of incorporation and by-laws of each Obligor (including,
without limitation, MAGIC), certified as of the Amendment/Restatement
Effective Date as complete and correct copies thereof by the Secretary or
an Assistant Secretary of such Obligor.
(h) Consents, Licenses and Approvals. (i) All governmental and
--------------------------------
third party approvals (including, without limitation, landlords' and other
consents) necessary or advisable in connection with the execution, delivery
and performance of this Agreement and the other Loan Documents required to
be executed and delivered in connection herewith or therewith and the MAGIC
Transaction Documents shall have been obtained and be in full force and
effect, (ii) all applicable waiting periods shall have expired without any
action being taken or threatened by any competent Governmental or
Regulatory Authority which would restrain, prevent or otherwise impose
adverse conditions on the MAGIC Transaction and (iii) the Lenders shall be
satisfied that the Parent Guarantor, the Borrower and their Subsidiaries
are not subject to contractual or other restrictions that would be violated
by the MAGIC Transaction, including, without limitation, the granting of
security interests and guarantees and the payment of dividends in
connection therewith.
(i) Officer's Certificate. A certificate of a Responsible Officer of
---------------------
the Borrower, dated the Amendment/Restatement Effective Date, to the effect
set forth in the first sentence of Section 7.02 hereof.
(j) Legal Opinions. The Administrative Agent shall have received,
--------------
with a counterpart for each Lender, (i) the executed legal opinion, dated
the Amendment/Restatement Effective Date, of Heller Ehrman White &
McAuliffe, counsel to the Obligors, covering such matters as the
Administrative Agent or any Lender reasonably requested, (ii) the executed
legal opinions of Testa, Hurwitz & Thibeault, LLP, counsel to the Borrower
and certain of the Obligors, (A) delivered in connection with the MAGIC
Transaction, and (B) covering certain aspects of Delaware law, (iii) the
executed legal opinion of Squire, Sanders & Dempsey L.L.P., special New
York counsel to the Borrower, covering such matters as the Administrative
Agent or any Lender reasonably requested, and (iv) the executed legal
opinion of Cohen and Wolf, P.C., special Connecticut counsel to the
Obligors, covering such matters as the Administrative Agent or any Lender
reasonably requested, in each case addressed to the Administrative Agent
and the Lenders.
(k) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent search by a Person reasonably satisfactory to the
Administrative Agent, of the Uniform Commercial Code, judgment and tax lien
filings which may have been filed with respect to personal property of
MAGIC and its Subsidiaries in any of the jurisdictions where the assets of
MAGIC and its Subsidiaries are located, and the results of such search
shall be reasonably satisfactory to the Administrative Agent.
<PAGE>
46
(l) Actions to Perfect Liens. The Administrative Agent shall have
------------------------
received evidence in form and substance reasonably satisfactory to it that
all filings, recordings, registrations and other actions, including,
without limitation, the filing or preparation for filing of duly executed
financing statements on form UCC-1 in each jurisdiction where the assets of
MAGIC and its Subsidiaries are located, necessary or, in the reasonable
opinion of the Administrative Agent, desirable to perfect the Liens created
by the Security Documents shall have been completed or shall be filed,
recorded or registered promptly following the Amendment/Restatement
Effective Date, except with respect to those assets as to which the
Administrative Agent shall determine in its sole discretion that the costs
of perfecting such Liens are excessive in relation to the value of the
security to be afforded thereby, and all agreements, statements and other
documents relating thereto shall be in form and substance reasonably
satisfactory to the Administrative Agent.
(m) Insurance Certificate. The Administrative Agent shall have
---------------------
received an insurance certificate complying with the applicable
requirements of the Security Documents.
(n) Financial Statements. The Administrative Agent shall have
--------------------
received, with a copy for each Lender, (i) the unaudited pro forma combined
--- -----
balance sheet and statement of operations of the Company and its
Subsidiaries as of, or for the year ended, as applicable, December 31, 1997
after giving effect to the MAGIC Transaction and the financings
contemplated thereby, which shall be in form and substance reasonably
satisfactory to the Lenders, (ii) audited financial statements of MAGIC and
its Subsidiaries for the fiscal years ended May 31, 1995, May 31, 1996 and
May 31, 1997, which financial statements shall have been prepared in
accordance with GAAP and (iii) audited financial statements of MAGIC and
its Subsidiaries for the nine-month period ended February 28, 1998, which
financial statements shall have been prepared in accordance with GAAP, and
none of the foregoing financial information shall, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of the Company and its Subsidiaries or
MAGIC and its Subsidiaries as reflected in the most recent audited
financial statements or projections previously delivered to the Lenders.
(o) Litigation. No litigation, inquiry, injunction or restraining
----------
order shall be pending, entered or threatened (including, without
limitation, any proposed statute, rule or regulation) which, in the
reasonable opinion of the Lenders, could have a Material Adverse Effect.
(p) No Adverse Change. The Lenders shall not have become aware of
-----------------
any previously undisclosed change, or development or event involving a
prospective change, which in either case in the reasonable opinion of the
Lenders could have a Material Adverse Effect.
(q) No Default. There shall exist no event of default (or condition
----------
which would constitute an event of default with the giving of notice or the
passage of time) under any capital stock or any material financing
agreements, lease agreements or other contracts of the Parent Guarantor,
the Company, the Borrower, MAGIC or any of their Subsidiaries.
(r) Fees. The Lenders, the Administrative Agent and the Arranger
----
shall have received on the Amendment/Restatement Effective Date all fees
previously agreed by the Borrower to be paid on such date, and all
reasonable expenses (including reasonable fees of counsel) for which
invoices have been presented prior to such date.
(s) Accrued Interest and Fees. The Borrower shall have paid to the
-------------------------
Administrative Agent all unpaid interest, commitment fees and letter of
credit commissions accrued to but not including the Amendment/Restatement
Effective Date under the Existing Credit Agreement.
<PAGE>
47
(t) Other Documentation. All other material documentation relating
-------------------
to the MAGIC Transaction, including, without limitation, any material tax
sharing agreement, employment agreement, management compensation
arrangement or other financing arrangement of the Parent Guarantor, the
Borrower or any of their Subsidiaries, shall be reasonably satisfactory in
form and substance to the Administrative Agent.
The Administrative Agent and the Lenders acknowledge that (i) certain of the
documents required to be delivered as conditions precedent under this Section
7.01 can only be delivered after consummation of the MAGIC Transaction and (ii)
such conditions precedent shall be deemed to be satisfied upon irrevocable
placement of such documents into escrow for immediate and unconditional delivery
upon consummation of the MAGIC Transaction.
7.02 Initial and Subsequent Extensions of Credit. The obligation of
-------------------------------------------
the Lenders to make any Loan or to issue any Letter of Credit hereunder upon the
occasion of each borrowing or issuance of a Letter of Credit hereunder
(including the initial borrowing) is subject to the further conditions precedent
that, both immediately prior to the making of such Loan or the issuance of such
Letter of Credit and also after giving effect thereto and to the intended use
thereof:
(a) no Default shall have occurred and be continuing.
(b) the representations and warranties made by the Borrower, the
Company and the Parent Guarantor in Section 8 hereof, and by each Obligor
in each of the other Loan Documents to which it is a party, shall be true
and complete on and as of the date of the making of such Loan or other
extension of credit with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date).
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Borrower hereunder shall constitute a certification by the Borrower to the
effect set forth in the preceding sentence (both as of the date of such notice
or request and, unless the Borrower otherwise notifies the Administrative Agent
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
7.03 Permitted Acquisitions. The consummation of each Permitted
----------------------
Acquisition is subject to the satisfaction of the following conditions
precedent:
(a) No Resulting Default. The consummation of such Permitted
--------------------
Acquisition (the "Relevant Permitted Acquisition") shall not result in a
------------------------------
Default or Event of Default.
(b) Acquisition Documents. The Administrative Agent shall have
---------------------
received (with a copy for each Lender, if requested), prior to the proposed
date of the Relevant Permitted Acquisition, true and correct copies (or the
most recent form), certified as to authenticity by the Borrower, of each
agreement pursuant to which such Relevant Permitted Acquisition is to be
consummated (including any amendments, supplements, waivers or other
modifications with respect thereto), and such other documents or
instruments as may be reasonably requested by the Administrative Agent or
any Lender, including, without limitation, a copy of any debt, any
instrument, security agreement or other material contract to which the
Borrower or its Subsidiaries may be a party upon the consummation of such
Relevant Permitted Acquisition.
(c) Pro Forma Compliance. (i) The Borrower shall be in compliance,
--------------------
on a pro forma basis after giving effect to the Relevant Permitted
--- -----
Acquisition, with the covenants contained in
<PAGE>
48
Section 9.10 hereof recomputed as at the last day of the most recently
ended fiscal quarter of the Company as if such Relevant Permitted
Acquisition had occurred on the first day of each relevant period for
testing such compliance, and the Borrower shall have delivered to the
Administrative Agent a certificate of a Responsible Officer to such effect,
together with all relevant financial information for such Subsidiary or
assets, and (ii) after giving effect to such transaction, any acquired or
newly formed Subsidiary shall not be liable for any Indebtedness (except
for Indebtedness permitted by Section 9.07 hereof).
(d) Subsidiary Guarantors. All actions required to be taken, if any,
---------------------
with respect to any acquired or newly formed Subsidiary in such Relevant
Permitted Acquisition under Section 9.16 hereof shall have been taken.
Section 8. Representations and Warranties. To induce the
------------------------------
Administrative Agent and each Lender to make the extensions of credit requested
to be made by it on the Amendment/Restatement Effective Date and on each
borrowing date thereafter, each of the Parent Guarantor, the Company and the
Borrower hereby represents and warrants, on the Amendment/Restatement Effective
Date (with each representation and warranty made as of the Amendment/Restatement
Effective Date being deemed made after giving effect to the MAGIC Transaction
and the other related transactions occurring on the Amendment/Restatement
Effective Date), and on every borrowing date thereafter, to the Administrative
Agent and each Lender that:
8.01 Corporate Existence. Each of the Parent Guarantor and its
-------------------
Subsidiaries (including the Borrower): (a) is a corporation, partnership or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization; (b) has all requisite corporate or
other power, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
and is in good standing in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify could (either individually or in the aggregate) have a Material Adverse
Effect.
8.02 Financial Condition. (a) The Borrower has heretofore furnished
-------------------
to the Administrative Agent, with a copy for each Lender, the following:
(i) the audited balance sheets of the Company and its Consolidated
Subsidiaries as at December 31, 1995, 1996 and 1997 and the related audited
consolidated statements of operations, stockholders' equity and cash flows
for each of the fiscal years ended on said dates, together with a true and
correct copy of the report on such audited information by Arthur Andersen
LLP;
(ii) the audited balance sheets of MAGIC and its Consolidated
Subsidiaries as at May 31, 1995, 1996 and 1997 and the related audited
consolidated statements of operations, stockholders' equity and cash flows
for each of the fiscal years ended on said dates, together with a true and
correct copy of the report on such audited information by Coopers & Lybrand
L.L.P.; and
(iii) the audited balance sheet of MAGIC and its Consolidated
Subsidiaries as at February 28, 1998 and the related audited consolidated
statements of operations, stockholders' equity and cash flows for the nine-
month period ended on said date, together with a true and correct copy of
the report on such audited information by Arthur Andersen, LLP.
<PAGE>
49
(b) All financial statements referred to in the preceding paragraph
(a) fairly present the financial condition of the respective entities as at the
respective dates, and the respective financial results of operations, as the
case may be, for the respective periods on said respective dates, all in
accordance with GAAP (subject, in the case of clause (iii) above, to normal
year-end audit adjustments). Neither the Company nor any of its Subsidiaries
has on the Amendment/Restatement Effective Date any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in said financial statements as at said
dates or as permitted hereby. Since December 31, 1997, there has been no
material adverse change in the consolidated financial condition, operations,
business or prospects taken as a whole of the Company and its Consolidated
Subsidiaries (other than MAGIC and its Subsidiaries) from that set forth in the
relevant financial statements described above as at said date. Since February
28, 1998, there has been no material adverse change in the consolidated
financial condition, operations, business or prospects taken as a whole of MAGIC
and its Subsidiaries from that set forth in the relevant financial statements
described above as at said date.
(c) The pro forma balance sheet referred to in Section 7.01(n)(i) has
--- -----
been prepared based on the best information available to the Borrower as of the
date of delivery thereof, and presents fairly on a pro forma basis the estimated
--- -----
financial position of Borrower and its consolidated Subsidiaries as of, or for
the year ended, as applicable, December 31, 1997, after giving effect to the
MAGIC Transaction.
8.03 Litigation. There are no legal or arbitral proceedings, or any
----------
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Parent Guarantor, the Company or the
Borrower) threatened against the Parent Guarantor or any of its Subsidiaries
(and in respect of which the Parent Guarantor or any of its Subsidiaries would
be obligated after giving effect to the MAGIC Transaction) that, if adversely
determined, could (either individually or in the aggregate) have a Material
Adverse Effect or where there is a reasonable likelihood of determinations that
will result (either individually or in the aggregate) in liabilities to the
Parent Guarantor and its Subsidiaries in an aggregate amount (excluding, except
where the Parent Guarantor and its Subsidiaries have self-insured, liabilities
for which creditworthy insurance companies have acknowledged coverage) exceeding
$4,000,000.
8.04 No Breach. None of the execution and delivery of this Agreement
---------
and any Notes and the other Loan Documents, the consummation of the transactions
herein and therein contemplated or compliance with the terms and provisions
hereof and thereof will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of any Obligor, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Parent Guarantor or any of its Subsidiaries is a party or by which any of them
or any of their Property is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or (except for the
Liens created pursuant to the Security Documents) result in the creation or
imposition of any Lien upon any Property of the Parent Guarantor or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
8.05 Action. Each Obligor has all necessary corporate or partnership
------
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by each Obligor of each of the Loan Documents to which it is a
party have been duly authorized by all necessary corporate or partnership action
on its part (including, without limitation, any required shareholder approvals);
and this Agreement has been duly and validly executed and delivered by each
Obligor and constitutes, and each of any Notes and the other Loan Documents to
which it is a party when executed and delivered by such Obligor (in the case of
any Notes, for value) will constitute, its legal, valid and binding obligation,
enforceable against
<PAGE>
50
each Obligor in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
8.06 Approvals. No authorizations, approvals or consents of, and no
---------
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery or
performance by any Obligor of this Agreement or any of the other Loan Documents
to which it is a party or for the legality, validity or enforceability hereof or
thereof, except for (a) consents, authorizations and filings in connection with
the MAGIC Transaction or the MAGIC Transaction Documents (i) which are required
to be obtained or made and are in full force and effect (each of which are
listed on Schedule IV) or (ii) which are not required to be obtained or made
prior to consummation of the MAGIC Transaction and are listed on Schedule IV or
(iii) which, if not obtained or made, could not reasonably be expected to have a
Material Adverse Effect, (b) the filing of Uniform Commercial Code financing
statements and filings with the United States Patent and Trademark Office and
the United States Copyright Office to perfect the security interest that can be
perfected by such filings, (c) recordation of the Mortgages, (d) consents,
authorizations and filings in connection with enforcement of the Loan Documents
and (e) as contemplated by Section 7.01. No authorizations, approvals or
consents of any Person (other than any governmental or regulatory authority or
agency, and other than any securities exchange) are necessary for the execution,
delivery or performance by any Obligor of this Agreement or any of the other
Loan Documents to which it is a party or for the legality, validity or
enforceability hereof or thereof, except for authorizations, approvals or
consents the failure of which to be obtained could not have a Material Adverse
Effect.
8.07 ERISA. Each Plan, and, to the knowledge of the Borrower, each
-----
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Borrower would be
under an obligation to furnish a report to the Lenders under Section 9.01(e)
hereof.
8.08 Taxes. After the consummation of the MAGIC Transaction, the
-----
Company and its Subsidiaries will be members of an affiliated group of
corporations filing consolidated returns for Federal income tax purposes, of
which the Parent Guarantor is the "common parent" (within the meaning of Section
1504 of the Code) of such group. The Parent Guarantor and its Subsidiaries have
filed all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Parent Guarantor or any of
its Subsidiaries. The charges, accruals and reserves on the books of the Parent
Guarantor and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Parent Guarantor, adequate. Neither the
Parent Guarantor nor any of its Subsidiaries has given or been requested to give
a waiver of the statute of limitations relating to the payment of any Federal,
state, local and foreign taxes or other impositions.
8.09 Investment Company Act. Neither the Parent Guarantor nor any of
----------------------
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
8.010 Public Utility Holding Company Act. Neither the Parent
----------------------------------
Guarantor nor any of its Subsidiaries is a "holding company", or an "affiliate"
of a "holding company" or a "Subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
<PAGE>
51
8.11 Material Agreements and Liens; Ownership of Property; Insurance.
---------------------------------------------------------------
(a) Part A of Schedule I hereto is a complete and correct list of
each credit agreement, loan agreement, indenture, note purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Parent Guarantor or any of its
Subsidiaries, that will be outstanding on the Amendment/Restatement Effective
Date, and the aggregate principal or face amount outstanding or that may become
outstanding under each such arrangement is correctly described in Part A of said
Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list of
each Lien securing Indebtedness of any Person that will be outstanding on the
Amendment/Restatement Effective Date, and covering any Property of the Parent
Guarantor or any of its Subsidiaries, and the aggregate Indebtedness secured (or
that may be secured) by each such Lien and the Property covered by each such
Lien is correctly described in Part B of said Schedule I.
(c) Each of the Company and its Subsidiaries has good record and
marketable title in fee simple to all its owned real property, and, as of the
Amendment/Restatement Effective Date, none of such property is subject to any
Lien except as described in Part B of Schedule I.
(d) As of the Amendment/Restatement Effective Date, the Borrower and
its Subsidiaries will have insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations or other entities engaged in the same or
similar business similarly situated, against loss, damage and liability of the
kinds and in the amounts customarily maintained by such corporations or
entities.
8.12 Environmental Matters. (a) Each of the Borrower and its
---------------------
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required under all Environmental Laws to carry on their
respective businesses as now being or as proposed to be conducted, except to the
extent failure to have any such permit, license or authorization would not
(either individually or in the aggregate) have a Material Adverse Effect.
(b) Each of such permits, licenses and authorizations is in full
force and effect and each of the Borrower and its Subsidiaries is in compliance
with the terms and conditions thereof, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply therewith would not (either individually
or in the aggregate) have a Material Adverse Effect.
(c) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by any of the Borrower or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization required
under any Environmental Law in connection with the conduct of the business of
any of the Borrower or any of its Subsidiaries, or with respect to any
generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release of any Hazardous Materials generated by any of the
Borrower or any of its Subsidiaries, in each case except as to matters that
would not (either individually or in the aggregate) have a Material Adverse
Effect.
<PAGE>
52
(d) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or that are in the possession of
any of the Borrower or any of its Subsidiaries in relation to any site or
facility now or previously owned, operated or leased by the Borrower or any of
its Subsidiaries, that have not been made available to the Lenders.
(e) There is not a reasonable likelihood of any Environmental
Liabilities (as defined below) that would require payments or expenditures by
the Borrower and its Subsidiaries, either individually or in the aggregate, in
excess of $2,500,000. For purposes of this paragraph (e), "Environmental
Liability" shall mean any liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other Property,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or Release into the environment, of any Hazardous Material at
any location, whether or not owned by such Person, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law. The
term "Environmental Liability" shall include, without limitation, any liability
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
8.13 Capitalization.
--------------
(a) The authorized capital stock of the Parent Guarantor will
consist, on the Amendment/Restatement Effective Date, of 20,000,000 shares of
common stock, par value $.01 per share, of which 16,533,333 shares will be duly
and validly issued and outstanding, each of which shares will be fully paid and
nonassessable. As of the Amendment/Restatement Effective Date all shares of
such issued and outstanding shares of common stock will be owned beneficially
and of record by H&F Affiliated Parties. As of the Amendment/Restatement
Effective Date, except as described in Part A of Schedule I hereto, (x) there
will be no outstanding Equity Rights with respect to the Parent Guarantor and
(y) there will be no outstanding obligations of the Parent Guarantor, the
Company or the Borrower or any of its Subsidiaries to repurchase, redeem, or
otherwise acquire any shares of capital stock of the Parent Guarantor nor will
there be any outstanding obligations of the Parent Guarantor or any of its
Subsidiaries to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Parent Guarantor or any of its Subsidiaries.
(b) The authorized capital stock of the Company will consist, on the
Amendment/Restatement Effective Date, of an aggregate of 3,100,000 shares
consisting of (i) 3,000,000 shares of common stock, par value $.01 per share, of
which 100 shares will be duly and validly issued and outstanding, each of which
shares will be fully paid and nonassessable and (ii) 100,000 shares of preferred
stock, par value $.01 per share, none of which will be duly and validly issued
and outstanding on the Amendment/Restatement Effective Date. As of the
Amendment/Restatement Effective Date all of such issued and outstanding shares
of common stock will be owned beneficially and of record by the Parent
Guarantor. As of the Amendment/Restatement Effective Date, (x) there will be no
outstanding Equity Rights with respect to the Company and (y) there will be no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem, or otherwise acquire any shares of capital stock of the Company (other
than as contemplated and provided for by the Merger Agreement) nor will there be
any outstanding obligations of the Company or any of its Subsidiaries to make
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market value or equity value of
the Company or any of its Subsidiaries.
<PAGE>
53
(c) The authorized capital stock of the Borrower will consist, on the
Amendment/Restatement Effective Date, of an aggregate of 1,500,000 shares of
common stock, par value $.01 per share, of which 1,000,000 shares will be duly
and validly issued and outstanding, each of which shares will be fully paid and
nonassessable.
8.14 Subsidiaries, Etc.
------------------
(a) Set forth in Schedule II hereto is a complete and correct list of
all of the Subsidiaries of the Parent Guarantor as of the Amendment/Restatement
Effective Date, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests in
such Subsidiary and (iii) the nature of the ownership interests held by each
such Person and the percentage of ownership of such Subsidiary represented by
such ownership interests. Except as disclosed in Schedule II hereto, as of the
Amendment/Restatement Effective Date, (x) each of the Parent Guarantor and its
Subsidiaries owns, free and clear of Liens (other than Liens created pursuant to
the Security Documents), and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it in Schedule II hereto,
(y) all of the issued and outstanding capital stock of each such Person
organized as a corporation is validly issued, fully paid and nonassessable and
(z) there are no outstanding Equity Rights with respect to such Person.
(b) The financial statements referred to in Section 8.02(a)(i) and
(ii) hereof contain a complete and correct list of all Investments (other than
Investments disclosed in Schedule II hereto) held by the Parent Guarantor or any
of its Subsidiaries in any Person on the Amendment/Restatement Effective Date.
(c) None of the Subsidiaries of the Parent Guarantor is, on the
Amendment/Restatement Effective Date, subject to any indenture, agreement,
instrument or other arrangement of the type described in Section 9.16(c) hereof.
8.15 True and Complete Disclosure. The information, reports,
----------------------------
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Administrative Agent or any Lender in connection
with the negotiation, preparation or delivery of this Agreement and the other
Loan Documents or included herein or therein or delivered pursuant hereto or
thereto, when taken as a whole do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the Amendment/Restatement
Effective Date by the Parent Guarantor and its Subsidiaries to the
Administrative Agent and the Lenders in connection with this Agreement and the
other Loan Documents and the transactions contemplated hereby and thereby will
be true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to the Borrower, the
Company or the Parent Guarantor that could have a Material Adverse Effect that
has not been disclosed herein, in the other Loan Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Lenders for use in connection with the transactions
contemplated hereby or thereby.
8.16 MAGIC Transaction Documents. Each MAGIC Transaction Document
---------------------------
has been duly executed and delivered by each party thereto and is in full force
and effect. On the Amendment/Restatement Effective Date (after the consummation
of the MAGIC Transaction), the Parent Guarantor will have good title to all the
capital stock of the Company, the Company will have good title to all the
capital stock of the Borrower, and the Borrower will have good title to all the
capital stock of its Subsidiaries (including, without limitation, MAGIC), free
and clear of all Liens (other than Liens described in Section 9.06 hereof).
<PAGE>
54
8.17 Regulation H. To the extent available, the Borrower has
------------
obtained for all Mortgaged Properties which are located in a "flood hazard
area", as designated in any Flood Insurance Rate Map published by the Federal
Emergency Management Agency, flood insurance in such total amount as the
Administrative Agent has from time to time reasonably required.
8.18 Security Documents. (a) The Security Agreement is effective
------------------
to create in favor of the Administrative Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in all the respective
Collateral described therein and proceeds thereof and, upon completion of the
filings and other actions specified therein, the Security Agreement shall
constitute fully perfected, first priority Liens on, and security interests in,
all right, title and interest of each Obligor party thereto in the respective
Collateral described therein and in proceeds thereof superior in right to any
other Person other than Liens permitted hereby.
(b) (i) The properties listed on Schedule III constitute all
material real properties owned by the Borrower or any of its Subsidiaries as of
the Amendment/Restatement Effective Date. The Mortgages constitute a fully
perfected, first priority Lien on, and security interest in, all right, title
and interest of the Loan Parties in the properties described therein and the
proceeds thereof, in favor of the Administrative Agent, for the ratable benefit
of the Lenders, superior in right to any other Person other than Liens permitted
hereby.
8.19 Intellectual Property Rights. The Borrower and its
----------------------------
Subsidiaries have all right, title and interest in, or a valid and binding
license to use, the Intellectual Property (as defined below) disclosed in
Schedule V hereto, which represents all Intellectual Property individually or in
the aggregate material to the conduct of the businesses of the Borrower and its
Subsidiaries taken as a whole on the Amendment/Restatement Effective Date.
Except as disclosed in Schedule V hereto, (i) the Borrower or a Subsidiary has
the exclusive right to use the Intellectual Property disclosed in Schedule V
hereto in perpetuity and without payment of royalties, (ii) all registrations
with and applications to Governmental or Regulatory Authorities in respect of
such Intellectual Property are valid and in full force and effect and are not
subject to the payment of any taxes or maintenance fees or the taking of any
other actions by the Borrower or a Subsidiary to maintain their validity or
effectiveness, and (iii) there are no restrictions on the direct or indirect
transfer of any Contractual Obligation, or any interest therein, held by the
Borrower or any Subsidiary in respect of such Intellectual Property. Neither the
Borrower nor any Subsidiary of the Borrower is in material default (or with the
giving of notice or lapse of time or both, would be in material default) under
any license to use such Intellectual Property, such Intellectual Property is not
being materially infringed by any third party, and neither the Borrower nor any
Subsidiary of the Borrower is infringing any Intellectual Property of any third
party. For purposes of this Section 8.19, "Intellectual Property" means patents
---------------------
and patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and service name
rights, copyrights and copyright rights and related intellectual property rights
and all pending applications for and registrations of any of the foregoing.
8.20 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect.
8.21 Year 2000 Matters. To the extent that the failure to do so
-----------------
could reasonably be expected to result in a Material Adverse Effect, (a) any
reprogramming required to permit the proper functioning (but only to the extent
that such proper functioning would otherwise be impaired by the occurrence of
the year 2000) in and following the year 2000 of computer systems and other
equipment
<PAGE>
55
containing embedded microchips, in either case owned or operated by the Parent
Guarantor or any of its Subsidiaries or used or relied upon in the conduct of
their business (including any such systems and other equipment supplied by
others or with which the computer systems of the Parent Guarantor or any of its
Subsidiaries interface and which are material to the conduct, in the ordinary
course, of business of the Parent Guarantor or any Subsidiary), and (b) the
testing of all such systems and other equipment as so reprogrammed, will be
completed by December 31, 1999. The costs to the Parent Guarantor and its
Subsidiaries that have not been incurred as of the date hereof for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. Except for any reprogramming referred to above, the
computer systems of the Parent Guarantor and its Subsidiaries are and, with
ordinary course upgrading and maintenance, will continue for the term of this
Agreement to be, reasonably sufficient for the conduct of their business as
currently conducted.
Section 9. Covenants of the Borrower, the Company and the Parent
-----------------------------------------------------
Guarantor. Each of the Parent Guarantor, the Company and the Borrower hereby
- ---------
agrees that, so long as the Revolving Credit Commitments remain in effect, and
thereafter until payment in full of the Loans, all Letter of Credit Liabilities
and any other amount then due and owing to any Lender or the Administrative
Agent hereunder and under any Note and termination or expiration of all Letters
of Credit:
9.01 Financial Statements Etc. The Borrower shall deliver to each of
-------------------------
the Lenders:
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated and consolidating statements of operations, stockholders'
equity and cash flows of the Company and its Consolidated Subsidiaries for
such period and for the period from the beginning of the respective fiscal
year to the end of such period, and the related consolidated and
consolidating balance sheets of the Company and its Consolidated
Subsidiaries as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the corresponding periods in the preceding fiscal year (except that, in
the case of balance sheets, such comparison shall be to the last day of the
prior fiscal year), accompanied by a certificate of a Responsible Officer
of the Company which certificate shall state that said consolidated
financial statements fairly present the consolidated financial condition
and results of operations of the Company and its Consolidated Subsidiaries
(and of the Parent Guarantor and its Consolidated Subsidiaries), and said
consolidating financial statements fairly present the respective individual
unconsolidated financial condition and results of operations of the Company
and of each of its Consolidated Subsidiaries, in each case in accordance
with GAAP, as at the end of, and for, such period (subject to normal year-
end audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, consolidated and consolidating
statements of operations, stockholders' equity and cash flows of the
Company and its Consolidated Subsidiaries for such fiscal year and the
related consolidated and consolidating balance sheets of the Company and
its Consolidated Subsidiaries as at the end of such fiscal year, setting
forth in each case in comparative form the corresponding consolidated and
consolidating figures for the preceding fiscal year, and accompanied (i) in
the case of said consolidated statements and balance sheet of the Company,
by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP, and a statement
<PAGE>
56
of such accountants setting forth calculations demonstrating whether the
Company was in compliance with Section 9.10 hereof, insofar as such Section
relates to accounting matters, and (ii) in the case of said consolidating
statements and balance sheets, by a certificate of a Responsible Officer of
the Company, which certificate shall state that said consolidating
financial statements fairly present the respective individual
unconsolidated financial condition and results of operations of the Company
and of each of its Consolidated Subsidiaries, in each case in accordance
with GAAP, as at the end of, and for, such fiscal year;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Parent Guarantor and any of its Subsidiaries shall have filed with the
Securities and Exchange Commission (or any governmental agency substituted
therefor) or any national securities exchange;
(d) if the Parent Guarantor becomes subject to the reporting
requirements of the Securities and Exchange Act of 1934 as amended,
promptly upon the mailing thereof to any public security holders of the
Parent Guarantor and any of its Subsidiaries generally, copies of all
financial statements, reports and proxy statements so mailed;
(e) as soon as possible, and in any event within 30 days after the
Borrower knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan
has occurred or exists, a statement signed by a Responsible Officer of the
Borrower setting forth details respecting such event or condition and the
action, if any, that the Company or its ERISA Affiliate proposes to take
with respect thereto (and a copy of any report or notice required to be
filed with or given to the PBGC by the Company or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which the PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the minimum
--------
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the Code
for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Company or an ERISA Affiliate to terminate any Plan;
(iii) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Company or any ERISA Affiliate that results
in liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by the Company or any ERISA Affiliate of
notice from
<PAGE>
57
a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days; and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA,
would result in the loss of tax-exempt status of the trust of which
such Plan is a part if the Company or an ERISA Affiliate fails to
timely provide security to the Plan in accordance with the provisions
of said Sections;
(f) promptly after the Borrower knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Borrower has taken or
proposes to take with respect thereto; and
(g) from time to time such other information regarding the financial
condition, operations, business or prospects of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Administrative Agent may reasonably request.
The Borrower will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
Responsible Officer of the Borrower (i) to the effect that, to the best
knowledge of such financial officer, no Default has occurred and is continuing
(or, if any Default has occurred and is continuing, describing the same in
reasonable detail and describing the action that the Borrower has taken or
proposes to take with respect thereto) and (ii) setting forth in reasonable
detail the computations necessary to determine whether the Borrower is in
compliance with Sections 9.07, 9.09, 9.10 and 9.11 hereof as of the end of the
respective quarterly fiscal period or fiscal year.
9.02 Litigation. The Borrower will promptly give to each Lender
----------
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any of
its Subsidiaries, except proceedings that, if adversely determined, would not
(either individually or in the aggregate) have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Borrower will give to each
Lender notice of the assertion of any Environmental Claim by any Person against,
or with respect to the activities of, the Company or any of its Subsidiaries and
notice of any alleged violation of or non-compliance with any Environmental Laws
or any permits, licenses or authorizations, other than any Environmental Claim
or alleged violation that, if adversely determined, would not (either
individually or in the aggregate) have a Material Adverse Effect.
9.03 Existence, Etc. The Borrower will, and will cause each of its
---------------
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in this
--------
Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.05 hereof);
<PAGE>
58
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could (either individually or in the
aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and (unless the amount
thereof is not material) against which adequate reserves are being
maintained;
(d) maintain all of its Properties used or materially useful in its
business in good working order and condition, ordinary wear and tear
excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP; and
(f) permit representatives of any Lender or the Administrative Agent,
during normal business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers and accountants, all to the extent
reasonably requested by such Lender or the Administrative Agent (as the
case may be).
9.04 Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations or other entities engaged in the same or
similar business similarly situated, against loss, damage and liability of the
kinds and in the amounts customarily maintained by such corporations or
entities; and furnish to each Lender, upon written request, full information as
to the insurance carried.
9.05 Prohibition of Fundamental Changes. (a) The Borrower will not,
----------------------------------
nor will it permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution).
(b) The Borrower will not, nor will it permit any of its Subsidiaries
to, acquire any business or Property from, or capital stock of, or be a party to
any acquisition of, any Person except for purchases of inventory and other
Property to be sold or used in the ordinary course of business and transactions
expressly permitted by Section 9.08 hereof.
(c) The Borrower will not, nor will it permit any of its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, any part of its business or Property, whether now
owned or hereafter acquired (including, without limitation, receivables and
leasehold interests, but excluding (i) obsolete or worn-out Property, tools or
equipment no longer used or useful in its business or other Property that has
been transferred as a result of a Casualty Event, (ii) other assets (including
publications) so long as the aggregate consideration received by the Borrower
and its Subsidiaries for all assets so sold or disposed of since the
Amendment/Restatement Effective Date pursuant to this clause (c)(ii) shall not
exceed $20,000,000 and (iii) any inventory or other Property sold or disposed of
in the ordinary course of business and on ordinary business terms).
Notwithstanding the foregoing provisions of this Section 9.05:
<PAGE>
59
(x) any Subsidiary of the Borrower may be merged or consolidated with
or into: (1) the Borrower if the Borrower shall be the continuing or
surviving corporation or (2) any such other Subsidiary; provided that if
--------
any such transaction shall be between a Subsidiary and a Wholly Owned
Subsidiary, the Wholly Owned Subsidiary shall be the continuing or
surviving corporation;
(y) any Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary liquidation
or otherwise) to the Borrower or a Wholly Owned Subsidiary of the Borrower;
provided that if any such sale is by a Subsidiary Guarantor to a Subsidiary
--------
of the Borrower that is not a Subsidiary Guarantor, then such Subsidiary
shall have assumed all of the obligations of such Subsidiary Guarantor
hereunder and under the other Loan Documents; and
(z) a Permitted Acquisition may be effected pursuant to a transaction
of merger, consolidation or amalgamation with the entity being acquired,
subject to the applicable requirements of the definition of "Permitted
Acquisition".
9.06 Limitation on Liens. The Borrower will not, nor will it permit
-------------------
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the Amendment/Restatement Effective Date
and listed in Part B of Schedule I hereto (excluding, however, following
the making of the initial Loans hereunder, Liens securing Indebtedness to
be repaid with the proceeds of such Loans, as indicated on said Schedule
I);
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if, unless the amount thereof is not
material with respect to it or its financial condition, adequate reserves
with respect thereto are maintained on the books of the Borrower or the
affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, banker's or other like Liens, and rights of set-off, arising
in the ordinary course of business that are not overdue for a period of
more than 30 days or that are being contested in good faith and by
appropriate proceedings and Liens securing judgments but only to the extent
for an amount and for a period not resulting in an Event of Default under
Section 10(h) hereof;
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto that, in the
aggregate, are not material in amount, and that do not in any case
materially detract from the
<PAGE>
60
value of the Property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(h) Liens on Property of any corporation that becomes a Subsidiary of
the Borrower after the Amendment/Restatement Effective Date, provided that
--------
such Liens are in existence at the time such corporation becomes a
Subsidiary of the Borrower and were not created in anticipation thereof;
(i) Liens upon real and/or tangible personal Property acquired after
the Amendment/Restatement Effective Date (by purchase, construction or
otherwise) by the Borrower or any of its Subsidiaries, each of which Liens
either (A) existed on such Property before the time of its acquisition and
was not created in anticipation thereof or (B) was created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of such
Property; provided that (i) no such Lien shall extend to or cover any
--------
Property of the Borrower or such Subsidiary other than the Property so
acquired and improvements thereon and (ii) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 80% of the
fair market value (as determined in good faith by a Responsible Officer of
the Borrower) of such Property at the time it was acquired (by purchase,
construction or otherwise); and
(j) additional Liens upon real and/or personal Property created after
the Amendment/Restatement Effective Date, provided that the aggregate
--------
Indebtedness secured thereby and incurred on and after the
Amendment/Restatement Effective Date shall be permitted under Section
9.07(d) and shall not exceed $2,000,000 in the aggregate at any one time
outstanding.
9.07 Indebtedness. None of the Parent Guarantor, the Company or the
------------
Borrower will, nor will it permit any of its Subsidiaries to, create, incur or
suffer to exist any Indebtedness except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the Amendment/Restatement Effective
Date and listed in Part A of Schedule I hereto;
(c) (i) Indebtedness of Domestic Subsidiaries of the Borrower to the
Borrower or to other Subsidiaries of the Borrower and (ii) Indebtedness of
Foreign Subsidiaries to the Borrower or to other Subsidiaries in an
aggregate principal amount not to exceed $10,000,000 at any one time
outstanding to the extent that the related Investment by the Borrower or
such other Subsidiaries is permitted under Section 9.08(f) hereof;
(d) additional Indebtedness of the Borrower and its Subsidiaries
(including, without limitation, (i) Capital Lease Obligations and other
Indebtedness secured by Liens permitted under Sections 9.06(i) or 9.06(j)
hereof and (ii) Indebtedness which is assumed in connection with the
Permitted Acquisitions, but excluding Guarantees permitted under Section
9.07(f) hereof) up to but not exceeding $10,000,000 at any one time
outstanding;
(e) loans and advances from the Borrower or the Company, as the case
may be, to the Parent Guarantor the proceeds of which are applied to
repurchase membership interests in AHI Advanstar L.L.C. from an employee
pursuant to the operating agreement of AHI Advanstar L.L.C., provided that
--------
the aggregate amount of such loans and advances, when added to the
<PAGE>
61
amount of cash dividends made pursuant to Section 9.09(c) hereof, shall not
exceed the limitations set forth in the proviso to Section 9.09(c) hereof;
-------
(f) Guarantees made by the Parent Guarantor or any of its
Subsidiaries of obligations of any Subsidiary of the Parent Guarantor
otherwise permitted hereby; and
(g) subordinated Indebtedness of the Borrower and subordinated
Guarantees of the Guarantors in respect of the Senior Subordinated Notes or
the Interim Financing, provided, that additional Senior Subordinated Notes
--------
may not be issued after the Amendment/Restatement Effective Date unless (i)
prior to the issuance thereof, no Default or Event of Default shall have
occurred and be continuing, (ii) after giving pro forma effect to such
--- -----
issuance, (x) no Default or Event of Default shall have occurred and be
continuing and (y) the Total Leverage Ratio shall not exceed 6.00 to 1.00
(with the covenants contained in Section 9.10 hereof, and the Total
Leverage Ratio, computed as at the last day of the most recently ended
fiscal quarter of the Company and, where applicable, as if such issuance
had occurred on the first day of each relevant period for testing such
compliance) and (iii) the Borrower shall have delivered to the
Administrative Agent a certificate of a Responsible Officer certifying as
to the matters specified in clauses (i) and (ii) above, together with
copies of all documentation entered into by the Borrower or any Guarantor
in connection with such issuance.
9.08 Investments. None of the Parent Guarantor, the Company or the
-----------
Borrower will, nor will it permit any of its Subsidiaries to, make or permit to
remain outstanding any Investments except:
(a) Investments outstanding on the Amendment/Restatement Effective
Date and listed in Part A of Schedule I hereto;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) (i) Investments by the Parent Guarantor in the Company or the
Borrower or in AHI Advanstar L.L.C. pursuant to Section 9.07(e) hereof and
(ii) Investments by the Company in the Borrower;
(e) Investments by the Borrower and its Subsidiaries in the Borrower
and its Domestic Subsidiaries;
(f) Investments by the Borrower and its Subsidiaries (in addition to
the Investments permitted pursuant to Section 9.08(i) hereof) in any
Foreign Subsidiaries, provided that, the aggregate amount outstanding of
--------
Investments made by the Borrower and its Domestic Subsidiaries under this
Section 9.08(f) since the Amendment/Restatement Effective Date shall not
exceed $10,000,000;
(g) Interest Rate Protection Agreements entered into as bona fide
---- ----
hedges and not for speculative purposes or to reverse the effects of any
Interest Rate Protection Agreements entered into as required by Section
9.12 hereof;
(h) loans and advances to employees of the Borrower or any of its
Subsidiaries (including for travel, entertainment and relocation expenses
in the ordinary course of business) in
<PAGE>
62
an aggregate principal amount outstanding at any one time not to exceed
$2,000,000 and loans and advances described in clause (i) of Section
9.09(c) hereof;
(i) Permitted Acquisitions;
(j) Investments in obligations of any purchaser of Property from the
Borrower or any of its Subsidiaries in a Disposition permitted pursuant to
Section 9.05 hereof; provided that the aggregate principal amount of such
--------
obligations created in respect of any Disposition shall not exceed 20% of
the gross sales price received by the Borrower and any of its Subsidiaries
in such Disposition;
(k) Investments consisting of transactions expressly permitted by
clause (x) or (y) of Section 9.05 hereof;
(l) Investments consisting of Guarantees constituting Indebtedness
expressly permitted by Section 9.07 hereof or constituting obligations
expressly excluded from the definition of "Indebtedness" pursuant to clause
(i), (ii) or (iii) of such definition; and
(m) Investments in joint ventures (including business associations,
but excluding the ventures referred to in Section 9.16(d) hereof), provided
--------
that the aggregate amount outstanding of such Investments made since the
Amendment/Restatement Effective Date shall not exceed $20,000,000.
9.09 Dividend Payments. Neither the Borrower nor the Company will,
-----------------
nor will it permit any of its Subsidiaries to, declare or make any Dividend
Payment at any time, provided that:
--------
(a) any Subsidiary of the Borrower may pay dividends to the Borrower
or to any Domestic Subsidiary of the Borrower;
(b) either the Borrower or the Company may pay cash dividends to the
Company or the Parent Guarantor, respectively, to pay (i) any salaries to
any employees or customary directors fees or (ii) any taxes and costs of
maintaining its existence and managing its ownership of the Borrower and
the Company, respectively, in the ordinary course of business so long as
that any such taxes or other costs are paid no later than fifteen Business
Days after the date on which the relevant dividend is made; and
(c) either the Borrower or the Company may pay cash dividends to the
Company or the Parent Guarantor, respectively, (i) to pay any participant
in any incentive compensation plans, employment agreements and employment
benefit plans established in the ordinary course of business an amount in
cash as may be negotiated in return for such participant's relinquishment
and waiver of all rights under such plan or agreement, or to make loans or
advances to employees to finance the exercise of stock options granted
pursuant to any such plan or agreement, (ii) to repurchase shares of common
stock from employees (and their permitted transferees) pursuant to any of
its stock repurchase plans or (iii) to repurchase membership interests in
AHI Advanstar L.L.C. from an employee pursuant to the operating agreement
of AHI Advanstar L.L.C.; provided, that (x) the aggregate amount of such
--------
dividends paid shall not exceed $5,000,000 in any twelve-month period or
$10,000,000 after the Amendment/Restatement Effective Date; and (y) no
Event of Default shall have then occurred and be continuing or would result
therefrom, provided, that clause (y) of this Section 9.09(c) shall not
--------
prohibit any transaction otherwise permitted under this Section 9.09(c)
that is consummated within 60 days of the date of declaration or the making
of any binding
<PAGE>
63
commitment in respect of any such transaction if at said date of
declaration or commitment no Event of Default shall have then occurred and
be continuing or would result therefrom.
0.1 Certain Financial Covenants.
---------------------------
(a) Total Leverage Ratio. The Company will not permit the Total
--------------------
Leverage Ratio to exceed the following respective ratios at any time within the
following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including Amendment/Restatement
Effective Date through December 30, 1999 6.50 to 1.00
From and including December 31, 1999
through December 30, 2000 5.75 to 1.00
From and including December 31, 2000
through December 30, 2001 5.25 to 1.00
From and including December 31, 2001
through December 30, 2002 4.50 to 1.00
From and including December 31, 2002
and at all times thereafter 4.00 to 1.00
</TABLE>
(b) Fixed Charges Coverage Ratio. The Company will not permit the
----------------------------
Fixed Charges Coverage Ratio to be less than the following respective ratios as
of the last day of any fiscal quarter occurring during the following respective
periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the Amendment/Restatement
Effective Date through December 30, 1999 1.05 to 1.00
From and including December 31, 1999
and at all times thereafter 1.10 to 1.00
</TABLE>
0.2 Certain Net Available Proceeds. The Parent Guarantor will
------------------------------
contribute, or will cause to be contributed, the Net Available Proceeds of any
Equity Issuance on or after the Amendment/Restatement Effective Date to the
Borrower within two Business Days after the Parent Guarantor or the relevant
Subsidiary receives such Net Available Proceeds.
0.3 Interest Rate Protection Agreements. The Borrower will within 60
-----------------------------------
days of the Amendment/Restatement Effective Date enter into, and thereafter
maintain in full force and effect, one or more Interest Rate Protection
Agreements with one or more of the Lenders providing for interest rate
protection on terms reasonably acceptable to the Administrative Agent to the
extent necessary to provide that at least 50% of the aggregate principal amount
of the Senior Subordinated Notes and the Term Loans outstanding on the
Amendment/Restatement Effective Date will be subject to either a fixed interest
rate or such interest rate protection for a period of at least three years
measured from the Amendment/Restatement Effective Date.
<PAGE>
64
0.4 Lines of Business. The Borrower will not, nor will it permit any
-----------------
of its Subsidiaries to, alter its line or lines of business activity if as a
result thereof the Borrower and its Subsidiaries would not be predominantly
engaged in the business of publishing through print and electronic media trade
and business magazines, operating trade and business expositions and conferences
and providing trade-related marketing and information services.
0.5 Transactions with Affiliates. Except as expressly permitted by
----------------------------
this Agreement, the Borrower will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (x) any Affiliate who is an individual may serve as a director,
- --------
officer or employee of the Borrower or any of its Subsidiaries and receive
reasonable compensation for his or her services in such capacity and (y) the
Borrower and its Subsidiaries may enter into transactions (other than extensions
of credit by the Borrower or any of its Subsidiaries to an Affiliate) providing
for the leasing of Property, the rendering or receipt of services or the
purchase or sale of inventory and other Property in the ordinary course of
business if the monetary or business consideration arising therefrom would be
substantially as advantageous to the Borrower and its Subsidiaries as the
monetary or business consideration that would be obtained in a comparable
transaction with a Person not an Affiliate.
0.6 Use of Proceeds. The proceeds of the Revolving Credit Loans
---------------
hereunder shall be used by the Borrower to finance the operations of the
Borrower and the Subsidiary Guarantors, to finance Permitted Acquisitions and
for other general business purposes, in each case in compliance with all
applicable legal and regulatory requirements. The proceeds of the Term Loans
hereunder, to the extent not replacing loans outstanding under the Existing
Credit Agreement, shall be used by the Borrower to finance a portion of the
purchase price of MAGIC pursuant to the MAGIC Transaction and to pay related
fees and expenses.
<PAGE>
65
0.7 Certain Obligations Respecting Domestic Subsidiaries.
----------------------------------------------------
(a) Subsidiary Guarantors. In the event that the Borrower or any of
---------------------
its Subsidiaries shall form or acquire any new Domestic Subsidiary, the Borrower
will cause each such new Subsidiary, promptly upon such creation or acquisition,
to become a "Subsidiary Guarantor" (and, thereby, an "Obligor") hereunder and to
pledge and grant a security interest in its Property pursuant to the Security
Agreement to the Administrative Agent for the benefit of the Lenders, pursuant
to a written instrument in form and substance satisfactory to the Administrative
Agent (it being acknowledged and agreed that an instrument in the form attached
hereto as Exhibit H hereto shall satisfy this requirement) and to deliver such
proof of corporate or partnership action, incumbency of officers, opinions of
counsel and other documents as is consistent with those delivered by each
"Obligor" pursuant to Section 7.01 hereof upon the Amendment/Restatement
Effective Date or as the Administrative Agent shall have requested. The
Borrower shall, or shall cause the Subsidiary of the Borrower which holds the
Capital Stock of such new Subsidiary to, execute and deliver an instrument in
form and substance reasonably satisfactory to the Administrative Agent (it being
acknowledged and agreed that an instrument in the form attached hereto as
Exhibit H hereto shall satisfy this requirement) providing for the pledge of
100% of the issued and outstanding Capital Stock of each new Subsidiary of the
Borrower (or, in the case of a Permitted Acquisition pursuant to which the
Borrower acquires, directly or indirectly, less than 100% of each class of
Equity Interests of the new Subsidiary, all of the issued and outstanding
Capital Stock of the new Subsidiary owned by the Borrower or any Subsidiary)
created or acquired after the Amendment/Restatement Effective Date (including a
Foreign Subsidiary, except to the extent that the Administrative Agent, in its
reasonable judgment determining that the transaction costs, regulating burdens
and operation restrictions resulting from such pledge are not justified by the
value of the Capital Stock to be pledged, provided, that in no event shall
--------
Capital Stock representing more than 65% of the voting power of the Capital
Stock of any such new Foreign Subsidiary be so pledged) to the Administrative
Agent for the benefit of the Lenders, and the Borrower shall deliver to the
Administrative Agent the stock certificates evidencing such Capital Stock
together with undated stock powers for each such certificate, duly executed in
blank.
(b) Ownership of Subsidiaries. Each of the Parent Guarantor, the
-------------------------
Company and the Borrower will, and will cause each of its respective
Subsidiaries to, take such action from time to time as shall be necessary to
ensure that the Parent Guarantor, the Company, the Borrower and each of its
respective Subsidiaries at all times owns (subject only to the Lien of the
Security Agreement) at least the same percentage of the issued and outstanding
shares of each class of stock (or the same percentage of ownership interests) of
each of its respective Subsidiaries as is owned on the Amendment/Restatement
Effective Date or, if later, the date of acquisition of such Subsidiary;
provided that if the Parent Guarantor and the Company merge, the surviving
- --------
entity of such merger shall take such action from time to time as shall be
necessary to ensure that such surviving entity at all times owns (subject only
to the Lien of the Security Agreement) at least the same percentage of the
issued and outstanding shares of each class of stock (or the same percentage of
ownership interests) of each of the Subsidiaries of either the Parent Guarantor
(other than the Company) or the Company as is owned on the Amendment/Restatement
Effective Date or, if later, the date of acquisition of such Subsidiary. In the
event that any additional shares of stock shall be issued by any Subsidiary, the
respective Obligor agrees forthwith to deliver to the Administrative Agent
pursuant to the Security Agreement the certificates evidencing such shares of
stock, accompanied by undated stock powers executed in blank and to take such
other action as the Administrative Agent shall request to perfect the security
interest created therein pursuant to the Security Agreement.
(c) Certain Restrictions. The Borrower will not permit any of its
--------------------
Subsidiaries to enter into, after the Amendment/Restatement Effective Date, any
indenture, agreement, instrument or other
<PAGE>
66
arrangement that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the incurrence or payment of Indebtedness, the granting of Liens, the
declaration or payment of dividends, the making of loans, advances or
Investments or the sale, assignment, transfer or other disposition of Property
other than any such prohibition or restraint on the granting of Lien or on the
sale, assignment, transfer of disposition of Property in (a) any industrial
revenue bonds, purchase money mortgages or Capital Lease Obligations permitted
by this Agreement and the other Loan Documents, provided that, such prohibition
--------
or restraint shall only be effective against the assets financed thereby or (b)
any license or other arrangement permitted by this Agreement concerning
intellectual property or other intangible assets, provided that, any such
--------
prohibition or restraint shall only be effective against the Intellectual
Property or assets covered thereby.
(d) Ventures. The parties hereby acknowledge that the ventures to
--------
jointly produce certain exhibitions, trade shows and show directories pursuant
to the following agreements have no obligations to become a Subsidiary Guarantor
or an Obligor: (i) the Agreement dated July 15, 1985 between Expocon and North
American Technology Inc., (ii) the Agreement dated June 5, 1990 between Expocon
and Advertising Research Foundation, (iii) the Agreement dated July 2, 1990
between Expocon and The International Licensing Industry Merchandisers'
Association, (iv) two Joint Venture Agreements, dated December, 1995 and October
1, 1996, respectively, between TEC and Gartner Group, Inc., (v) the Joint
Venture Agreement dated September 24, 1993 between On Demand and Charles A.
Pesko Ventures, Inc., (vi) the venture to jointly publish TE&M Directory
pursuant to an agreement, dated as of October 20, 1992, with Telecommunications
Industry Association, (vii) the Agreement dated February 9, 1998 between the
Borrower and the Video Software Dealers Association, (viii) the Agreement dated
February 18, 1998 between the Borrower and Wideband, Inc., (ix) the Agreement
dated January 22, 1998 between the Borrower and P.E. Schall GmbH and (x) the
Sponsorship Agreement, dated as of February 1, 1997, between Expocon and RB
Publishing, Inc. relating to Parcel Shipping.
0.8 Ownership of the Company and the Borrower. (a) (i) The Parent
-----------------------------------------
Guarantor will at all times cause the Company to be a Wholly Owned Subsidiary of
the Parent Guarantor and (ii) the Company will at all times cause the Borrower
to be a Wholly Owned Subsidiary of the Company, or (b) if the Parent Guarantor
and the Company merge, the surviving entity of such merger will at all times
cause the Borrower to be a Wholly Owned Subsidiary of such surviving entity.
0.9 Certain Payments and Modifications. None of the Parent
----------------------------------
Guarantor, the Company or the Borrower will, nor will it permit any of its
Subsidiaries to, (a) make or offer to make any payment, prepayment, repurchase
or redemption of or otherwise defease or segregate funds with respect to the
Senior Subordinated Notes (other than scheduled interest payments required to be
made in cash), (b) amend, modify, waive or otherwise change, or consent or agree
to any amendment, modification, waiver or other change to, any of the terms of
(i) the Senior Subordinated Notes or the Senior Subordinated Note Indenture
(other than any such amendment, modification, waiver or other change that (x)
(i) would extend the maturity or reduce the amount of any payment of principal
of the Senior Subordinated Notes or reduce the rate or extend the date for
payment of interest thereon or (ii) does not require the consent of any holder
of the Senior Subordinated Notes and is not adverse to the interests of the
Lenders and (y) does not involve the payment of a consent fee) or (ii) any MAGIC
Transaction Document, or (c) designate any Indebtedness (other than obligations
of the Obligors pursuant to the Loan Documents) as "Designated Senior
Indebtedness" for the purposes of the Senior Subordinated Note Indenture.
0.10 Special Purpose Company. Notwithstanding anything herein to the
-----------------------
contrary, neither the Parent Guarantor nor the Company shall (a) engage in any
business other than ownership of the Company, the Borrower, or any membership
interest in Technology Events Company, L.L.C., as the case may be, (b) own any
material assets other than Investments permitted to be made or held by it as
<PAGE>
67
provided in Section 9.08 hereof or (c) create, incur, assume or have outstanding
any Indebtedness or other obligations or liabilities except for obligations
under the Loan Documents, under Guarantees permitted pursuant to Section 9.07(f)
hereof, under any subordinated Guarantee referred to in Section 9.07(g) hereof
and under any incentive compensation plans, employment agreements, employment
benefit plans established in the ordinary course of business and stockholders
agreement, subject to the limitations set forth in Section 9.09 hereof.
0.11 Covenants Regarding Trademarks and Copyrights.
---------------------------------------------
(a) The Borrower shall notify the Administrative Agent promptly if
it knows or has reason to know that any application or registration relating to
any Trademark which is material to the conduct of the Borrower's or any other
Subsidiary's business may become abandoned, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or any court) regarding the Borrower's or such other
Subsidiary's ownership of any Trademark which is material to the conduct of the
Borrower's or such other Subsidiary's business, its right to register the same,
or to keep and maintain the same.
(b) The Borrower shall notify the Administrative Agent promptly
after it knows or has reason to know of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any proceeding in any court) regarding any Copyright which is
material to the conduct of the Borrower's or any other Subsidiary's business,
whereby (i) such Copyright may become invalid or unenforceable prior to its
expiration or termination, or (ii) the Borrower's or such other Subsidiary's
ownership of such Copyright, its right to register the same or to keep and
maintain the same may become affected.
(c) (i) The Borrower shall promptly notify the Administrative Agent
of any filing by the Borrower or any other Subsidiary, either itself or through
any agent, employee, licensee or designs (but in no event later than the
fifteenth day following such filing), of any application for the registration of
any Trademark or Patent with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof.
(ii) Concurrently with the delivery of quarterly and annual financial
statements of the Company pursuant to Section 9.01 hereof, the Borrower shall
provide the Administrative Agent and its counsel a complete and correct list of
all Copyrights, Patents and Trademarks owned by such Obligor that have not been
set forth as Annexes 2, 3 and 4 of the Security Agreement or on a prior list
provided under this paragraph (d), together with such documents and instruments
showing all filings and recordings for the protection of the security interest
of the Administrative Agent therein pursuant to the agreements of the United
States Patent and Trademark Office or the United States Copyright Office.
(iii) Upon request of the Administrative Agent, the relevant Obligor
shall execute and deliver any and all agreements, instruments, documents, and
papers as the Administrative Agent may request to evidence the Administrative
Agent's security interest in the Copyrights, Patents, Trademarks and the General
Intangibles referred to in clauses (i) and (ii), including, without limitation,
the goodwill of the Borrower or such other Subsidiary, relating thereto or
represented thereby (or such other Copyrights, Trademarks, Patent or the General
Intangibles relating thereto or represented thereby as the Administrative Agent
may request).
(d) The Borrower will take all necessary actions, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office or the United States Copyright Office, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
<PAGE>
68
registration of the Trademarks and Copyrights which are material to the conduct
of any of the Borrower's or any other Subsidiary's business, including, without
limitation, filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings.
(e) In the event that any Trademark, Copyright or Patent is
infringed, misappropriated or diluted by a third party, the Borrower shall
notify the Administrative Agent promptly after it learns thereof and shall,
unless the Borrower or the relevant Subsidiary, as the case may be, shall
reasonably determine that such Trademark, Copyright or Patent is not material to
the conduct of the Borrower or such Subsidiary's business, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and take such other actions
as the Borrower or such Subsidiary, as the case may be, shall reasonably deem
appropriate under the circumstances to protect such Trademark or Copyright.
Section 1. Events of Default. If one or more of the following events
-----------------
(herein called "Events of Default") shall occur and be continuing:
-----------------
(a) The Borrower shall (i) default in the payment when due (whether
at stated maturity or upon mandatory or optional prepayment) of any
principal of any Loan or any Reimbursement Obligation; or (ii) default in
the payment of any interest on any Loan or any fee or any other amount
payable by it hereunder or under any other Loan Document when due and such
default shall have continued unremedied for three or more days; or
(b) The Parent Guarantor, the Company, the Borrower or any of its
Subsidiaries (the Parent Guarantor, the Company, the Borrower and its
Subsidiaries herein collectively called the "Relevant Parties") shall
----------------
default in the payment when due of any principal of or interest on any of
its other Indebtedness in excess of $5,000,000 or more; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of time or
both) to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness to
become due, or to be prepaid in full (whether by redemption, purchase,
offer to purchase or otherwise), prior to its stated maturity; or any
Relevant Party shall default in the payment when due of any amount
aggregating $5,000,000 or more under any Interest Rate Protection
Agreement; or any event specified in any Interest Rate Protection Agreement
shall occur if the effect of such event is to cause, or (with the giving of
any notice or the lapse of time or both) to permit, termination or
liquidation payment or payments aggregating $1,000,000 or more to become
due; or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document (or in any modification or supplement
hereto or thereto) by any Relevant Party, or any certificate furnished to
any Lender or the Administrative Agent pursuant to the provisions hereof or
thereof, shall prove to have been false or misleading as of the time made
or furnished in any material respect; or
(d) The Borrower, the Company (as applicable) or the Parent Guarantor
(as applicable) shall default in the performance of any of its obligations
under any of Sections 9.01(f), 9.03(a), 9.05, 9.06, 9.07, 9.08, 9.09, 9.10,
9.11, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18, 9.19 or 9.20 hereof or any
Obligor shall default in the performance of any of its obligations under
Section 4.02 or 5.02 of the Security Agreement or Section 6 or 7 of each of
the Mortgages; or any Obligor shall default in the performance of any of
its other obligations in this Agreement or any other Loan Document and such
default shall continue unremedied for a period of thirty or more days after
<PAGE>
69
notice thereof to the Borrower by the Administrative Agent or any Lender
(through the Administrative Agent); or
(e) Any Relevant Party shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) Any Relevant Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial part
of its Property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or partnership action for the
purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the affected Relevant Party, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of such Relevant Party or of all or any substantial
part of its Property or (iii) similar relief in respect of such Relevant
Party under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or an order for relief against
any Relevant Party shall be entered in an involuntary case under the
Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money of
$5,000,000 or more in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect of
such judgment), shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against any Relevant Party
and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof and such Relevant Party shall
not, within said period of 30 days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 9.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Majority Lenders shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or the PBGC (or any combination
of the foregoing) that, in the determination of the Majority Lenders, would
(either individually or in the aggregate) have a Material Adverse Effect;
or
(j) A reasonable basis shall exist for the assertion against the
Parent Guarantor or any of its Subsidiaries, or any predecessor in interest
of the Parent Guarantor or any of its Subsidiaries or Affiliates, of (or
there shall have been asserted against the Parent Guarantor or any of its
Subsidiaries) an Environmental Claim that, in the judgment of the Majority
Lenders is reasonably likely to be determined adversely to the Company or
any of its Subsidiaries, and the
<PAGE>
70
amount thereof (either individually or in the aggregate) is reasonably
likely to have a Material Adverse Effect (insofar as such amount is payable
by the Company or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor); or
(k) (i) prior to the initial registered public offering of the
Parent Guarantor's common stock, (x) the H&F Affiliated Parties shall cease
to own or control, directly or indirectly, more than 51% of the capital
stock of the Parent Guarantor, (y) the Parent Guarantor shall cease to own
or control directly or indirectly all of the capital stock of the Borrower
or (z) a Specified Change of Control shall occur, or (ii) on and after the
date of the initial registered public offering of the Parent Guarantor's
common stock, (w) the H&F Affiliated Parties shall cease to own or control,
directly or indirectly, more than 35% of the capital stock of the Parent
Guarantor, (x) any Person or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the H&F Affiliated Parties, shall become, or
------------
obtain rights (whether by means of warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of a percentage of the
outstanding shares of common stock of the Parent Guarantor which is greater
than the percentage of the outstanding shares of common stock of the Parent
Guarantor beneficially owned by the H&F Affiliated Parties, (y) the Parent
Guarantor shall cease to own or control directly or indirectly all of the
capital stock of the Borrower or (z) a Specified Change of Control shall
occur; or
(l) (i) The Liens created by the Security Documents on the capital
stock of the Borrower and its Subsidiaries shall at any time not constitute
a valid and perfected Lien in favor of the Administrative Agent, free and
clear of all other Liens, or, (ii) except for expiration in accordance with
its terms, any of the Security Documents shall for whatever reason be
terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by any Obligor, or (iii) Section 6 shall cease,
for any reason, to be in full force and effect or any Guarantor shall so
assert; or
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10 with respect to any Obligor, the
Administrative Agent may (and upon the request of the Majority Lenders shall),
by notice to the Borrower, terminate the Commitments and/or declare the
principal amount then outstanding of, and the accrued interest on, the Loans,
the Reimbursement Obligations and all other amounts payable by the Obligors
hereunder and under any Notes (including, without limitation, any amounts
payable under Section 5.05 or 5.06 hereof) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by each Obligor; and (2) in the case of the occurrence of an
Event of Default referred to in clause (f) or (g) of this Section 10 with
respect to any Obligor, the Commitments shall automatically be terminated and
the principal amount then outstanding of, and the accrued interest on, the
Loans, the Reimbursement Obligations and all other amounts payable by the
Obligors hereunder and under any Notes (including, without limitation, any
amounts payable under Section 5.05 or 5.06 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor.
<PAGE>
71
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Administrative Agent has declared the principal amount
then outstanding of, and accrued interest on, the Revolving Credit Loans and all
other amounts payable by the Borrower hereunder and under any Notes to be due
and payable), the Borrower agrees that it shall, if requested by the
Administrative Agent or the Majority Revolving Credit Lenders through the
Administrative Agent (and, in the case of any Event of Default referred to in
clause (f) or (g) of this Section 10 with respect to the Borrower or the Parent
Guarantor, forthwith, without any demand or the taking of any other action by
the Administrative Agent or such Lenders) provide cover for the Letter of Credit
Liabilities by paying to the Administrative Agent immediately available funds in
an amount equal to the then aggregate undrawn face amount of all Letters of
Credit, which funds shall be held by the Administrative Agent in the Collateral
Account as collateral security in the first instance for the Letter of Credit
Liabilities and be subject to withdrawal only as therein provided.
Section 11. The Administrative Agent.
------------------------
11.01 Appointment, Powers and Immunities. Each Lender hereby
----------------------------------
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 11.05 and the first sentence of Section 11.06 hereof
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Loan Documents, and shall not
by reason of this Agreement or any other Loan Document be a trustee for any
Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in
any other Loan Document, or in any certificate or other document referred
to or provided for in, or received by any of them under, this Agreement or
any other Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Note or
any other Loan Document or any other document referred to or provided for
herein or therein or for any failure by the Borrower or any other Person to
perform any of its obligations hereunder or thereunder;
(c) shall not, except to the extent expressly instructed by the
Majority Lenders with respect to collateral security under the Security
Documents, be required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Loan Document; and
(d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or
willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or attorneys-
in-fact selected by it in good faith. The Administrative Agent may deem and
treat the payee (or Registered Holder, as the case may be) of a Note as the
holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent.
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72
11.02 Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telegram or
cable) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Loan Document, the Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders or, if provided herein, in accordance with the instructions given by the
Majority Revolving Credit Lenders, the Majority Term Lenders or all of the
Lenders as is required in such circumstance, and such instructions of such
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
--------
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received notice from a Lender or the Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders or, if
provided herein, the Majority Revolving Credit Lenders or the Majority Term
Lenders, provided that, unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Lenders
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Majority Lenders, the Majority Revolving Credit Lenders, the Majority Term
Lenders or all of the Lenders.
11.04 Rights as a Lender. With respect to its Commitments and the
------------------
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Chase (and any successor acting as Administrative Agent)
and its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Obligors (and any of their
Subsidiaries or Affiliates) as if it were not acting as the Administrative
Agent, and Chase (and any such successor) and its affiliates may accept fees and
other consideration from the Obligors for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Borrower under said Section 12.03)
ratably in accordance with the aggregate principal amount of the Loans and
Reimbursement Obligations held by the Lenders (or, if no Loans or Reimbursement
Obligations are at the time outstanding, ratably in accordance with their
respective Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Administrative Agent (including by any Lender) arising out
of or by reason of any investigation in or in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses that the Borrower
is obligated to pay under Section 12.03 hereof, but excluding, unless a Default
has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the
<PAGE>
73
enforcement of any of the terms hereof or thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
--------
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
11.06 Non-Reliance on Administrative Agent and Other Lenders. Each
------------------------------------------------------
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Parent Guarantor and its Subsidiaries and decision to enter into this Agreement
and that it will, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or under any other
Loan Document. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by any Obligor of this Agreement or
any of the other Loan Documents or any other document referred to or provided
for herein or therein or to inspect the Properties or books of the Parent
Guarantor or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or under the Security Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Parent Guarantor or any of its Subsidiaries (or any
of their affiliates) that may come into the possession of the Administrative
Agent or any of its affiliates.
11.07 Failure to Act. Except for action expressly required of the
--------------
Administrative Agent hereunder and under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
----------------------------------------------
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Borrower and the Parent Guarantor, and the Administrative
Agent may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the right
to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent's giving of notice of resignation or the Majority Lenders' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, that shall be a
bank that has an office in New York, New York with a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 11 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.
11.09 Consents under Other Loan Documents. Except as otherwise
-----------------------------------
provided in Section 12.04 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the Loan Documents, provided that, without the prior consent of each Lender, the
--------
Administrative Agent
<PAGE>
74
shall not (except as provided herein, in the Security Documents or in the
Assumption Agreements) release any collateral or otherwise terminate any Lien
under any Security Document providing for collateral security, agree to
additional obligations being secured by such collateral security (unless the
Lien for such additional obligations shall be junior to the Lien in favor of the
other obligations secured by such Security Document, in which event the
Administrative Agent may consent to such junior Lien provided that it obtains
the consent of the Majority Lenders thereto), alter the relative priorities of
the obligations entitled to the benefits of the Liens created under the Security
Documents, except that no such consent shall be required, and the Administrative
Agent is hereby authorized, to release any Lien covering Property that is the
subject of either a disposition of Property permitted hereunder or a disposition
to which the Majority Lenders have consented.
Section 12. Miscellaneous.
-------------
12.01 Waiver. No failure on the part of the Administrative Agent or
------
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Each Obligor irrevocably waives, to the fullest extent permitted by
applicable law, any claim that any action or proceeding commenced by the
Administrative Agent or any Lender relating in any way to this Agreement should
be dismissed or stayed by reason, or pending the resolution, of any action or
proceeding commenced by any Obligor relating in any way to this Agreement
whether or not commenced earlier. To the fullest extent permitted by applicable
law, the Obligors shall take all measures necessary for any such action or
proceeding commenced by the Administrative Agent or any Lender to proceed to
judgment prior to the entry of judgment in any such action or proceeding
commenced by any Obligor.
12.02 Notices. All notices, requests and other communications
-------
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telecopy) delivered to the intended recipient addressed as follows in the case
of the Obligors and the Administrative Agent and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case
of each Lender (which shall be made available to the Borrower upon request), or
to such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Loans:
The Parent Guarantor: AHI Holding Corp.
c/o Hellman & Friedman
One Maritime Plaza
12th Floor
San Francisco, CA 94111
Attention: Mitchell R. Cohen
Telecopy: (415) 788-0176
Telephone: (415) 788-5111
<PAGE>
75
The Company: Advanstar Holdings, Inc.
575 Boylston Street
Boston, MA 02116
Attention: Robert Krakoff
Telecopy: (617) 282-2756
Telephone: (617) 282-2059
The Borrower: Advanstar Communications Inc.
7500 Old Oak Boulevard
Cleveland, OH 44130-3369
Attention: David W. Montgomery
Telecopy: (216) 826-2833
Telephone: (216) 826-2873
The other Obligors: c/o Advanstar Communications Inc.
7500 Old Oak Boulevard
Cleveland, OH 44130-3369
Attention: David W. Montgomery
Telecopy: (216) 826-2833
Telephone: (216) 826-2873
with a copy to: Hellman & Friedman LLC
One Maritime Plaza
12th Floor
San Francisco, CA 94111
Attention: Mitchell R. Cohen
Telecopy: (415) 788-0176
Telephone: (415) 788-5111
The Administrative The Chase Manhattan Bank
Agent: 270 Park Avenue
37th Floor
New York, New York 10017
Attention: Mitchell Gervis
Telecopy: (212) 270-4584
Telephone: (212) 270-8265
with a copy to: The Chase Manhattan Bank
Loan and Agency Services Group
One Chase Manhattan Plaza
New York, New York 10081
Attention: Janet Belden
Telecopy: (212) 552-5658
Telephone: (212) 552-7277
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
12.03 Expenses, Etc. The Borrower agrees to pay or reimburse each of
--------------
the Lenders and the Administrative Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Administrative
<PAGE>
76
Agent (including, without limitation, the reasonable fees and expenses of legal
counsel to Chase) in connection with (i) the negotiation, preparation, execution
and delivery of this Agreement and the other Loan Documents and the extension of
credit hereunder, (ii) the negotiation or preparation of any modification,
supplement or waiver of any of the terms of this Agreement or any of the other
Loan Documents (whether or not consummated) and (iii) the termination of the
Commitments, the payment or prepayment of the Loans, or the release of any
collateral under any of the Security Documents; (b) all reasonable out-of-pocket
costs and expenses of the Lenders and the Administrative Agent (including,
without limitation, the reasonable fees and expenses of legal counsel) in
connection with (i) any Default and any enforcement or collection proceedings
resulting therefrom, including, without limitation, all manner of participation
in or other involvement with (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, (y) judicial or regulatory
proceedings and (z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this Section 12.03; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to herein or
therein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated by any Security Document or any other document
referred to therein.
The Borrower hereby agrees to indemnify the Administrative Agent and
each Lender and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
incurred by the Administrative Agent to any Lender, whether or not the
Administrative Agent or any Lender is a party thereto) arising out of or by
reason of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Borrower or
any of its Subsidiaries of the proceeds of any of the extensions of credit
hereunder, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). Without limiting the generality of the
foregoing, the Borrower will indemnify the Administrative Agent and each Lender
from, and hold the Administrative Agent and each Lender harmless against, any
losses, liabilities, claims, damages or expenses described in the preceding
sentence (excluding, as provided in the preceding sentence, any loss, liability,
claim, damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any Environmental Law
as a result of the past, present or future operations of the Borrower or any of
its Subsidiaries (or any predecessor in interest to the Borrower or any of its
Subsidiaries), or the past, present or future condition of any site or facility
owned, operated or leased at any time by the Borrower or any of its Subsidiaries
(or any such predecessor in interest), or any Release or threatened Release of
any Hazardous Materials at or from any such site or facility, excluding any such
Release or threatened Release that shall occur during any period when the
Administrative Agent or any Lender shall be in possession of any such site or
facility following the exercise by the Administrative Agent or any Lender of any
of its rights and remedies hereunder or under any of the Security Documents, but
including any such Release or threatened Release occurring during such period
that is a continuation of conditions previously in existence, or of practices
employed by the Borrower and its Subsidiaries, at such site or facility.
12.04 Amendments, Etc. Except as otherwise expressly provided in
----------------
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Borrower and the Majority
Lenders, or by the Borrower and the Administrative Agent acting with the consent
of the Majority Lenders, and any provision of this Agreement may be waived by
<PAGE>
77
the Majority Lenders or by the Administrative Agent acting with the consent of
the Majority Lenders; provided that: no modification, supplement or waiver
--------
shall:
(a) unless by an instrument signed by each Lender directly affected
thereby or by the Administrative Agent acting with the consent of each
Lender directly affected thereby, (i) increase, or extend the term of any
of the Commitments, or extend the time or waive any requirement for the
reduction or termination of any of the Commitments, (ii) extend the date
fixed for the payment of principal of or interest on any Loan, the
Reimbursement Obligations or any fee hereunder, (iii) reduce the amount of
any such payment of principal or (iv) reduce the rate at which interest is
payable thereon or any fee is payable hereunder;
(b) unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the consent of all of the Lenders, (i)
consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents, (ii)
alter the terms of this Section 12.04, (iii) modify the definition of the
term "Majority Lenders", (iv) release any Guarantor from any of its
guarantee obligations under Section 6 hereof (other than any release of any
Guarantor in connection with any Disposition permitted under Section
2.10(e) hereof or pursuant to Section 9.05 hereof) or (v) release all or
substantially all of the Collateral;
(c) unless by an instrument signed by the Majority Revolving Credit
Lenders, Majority Tranche A Lenders and Majority Tranche B Lenders or by
the Administrative Agent acting with the consent of the Majority Revolving
Credit Lenders, Majority Tranche A Lenders and Majority Tranche B Lenders,
alter the manner in which payments or prepayments of principal, interest or
other amounts hereunder shall be applied as between the Lenders or Types or
Classes of Loans;
(d) reduce the percentage in the definition of the term "Majority
Tranche A Lenders" without the consent of all the Tranche A Lenders;
(e) reduce the percentage in the definition of the term "Majority
Tranche B Lenders" without the consent of all the Tranche B Lenders;
(f) reduce the percentage in the definition of the term "Majority
Revolving Credit Lenders" without the consent of all the Revolving Credit
Lenders;
(g) amend, modify or waive any provision of Section 11 hereof or any
other rights or duties of the Administrative Agent hereunder without the
written consent of the then Administrative Agent;
(h) amend, modify or waive any provision of Section 6 hereof without
the written consent of each Guarantor;
(i) amend, modify or waive any provision relating to rights or duties
of the Issuing Lender hereunder without the written consent of the Issuing
Lender; or
(j) unless by an instrument signed by all of the affected Lenders,
convert any Loan into equity of any Obligor.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders and the Administrative Agent
<PAGE>
78
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
Anything in this Agreement to the contrary notwithstanding, no waiver
or modification of any provision of this Agreement that has the effect (either
immediately or at some later time) of enabling the Borrower to satisfy a
condition precedent to the making of a Revolving Credit Loan shall be effective
against the Revolving Credit Lenders for the purposes of the Revolving Credit
Commitments unless the Majority Revolving Credit Lenders shall have concurred
with such waiver or modification.
12.05 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.06 Assignments and Participations.
------------------------------
(a) No Obligor may assign any of its rights or obligations hereunder
or under any Notes without the prior consent of all of the Lenders and the
Administrative Agent.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Affiliate thereof or, with the prior written consent of the
Borrower and the Administrative Agent (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution or
investment funds which invest in credit facilities (an "Assignee") all or any
--------
part of its rights and obligations under this Agreement and any Notes,
including, without limitation, its Revolving Credit Commitment, Term Loan
Commitments, Loans, and, if such Lender is a Revolving Credit Lender, its Letter
of Credit Interest (pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit E, executed by such Assignee, such assigning Lender (and, in
the case of an Assignee that is not then a Lender or an Affiliate thereof, by
the Borrower and the Administrative Agent) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that (unless
--------
the Borrower and the Administrative Agent otherwise consent in writing)
(i) except to the extent the Borrower and the Administrative
Agent shall otherwise consent, any such partial assignment (other than to
another Lender) shall be in an amount at least equal to $5,000,000;
(ii) each such assignment by a Lender of its Revolving Credit
Loans, Revolving Credit Note, Revolving Credit Commitment or Letter of
Credit Interest shall be made in such manner so that the same portion of
its Revolving Credit Loans, Revolving Credit Note, Revolving Credit
Commitment and Letter of Credit Interest is assigned to the respective
assignee;
(iii) each such assignment by a Lender of its Tranche A Term
Loans or Tranche A Term Loan Commitment shall be made in such manner so
that the same portion of its Tranche A Term Loans and Tranche A Term Loan
Commitment is assigned to the respective assignee; and
(iv) each such assignment by a Lender of its Tranche B Term
Loans or Tranche B Term Loan Commitment shall be made in such manner so
that the same portion of its Tranche B Term Loans and Tranche B Term Loan
Commitment is assigned to the respective assignee.
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79
Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Revolving Credit Commitment and, if applicable, Letter of Credit Interest
(or a portion thereof) and the Term Loan Commitment and the Term Loans, as set
forth therein, and (y) the assigning Lender thereunder shall be released from
its obligations under this Agreement to the extent that such obligations shall
have been expressly assumed by the Assignee pursuant to such Assignment and
Acceptance (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto but shall
nevertheless continue to be entitled to the benefits of Sections 5.01, 5.05,
5.06, 5.07 and 12.03). Notwithstanding the foregoing, no Assignee, which as of
the date of any assignment to it pursuant to this Section 12.06(b) would be
entitled to receive any greater payment under Section 5.01 or 5.07 than the
assigning Lender would have been entitled to receive as of such date under such
Sections with respect to the rights assigned, shall be entitled to receive such
payments unless the Borrower has expressly consented in writing to waive the
benefit of this provision at the time of the assignment.
(c) A Lender may sell or agree to sell to one or more other Persons
(each a "Participant") a participation in all or any part of any Loans or Letter
-----------
of Credit Interest held by it, or in its Commitments, provided that such
--------
Participant shall not have any rights or obligations under this Agreement or any
Note or any other Loan Document (the Participant's rights against such Lender in
respect of such participation to be those set forth in the agreements executed
by such Lender in favor of the Participant). All amounts payable by the
Borrower to any Lender under Section 5 hereof in respect of Loans, Letter of
Credit Interest held by it, and its Commitments, shall be determined as if such
Lender had not sold or agreed to sell any participations in such Loans, Letter
of Credit Interest and Commitments, and as if such Lender were funding each of
such Loan, Letter of Credit Interest and Commitments in the same way that it is
funding the portion of such Loan, Letter of Credit Interest and Commitments in
which no participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Loan Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term of such Lender's related
Commitment or extend the amount or date of any scheduled reduction of such
Commitment pursuant to Section 2.04 hereof, (ii) extend the date fixed for the
payment of principal of or interest on the related Loan or Loans, Reimbursement
Obligations or any portion of any fee hereunder payable to the Participant,
(iii) reduce the amount of any such payment of principal, (iv) reduce the rate
at which interest is payable thereon, or any fee hereunder payable to the
Participant, to a level below the rate at which the Participant is entitled to
receive such interest or fee or (v) consent to any modification, supplement or
waiver hereof or of any of the other Loan Documents to the extent that the same,
under Section 11.09 or 12.04 hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Lender may (without notice
to the Borrower, the Administrative Agent or any other Lender and without
payment of any fee) (i) assign and pledge all or any portion of its Loans and
its Notes to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank and
(ii) assign all or any portion of its rights under this Agreement and its Loans
and its Notes to an affiliate. No such assignment shall release the assigning
Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 12.12(b) hereof.
<PAGE>
80
(f) Anything in this Section 12.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan or Reimbursement
Obligation held by it hereunder to the Borrower or any of its Affiliates or
Subsidiaries without the prior consent of each Lender.
(g) The Administrative Agent, on behalf of the Borrower, shall
maintain at its Principal Office a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
--------
and addresses of the Lenders and the Revolving Credit Commitment and Term Loan
Commitments of, and the principal amount of the Loans owing to, and any Notes
evidencing such Loans owned by, each Lender from time to time. Notwithstanding
anything in this Agreement to the contrary, the Borrower, the Administrative
Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of any Loan, any Notes and the Revolving Credit
Commitments and Term Loan Commitments recorded therein for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(h) Notwithstanding anything in this Agreement to the contrary, no
assignment under Section 12.06(b) of any rights or obligations under or in
respect of the Loans or any Notes evidencing such Loans shall be effective
unless and until the Administrative Agent shall have recorded the assignment
pursuant to Section 12.06(g). Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an Affiliate thereof, by the Borrower and the
Administrative Agent), together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give prompt notice of such acceptance and recordation to the
Lenders and the Borrower. On or prior to such effective date, the assigning
Lender shall surrender any outstanding Notes held by it all or a portion of
which are being assigned, and the Borrower, at its own expense, shall, upon the
request to the Administrative Agent by the assigning Lender or the Assignee, as
applicable, execute and deliver to the Administrative Agent (in exchange for the
outstanding Notes of the assigning Lender, if any) a new Revolving Credit Note,
Tranche A Term Note and/or Tranche B Term Note, as the case may be (such new
Note to be a new Registered Note in the case of an assignment by or to a
Qualified Foreign Lender), to the order of such Assignee in an amount equal to
(i) in the case of a Revolving Credit Note, the amount of such Assignee's
Revolving Credit Commitment, (ii) in the case of a Tranche A Term Note, the
amount of such Assignee's Tranche A Term Loans and (iii) in the case of a
Tranche B Term Note, the amount of such Assignee's Tranche B Term Loan, and, if
the assigning Lender has retained a Revolving Credit Commitment or Term Loan
hereunder, a new Revolving Credit Note, Tranche A Term Note and/or Tranche B
Term Note, as the case may be, to the order of the assigning Lender in an amount
equal to (i) in the case of a Revolving Credit Note, the lesser of (A) the
amount of such Lender's Revolving Credit Commitment and (B) the aggregate
principal amount of all Revolving Credit Loans made by such Lender, (ii) in the
case of a Tranche A Term Note, the amount of such Lender's Tranche A Term Loans
and (iii) in the case of a Tranche B Term Note, the amount of such Lender's
Tranche B Term Loan, in each case with respect to the relevant Loan or Revolving
Credit Commitment after giving effect to such Assignment and Acceptance. Any
such new Notes shall be dated the Closing Date, and shall otherwise be in the
form of any Note replaced thereby. Any Notes surrendered by the assigning
Lender shall be returned by the Administrative Agent to the Borrower marked
"cancelled".
12.07 Survival. The obligations of the Borrower under Sections 5.01,
--------
5.05, 5.06, 5.07 and 12.03 hereof, the obligations of each Guarantor under
Section 6.03 hereof, and the obligations of the Lenders under Section 11.05
hereof, shall survive the repayment of the Loans and Reimbursement Obligations
and the termination of the Commitments and, in the case of any Lender that may
assign any
<PAGE>
81
interest in its Commitments, Loans or letter of Credit Interest hereunder, shall
survive the making of such assignment, notwithstanding that such assigning
Lender may cease to be a "Lender" hereunder. In addition, each representation
and warranty made, or deemed to be made by a notice of any extension of credit
(whether by means of a Loan or a Letter of Credit) herein or pursuant hereto
shall survive the making of such representation and warranty, and no Lender
shall be deemed to have waived, by reason of making any extension of credit
hereunder (whether by means of a Loan or a Letter of Credit) any Default that
may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that such Lender or the Administrative
Agent may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time such extension of
credit was made.
12.08 Captions. The table of contents and captions and section
--------
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.10 Governing Law; Submission to Jurisdiction. This Agreement and
-----------------------------------------
any Notes shall be governed by, and construed in accordance with, the law of the
State of New York. Each Obligor hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
the Supreme Court of the State of New York sitting in New York County (including
its Appellate Division), and of any other appellate court in the State of New
York, for the purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each Obligor hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
12.11 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE ADMINISTRATIVE
--------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
12.12 Treatment of Certain Information; Confidentiality. (a) Each of
-------------------------------------------------
the Borrower and the Parent Guarantor acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to the Borrower, the Parent Guarantor or one or more of their
Subsidiaries (in connection with this Agreement or otherwise) by any Lender or
by one or more Subsidiaries or affiliates of such Lender and each of the
Borrower and the Parent Guarantor hereby authorizes each Lender to share any
information delivered to such Lender by the Borrower, the Parent Guarantor and
their Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender to enter into this Agreement, to any such Subsidiary or
affiliate, it being understood that any such Subsidiary or affiliate receiving
such information shall be bound by the provisions of paragraph (b) below as if
it were a Lender hereunder. Such authorization shall survive the repayment of
the Loans and Reimbursement Obligations and the termination of the Commitments.
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the
<PAGE>
82
same nature and in accordance with safe and sound banking or investment
practices, any non-public information supplied to it by the Parent Guarantor or
the Borrower pursuant to this Agreement that is identified by such Person as
being confidential at the time the same is delivered to the Lenders or the
Administrative Agent, provided that nothing herein shall limit the disclosure of
--------
any such information (i) after such information shall have become public (other
than through a violation of this Section 12.12), (ii) to the extent required by
statute, rule, regulation or judicial process, (iii) to counsel for any of the
Lenders or the Administrative Agent, (iv) to bank examiners (or any other
regulatory authority having jurisdiction over any Lender or the Administrative
Agent), or to auditors or accountants, (v) to the Administrative Agent or any
other Lender (or to Chase Securities, Inc.), (vi) in connection with any
litigation to which any one or more of the Lenders or the Administrative Agent
is a party, or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document, (vii) to a Subsidiary or affiliate
of such Lender as provided in paragraph (a) above, (viii) to any direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such counterparty agrees to be bound by the provisions
of this Section 12.12(b), or (ix) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes and delivers to the respective Lender a
Confidentiality Agreement substantially in the form of Exhibit D hereto (or
executes and delivers to such Lender an acknowledgement to the effect that it is
bound by the provisions of this Section 12.12(b), which acknowledgement may be
included as part of the respective assignment or participation agreement
pursuant to which such assignee or participant acquires an interest in the Loans
or Letter of Credit Interest hereunder); provided, further, that (x) unless
-------- -------
specifically prohibited by applicable law or court order, each Lender and the
Administrative Agent shall, prior to disclosure thereof, notify the Borrower of
any request for disclosure of any such non-public information (A) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) or (B) pursuant to legal process and (y) in no event shall
any Lender or the Administrative Agent be obligated or required to return any
materials furnished by the Parent Guarantor or the Borrower. The obligations of
each Lender under this Section 12.12 shall supersede and replace the obligations
of such Lender under the confidentiality letter in respect of this financing
signed and delivered by such Lender to the Borrower prior to the
Amendment/Restatement Effective Date; in addition, the obligations of any
assignee that has executed a Confidentiality Agreement in the form of Exhibit D
hereto shall be superseded by this Section 12.12 upon the date upon which such
assignee becomes a Lender hereunder pursuant to Section 12.06(b) hereof.
<PAGE>
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
ADVANSTAR COMMUNICATIONS INC.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
AHI HOLDING CORP.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
ADVANSTAR HOLDINGS, INC.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
SUBSIDIARY GUARANTORS:
---------------------
ART EXPOSITIONS INTERNATIONAL, INC.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
EXPOCON MANAGEMENT ASSOCIATES, INC.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
ON DEMAND MARKETING, INC.
By: /s/ Robert L. Krakoff
_________________________________
Title: Chairman & Chief
Executive Officer
<PAGE>
84
TECHNOLOGY EVENTS COMPANY, LLC
By: /s/ Robert L. Krakofff
_________________________________
Title: Chairman & Chief
Executive Officer
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
July 1, 1996 by and between AHI HOLDING CORP., a Delaware corporation (the
"Company") and Robert L. Krakoff ("Executive").
WHEREAS, the Company has acquired, pursuant to a Merger Agreement dated as
of April 12, 1996, and currently operates certain trade exposition and
publishing businesses; and
WHEREAS, the Company wishes to employ Executive and Executive is prepared
to serve in those capacities required by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Position and Authority. The Company agrees to employ the Executive,
----------------------
and the Executive accepts such employment and agrees to serve the Company as the
Chairman of the Board of Directors and Chief Executive Officer of the Company
and its respective Subsidiaries, for the compensation and benefits detailed in
Sections 3 and 4 hereof. It is understood that the Executive will report
directly to the Board of Directors and that no other officer shall regularly so
report. The Executive shall be the highest ranking officer of the Company and
shall have (in all cases subject to the overall authority and control of the
Board of Directors) such authority as is typical for executives having similar
positions in similar companies. A "Subsidiary" shall be any company in which
the Company beneficially owns more than 50% of the voting power of such
company's outstanding voting securities.
2. Duties. Executive shall devote substantially all of his business time
------
(subject to four weeks of vacation, or such greater amount as is authorized by
the Board of Directors) to the affairs of the Company during the employment
term, except as may be consented to by the Board of Directors. Notwithstanding
the foregoing, to the extent that it does not materially interfere with the
performance of his duties, Executive may devote such business time as is
reasonably necessary to his duties as a director of not more than two business
corporations not affiliated with the Company, and Executive may devote business
time to any charitable or not-for-profit activities. Executive shall perform
such duties and responsibilities as the Board of Directors of the Company may
from time to time reasonably determine, provided that such duties and
responsibilities are consistent with Executive's position as Chief Executive
Officer of the Company and do not diminish Executive's authority as set forth in
Section 1 hereof. Executive will not be required to relocate his permanent
residence outside of Boston, Massachusetts.
<PAGE>
3. Base Compensation and Bonus.
---------------------------
(a) Base Composition. Executive will be compensated at a base salary
----------------
rate of $400,000 per year (or such higher rate as may be set from time to time
by the Board of Directors in its discretion) during the employment term. Base
compensation will be paid in installments on the same schedule as the Company's
Subsidiaries generally pay their employees. All compensation and benefits will
be subject to reduction by all federal, state, local and other withholdings and
similar taxes and payments required by applicable law.
(b) Bonus for the Fiscal Year Ended December 31, 1996. The Executive
-------------------------------------------------
shall receive a bonus of $100,000 for the fiscal year ended December 31, 1996.
(c) Bonus for Subsequent Fiscal Years. In addition to Executive's
---------------------------------
base compensation, Executive will receive bonus compensation based on the
relationship between the Company's actual earnings before interest, taxes,
depreciation and amortization ("EBITDA") for each fiscal year starting with the
fiscal year ending December 31, 1997 (determined based on the Company's audited
financial statements for such fiscal year) and the EBITDA set for such year in
the Company "Adjusted Business Plan" (as defined below) as follows:
<TABLE>
<CAPTION>
Actual EBITDA Bonus
as a Percentage (as a Percentage
of Plan of Base Salary
--------------- ----------------
<S> <C>
Less than 80% No bonus
100% 50% of Base Salary
120% or More 100% of Base Salary
</TABLE>
If actual EBITDA as a percentage of the Company's Adjusted Business Plan falls
between 80% and 120%, the amount of bonus shall be pro rated on a straight-line
basis. In no case shall bonus payable under this Section 3(c) exceed 100% of
Base Salary unless agreed to by the Board of Directors in its absolute
discretion.
The "Adjusted Business Plan" shall be the Company's business plan for the
fiscal year in question as approved by the Board of Directors with the consent
of Executive, appropriately adjusted for acquisitions or dispositions during the
year as determined by the Board of Directors in good faith. If the Board and
the Executive do not adopt a mutually satisfactory business plan prior to the
beginning of any fiscal year, the business plan for purposes of this Section
3(c) shall be the business plan submitted to Chemical
2
<PAGE>
Bank and dated May, 1996, subject to adjustment as provided above for
acquisitions and dispositions occurring after May 31, 1996.
Any bonus payable under this Section 3(c) shall be paid not later than 60
days after the applicable fiscal year end.
4. Benefits.
--------
(a) During Executive's employment by the Company, Executive will
receive the same (or substantially similar) employee benefits to those provided
by the Company or its Subsidiaries to other members of senior management from
time to time, including, without limitation, medical and dental insurances,
disability insurance and life insurance (the latter in an amount of not less
than $1,200,000); provided, that regardless of whether or not paid for other
members of senior management, the Company shall pay the entire amount of any
premium for life insurance in an amount of $1,200,000 and disability insurance
provided by the Company to Executive under this Agreement.
(b) During and after the employment term the Company agrees that if
Executive is made a party, or compelled to testify or otherwise participate in,
any action, suit or proceeding (a "Proceeding"), by reason of the fact that he
is or was a director or officer of the Company or any of its Subsidiaries,
Executive shall be indemnified by the Company as provided in Section 145 of the
Delaware General Corporation Law or (but not to any lesser extent) as authorized
by the Company's certificate of incorporation or bylaws or resolutions of the
Company's Board of Directors against all cost, expense, liability, damage and
loss reasonably incurred or suffered by Executive in connection therewith, and
such indemnification shall continue as to Executive even if he has ceased to be
a director or officer of the Company or Subsidiary for the period of any
applicable statute of limitations or, if longer, for the period in which any
such Proceeding which commenced within the period of any such statute of
limitations is pending. The Company shall advance to Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request for such advance. Such
request shall include an itemized list of the costs and expenses and an
undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined, in a final judgment for which the time to appeal has
expired, that, pursuant to applicable law, he is not entitled to be indemnified
against such costs and expenses.
(c) The Company will reimburse Executive for his reasonable and
customary business expenses, including travel, accommodations and meals. Such
reimbursement shall include the reasonable cost of travel to and from Boston
(other than commuting expenses) and accommodations and meals when outside of
Boston.
3
<PAGE>
(d) The Company shall lease in Boston office space, reasonably
satisfactory to Executive, at which the Company's principal executive offices
shall be located, including Executive's principal office. Any leasehold
improvements reasonably necessary to prepare such office space for use as the
Company's principal executive office, and all reasonably necessary office
equipment, shall be paid for by the Company. The Company shall provide
Executive with a secretary and such additional office staff as the Board of
Directors and Executive shall determine.
5. Stock Option Plan. The Company shall establish a Stock Option Plan
-----------------
for employees of the Company or its Subsidiaries other than Executive or other
members of AHI Advanstar LLC ("LLC"), which plan shall permit the grant of
options covering (as of May 15, 1997) not less than 7,452 shares (as adjusted
for stock splits, stock dividends, reverse stock splits and similar transactions
on such terms as the Board deems appropriate). In the event that additional
capital is invested in the Company after May 15, 1997 by any person up to a
total aggregate investment (including capital already invested) of $200,000,000,
additional shares will be made available for the grant of options under the
option plan such that the number of Company shares subject to such options
equals the number of shares of Common Stock of the Company outstanding
multiplied by a percentage (expressed as a decimal) equal to the difference
between (A) and (B), where (A) is 18.0% (reduced by the amount, if any, by which
the Carried Interest Percentage of Solomon under the LLC Operating Agreement is
less than 2.5%) and (B) is the aggregate Carried Interest Percentage of all
Members of the LLC as it may be adjusted from time to time by the operating
agreement of the LLC. This Section 5 shall terminate upon the occurrence of a
Final Liquidity Event under the LLC Operating Agreement.
6. Term. This Agreement shall have a term of four (4) years, provided
----
that Sections 9 and 10 shall survive such expiration in accordance with their
terms.
7. Termination.
-----------
(a) This Agreement may be terminated by the Company at any time for
Cause upon written notice to Executive, which notice shall specify the reason
for termination. Such notice shall be given at any time prior to termination in
the case of matters described in clauses (B) or (C), and shall be given not less
than 30 days prior to the date of termination, in the case of matters described
in clauses (A), (D) or (E), and in the case of matters described in clauses (A),
(D) or (E) shall be rescinded if the Executive cures any misconduct, negligent
act, breach or failure giving rise to such notice to the reasonable satisfaction
of the Board of Directors, including curing any damage suffered by the Company
as a result thereof. As used herein, "Cause" shall mean (A) willful misconduct
or gross negligence by Executive in respect of his material obligations under
this Agreement, (B) conviction of a felony involving moral turpitude, (C) theft
of Company property or other disloyal or dishonest conduct of the Executive that
materially
4
<PAGE>
harms the Company or its business or (in the case of dishonest conduct)
undermines the confidence of the Board in the Executive, (D) willful breach of
this Agreement, or (E) willful failure to observe Company policies or carry out
the directives of the Board of Directors that are not inconsistent with the
position of Executive as provided in Section 1 hereof.
(b) Executive may terminate this Agreement for Good Reason by giving
thirty (30) days prior written notice to the Company. Good Reason shall exist
only if (i) Executive is removed or is not re-appointed as the Company's Chief
Executive Officer, except in connection with termination of this Agreement by
the Company for Cause or due to death or Disability (as defined below), (ii)
Executive is assigned duties, or authority is withdrawn from Executive,
inconsistent with Executive's authority pursuant to Section 1, without
Executive's express written consent, (iii) breach by the Company of any material
obligation of the Company under this Agreement or (iv) Hellman & Friedman (as
defined in the operating agreement of LLC) shall cease to beneficially own at
least 50% of the membership interests in LLC or, following dissolution of LLC,
at least 50% of the voting securities of the Company, and, in either such case,
another person or group (as defined in Section 13 of the Securities Exchange
Act) beneficially owns a greater percentage of such membership interests or
voting securities.
(c) Should the Executive terminate this Agreement for Good Reason, or
should the Company terminate this Agreement without Cause, then the Executive
shall be entitled to receive, for a period of one year, the salary and the
benefits provided for in Sections 3 and 4 hereof (provided, that any bonus under
Section 3(c) will be payable only with respect to that portion of the fiscal
year in which Executive's employment was terminated (or any prior fiscal year
for which bonus remains unpaid)); bonus for any partial fiscal year shall be
determined by multiplying the bonus Executive would have received had he
continued to work for the Company during the entire fiscal year by a fraction,
the numerator of which is the number of days in the fiscal year during which
Executive was employed by the Company, and the denominator of which is 365 (such
amount the "Pro Rata Bonus Amount"). If any such benefits cannot be legally
provided, or the provision thereof would disqualify any plan for favorable tax
treatment under the Internal Revenue Code, a financially equivalent substitute
shall be provided. The Company shall have no obligation to Executive under this
Section 8(c) if Executive breaches the provisions of the letter agreement
referred to in Section 9. This clause (c) shall not apply to a termination
under clause (d) below.
(d) This Agreement shall terminate automatically upon Executive's
death. This Agreement may be terminated by the Company upon written notice to
Executive, or by Executive upon written notice to the Company, upon Executive's
Disability. For purposes of this Agreement, "Disability" means the Executive's
suffering of a disability which shall have prevented him from performing his
obligations hereunder
5
<PAGE>
for a period of at least 120 consecutive days or 180 non-consecutive days in any
365 day period. In the event of termination of this Agreement due to Executive's
death or Disability, in addition to any salary due to Executive as of the date
of death or Disability and remaining unpaid, Executive shall be entitled to
receive, at such time as Executive would otherwise would have received such sum,
the Pro Rata Bonus Amount for the portion of the fiscal year in which
Executive's death or Disability occurred during which Executive was employed by
the Company.
(e) If the Company terminates this Agreement with Cause or if the
Executive terminates this Agreement without Good Reason, or if this Agreement is
terminated under clause (d) above, then the Executive shall, from the date of
such termination, no longer be entitled to any compensation under Sections 3 or
4 (other than, in the case of termination for Disability, disability benefits as
provided pursuant to Section 4 and, in the case of termination for death or
Disability, any bonus payable pursuant to clause (d) above). Nothing in this
clause (e) shall effect Executive's rights under Company health and disability
plans in which Executive participates to the extent such plans provide for
benefits to be paid following the termination of employment.
(f) Termination of this Agreement shall not discharge any liability
existing at the date of termination. Further, notwithholding any termination,
the provisions of Sections 9 and 10 shall survive in accordance with their
terms.
8. Effective Date. This Agreement shall take effect as of July 1, 1996.
--------------
9. Non-Competition and Confidentiality. Executive shall execute and
-----------------------------------
deliver a letter agreement in the form of Exhibit A hereto.
10. Arbitration. Any claim arising out of or relating to this Agreement
-----------
(including disputes regarding the presence or absence of "Cause" or "Good
Reason" in the event of a termination), or otherwise arising out of or relating
to the Executive's employment by the Company, will be subject to arbitration in
San Francisco, California (if brought by Executive) or Boston, Massachusetts (if
brought by the Company), in accordance with the Federal Arbitration Act and the
rules of the American Arbitration Association relating to commercial disputes.
The prevailing party in any such arbitration shall be entitled to recover from
the other party its reasonable expenses incurred in connection with such
arbitration, including the reasonable fees and expenses of counsel.
11. Severability. If any provision of this Agreement is determined to be
------------
invalid or unenforceable, it shall be adjusted rather than voided, to achieve
the intent of the parties to the extent possible, and the remainder of the
Agreement shall be enforced to the maximum extent possible.
6
<PAGE>
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between Executive and the Company with respect to the terms and conditions of
the employment of Executive by the Company, and supersedes all prior or
concurrent arrangements, discussions, agreements or understandings with respect
to your employment.
13. Governing Law. This Agreement shall be governed by the laws of
-------------
California without regard to principles of conflicts of law.
14. Expenses. The Company shall pay, or reimburse Executive for, the
--------
reasonable out-of-pocket expenses incurred by Executive in negotiating,
executing and delivering this Agreement and the related agreements executed and
delivered in connection herewith (including the reasonable fees and expenses of
legal counsel), up to a maximum of $50,000.
15. Notice. Any notice, or other written communication to be given
------
pursuant to this Agreement for whatever reason shall be deemed duly given and
received (a) if delivered personally, from the date of delivery, or (b) by
certified mail, postage pre-paid, return receipt requested, three (3) days after
the date of mailing, addressed to the above parties as follows:
If to the Company:
AHI HOLDING CORP.
c/o Hellman & Friedman
One Maritime Plaza
Suite 1200
San Francisco, California 94111
Attn: John M. Pasquesi
with a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94101
Attn: Timothy G. Hoxie, Esq.
If to Executive:
Robert Krakoff
257 Commonwealth Avenue
Boston, Massachusetts 02116
7
<PAGE>
with a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, Massachusetts 02110
Attn: F. George Davitt, Esq.
16. Certain Definitions. Capitalized terms not otherwise defined herein
-------------------
shall have the meaning ascribed to such terms in the Stockholders Agreement of
even date herewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
AHI HOLDING CORP.
By: /s/ Mitchell R. Cohen
________________________
Name: Mitchell R. Cohen
Title: Vice President
/s/ Robert L. Krakoff
__________________________________
Robert L. Krakoff
8
<PAGE>
EXHIBIT A
---------
AHI Holding Corp.
July 1, 1996
Robert L. Krakoff
257 Commonwealth Avenue
Boston, Massachusetts 02116
Dear Mr. Krakoff:
You are to be employed by AHI Holding Corp. (the "Company" and, together
with Advanstar Holdings, Inc. and its subsidiaries "Advanstar"). In
consideration of your employment with the Company, you and the Company agree as
follows:
1. Non-Competition. You agree that you will not, during the course of
---------------
your employment with the Company or for the Non-Compete Period following the
termination of such employment, compete with Advanstar, as defined in paragraph
4 below. As used herein "Non-Compete Period" means (a) if your employment is
terminated by the Company without Cause (as defined therein) or by you for Good
Reason (as defined therein), six months or (b) if your employment is terminated
for any other reason, one year.
2. Confidentiality. You acknowledge that your association with
---------------
Advanstar will bring you into close contact with many confidential affairs of
Advanstar, including information about costs, profits, markets, sales,
publications, key personnel, pricing policies, operational methods, other
business affairs, methods and other information not readily available to the
public, and plans for future development. In recognition of the foregoing, you
covenant and agree that you will keep confidential all material confidential to
Advanstar that is not otherwise in the public domain and that you will not
intentionally disclose any such information to anyone outside Advanstar or make
any use thereof for your own benefit or for any purpose other than the
advancement of the business of Advanstar at any time except with the prior
written consent of Advanstar as evidenced by a certified resolution of the Board
of Directors of the Company. For purposes of this Agreement, the following
information shall be deemed not to constitute confidential information of
Advanstar:
(a) Any information developed independently by you;
<PAGE>
(b) Information that was received by you from a third-party, which,
to your knowledge, is not bound by an agreement of
confidentiality with Advanstar; or
(c) Any information that is in the public domain or generally
available to the public.
3. No Solicitation of Employees. You covenant that during the
----------------------------
Non-Compete Period you will not, and no person, corporation, partnership, or
other entity over which you exercise control (whether as an officer, director,
sole proprietor, holder, debt or equity securities, consultant, partner, or
otherwise) will, directly or indirectly (a) enter into any written or oral
agreement or understanding relating to the services of any person who is then
employed by Advanstar or, in the case of any employee other than secretaries,
clerks and similar employees fulfilling merely clerical functions, who has been
so employed within the preceding six months, or (b) solicit, or bid against
Advanstar in an attempt to be awarded, any trade show or exposition business, or
any publishing contract, from any party sponsoring or arranging any trade show
or exposition, or publishing or sponsoring any publication, in either case with
which Advanstar then has such a relationship or contract.
4. Certain Definitions. For purposes of this Letter Agreement,
-------------------
competition with Advanstar shall include carrying on any business that is
competitive with the business of Advanstar, in the United States or in any other
country in which Advanstar conducts business as of the termination of your
employment. For purposes of this Letter Agreement, (a) the business of Advanstar
will be deemed to include (without limitation) the organization of trade shows
and expositions of the type and with respect to the industries held by Advanstar
as of the termination of your employment (it being understood that industry
shall be analogized to the categories of the category system of the Standard
Rate Data Service) and the publication (including electronic publication) of
trade journals and other magazines aimed at the particular businesses,
industries or professions (as defined by category according to the category
system of the Standard Rate Data Service) at which Advanstar's operations are
aimed, and (b) each of the following activities (without limitation) will be
deemed to constitute to carrying on business: to engage in, work with, have
interest in, advise, lend money to, guarantee the debts or obligations of, or
permit one's name or any part thereof to be used in connection with, an
enterprise or endeavor either individually, in partnership, or in conjunction
with any person, firm, association, company, or corporation, whether as
principal, agent, shareholder (other than holding of less than 1% of the voting
securities of any public company or 5% of the voting securities of any private
company), employee, director, consultant, or in any other capacity or manner
whatsoever.
<PAGE>
5. Severability. The scope and effect of the terms and provisions
------------
contained in this Letter Agreement (including the noncompetition covenant
contained in Section 1) will be as broad in time (but not beyond the time
periods specified herein), geography, and all other respects as is permitted by
applicable law. If arbitrators, a court, or another body of competent
jurisdiction determine that any term or provision of this Agreement is excessive
in scope, then if possible such term or provision will be adjusted (rather than
voided) in accordance with the purpose stated in the preceding sentence and with
applicable law, but in such a manner as to minimize the change in the provision.
If such term or provision cannot be so adjusted, then it will be struck. All
other terms and provisions of this Letter Agreement will be deemed valid and
enforceable to the full extent possible.
6. Remedies. If any of the covenants or agreements in Sections 1, 2 or
--------
3 are violated or threatened to be violated, you agree and acknowledge that such
violation or threatened violation will cause irreparable injury to Advanstar,
and that the remedy at law of Advanstar for any such violation or threatened
violation will be inadequate and that Advanstar will be entitled to obtain any
injunction prohibiting a continuance or occurrence of such violations or
threatened violations in addition to (not in limitation of) any other rights or
remedies available at law or in equity. Your services hereunder are of a
special, unique, unusual, extraordinary character which gives them peculiar
value, the loss of which cannot be reasonably or adequately computed in damages.
The provisions of this Letter Agreement will be binding upon and inure to
the benefit of our respective heirs, executives, administrators, successors and
assigns. This Letter Agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
Very truly yours,
AHI HOLDING CORP.
By: /s/ Mitchell R. Cohen
__________________________
ACCEPTED AND AGREED:
/s/ Robert L. Krakoff
______________________________
Robert L. Krakoff
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
July 1, 1996 by and between AHI HOLDING CORP., a Delaware corporation (the
"Company") and James Alic ("Executive").
WHEREAS, the Company has acquired, pursuant to a Merger Agreement dated as
of April 12, 1996, and currently operates certain trade exposition and
publishing businesses; and
WHEREAS, the Company wishes to employ Executive and Executive is prepared
to serve in those capacities required by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Position and Authority. The Company agrees to employ the Executive, and
----------------------
the Executive accepts such employment and agrees to serve the Company as Vice
Chairman of the Company and its respective Subsidiaries, for the compensation
and benefits detailed in Sections 3 and 4 hereof. It is understood that the
Executive will report to the Chief Executive Officer of the Company. A
"Subsidiary" shall be any company in which the Company beneficially owns more
than 50% of the voting power of such company's outstanding voting securities.
2. Duties. Executive shall devote substantially all of his business time
------
(subject to four weeks of vacation, or such greater amount as is authorized by
the Board of Directors) to the affairs of the Company during the employment
term, except as may be consented to by the Board of Directors. Notwithstanding
the foregoing, to the extent that it does not materially interfere with the
performance of his duties, Executive may devote such business time as is
reasonably necessary to his duties as a director of not more than two business
corporations not affiliated with the Company, and Executive may devote business
time to any charitable or not-for-profit activities. Executive shall perform
such duties and responsibilities as the Board of Directors or Chief Executive
Officer of the Company may from time to time reasonably determine, provided that
such duties and responsibilities are consistent with Executive's position and do
not diminish Executive's authority as set forth in Section 1 hereof. Executive
will not be required to relocate his permanent residence.
3. Base Compensation and Bonus.
---------------------------
(a) Base Composition. Executive will be compensated at a base salary
----------------
rate of $300,000 per year (or such higher rate as may be set from time to time
by the Board of Directors in its discretion) during the employment term. Base
compensation will be paid in installments on the same schedule as the Company's
Subsidiaries generally
<PAGE>
pay their employees. All compensation and benefits will be subject to reduction
by all federal, state, local and other withholdings and similar taxes and
payments required by applicable law.
(b) Bonus for the Fiscal Year Ended December 31, 1996. The Executive
-------------------------------------------------
shall receive a bonus of $75,000 for the fiscal year ended December 31, 1996.
(c) Bonus for Subsequent Fiscal Years. In addition to Executive's
---------------------------------
base compensation, Executive will receive bonus compensation based on the
relationship between the Company's actual earnings before interest, taxes,
depreciation and amortization ("EBITDA") for each fiscal year starting with the
fiscal year ending December 31, 1997 (determined based on the Company's audited
financial statements for such fiscal year) and the EBITDA set for such year in
the Company "Adjusted Business Plan" (as defined below) as follows:
Actual EBITDA Bonus
as a Percentage (as a Percentage of Base Salary)
-------------------------------
of Plan
---------------
Less than 80% No bonus
100% 50% of Base Salary
120% 100% of Base Salary
If actual EBITDA as a percentage of the Company's Adjusted Business Plan falls
between 80% and 120%, the amount of bonus shall be pro rated on a straight-line
basis. In no case shall bonus payable under this Section 3(c) exceed 100% of
Base Salary unless agreed to by the Board of Directors in its absolute
discretion.
The "Adjusted Business Plan" shall be the Company's business plan for the
fiscal year in question as approved by the Board of Directors with the consent
of the Chief Executive Officer of the Company, appropriately adjusted for
acquisitions or dispositions during the year as determined by the Board of
Directors in good faith. If the Board and the Chief Executive Officer do not
adopt a mutually satisfactory business plan prior to the beginning of any fiscal
year, the business plan for purposes of this Section 3(c) shall be the business
plan submitted to Chemical Bank and dated May, 1996, subject to adjustment as
provided above for acquisitions and dispositions occurring after May 31, 1996.
Any bonus payable under this Section 3(c) shall be paid not later than 60
days after the applicable fiscal year end.
<PAGE>
4. Benefits.
--------
(a) During Executive's employment by the Company, Executive will
receive the same (or substantially similar) employee benefits to those provided
by the Company or its Subsidiaries to other members of senior management from
time to time.
(b) During and after the employment term the Company agrees that if
Executive is made a party, or compelled to testify or otherwise participate in,
any action, suit or proceeding (a "Proceeding"), by reason of the fact that he
is or was a director or officer of the Company or any of its Subsidiaries,
Executive shall be indemnified by the Company as provided in Section 145 of the
Delaware General Corporation Law or (but not to any lesser extent) as authorized
by the Company's certificate of incorporation or bylaws or resolutions of the
company's Board of Directors against all cost, expense, liability, damage and
loss reasonably incurred or suffered by Executive in connection therewith, and
such indemnification shall continue as to Executive even if he has ceased to be
a director or officer of the Company or Subsidiary for the period of any
applicable statute of limitations or, if longer, for the period in which any
such Proceeding which commenced within the period of any such statute of
limitations is pending. The Company shall advance to Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within
20 days after receipt by the Company of a written request for such advance.
Such request shall include an itemized list of the costs and expenses and an
undertaking by Executive to repay the amount of such advance if it shall
ultimately be determined, in a final judgment for which the time to appeal has
expired, that, pursuant to applicable law, he is not entitled to be indemnified
against such costs and expenses.
(c) The Company will reimburse Executive for his reasonable and
customary business expenses, including travel, accommodations and meals. Such
reimbursement shall include the reasonable cost of travel to and from Boston,
Cleveland and other Company offices and accommodations and meals when outside of
his residence location.
5. [Reserved]
6. Term. This Agreement shall have a term of four (4) years, provided
----
that Sections 9 and 10 shall survive such expiration in accordance with their
terms.
7. Termination.
-----------
(a) This Agreement may be terminated by the Company at any time for
Cause upon written notice to Executive, which notice shall specify the reason
for termination. Such notice shall be given at any time prior to termination in
the case of matters described in clauses (B) or (C), and shall be given not less
than 30 days prior to
<PAGE>
the date of termination, in the case of matters described in clauses (A), (D) or
(E), and in the case of matters described in clauses (A), (D) or (E) shall be
rescinded if the Executive cures any misconduct, negligent act, breach or
failure giving rise to such notice to the reasonable satisfaction of the Board
of Directors, including curing any damage suffered by the Company as a result
thereof. As used herein, "Cause" shall mean (A) willful misconduct or gross
negligence by Executive in respect of his material obligations under this
Agreement, (B) conviction of a felony involving moral turpitude, (C) theft of
Company property or other disloyal or dishonest conduct of the Executive that
materially harms the Company or its business or (in the case of dishonest
conduct) undermines the confidence of the Board in the Executive, (D) willful
breach of this Agreement, or (E) willful failure to observe Company policies or
carry out the directives of the Board of Directors that are not inconsistent
with the position of Executive as provided in Section 1 hereof.
(b) Executive may terminate this Agreement for Good Reason by giving
thirty (30) days prior written notice to the Company. Good Reason shall exist
only if (i) Executive is removed or is not re-appointed as the Company's Vice
Chairman, except in connection with termination of this Agreement by the Company
for Cause or due to death or Disability (as defined below), (ii) Executive is
assigned duties, or authority is withdrawn from Executive, inconsistent with
Executive's authority pursuant to Section 1, without Executive's express written
consent, (iii) breach by the Company of any material obligation of the Company
under this Agreement (iv) Hellman & Friedman (as defined in the operating
agreement of LLC) shall cease to beneficially own at least 50% of the membership
interests in LLC or, following dissolution of LLC, at least 50% of the voting
securities of the Company and, in either such case, another person or group (as
defined in Section 13 of the Securities Exchange Act) beneficially owns a
greater percentage of such membership interests or voting securities or (v)
Robert Krakoff ceases to be the Chief Executive Officer of the Company and
Executive is not appointed Chief Executive Officer of the Company.
(c) Should the Executive terminate this Agreement for Good Reason, or
should the Company terminate this Agreement without Cause, then the Executive
shall be entitled to receive, for a period of one year, the salary and the
benefits provided for in Sections 3 and 4 hereof (provided, that any bonus under
Section 3(c) will be payable only with respect to that portion of the fiscal
year in which Executive's employment was terminated (or any prior fiscal year
for which bonus remains unpaid)); bonus for any partial fiscal year shall be
determined by multiplying the bonus Executive would have received had he
continued to work for the Company during the entire fiscal year by a fraction,
the numerator of which is the number of days in the fiscal year during which
Executive was employed by the Company, and the denominator of which is 365 (such
amount the "Pro Rata Bonus Amount"). If any such benefits cannot be legally
provided, or the provision thereof would disqualify any plan for favorable tax
treatment under the
<PAGE>
Internal Revenue Code, a financially equivalent substitute shall be provided.
The Company shall have no obligation to Executive under this Section 8(c) if
Executive breaches the provisions of the letter agreement referred to in Section
9. This clause (c) shall not apply to a termination under clause (d) below.
(d) This Agreement shall terminate automatically upon Executive's
death. This Agreement may be terminated by the Company upon written notice to
Executive, or by Executive upon written notice to the Company, upon Executive's
Disability. For purposes of this Agreement, "Disability" means the Executive's
suffering of a disability which shall have prevented him from performing his
obligations hereunder for a period of at least 120 consecutive days or 180 non-
consecutive days in any 365 day period. In the event of termination of this
Agreement due to Executive's death or Disability, in addition to any salary due
to Executive as of the date of death or Disability and remaining unpaid,
Executive shall be entitled to receive, at such time as Executive would
otherwise would have received such sum, the Pro Rata Bonus Amount for the
portion of the fiscal year in which Executive's death or Disability occurred
during which Executive was employed by the Company.
(e) If the Company terminates this Agreement with Cause or if the
Executive terminates this Agreement without Good Reason, or if this Agreement is
terminated under clause (d) above, then the Executive shall, from the date of
such termination, no longer be entitled to any compensation under Sections 3 or
4 (other than, in the case of termination for Disability, disability benefits as
provided pursuant to Section 4 and, in the case of termination for death or
Disability, any bonus payable pursuant to clause (d) above.). Nothing in this
clause (e) shall affect Executive's rights under Company health and disability
plans in which Executive participates to the extent such plans provide for
benefits to be paid following the termination of employment.
(f) Termination of this Agreement shall not discharge any liability
existing at the date of termination. Further, notwithholding any termination,
the provisions of Sections 9 and 10 shall survive in accordance with their
terms.
8. Effective Date. This Agreement shall take effect as of July 1, 1996.
--------------
9. Non-Competition and Confidentiality. Executive shall execute and
-----------------------------------
deliver a letter agreement in the form of Exhibit A hereto.
10. Arbitration. Any claim arising out of or relating to this Agreement
-----------
(including disputes regarding the presence or absence of "Cause" or "Good
Reason" in the event of a termination), or otherwise arising out of or relating
to the Executive's employment by the Company, will be subject to arbitration in
San Francisco, California (if brought by Executive) or Boston, Massachusetts (if
brought by the Company), in
<PAGE>
accordance with the Federal Arbitration Act and the rules of the American
Arbitration Association relating to commercial disputes. The prevailing party in
any such arbitration shall be entitled to recover from the other party its
reasonable expenses incurred in connection with such arbitration, including the
reasonable fees and expenses of counsel.
11. Severability. If any provision of this Agreement is determined to be
------------
invalid or unenforceable, it shall be adjusted rather than voided, to achieve
the intent of the parties to the extent possible, and the remainder of the
Agreement shall be enforced to the maximum extent possible.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between Executive and the Company with respect to the terms and conditions of
the employment of Executive by the Company, and supersedes all prior or
concurrent arrangements, discussions, agreements or understandings with respect
to your employment.
13. Governing Law. This Agreement shall be governed by the laws of
-------------
California without regard to principles of conflicts of law.
14. Expenses. The Company shall pay, or reimburse Executive for, the
--------
reasonable out-of-pocket expenses incurred by Executive in negotiating,
executing and delivering this Agreement and the related agreements executed and
delivered in connection herewith (including the reasonable fees and expenses of
legal counsel), up to a maximum of $50,000 less any amount (which may be up to
----
$50,000) that the Company pays to Robert L. Krakoff as reimbursement for his
expenses under Section 14 of his employment agreement with the Company.
15. Notice. Any notice, or other written communication to be given
------
pursuant to this Agreement for whatever reason shall be deemed duly given and
received (a) if delivered personally, from the date of delivery, or (b) by
certified mail, postage pre-paid, return receipt requested, three (3) days after
the date of mailing, addressed to the above parties as follows:
If to the Company:
AHI HOLDING CORP.
c/o Hellman & Friedman
One Maritime Plaza
Suite 1200
San Francisco, California 94111
Attn: John M. Pasquesi
<PAGE>
with a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94101
Attn: Timothy G. Hoxie, Esq.
If to Executive:
James Alic
6 Snowflake Lane
Westport, Conn. 06880
with a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, Massachusetts 02110
Attn: F. George Davitt, Esq.
16. Certain Definitions. Capitalized terms not otherwise defined herein
-------------------
shall have the meaning ascribed to such terms in the Stockholders Agreement of
even date herewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
AHI HOLDING CORP.
By: /s/ Mitchell R. Cohen
__________________________
Name: Mitchell R. Cohen
Title: Vice President
/s/ James Alic
_____________________________
James Alic
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
<PAGE>
EXHIBIT A
---------
AHI Holding Corp.
July 1, 1996
James Alic
6 Snowflake Lane
Westport, Conn. 06880
Dear Mr. Alic:
You are to be employed by AHI Holding Corp. (the "Company" and, together
with Advanstar Holdings, Inc. and its subsidiaries "Advanstar"). In
consideration of your employment with the Company, you and the Company agree as
follows:
1. Non-Competition. You agree that you will not, during the course of
---------------
your employment with the Company or for the Non-Compete Period following the
termination of such employment, compete with Advanstar, as defined in paragraph
4 below. As used herein "Non-Compete Period" means (a) if your employment is
terminated by the Company without Cause (as defined therein) or by you for Good
Reason (as defined therein), six months or (b) if your employment is terminated
for any other reason, one year.
2. Confidentiality. You acknowledge that your association with Advanstar
---------------
will bring you into close contact with many confidential affairs of Advanstar,
including information about costs, profits, markets, sales, publications, key
personnel, pricing policies, operational methods, other business affairs,
methods and other information not readily available to the public, and plans for
future development. In recognition of the foregoing, you covenant and agree
that you will keep confidential all material confidential to Advanstar that is
not otherwise in the public domain and that you will not intentionally disclose
any such information to anyone outside Advanstar or make any use thereof for
your own benefit or for any purpose other than the advancement of the business
of Advanstar at any time except with the prior written consent of Advanstar as
evidenced by a certified resolution of the Board of Directors of the Company.
For purposes of this Agreement, the following information shall be deemed not to
constitute confidential information of Advanstar:
(a) Any information developed independently by you;
<PAGE>
(b) Information that was received by you from a third-party, which,
to your knowledge, is not bound by an agreement of
confidentiality with Advanstar; or
(c) Any information that is in the public domain or generally
available to the public.
3. No Solicitation of Employees. You covenant that during the Non-
----------------------------
Compete Period you will not, and no person, corporation, partnership, or other
entity over which you exercise control (whether as an officer, director, sole
proprietor, holder, debt or equity securities, consultant, partner, or
otherwise) will, directly or indirectly (a) enter into any written or oral
agreement or understanding relating to the services of any person who is then
employed by Advanstar or, in the case of any employee other than secretaries,
clerks and similar employees fulfilling merely clerical functions, who has been
so employed within the preceding six months, or (b) solicit, or bid against
Advanstar in an attempt to be awarded, any trade show or exposition business, or
any publishing contract, from any party sponsoring or arranging any trade show
or exposition, or publishing or sponsoring any publication, in either case with
which Advanstar then has such a relationship or contract.
4. Certain Definitions. For purposes of this Letter Agreement,
-------------------
competition with Advanstar shall include carrying on any business that is
competitive with the business of Advanstar, in the United States or in any other
country in which Advanstar conducts business as of the termination of your
employment. For purposes of this Letter Agreement, (a) the business of
Advanstar will be deemed to include (without limitation) the organization of
trade shows and expositions of the type and with respect to the industries held
by Advanstar as of the termination of your employment (it being understood that
industry shall be analogized to the categories of the category system of the
Standard Rate Data Service) and the publication (including electronic
publication) of trade journals and other magazines aimed at the particular
businesses, industries or professions (as defined by category according to the
category system of the Standard Rate Data Service) at which Advanstar's
operations are aimed, and (b) each of the following activities (without
limitation) will be deemed to constitute to carrying on business: to engage in,
work with, have interest in, advise, lend money to, guarantee the debts or
obligations of, or permit one's name or any part thereof to be used in
connection with, an enterprise or endeavor either individually, in partnership,
or in conjunction with any person, firm, association, company, or corporation,
whether as principal, agent, shareholder (other than holding of less than 1% of
the voting securities of any public company or 5% of the voting securities of
any private company), employee, director, consultant, or in any other capacity
or manner whatsoever.
<PAGE>
5. Severability. The scope and effect of the terms and provisions
------------
contained in this Letter Agreement (including the noncompetition covenant
contained in Section 1) will be as broad in time (but not beyond the time
periods specified herein), geography, and all other respects as is permitted by
applicable law. If arbitrators, a court, or another body of competent
jurisdiction determine that any term or provision of this Agreement is excessive
in scope, then if possible such term or provision will be adjusted (rather than
voided) in accordance with the purpose stated in the preceding sentence and with
applicable law, but in such a manner as to minimize the change in the provision.
If such term or provision cannot be so adjusted, then it will be struck. All
other terms and provisions of this Letter Agreement will be deemed valid and
enforceable to the full extent possible.
6. Remedies. If any of the covenants or agreements in Sections 1, 2 or 3
--------
are violated or threatened to be violated, you agree and acknowledge that such
violation or threatened violation will cause irreparable injury to Advanstar,
and that the remedy at law of Advanstar for any such violation or threatened
violation will be inadequate and that Advanstar will be entitled to obtain any
injunction prohibiting a continuance or occurrence of such violations or
threatened violations in addition to (not in limitation of) any other rights or
remedies available at law or in equity. Your services hereunder are of a
special, unique, unusual, extraordinary character which gives them peculiar
value, the loss of which cannot be reasonably or adequately computed in damages.
The provisions of this Letter Agreement will be binding upon and inure to
the benefit of our respective heirs, executives, administrators, successors and
assigns. This Letter Agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
Very truly yours,
AHI HOLDING CORP.
By: /s/ Mitchell R. Cohen
______________________
ACCEPTED AND AGREED:
/s/ James Alic
______________________
James Alic
<PAGE>
EXHIBIT 10.6
AHI HOLDING CORP.
1996 STOCK OPTION PLAN
----------------------
1. PURPOSE. The purpose of this 1996 Stock Option Plan (the "Plan") is to
-------
encourage employees of AHI Holding Corp. (the "Company") and of any present or
future parent or subsidiary of the Company (collectively, "Related
Corporations"), and other individuals who render services to the Company or a
Related Corporation, by providing opportunities to purchase stock in the Company
pursuant to options granted hereunder ("Non-Qualified Options"). Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively, as those terms are
defined in Section 424 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. ADMINISTRATION OF THE PLAN.
--------------------------
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
---------------------------------
by the Board of Directors of the Company (the "Board") or, by a committee
appointed by the Board (the "Committee"). Hereinafter, all references in
this Plan to the "Committee" shall mean the Board if no Committee has been
appointed. Subject to ratification of the grant or authorization of each
Option by the Board (if so required by applicable state law), and subject to
the terms of the Plan, the Committee shall have the authority to (i)
determine to whom Options may be granted; (ii) determine the time or times at
which Options shall be granted; (iii) determine the exercise price of shares
subject to each Option, which price shall not be less than the minimum price
specified in paragraph 6; (iv) determine (subject to paragraph 7) the time or
times when each Option shall become exercisable and the duration of the
exercise period; (v) extend the period during which outstanding Options may
be exercised; (vi) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options and the nature of such
restrictions, if any; and (vii) interpret the Plan and prescribe and rescind
rules and regulations relating to it. The Committee shall take whatever
actions it deems necessary, under Section 422 of the Code and the regulations
promulgated thereunder, to ensure that Options granted hereunder are not
treated as "incentive stock options" ("ISOs"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Option
granted under it shall be final unless otherwise determined by the Board.
The Committee may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem advisable. No member of the Board or
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Option granted under it.
<PAGE>
-2-
B. COMMITTEE ACTIONS. The Committee may select one of its members as
-----------------
its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts by
a majority of the members of the Committee at a meeting at which a quorum is
present, or acts reduced to or approved in writing by a majority of the
members of the Committee (if consistent with applicable state law), shall
constitute the valid acts of the Committee. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
C. GRANT OF OPTIONS TO BOARD MEMBERS. All grants of Options to members
---------------------------------
of the Board shall in all respects be made in accordance with the provisions
of this Plan applicable to other eligible persons. Consistent with the
provisions of the first sentence of paragraph 2(A) above, members of the
Board who either (i) are eligible to receive grants of Options pursuant to
the Plan or (ii) have been granted Options may vote on any matters affecting
the administration of the Plan or the grant of any Options pursuant to the
Plan, except that no such member shall act upon the granting to himself or
herself of Options, but any such member may be counted in determining the
existence of a quorum at any meeting of the Board during which action is
taken with respect to the granting to such member of Options.
D. PERFORMANCE-BASED COMPENSATION. The Board, in its discretion, may
------------------------------
take such action as may be necessary to ensure that Options granted under the
Plan qualify as "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and applicable regulations promulgated
thereunder ("Performance-Based Compensation"). Such action may include, in
the Board's discretion, some or all of the following (i) if the Board
determines that Options granted under the Plan generally shall constitute
Performance-Based Compensation, the Plan shall be administered, to the extent
required for such Options to constitute Performance-Based Compensation, by a
Committee consisting solely of two or more "outside directors" (as defined in
applicable regulations promulgated under Section 162(m) of the Code), (ii) if
any Options with an exercise price less than the fair market value per share
of Common Stock are granted under the Plan and the Board determines that such
Options should constitute Performance-Based Compensation, such options shall
be made exercisable only upon the attainment of a pre-established, objective
performance goal established by the Committee, and such grant shall be
submitted for, and shall be contingent upon shareholder approval and (iii)
Options granted under the Plan may be subject to such other terms and
conditions as are necessary for compensation recognized in connection with
the exercise or disposition of such stock option or the disposition of Common
Stock acquired pursuant to such stock option, to constitute Performance-Based
Compensation.
<PAGE>
-3-
3. ELIGIBLE EMPLOYEES AND OTHERS. Options may be granted to any employee,
-----------------------------
officer or director (whether or not also an employee) or consultant of the
Company or any Related Corporation. The granting of any Option to any individual
or entity shall neither entitle that individual or entity to, nor disqualify
such individual or entity from, participation in any other grant of Options.
4. STOCK. The stock subject to Options shall be authorized but unissued
-----
shares of Common Stock of the Company, par value $ 0.01 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is 7,452
(without giving effect to the 100-for-1 split of the Common Stock contemplated
for the first half of 1997), subject to adjustment as provided in paragraph 13.
If any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part or shall be repurchased by the Company, the
shares subject to such Option shall again be available for grants of Options
under the Plan.
5. GRANTING OF OPTIONS. Options may be granted under the Plan at any
-------------------
time on or after November 15, 1996 and prior to November 15, 2006. The date of
grant of an Option under the Plan will be the date specified by the Committee at
the time it grants the Option; provided, however, that such date shall not be
prior to the date on which the Committee acts to approve the grant.
6. MINIMUM OPTION PRICE.
--------------------
A. PRICE FOR OPTIONS. Subject to Paragraph 2(D) (relating to
-----------------
compliance with Section 162(m) of the Code), the exercise price per share
of each Option granted under the Plan shall be the fair market value of the
Common Stock of the Company on the date of grant, unless otherwise
specified in the agreement relating to the grant of such Option; provided
that in no event shall such exercise price be less than the minimum legal
consideration required therefor under the laws of any jurisdiction in which
the Company or its successors in interest may be organized.
B. RESERVED.
--------
C. RESERVED.
--------
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
----------------------------------
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date,
the last business day for which such prices or quotes are available prior
to the date of grant and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common
Stock is then
<PAGE>
-4-
traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq National Market, if
the Common Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Common Stock is not reported on the Nasdaq National Market. If the Common
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Common Stock
as determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and
offer prices of the Common Stock in private transactions negotiated at arm's
length.
7. OPTION DURATION. Subject to earlier termination as provided in
---------------
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than ten years
from the date of grant.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
------------------
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
-------
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
----------------------------
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
----------------
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
-----------------------
accelerate the date on which any installment of any Option becomes
exercisable.
9. TERMINATION OF EMPLOYMENT. The termination of employment of an optionee
-------------------------
shall cause such optionee's Options to terminate immediately unless otherwise
specified in the agreement relating to the grant of such Options. Nothing in
the Plan shall be deemed to give any optionee the right to be retained in
employment or other service by the Company or any Related Corporation for any
period of time. For purposes of this paragraph 9, employment shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute or
by contract. A bona fide leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under this
paragraph 9,
<PAGE>
-5-
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the optionee after the
approved period of absence.
10. DEATH; DISABILITY.
-----------------
A. DEATH. If an optionee ceases to be employed by the Company and
-----
all Related Corporations by reason of his or her death, any Option owned by
such optionee may be exercised, to the extent otherwise exercisable on the
date of death, by the estate, personal representative or beneficiary who
has acquired the Option by will or by the laws of descent and distribution,
until the earlier of (i) the specified expiration date of the Option or
(ii) 365 days from the date of the optionee's death.
B. DISABILITY. If an optionee ceases to be employed by the Company
----------
and all Related Corporations by reason of his or her disability, such
optionee shall have the right to exercise any Option held by him or her on
the date of termination of employment, to the extent of the number of
shares with respect to which he or she could have exercised it on that
date, until the earlier of (i) the specified expiration date of such Option
or (ii) 365 days from the date of the termination of the optionee's
employment. For the purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code
or any successor statute.
11. ASSIGNABILITY. Options shall not be transferable except to the extent
-------------
set forth in the agreement relating thereto.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
-------------------------------
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including termination and cancellation provisions and
restrictions applicable to shares of Common Stock issuable upon exercise of
Options. The Committee may from time to time confer authority and responsibility
on one or more of its own members and/or one or more officers of the Company to
execute and deliver such instruments. The proper officers of the Company are
authorized and directed to take any and all action necessary or advisable from
time to time to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
-----------
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common
--------------------------------
Stock shall be subdivided or combined into a greater or smaller number of
shares
<PAGE>
-6-
(including the 100-for-1 split of the Common Stock contemplated for the first
half of 1997) or if the Company shall issue any shares of Common Stock as a
stock dividend on its outstanding Common Stock, the number of shares of
Common Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision, combination
or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
-------------------------
with or acquired by another entity in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company immediately
preceding the consummation of such event, shall, immediately following such
event, hold, as a group, less than a majority of the voting securities of the
surviving or successor entity, or in the event of a sale of all or
substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the Committee or, if in the absence of action by the
Committee, the board of directors of any entity assuming the obligations of
the Company hereunder (the "Successor Board"), shall, as to outstanding
Options, either (i) make appropriate provision for the continuation of such
Options by substituting on an equitable basis for the shares then subject to
such Options either (a) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition, (b)
shares of stock of the surviving or successor corporation or (c) such other
securities as the Successor Board deems appropriate, the fair market value of
which shall not materially exceed the fair market value of the shares of
Common Stock subject to such Options immediately preceding the Acquisition;
or (ii) upon written notice to the optionees, provide that all Options must
be exercised, to the extent then exercisable or to be exercisable as a result
of the Acquisition, within a specified number of days of the date of such
notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of
the fair market value of the shares subject to such Options (to the extent
then exercisable or to be exercisable as a result of the Acquisition) over
the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
----------------------------------
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the outstanding
shares of Common Stock, an optionee upon exercising an Option shall be
entitled to receive for the purchase price paid upon such exercise the
securities he or she would have received if he or she had exercised such
Option prior to such recapitalization or reorganization.
D. RESERVED.
--------
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by the
Committee.
<PAGE>
-7-
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
-----------------------
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
-----------------
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
-----------
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Options which previously have
been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments
to be made under this paragraph 13 and, subject to paragraph 2, its
determination shall be conclusive.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
---------------------------
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify
the number of shares as to which such Option is being exercised, accompanied by
full payment of the purchase price therefor either (a) in United States dollars
in cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (d) at the
discretion of the Committee, by any combination of (a), (b) and (c) above. The
holder of an Option shall not have the rights of a shareholder with respect to
the shares covered by his Option until the date of issuance of a stock
certificate to such holder for such shares. Except as expressly provided above
in paragraph 13 with respect to changes in capitalization and stock dividends,
no adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board as of
--------------------------
November 15, 1996. The Plan shall expire at the end of the day on November 15,
2006 (except as to Options outstanding on that date). Subject to the provisions
of paragraph 5 above, Options may be granted under the Plan prior to the date of
stockholder approval of the Plan. The Board may terminate or amend the Plan in
any respect at any time. Except
<PAGE>
-8-
as otherwise provided in this paragraph 15, in no event may action of the Board
alter or impair the rights of an optionee, without such optionee's consent,
under any Option previously granted to such optionee.
16. RESERVED.
--------
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
--------------------
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.
18. RESERVED.
--------
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of an Option,
--------------------------------------
the transfer of an Option pursuant to an arm's length transaction, the vesting
or transfer of restricted stock or securities acquired on the exercise of a
Option hereunder, or the making of a distribution or other payment with respect
to such stock or securities, the Company may withhold taxes in respect of
amounts that constitute compensation includible in gross income. The Committee
in its discretion may condition (i) the exercise of an Option (ii) the transfer
of an Option, or (iii) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the optionee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
-----------------------
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares. The Committee shall not grant Options under the Plan
unless the Company has complied with all applicable securities laws in
connection with such grant.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by optionees in connection with the Plan.
21. GOVERNING LAW. The validity and construction of the Plan and the
-------------
instruments evidencing Options shall be governed by the laws of the State of
Delaware, or the laws of any jurisdiction in which the Company or its successors
in interest may be organized.
<PAGE>
EXHIBIT 10.7
ADVANSTAR COMMUNICATIONS, INC.
EMPLOYEES' 401(k) PLAN
----------------------
(1993 RESTATEMENT)
THIS AGREEMENT is made this 9th day of September, 1993, by and among
ADVANSTAR COMMUNICATIONS, INC., a corporation, hereinafter called the "Company,"
and MARY ABOOD, TEUTA CENAJ, BYRON GLIDDEN, DAVID MONTGOMERY and PHILLIP
STOCKER, hereinafter collectively called the "Trustee."
WHEREAS, the Company adopted the Advanstar Communications, Inc. Employees'
401(k) Trust on May 3, 1989, which was restated in its entirety effective the
1st day of January, 1989; and
WHEREAS, the Company desires to continue to promote in its employees the
strongest interest in the successful operation of the business, loyalty to the
Company, increased efficiency in their work, and the assurance that they will
share in the prosperity of the enterprise; and
WHEREAS, the Company desires to provide its employees with a means to
accumulate voluntary savings for their retirement years;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is hereby agreed by and between the Company and
the Trustee that said Plan and Trust is fully and completely restated as
follows:
1. Name of Trust; Effective Date.
-- -----------------------------
The Trust heretofore created and restated in accordance with the terms
hereof shall continue to be known as the ADVANSTAR COMMUNICATIONS INC.
EMPLOYEES' 401(k) TRUST. The Plan and Trust restated hereby shall be generally
effective as of July 1, 1993.
2. Definitions.
-- -----------
As used in this instrument, the following terms shall have the meaning
hereinafter set forth:
<PAGE>
(a) "Anniversary Date" shall mean the last day of a Plan Year.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" or "Employer" shall mean Advanstar Communications Inc.
Any corporation which is a member of a controlled group of corporations
with Advanstar Communications Inc. may also sponsor this Plan if such
corporation has been designated by Advanstar Communications Inc. as a
sponsoring employer and such corporation agrees to be bound by the terms of
this Plan.
(e) "Compensation" shall mean the total compensation paid by the
Company to an Employee for services rendered for the period under
consideration (other than compensation in the form of qualified or
previously qualified compensation) that is currently includible in gross
income of the Employee for income tax purposes. Effective January 1, 1992,
"Compensation" shall also include amounts that are not includible in income
of the Employee under Code Section 125 (except for amounts not includible
in income under Code Section 125 which are applied to the payment of
medical insurance premiums on behalf of such Employee). No more than
$200,000 (or such higher amount as determined by the Secretary of the
Treasury pursuant to Section 416(d)(2) of the Code) of Compensation shall
be taken into account for all purposes of this Plan.
(f) "Disability" shall mean a physical or mental condition of a
Participant resulting from bodily injury, disease or mental disorder which
renders him incapable of continuing any gainful occupation and which
condition constitutes total disability under a medically determinable
physical or mental impairment which can be expected to result in death or
to be of long, continued and indefinite duration. The disability of a
Participant shall be determined by a licensed physician chosen by the
Company.
(g) "Employee" shall mean any person employed by the Company or any
other employer required to be aggregated with the Company under Sections
414(b), (c), (m), or (o) of the Code, but excluding any member of a
collective bargaining unit with which the Company is required to negotiate
with respect to retirement benefits (if retirement benefits have been the
subject of good faith negotiation). After January 1, 1991, the term
"Employee" shall exclude any person who is employed on an hourly basis.
Employee shall also include any Leased Employee deemed to be an
Employee as provided in Sections 414(n) or (o) of the Code.
(h) "Family" shall mean with respect to any Employee, such Employee's
spouse and lineal ascendants or descendants and the spouse of such lineal
ascendants or descendants.
-2-
<PAGE>
(i) "Fund" or Funds" shall mean the investment fund or funds
established and maintained hereunder by the Trustee for the Plan pursuant
to subparagraph 8. A.
-- --
(j) "Gross Compensation" shall mean a Participant's Compensation
(including all amounts not includible in income of the Participant under
Code Section 125) plus amounts deferred hereunder pursuant to a salary
reduction agreement.
(k) "Highly Compensated Employee" shall include highly compensated
active and former employees. A highly compensated active employee is any
Employee who performs service for the Employer during the determination
year and who, during the determination year: (i) received Compensation
from the Employer in excess of $75,000 (as adjusted pursuant to Section
415(d) of the Code); (ii) received Compensation from the Employer in excess
of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group for such year; (iii) was an officer of the
Employer and received Compensation during such year that is greater than 50
percent of the dollar limitation in effect under Section 415(b)(1)(A) of
the Code; or (iv) was a 5 percent owner at any time during the
determination year.
If no officer has satisfied the Compensation requirement of (iii)
above, during a determination year, the highest paid officer for such year
shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year, and
the Employer elects the calendar year calculation election as provided in
Treasury Regulation (S) 1.414(q)-IT, A-14(b).
A highly compensated former employee is any Employee who separated
from service (or was deemed to have separated) prior to the determination
year, performs no service for the Employer during the determination year,
and was a highly compensated active employee for either the separation year
or any determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year, a Family member of
either a 5 percent owner who is an active or former employee or a Highly
Compensated Employee who is one of the 10 most highly compensated employees
ranked on the basis of compensation paid by the Employer during such year,
then the Family member and the 5 percent owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family member
and 5 percent owner or top-ten Highly Compensated Employee shall be treated
as a single employee receiving compensation and plan contributions or
benefits equal to the sum of such compensation and contributions or
benefits of the Family member and 5 percent owner or top-ten Highly
Compensated Employee.
-3-
<PAGE>
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the number of Employees treated as officers and the Compensation
that is considered, will be made in accordance with Section 414(q) of the
Code and the regulations thereunder.
(l) "Hour of Service" shall mean each hour for which an Employee is
directly or indirectly paid, or entitled to payment, by the Company for the
performance of duties (such hours to be credited for the computation period
in which the duties were performed), each hour for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to
by the Company (such hours to be credited for the computation period to
which the award or agreement pertains), and each hour for which an Employee
is directly or indirectly paid, or entitled to payment, by the Company for
reasons (such as vacation, sickness, disability, holidays, paid layoff and
similar paid periods of nonworking time) other than the performance of
duties (such hours to be credited for the computation period in which such
period of nonworking time first occurs).
With respect to an Employee who is absent from work for any period (i)
by reason of the pregnancy of the Employee; (ii) by reason of the birth of
a child of the Employee; (iii) by reason of the placement of a child with
the Employee in connection with the adoption of such child by such
Employee, or (iv) for purposes of caring for such child for a period
beginning immediately following such birth or placement, then solely for
purposes of determining whether a One-Year Break in Service has occurred,
such Employee shall be credited with the Hours of Service which otherwise
would have been credited to such Employee but for such absence. In the
event that the Plan Administrator is unable to determine the Hours of
Service with respect to such absence, the Employee shall be credited with
eight Hours of Service for each normal workday of such absence. No credit
for Hours of Service shall be granted with respect to an absence described
in this paragraph if the Employee fails to timely provide information
required by the Plan Administrator which is reasonably required to
establish that the Employee was absent from work for a reason described in
this paragraph and to establish the number of days for which there was such
an absence. Hours of Service which are credited pursuant to this paragraph
shall be credited only in the Plan Year in which the absence from work
begins (if the Employee would be prevented from incurring a One-Year Break
in Service in such year solely because the Employee is credited with Hours
of Service pursuant to this paragraph), or in any other case, in the
immediately following Plan Year.
No more than 501 Hours of Service shall be credited to an Employee on
account of any single continuous period during which the Employee performs
no duties. In addition to the foregoing, the rules set forth at Sections
2530.200b-2(b) and 2(c) of the Department of Labor Regulations shall apply
in determining Hours of Service.
-4-
<PAGE>
An Hour of Service respecting any member of a controlled group of
corporations or any member of an affiliated service group (as defined in
Section 414(b), 414(m) or 414(o) of the Code) of which the Company is a
member, or respecting an unincorporated trade or business which is under
common control with the Company (as defined in Section 414(c) of the Code)
or any other entity required to be aggregated with the Company under
Section 414(o) of the Code shall be credited as an Hour of Service with the
Company.
(m) "Income" shall mean the income allocable to "excess
contributions" or "excess aggregate contributions" within the meaning of
subparagraphs 7. C. or 7. D., below for the Plan Year in which such excess
-- -- -- --
contribution was made. The amount of income attributable to such excess
contributions shall be determined by the Administrator in a reasonable and
consistent manner. Income shall not include income allocable to excess
contributions for the Plan Year in which the excess contribution is
returned to the Participant.
(n) "Non-Highly Compensated Employee" shall mean an Employee who is
neither a Highly Compensated Employee nor a member of his Family.
(o) "Normal Retirement Age" shall mean age sixty-five (65).
(p) "One-Year Break in Service" shall mean a Plan Year during which
an Employee does not complete more than one Hour of Service with the
Company. For purposes of determining eligibility to participate in the
Plan, such 12-month period shall be calculated with reference to the
Employee's "Employment Commencement Date" (as defined in subparagraph 2.(w)
-
below), and annual anniversaries thereof. For purposes of determining the
nonforfeitable percentage of a Participating Employee's share in the Trust,
such 12-month period shall be deemed to be the Plan Year.
(q) "Participating Employee" and "Participant" shall mean any
Employee of the Company who is eligible to participate in Company
contributions to the Plan and Trust. "Beneficiary" shall mean a person who
has become eligible to participate and for whom an account is maintained by
the Trustee, but who has ceased to be an Employee of the Company, or a
person entitled to benefits hereunder as beneficiary of a deceased
Participating Employee or as beneficiary of a deceased Beneficiary.
(r) "Plan" shall mean the Advanstar Communications Inc. Employees'
401(k) Plan set forth in and by this Agreement and all subsequent
amendments thereto.
(s) "Plan Year" shall mean the calendar year.
-5-
<PAGE>
(t) "Revaluation Date" shall mean the last day of a Plan Year, or
such other additional dates as are mutually agreeable to the Trustee and
the Company.
(u) "Trust" shall mean the Advanstar Communications Inc. Employees'
401(k) Trust set forth herein.
(v) "Trustee" shall mean the Trustee or Trustees appointed from time
to time by the Company to accept contributions, administer the assets of
the Trust, and otherwise to act in accordance with this Plan and Trust.
(w) "Vesting Year of Service" shall mean a period of twelve (12)
consecutive months during which a Participating Employee completes at least
one (1) Hour of Service. Such 12-month period shall be calculated with
reference to the Employee's "Employment Commencement Date" (the first date
of employment on which the Employee is credited with an Hour of Service
with the Company), and subsequent such 12-month periods shall be calculated
with reference to subsequent anniversaries of said Employment Commencement
Date. In determining Vesting Years of Service, service with Harcourt Brace
Jovanovich, Inc. shall be considered as service with the Company.
An Employee who ceases to be a Participant, but who remains in the
employment of the Company, shall continue to be credited with Vesting Years
of Service under this Plan so long as he remains in the employment of the
Company. An Employee who was in the employment of the Company before he
became an Employee for purposes of this Plan shall receive credit for
Vesting Years of Service as though he had been an Employee during such
prior period of employment with the Company.
(x) "Year of Service" shall mean a period of twelve (12) consecutive
months during which an Employee has not less than 1,000 Hours of Service
with the Company. Such 12-month period shall be calculated with reference
to the Employee's "Employment Commencement Date" (the first date of
employment on which the Employee is credited with an Hour of Service with
the Company), and subsequent such 12-month periods shall be calculated with
reference to subsequent anniversaries of said Employment Commencement Date.
Where necessary or appropriate to the meaning hereof, the singular shall be
deemed to include the plural, the plural to include the singular, the masculine
to include the feminine and neuter, the feminine to include the masculine and
neuter, and the neuter to include the masculine and feminine.
3. Purpose.
-- -------
-6-
<PAGE>
This Trust was created and continues in existence for the purpose of
enabling eligible Employees of the Company to defer a portion of their
compensation until retirement and to share in the profits of the Company's
business. Except as provided in Paragraph 32. below, in no event shall any part
---
of the principal or income of this Trust be paid to or revested in the Company,
or be used for any purpose whatsoever other than the exclusive benefit of such
Employees and their Beneficiaries.
All discretionary acts taken by the Trustee hereunder shall be uniform in
their nature and application to all persons similarly situated, and no
discretionary acts shall be taken which shall be discriminatory under the
provisions of the Code or the Employee Retirement Income Security Act of 1974,
as they relate to employees' profit-sharing trusts, as such provisions now exist
or may from time to time be amended.
4. Plan Entry Requirements.
-- -----------------------
Each Employee of the Company shall enter the Plan on the first day of the
calendar month next following the later to occur of the end of the 12-month
period of service which constitutes a Year of Service with respect to such
Employee and his attainment of age twenty-one (21). Prior to January 1, 1991,
each Employee of the Company shall enter the Plan on the January 1 or July 1
next following the later to occur of the end of the 12-month period of service
which constitutes a Year of Service with respect to such Employee and his
attainment of age twenty-one (21). An Employee who has met the Plan entry
requirements may elect not to participate in the Plan by providing the Company
with written notice of his or her election not to be included as a Participant.
Said election shall remain in effect until the Employee provides the Company
with written notice of his or her election to become a Participant.
With respect to an Employee who has met the eligibility requirements of the
Plan but who has incurred a One-Year Break in Service, such Employee shall be
eligible to re-enter the Plan commencing immediately upon his return. In the
event an Employee who is not a member of an eligible class of employees becomes
a member of an eligible class, such employee will participate immediately if
such Employee has satisfied the minimum age and service requirements and would
have otherwise previously become a Participant. In the event that the
eligibility of any person to participate in the Plan shall be disputed, the
decision of the Trustee upon such eligibility shall be controlling. For the
purposes of enabling the Trustee to make such determination, all information
available to the Company which shall be required by the Trustee shall be made
available to the Trustee.
5. Contributions.
-- -------------
Subject to the provisions of subparagraphs 8. H. and 8. I. below,
-- -- -- --
contributions under the
-7-
<PAGE>
Plan shall be made as follows:
A. Salary Reduction Contributions. Each Participant may elect to
-- ------------------------------
enter into a salary reduction agreement with the Company under which the
Participant agrees to accept a reduction in salary from the Company (such
reduction not to exceed fifteen percent (15%) of such Participant's Gross
Compensation with respect to any Plan Year). Said salary reduction
agreement shall be filed by the Participant with the Company within 30 days
prior to the payment of Compensation to which such salary reduction
agreement applies. In consideration of such agreement, the Company will
make a salary reduction contribution to the Participant's Salary Reduction
Contribution Account on behalf of the Participant for such Plan Year in an
amount equal to the total amount by which the Participant's Compensation
from the Company was reduced during the Plan Year pursuant to the salary
reduction agreement. Contributions made by the Company for a given Plan
Year pursuant to salary reduction agreements shall be deposited with the
Trustee within a reasonable amount of time, but in no event will such
deposit be made more than 90 days following the date such funds are
withheld from the Participant's salary.
Salary reduction contributions made pursuant to this subparagraph A.
--
shall be governed by the following additional provisions:
(1) Amounts credited to a Participant's Salary Reduction Account
shall be 100 percent vested and nonforfeitable at all times.
(2) Amounts credited to a Participant's Salary Reduction Account
shall be considered as a contribution made by the Company for purposes
of subparagraphs 8. H., 8. I. and 26. B.
-- -- -- -- --- --
(3) A salary reduction agreement may provide for a reduction in
salary by means of reducing the Participant's payroll on a periodic
basis, or the agreement may provide for lump sum reductions with
respect to any compensation payments in such amounts that will not
cause the limitations of Paragraphs 7., 8. H., or 8. I. to be
-- -- -- -- --
exceeded.
(4) A salary reduction agreement providing for reductions to a
Participant's periodic payroll may be cancelled at any time by a
Participant by giving at least 30 days advance written notice to the
Company, specifying the effective date of the cancellation. A
Participant may change the rate of his salary reduction four (4) times
per Plan Year, to be effective as of any January 1, April 1, July 1,
or October 1 following such election, by filing an amended salary
reduction agreement with the Company within thirty (30) days prior to
said date.
-8-
<PAGE>
(5) The Company may refrain from making contributions to this
Plan, in respect of the salary reduction agreement entered into by the
Participant, if the Company determines that such action is necessary
to insure that the Participant's annual additions for any Plan Year
will not exceed the limitations of subparagraphs 8. H. or 8. I.
-- -- -- --
hereinbelow, or to insure that the Actual Deferral Percentage Test
described in Paragraph 7. hereinbelow is met for such Plan Year. In
--
any such event, the Company may pay to the Participant the amount
which otherwise would have been paid prior to the Participant's
election to reduce his salary, rather than as a contribution made
pursuant to a salary reduction agreement.
(6) A salary reduction agreement shall not provide for a
reduction in excess of $7,000 (or such higher amount as determined by
the Secretary pursuant to Section 415(d) of the Code) under all plans
maintained by the Company with respect to any Employee's taxable year.
B. Matching Company Contributions. Not later than the time
-- ------------------------------
prescribed by law for filing its federal income tax return (including any
extensions thereof) for its current taxable year, the Company shall
contribute to the Trustee, on behalf of each Participant, as its Matching
Company Contribution to the Trust for the Plan Year which ends within or
which is co-terminous with such taxable year of the Company, to be held in
trust, administered and distributed under the terms of this Agreement, an
amount to be determined as follows:
(1) With respect to Salary Reduction Contributions up to the
first two percent (2%) of the Participant's Gross Compensation, the
Matching Company Contribution shall be equal to 100% of the Salary
Reduction Contribution;
(2) With respect to Salary Reduction Contributions in excess of
two percent (2%) of the Participant's Gross Compensation and not in
excess of six percent (6%) of the Participant's Gross Compensation,
the Matching Company Contribution shall be equal to 25% of such Salary
Reduction Contribution; and
(3) With respect to Salary Reduction Contributions in excess of
six percent (6%) of the Participant's Gross Compensation, there shall
be no Matching Company Contribution. In no event shall the Matching
Company Contribution made on behalf of a Participant in a Plan Year
exceed three percent (3%) of the Participant's Gross Compensation.
In determining the Matching Company Contribution, the computation of
the Salary Reduction Contribution as a percentage of Gross Compensation
shall be made on a per payroll basis.
-9-
<PAGE>
Notwithstanding the foregoing, the Company shall not contribute to the
Plan as a Matching Company Contribution any amount that would cause the
limitation set forth in Paragraph 7. to be exceeded, considering only
--
Matching Company Contributions, rather than Salary Reduction Contributions.
C. Discretionary Company Contributions. Not later than the time
-- -----------------------------------
prescribed by law for filing its federal income tax return (including
extensions thereof) for its current taxable year and for each succeeding
taxable year, the Company may contribute to the Trust fund, as its
contribution to this Trust for the Plan Year which ends within or which is
co-terminous with such taxable year of the Company, to be held in trust,
administered and distributed under the terms of this Agreement, an amount
or amounts which the Company, in its sole discretion may determine. The
Company may contribute such amount or amounts at any time; and it may make
such contribution in two or more installments.
The Company shall determine by resolution of its Board of Directors
and communicate to the Trustee before the close of each Plan Year either
(i) the amount in dollars to be contributed for such year, or (ii) a
formula by which such amount may be determined. These contributions shall
be totally in the discretion of the Company with respect to amount, timing
and form, and they need not be limited to the profits of the Company. The
Company may make such contributions in cash or in kind. Nothing in this
Agreement shall entitle any Trustee, Participating Employee or Beneficiary
to inquire into or demand the right to inspect the books or records of the
Company.
D. Rollover Contributions. An Employee, whether or not he would
-- ----------------------
otherwise be a Participant in the Plan, may contribute a "Rollover
Contribution" to the Trust by delivery of such contribution to the Trustee;
provided that such Employee submits a written certification that such
contribution qualified as a Rollover Contribution as defined hereinbelow.
For purposes of this subparagraph D., for an amount to qualify for
--
contribution by an Employee as a Rollover Contribution, it must:
(1) represent the balance to the credit of such Employee under a
plan qualified under Section 401 of the Code, and have been paid to
him:
(a) within one taxable year of the Employee on account of
the termination of such plan, or if such plan was a profit-
sharing or stock bonus plan, upon complete discontinuance of
Employer contributions thereto, or
(b) in one or more distributions which constitute a lump
sum
-10-
<PAGE>
distribution; or
(2) represent the balance to his credit of a conduit Individual
Retirement Account or similar account or annuity, unless such balance
is derived in any part from a previous rollover of a partial qualified
plan contribution; and (in either the case of compliance with
subdivision (1) above or this subdivision (2)); and
(3) be contributed to the Plan within 60 days following
distribution of such amount to the Employee.
In addition to the foregoing, the provisions of Code Sections
402(a)(6)(C), (D) and 402(a)(7) shall apply in determining the
permissibility of a desired Rollover Contribution by an Employee.
An amount will not qualify as a Rollover Contribution if it includes
any amount which constituted a contribution made by the Employee to a plan
qualified under Section 401 of the Code.
A Rollover Contribution shall be considered as a part of the account
of the contributing Employee in this Plan, shall be fully vested and
nonforfeitable, and shall be accounted for separately from Company
contributions.
A Participant may also arrange for the direct transfer of his benefit
from a plan qualified under Section 401 of the Code to this Plan. For
accounting and record keeping purposes, transfer contributions shall be
identical to Rollover Contributions.
If a Rollover Contribution is from a plan that is subject to the
provisions of Code Section 417, with respect to qualified joint and
survivor annuities and qualified preretirement survivor annuities, the
rules of said Section 417 shall continue to apply to the Participant's
Rollover Contribution Account.
6. Withdrawals.
-- -----------
A. Age 59-1/2. A Participant who has attained age 59-1/2 may
-- ----------
withdraw all or any portion of his Salary Reduction Account by notifying
the Trustee of his election to make such a withdrawal.
B. Hardship. In the event a Participant who has not attained age 59
-- --------
1/2 suffers a serious financial hardship, such Participant may withdraw a
portion of his account attributable to his Salary Reduction Contributions
(but not the earnings on such
-11-
<PAGE>
contributions) as provided hereinbelow. The determination of whether a
serious financial hardship exists shall be based on all relevant facts and
circumstances. A need shall not be disqualified because it was reasonably
foreseeable or voluntarily incurred. Withdrawal under this subparagraph 6.
--
B. shall be authorized only if the distribution is on account of:
--
(1) Medical expenses described in Code Section 213(d) incurred
by the Participant, his spouse, or any of his dependents (as defined
in Code Section 152);
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition for the next semester or quarter of post-
secondary education for the Participant, his spouse, children, or
dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
C. Conditions for Hardship Distribution. No distribution shall be
-- ------------------------------------
made pursuant to Paragraph 6. B. above unless the Administrator, based upon
-- --
the Participant's representation and such other facts as are known to the
Administrator, determines that the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant; and
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available
under all plans maintained by the Employer.
D. Available Other Resources. No distribution shall be made
-- -------------------------
pursuant to subparagraph 6. B. unless the Administrator determines, based
-- -
upon all relevant facts and circumstances, that the amount to be
distributed is not in excess of the amount required to relieve the
financial need and that such need cannot be satisfied from other resources
reasonably available to the Participant. For this purpose, the
Participant's resources shall be deemed to include those assets of his
spouse and minor children that are reasonably available to the Participant.
A distribution may be treated as necessary to satisfy a financial need if
the Administrator relies upon the Participant's representation that the
need cannot be relieved:
-12-
<PAGE>
(1) Through reimbursement or compensation by insurance or
otherwise;
(2) By reasonable liquidation of the Participant's assets, to
the extent such liquidation would not itself cause an immediate and
heavy financial need;
(3) By cessation of Salary Reduction Contributions and voluntary
Employee contributions, if available, under the Plan; or
(4) By other distributions or loans from the Plan, if available,
or any other qualified retirement plan, or by borrowing from
commercial sources on reasonable commercial terms.
7. Special Nondiscrimination Testing.
-- ---------------------------------
A. Actual Deferral Percentage Tests. For each Plan Year the Plan
-- --------------------------------
shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Employee group shall not be more than the "Actual Deferral Percentage"
of the Non-Highly Compensated Employee group multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the
Highly Compensated Employee group over the "Actual Deferral
Percentage" for the Non-Highly Compensated Employee group shall not be
more than two percentage points. Additionally, the "Actual Deferral
Percentage" for the Highly Compensated Employee group shall not exceed
the "Actual Deferral Percentage" for the Non-Highly Compensated
Employee group multiplied by 2. The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein by
reference.
For the purposes of this Paragraph 7. "Actual Deferral Percentage"
--
means, with respect to the Highly Compensated Employee group and Non-Highly
Compensated Employee group for a Plan Year, the average of the ratios,
calculated separately for each Participant in such group, of the amount of
Salary Reduction Contributions allocated to each Participant's Salary
Reduction Contribution Account for such Plan Year to such Participant's
Compensation for such Plan Year. The actual deferral ratio for each
Participant and the "Actual Deferral Percentage" for each group shall be
calculated to the nearest one-hundredth of one percent.
For the purpose of determining the actual deferral ratio of a Highly
Compensated
-13-
<PAGE>
Employee who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five percent owner"
of the Employer or one of the ten (10) Highly Compensated Employees paid
the greatest "415 Compensation" during this year, the following shall
apply:
(1) The combined actual deferral ratio for the family group
(which shall be treated as one Highly Compensated Employee) shall be
the greater of (i) the ratio determined by aggregating Salary
Reduction Contributions and Gross Compensation of all eligible Family
Members who are Highly Compensated Employees without regard to family
aggregation; and (ii) the ratio determined by aggregating Employees
Contributions and Gross Compensation of all eligible Family Members
(including Highly Compensated Employees).
(2) The Salary Reduction Contributions and Gross Compensation of
all Family Members shall be disregarded for purposes of determining
the "Actual Deferral Percentage" of the Non-Highly Compensated
Employee group except to the extent taken into account in paragraph
(1) above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are members
of those family groups that include the Participant are aggregated as
one family group in accordance with paragraphs (1) and (2) above.
For the purposes of this subparagraph 7. A., a Highly Compensated
-- --
Employee and a Non-Highly Compensated Employee shall include any Employee
eligible to make a Salary Reduction Contribution pursuant to subparagraph
5. A., whether or not such deferral election was made or suspended pursuant
-- --
to subparagraph 5. A.
-- --
For the purposes of this subparagraph 7. A. and Code Sections
-- --
401(a)(4), 410(b) and 401(k), if two or more plans which include cash or
deferred arrangements are considered one plan for the purposes of Code
Section 410(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)), the
cash or deferred arrangements included in such plans shall be treated as
one arrangement. In addition, two or more cash or deferred arrangements
may be considered as a single arrangement for purposes of determining
whether or not such arrangements shall be treated as one arrangement and as
one plan for purposes of this subparagraph 7. A. and Code Sections
-- --
401(a)(4), 410(b) and 401(k). For Plan Years beginning after December 31,
1989, plans may be aggregated under this subparagraph 7. A. only if they
-- --
have the same plan year.
Notwithstanding the above, an employee stock ownership plan described
in Code Section 4975(e)(7) may not be combined with this Plan for purposes
of determining whether the employee stock ownership plan or this Plan
satisfies this subparagraph 7. A.
-- --
-14-
<PAGE>
and Code Sections 401(a)(4), 410(b) and 401(k).
For the purpose of this subparagraph 7. A., if a Highly Compensated
-- --
Employee is a Participant under two or more cash or deferred arrangements
of the Employer, all such cash or deferred arrangements shall be treated as
one cash or deferred arrangement for the purpose of determining the actual
deferral ratio with respect to such Highly Compensated Employee. However,
if the cash or deferred arrangements have different Plan Years, this
paragraph shall be applied by treating all cash or deferred arrangements
ending with or within the same calendar year as a single arrangement.
B. Actual Contribution Percentage Tests. For each Plan Year, the
-- ------------------------------------
Plan shall satisfy one of the following tests:
(1) The "Actual Contribution Percentage" for the Highly
Compensated Employee group shall not be more than the "Actual
Contribution Percentage" of the Non-Highly Compensated Employee group
multiplied by 1.25, or
(2) The excess of the "Actual Contribution Percentage" for the
Highly Compensated Employee group over the "Actual Contribution
Percentage" for the Non-Highly Compensated Employee group shall not be
more than two percentage points. Additionally, the "Actual
Contribution Percentage" for the Highly Compensated Employee group
shall not exceed the "Actual Contribution Percentage" for the Non-
Highly Compensated Employee group multiplied by 2.
However, to prevent the multiple use of the alternative method (2)
described in this paragraph and Code Section 401(m)(9)(A), any Highly
Compensated Employee eligible to make Salary Reduction Contributions or to
receive Matching Company Contributions under this Plan shall have his
actual contribution ratio reduced pursuant to Regulation 1.401(m)-2. The
provisions of Code Section 401(m) and Regulations 1.401(m)-1(b) and
1.401(m)-2 are incorporated herein by reference.
For the purposes of this Plan, "Actual Contribution Percentage" for a
Plan Year means, with respect to the Highly Compensated Employee group and
Non-Highly Compensated Employee group, the same as Actual Deferral
Percentage as computed in subparagraph 7. A., but substituting "Matching
-- --
Company Contributions" for "Salary Reduction Contributions."
For purposes of determining the "Actual Contribution Percentage" and
the amount of Excess Aggregate Contributions pursuant to subparagraph 7.
--
D., only Company Matching Contributions contributed to the Plan prior to
--
the end of the succeeding Plan Year shall be considered.
-15-
<PAGE>
C. Adjustment to Actual Deferral Percentage Tests. In the event that
-- ----------------------------------------------
the initial allocations of the Salary Reduction Contributions do not
satisfy one of the tests set forth in subparagraph 7. A., the Administrator
-- -
shall adjust Excess Contributions (i.e., Salary Reduction Contributions in
excess of the limits established by the tests set forth in subparagraph 7.
--
A.) as set forth below:
--
(1) On or before the fifteenth day of the third month following
the end of each Plan Year, the Highly Compensated Employee having the
highest actual deferral ratio shall have his portion of Excess
Contributions distributed to him until one of the tests set forth in
subparagraph 7. A. is satisfied, or until his actual deferral ratio
-- --
equals the actual deferral ratio of the Highly Compensated Employee
having the second highest actual deferral ratio. This process shall
continue until one of the tests set forth in subparagraph 7. A. is
-- --
satisfied. For each Highly Compensated Employee, the amount of Excess
Contributions is equal to the Salary Reduction Contributions on behalf
of such Highly Compensated Employee (determined prior to the
application of this paragraph) minus the amount determined by
multiplying the Highly Compensated Employee's actual deferral ratio
(determined after application of this paragraph) by his Gross
Compensation. However, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly
Compensated Employee as determined herein, such amount shall be
reduced by any Salary Reduction Contributions previously distributed
to such affected Highly Compensated Employee for his taxable year
ending with or within such Plan Year.
With respect to the distribution of Excess Contributions as
described above, such distribution:
(a) may be postponed but not later than the close of the
succeeding Plan Year;
(b) shall be adjusted for Income; and
(c) shall be designated by the Employer as a distribution
of Excess Contributions (and Income).
The determination and correction of Excess Contributions of a
Highly Compensated Employee whose actual deferral ratio is determined
under the family aggregation rules shall be accomplished by allocating
the Excess Contributions for the family unit among the Family Members
in proportion to the Elective Contributions of each Family Member that
were combined to determine the group actual deferral ratio.
-16-
<PAGE>
D. Adjustment to Actual Contribution Percentage Tests. In the event
-- --------------------------------------------------
that the "Actual Contribution Percentage" for the Highly Compensated
Employee group exceeds the "Actual Contribution Percentage" for the Non-
Highly Compensated Employee group pursuant to subparagraph 7. B., the
-----
Administrator (on or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close of the
following Plan Year) shall direct the Trustee to distribute to the Highly
Compensated Employee having the highest actual contribution ratio, his
portion of Excess Aggregate Contributions (i.e., Matching Company
Contributions in excess of the limits established by the tests set forth in
subparagraph 7. B.) and Income allocable to such contributions or, if
-- --
forfeitable, forfeit such non-Vested Excess Aggregate Contributions
attributable to Matching Company Contributions (and Income allocable to
such Forfeitures) until either one of the tests set forth in subparagraph
7. B. is satisfied, or until his actual contribution ratio equals the
-- --
actual contribution ratio of the Highly Compensated Employee having the
second highest actual contribution ratio. This process shall continue
until one of the tests set forth in subparagraph B. is satisfied.
--
Any distribution and/or Forfeiture of less than the entire amount of
Excess Aggregate Contributions (and Income) shall be treated as a pro rata
distribution and/or Forfeiture of Excess Aggregate Contributions and
Income. Distribution of Excess Aggregate Contributions shall be designated
by the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with subparagraph 9. D. However, no such Forfeiture may be
-- --
allocated to a Highly Compensated Employee whose contributions are reduced
pursuant to this subparagraph.
Excess Aggregate Contributions shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even if distributed
from the Plan.
For each Highly Compensated Employee, the amount of Excess Aggregate
Contributions is equal to the Matching Company Contributions made pursuant
to subparagraph 5. B. (determined prior to the application of this
-- --
paragraph) minus the amount determined by multiplying the Highly
Compensated Employee's actual contribution ratio (determined after
application of this paragraph) by his Gross Compensation. The actual
contribution ratio must be rounded to the nearest one-hundredth of one
percent. In no case shall the amount of Excess Contribution with respect
to any Highly Compensated Employee exceed the amount of Matching Company
Contributions made pursuant to subparagraph 5. B. on behalf of such Highly
-- --
Compensated Employee for such Plan Year.
8. Selection of Investments; Employee Accounts and Allocation of
-- -------------------------------------------------------------
Benefits.
--------
A. Establishment of Investment Funds. With respect to each Plan
-- ---------------------------------
Year, the
-17-
<PAGE>
Company and Trustee may designate and describe one or more investment funds
available for the allocation of Participants' accounts. Subject to
Paragraph 13., the Trustee shall have the responsibility to decide the
---
allocation of contributions which shall be made to the available Funds. The
Company may delegate this responsibility to each Participant in a
consistent and nondiscriminatory manner. In the event the Company so
delegates the investment responsibility to Participants, each Participating
Employee shall have the opportunity to designate the manner in which his
account will be allocated among the available Funds, in accordance with the
provisions of subparagraph 8. B.
-- --
B. Selections. The designation by a Participant of the allocation
-- ----------
of his account among the available investment funds may be made from time
to time, with such frequency and in accordance with such procedures as
established by the Trustee and applied in a uniform nondiscriminatory
manner. Any such procedure shall be communicated to the Participants and
designed with the intention of permitting the Participants to exercise
control over the assets in their respective accounts within the meaning of
Section 404(c) of the Employee Retirement Income Security Act and the
regulations promulgated thereunder. If and to the extent that a Participant
shall fail to designate an allocation of his account under this
subparagraph 8.B., the Trustee shall select a Fund or Funds to which such
----
amount shall be allocated. Otherwise, the Company shall instruct the
Trustee to allocate and invest the assets of the Trust in accordance with
the Participant's selections.
If and to the extent that the account of a Participant or Beneficiary
herein is directed to be invested pursuant to this paragraph, no person who
is otherwise a fiduciary hereunder shall be liable to the directing
Participant or Beneficiary for any particular loss, for failure to
diversify assets, or in any other respect regarding such directed
investment. No investment shall be directed by a Participant or
Beneficiary, nor made by the Trustee even if so directed, which would
directly or indirectly inure to the benefit of the Company or which would
constitute a prohibited transaction under applicable law and regulations.
C. Separate Records. The Trustee shall maintain a separate account
-- ----------------
in the name of each Participating Employee and each Beneficiary having a
share in the Trust. Separate records shall be kept of:
(1) the portion of each Participating Employee's share or
account resulting from Company contributions made pursuant to a salary
reduction agreement (such amounts to be recorded in a "Salary
Reduction Contribution Account");
(2) the portion of each Participating Employee's share or
account resulting from Matching Company Contributions intended to
supplement amounts contributed pursuant to a salary reduction
agreement (such amount to be recorded
-18-
<PAGE>
in a "Matching Company Contribution Account");
(3) the portion of each Participating Employee's share or
account resulting from the Company's Discretionary Contributions (such
amounts to be recorded in a "Company Discretionary Contribution
Account").
(4) the portion of each Participating Employee's share or
account resulting from the Participating Employee's Rollover
Contribution (such amount to be recorded in a "Rollover Contribution
Account").
To that end, wherever in this Agreement reference is made to the "share" or
"account" of a Participating Employee, the word "share" or "account" where
the context so permits, shall be deemed to refer severally to the Salary
Reduction Contribution Account, the Company Matching Contribution Account,
the Company Discretionary Contribution Account, and the Rollover
Contribution Account, each such account being adjusted for income and
expense credited or charged as hereinafter described.
D. Allocation of Income and Expenses. As of each Revaluation Date,
-- ---------------------------------
all income of the Trust for the period since the preceding Revaluation Date
shall be credited to, and all losses and expenses of the Trust for such
period shall be charged to, the various Accounts maintained by the Trustee
for the Participating Employees and Beneficiaries. Such credits and
charges shall be made in proportion to the value of the respective
Participating Employee and Beneficiary Accounts as of the preceding
Revaluation Date (after recording all credits and charges which would
otherwise be made based on Account balances as of the preceding Revaluation
Date). Further, the Trustee may adjust in a nondiscriminatory and
consistent manner the credits and charges which would otherwise be made
based on Account balances as of the preceding Revaluation Date to take into
account inter-Fund transfers, periodic contributions made on behalf of
Participants, repayments of Participant loans or borrowing by Participants,
Rollover contributions, or any other transactions occurring since the
preceding Revaluation Date.
Any loan extended by the Trustee to a Participant pursuant to
Paragraph 11. hereinbelow shall be deemed, for purposes of allocation of
---
income, as an earmarked investment made for such Participant's benefit.
Accordingly, all interest or other earnings attributable to such loan shall
be allocated and credited exclusively to the account of the Participant to
whom such loan was made.
E. Revaluation of Assets. As of each Revaluation Date, the Trustee
-- ---------------------
shall revalue the various Accounts maintained by the Trustee for the
Participating Employees and Beneficiaries, to the end that such Employee
and Beneficiary Accounts will reflect any increase or decrease in fair
market value of the assets of the Trust as of such date. Any such increase
or decrease in market value shall be apportioned in the same manner
-19-
<PAGE>
that income, expenses, and losses are to be apportioned in accordance with
the provisions of this Paragraph 8.
--
F. List of Participants. On or about the Anniversary Date ending
-- --------------------
each Plan Year, the Company shall deliver to the Trustee a list of all
Employees eligible on such date to participate herein, to whom Compensation
was paid or payable for such year, together with a statement of the amount
of such Compensation, and the amount by which such Compensation was reduced
pursuant to a salary reduction agreement.
G. Allocation of Contributions. The Trustee shall credit to the
-- ---------------------------
Salary Reduction Contribution Account of each Participant, from the
Company's current contribution, an amount equal to the amount set forth in
the salary reduction agreement in effect with such Participant.
The Trustee shall credit to the Matching Company Contribution Account
of each Participant who makes Salary Reduction Contributions, an amount
equal to the amount required to be contributed pursuant to Paragraph 5. B.
-- --
As of the Anniversary Date ending each Plan Year for which the Company
shall make a Discretionary contribution hereunder, the Trustee shall credit
to the Company Discretionary Account of each Participating Employee
employed by the Company on such day and who has completed at least one (1)
Hour of Service during such Plan Year (irrespective of whether such
Participant has made a Salary Reduction Contribution), an amount which
bears the same ratio to the total of the Company's Profit-Sharing
Contribution as such Employee's Gross Compensation for such year shall bear
to the aggregate of the Gross Compensation of all Participating Employees
for such year.
In the case of a Participating Employee who is entitled to have
credited to his account a portion of a Company Discretionary contribution
for such year but whose employment is terminated after the close of such
year and before such contribution has been made to the Trust and such
credit effected, such credit shall be effected as though such Employee's
employment had not terminated.
In addition, from time to time the Trustee shall credit to the other
accounts of each Employee the amounts contributed by him to the Plan which
constitute Rollover Contributions.
H. Limitation on Annual Additions. If the Participant does not
-- ------------------------------
participate in, and has never participated in another qualified plan
maintained by the employer or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the employer, or an individual medical
account, as defined in Section 415(1)(2) of the Code, maintained by the
employer, which provides an annual addition as defined in
-20-
<PAGE>
subparagraph 8. J.(6), the amount of annual additions which may be credited
-- -
to the Participant's account for any limitation year will not exceed the
lesser of the maximum permissible amount or any other limitation contained
in this Plan. If the employer contribution that would otherwise be
contributed or allocated to the Participant's account would cause the
annual additions for the limitation year to exceed the maximum permissible
amount, the amount contributed or allocated will be reduced so that the
annual additions for the limitation year will equal the maximum permissible
amount.
Prior to determining the Participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a Participant on the basis of a reasonable estimation of the
Participant's compensation for the limitation year, uniformly determined
for all Participants similarly situated. As soon as is administratively
feasible after the end of the limitation year, the maximum permissible
amount for the limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year. If as a result
of forfeitures or as a result of exceeding the maximum permissible amount,
there is an excess amount the excess will be disposed of as follows:
(1) Any nondeductible voluntary employee contributions, to the
extent they would reduce the excess amount, will be returned to the
Participant;
(2) If after the application of subparagraph (1) an excess
amount still exists, and the Participant is covered by the Plan at the
end of the limitation year, the excess amount in the Participant's
account will be used to reduce employer contributions (including any
allocation of forfeitures) for such Participant in the next limitation
year, and each succeeding limitation year if necessary;
(3) If after the application of subparagraph (1) an excess
amount still exists, and the Participant is not covered by the Plan at
the end of a limitation year, the excess amount will be held
unallocated in a suspense account. The suspense account will be
applied to reduce employer contributions for all remaining
Participants in the next limitation year, and each succeeding
limitation year if necessary; and
(4) If a suspense account is in existence at any time during a
limitation year pursuant to this section, it will not participate in
the allocation of the trust's investment gains and losses. If a
suspense account is in existence at any time during a particular
limitation year, all amounts in the suspense account must be allocated
and reallocated to Participants' accounts before any employer or
Employee contributions may be made to the Plan for that limitation
year. Excess amounts may not be distributed to Participants or former
Participants.
-21-
<PAGE>
I. Combination With Other Plans. This section applies if, in
-- ----------------------------
addition to this Plan, the Participant is covered under another qualified
defined contribution plan maintained by the employer, a welfare benefit
fund, as defined in Section 419(e) of the Code maintained by the employer,
or an individual medical account, as defined in Section 415(1)(2) of the
Code, maintained by the employer, which provides an annual addition as
defined in subparagraph 8. J.(6), during any limitation year. The annual
--
additions which may be credited to a Participant's account under this Plan
for any such limitation year will not exceed the maximum permissible amount
reduced by the annual additions credited to a Participant's account under
the other plans and welfare benefit funds for the same limitation year. If
the annual additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the employer are
less than the maximum permissible amount and the employer contribution that
would otherwise be contributed or allocated to the Participant's account
under this Plan would cause the annual additions for the limitation year to
exceed this limitation, the amount contributed or allocated will be reduced
so that the annual additions under all such plans and funds for the
limitation year will equal the maximum permissible amount. If the annual
additions with respect to the Participant under such other defined
contribution plans and welfare benefit funds in the aggregate are equal to
or greater than the maximum permissible amount, no amount will be
contributed or allocated to the Participant's account under this Plan for
the limitation year.
Prior to determining the Participant's actual compensation for the
limitation year, the employer may determine the maximum permissible amount
for a Participant in the manner described in subparagraph 8. H. As soon as
-- --
is administratively feasible after the end of the limitation year, the
maximum permissible amount for the limitation year will be determined on
the basis of the Participant's actual compensation for the limitation year.
If as a result of forfeitures or as a result of exceeding the maximum
permissible amount, a Participant's annual additions under this Plan and
such other plans would result in an excess amount for a limitation year,
the excess amount will be deemed to consist of the annual additions last
allocated, except that annual additions attributable to a welfare benefit
fund or individual medical account will be deemed to have been allocated
first regardless of the actual allocation date. If an excess amount was
allocated to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan, the excess amount
attributed to this Plan will be the product of:
(a) the total excess amount allocated as of such date, times
(b) the ratio of (i) the annual additions allocated to the
Participant for the limitation year as of such date under this Plan to
(ii) the total annual additions allocated to the Participant for the
limitation year as of such date under this and all the other qualified
defined contribution plans.
-22-
<PAGE>
Any excess amount attributed to this Plan will be disposed in the
manner described in subparagraph 8. H.
-- --
If the employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of the
Participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed 1.0 in any limitation year. The annual additions
which may be credited to the Participant's account under this Plan for any
limitation year will be reduced or limited by the Trustee in a uniform and
nondiscriminatory manner in order to effect the foregoing limitation.
J. Section 415 Definitions.
-- -----------------------
(1) Annual additions: The sum of the following amounts credited
to a Participant's account for the limitation year:
(a) employer contributions,
(b) Employee contributions,
(c) forfeitures, and
(d) amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section 415(1)(2) of
the Code, which is part of a pension or annuity plan maintained
by the employer are treated as annual additions to a defined
contribution plan. Also amounts derived from contributions paid
or accrued after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement medical
benefits, allocated to the separate account of a key employee, as
defined in Section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e) of the Code,
maintained by the employer are treated as annual additions to a
defined contribution plan.
For this purpose, any excess amount applied under subparagraphs
8. H. or 8. I. in the limitation year to reduce employer contributions
-- -- -- --
will be considered annual additions for such limitation year.
(2) Compensation: A Participant's Earned Income, wages,
salaries, and fees for professional services and other amounts
received for personal services actually rendered in the course of
employment with the employer maintaining the Plan (including, but not
limited to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
-23-
<PAGE>
(a) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's gross
income for the taxable year in which contributed, or employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described
in Section 403(b) of the Code (whether or not the amounts are
actually excludible from the gross income of the Employee).
For purposes of applying the limitations of this article,
compensation for a limitation year is the compensation actually paid
or includible in gross income during such limitation year.
Notwithstanding the preceding sentence, compensation for a
participant in a defined contribution plan who is Disabled is the
compensation such participant would have received for the limitation
year if the Participant had been paid at the rate of compensation paid
immediately before becoming Disabled; such imputed compensation for
the Disabled Participant may be taken into account only if the
Participant is not a Highly Compensated Employee and contributions
made on behalf of said Participant are nonforfeitable when made.
(3) Defined benefit fraction: A fraction, the numerator of which
is the sum of the Participant's projected annual benefits under all
the defined benefit plans (whether or not terminated) maintained by
the employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the limitation year
under Sections 415(b) and (d) of the Code or 140 percent of the
highest average compensation, including any adjustments under Section
415(b) of the Code.
(4) Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar limitation set forth
in Section 415(b)(1) of
-24-
<PAGE>
the Code as in effect for the limitation year.
(5) Defined contribution fraction: A fraction, the numerator of
which is the sum of the annual additions to the Participant's account
under all the defined contribution plans (whether or not terminated)
maintained by the employer for the current and all prior limitation
years (including the annual additions attributable to the
Participant's nondeductible employee contributions to all defined
benefit plans, whether or not terminated, maintained by the employer,
and the annual additions attributable to all welfare benefit funds, as
defined in Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(1)(2) of the Code, maintained by
the employer), and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior limitation years of
service with the employer (regardless of whether a defined
contribution plan was maintained by the employer). The maximum
aggregate amount in any limitation year is the lesser of 125 percent
of the dollar limitation determined under Sections 415(b) and (d) of
the Code in effect under Section 415(c)(1)(A) of the Code or 35
percent of the Participant's compensation for such year.
(6) Employer: For purposes of subparagraphs 8. H., 8. I. and 8.
-- -- -- -- --
J., employer shall mean the employer that adopts this Plan, and all
--
members of a controlled group of corporations (as defined in Section
414(b) of the Code as modified by Section 415(h)), all commonly
controlled trades or businesses (as defined in Section 414(c) as
modified by Section 415(h)) or affiliated service groups (as defined
in Section 414(m)) of which the adopting employer is a part, and any
other entity required to be aggregated with the employer pursuant to
regulations under Section 414(o) of the Code.
(7) Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum permissible amount.
(8) Highest average compensation: The average compensation for
the three consecutive Years of Service with the employer that produces
the highest average.
(9) Limitation year: A calendar year, or the 12-consecutive
month period elected by the employer pursuant to action of the Board.
(10) Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a participant's account under
the Plan for any limitation year shall not exceed the lesser of:
(a) the defined contribution dollar limitation, or
-25-
<PAGE>
(b) 25 percent of the Participant's compensation for the
limitation year.
The compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is otherwise treated
as an annual addition under Section 415(l)(1) or 419A(d)(2) of the
Code.
If a short limitation year is created because of an amendment
changing the limitation year to a different 12-consecutive month
period, the maximum permissible amount will not exceed the defined
contribution dollar limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(11) Projected Annual Benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity) or
qualified joint and survivor annuity to which the Participant would be
entitled under the terms of the Plan assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
(b) the Participant's compensation for the current
limitation year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
limitation years.
9. Retirement and Severance.
-- ------------------------
A. Normal Retirement, Etc. Upon the attainment by a Participant of
-- -----------------------
the Normal Retirement Age of sixty-five (65), such Participant's account
shall be fully vested and nonforfeitable. In the event that the employment
of a Participating Employee shall terminate at any time due to the death or
Disability of such Participating Employee, such Participant's account shall
be fully vested and nonforfeitable from and after the date of termination
of employment. Payment of benefits under the Plan to or on behalf of said
Participant shall be made in accordance with the provisions of Paragraph
10. below.
---
B. Vested Benefits; Termination of Employment. The portion of a
-- ------------------------------------------
Participating Employee's share in the Trust allocated to the Salary
Reduction
-26-
<PAGE>
Contribution Account and the Rollover Contribution Account shall at all
times be fully and immediately vested in such Employee. This portion,
together with the vested portion of the Matching Company Contribution
Account and the Company Discretionary Contribution Account, determined in
accordance with the schedule set forth below, depending upon such
Participant's Vesting Years of Service completed to the date of termination
of employment shall be paid to or on behalf of such Participant at such
time and in the manner provided under the further terms of the Plan.
The vesting schedule applicable to a Participant's Matching Company
Contribution Account and Company Discretionary Contribution Account shall
be as follows:
<TABLE>
<CAPTION>
Vested
Vesting Years of Service Percentage
------------------------ ----------
<S> <C>
Less than 1 year 0%
1 or more, but less than 2 20%
2 or more, but less than 3 40%
3 or more, but less than 4 60%
4 or more, but less than 5 80%
5 years or more 100%
</TABLE>
Any amount not vested under the foregoing vesting schedule shall
remain as an unallocated suspense account until the Anniversary Date upon
which said Participant has incurred five consecutive One-Year Breaks in
Service, which said amount shall thereupon constitute a forfeiture and
shall be applied as provided in subparagraph D. hereinbelow.
--
Notwithstanding the foregoing sentence, the amount not vested under the
above vesting schedule shall constitute a forfeiture as of the time of
distribution of the vested benefit. If a Participant terminates employment
with the Company at a time when his vested account balance is zero, he will
be deemed to have received a distribution of his entire vested account
balance upon his termination of employment.
In the case of a terminated Participating Employee who has incurred
five consecutive One-Year Breaks in Service, Vesting Years of Service after
such break shall not be taken into account in determining the vested
percentage of his account which accrued prior to such five consecutive One-
Year Breaks in Service. In the case of a Participating Employee whose
interest in the Plan has been distributed on termination of participation
and was not repaid pursuant to the terms of subparagraph C. below, any
--
service after the distribution date will not increase the amount of the
Participant's non-forfeitable benefit in the Plan as computed at the time
of distribution. Separate accounts for the pre-break and post-break
portions of such person's interest in the Plan
-27-
<PAGE>
will be maintained, if and to the extent necessary to properly reflect the
provisions of this subparagraph.
C. Repayment of Prior Distributions. If a Participating Employee
-- --------------------------------
who has separated from service with the Company and received a distribution
under the Plan shall return to the employment of the Company before
incurring five consecutive One-Year Breaks in Service, any amount
previously declared as a forfeiture (unadjusted by any later gains or
losses) shall be reinstated to the Participant's account upon repayment by
the Participant of the full amount of the distribution (unadjusted by any
later gains or losses). Such repayment must be made before the Anniversary
Date ending the Plan Year within which the Participant incurs a fifth
consecutive One-Year Break in Service. If a Participant who is deemed to
have received a distribution of his vested account balance because his
vested account balance was zero returns to the employment of the Company
before incurring five consecutive One-Year Breaks in Service, any amount
previously declared as a forfeiture shall be reinstated to the
Participant's account. Funds needed in any Plan Year to reinstate the
amount previously forfeited by a re-employed Participant shall be provided
first by forfeitures occurring during that Plan Year, and second, if
necessary, by the Company by way of a separate Plan contribution. In such
event, upon a subsequent termination of employment or retirement, the
Participant's vested interest shall be determined in accordance with the
foregoing vesting schedule as if no previous separation from service had
occurred.
D. Treatment of Forfeitures. The nonvested portion of a
-- ------------------------
Participant's account under the Plan shall constitute a forfeiture. Any
such forfeiture with respect to a Company Discretionary Contribution
Account shall be reallocated to the accounts of those persons who, on the
Anniversary Date ending the Plan Year during which the forfeiture occurred
are eligible to participate in Company Discretionary contributions to the
Plan for such Plan Year, and shall be allocated in the same manner as
Company Discretionary contributions to the Plan are allocated pursuant to
subparagraph 8. G. hereinabove. Any such forfeiture of a Participant's
-- --
Matching Company Contribution Account shall be used to reduce the Company's
Matching Company Contributions to the Plan, and shall not be used to
increase the benefits of the Participants and Beneficiaries.
10. Distribution of Benefits.
--- ------------------------
A. Notice By Company. The Company shall certify to the Trustee, in
-- -----------------
the event of termination of the employment of any Participant, the date of
such termination. The Company shall also certify to the Trustee the date
of death of any Participant. The Trustee shall rely on such certification
in determining the extent to which such Participant, or his Beneficiary,
shall be entitled to benefits under the Plan.
B. Form of Payment. The amount payable to the Participant (or his
-- ---------------
or her
-28-
<PAGE>
Beneficiary) shall be paid in the form of a cash lump sum.
C. Timing of Payment. A Participant who terminates employment after
-- -----------------
attainment of the Normal Retirement Age shall receive or commence to
receive his benefit within 60 days after the Anniversary Date following his
termination of employment. A Participant who terminates employment prior
to his attainment of the Normal Retirement Age shall have the option to
receive, at his or her election, a distribution of his or her entire
interest in the form of a cash lump sum as soon as administratively
feasible after the Participant's termination of employment with the
Company. If the Participant's vested interest in the Plan has never
exceeded $3,500, the entire benefit shall be distributed to the Participant
in a cash lump sum payment as soon as administratively feasible. In no
event shall payments be delayed in violation of Section 401(a)(14) of the
Code.
Notwithstanding the foregoing, a Participant's Salary Reduction
Account shall not be distributed earlier than: (i) termination of
employment, death, or Disability; (ii) termination of the Plan without
establishment of a successor plan; (iii) attainment of age 59-1/2; (iv)
financial hardship as provided in Paragraph 6. above; (v) the sale or other
--
disposition by the Company of substantially all of its assets used in a
trade or business to an unrelated entity, but only with respect to
Employees who continue employment with the acquiring entity; or (vi) the
sale or other disposition by the Company of its interest in a subsidiary to
an unrelated entity but only with respect to Employees who continue
employment with the subsidiary.
D. Other Rules for Commencement and Duration of Benefits. This
-- -----------------------------------------------------
subparagraph only applies to Participant's who remain in the employment of
the Company beyond the calendar year in which they attain age 70-1/2 and to
Participant's who are eligible to receive distribution of their benefit in
a form other than a cash lump sum. The entire interest in the Plan of any
Participating Employee must be, or commence to be, distributed before April
1 of the calendar year following the calendar year in which the
Participating Employee attains age 70-1/2. Benefits distributed hereunder
shall be distributed over a period not to exceed the life of the
Participant, the life of the Participant and his designated Beneficiary,
the life expectancy of the Participating Employee, or the joint life
expectancy of the Participating Employee and his designated Beneficiary. If
the Participant's entire interest is to be distributed in a form other than
a lump sum, then the amount to be distributed each year must be at least
equal in amount to the quotient obtained by dividing the Participant's
entire interest by the lesser of (i) the applicable life expectancy (ii) if
the Participant's spouse is not the designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Proposed Regulations or such other successor
regulation or publication which may be announced by the Secretary of the
Treasury. For purposes of this computation, the life expectancy of the
Participant may be recalculated no more frequently than annually, but the
life expectancy of a nonspouse Beneficiary may not be recalculated.
-29-
<PAGE>
E. Death Benefits; Beneficiary Designation; Distribution of Death
-- --------------------------------------------------------------
Benefits. In the event of the death of a Participant in the Plan, his
--------
accrued benefit shall be paid in full as soon as practicable to his
surviving spouse, as his Beneficiary. Notwithstanding the foregoing,
however, a Participant may designate a Beneficiary other than the
Participant's spouse if (1) the spouse has waived his or her right to be
the Participant's Beneficiary in accordance with this subparagraph; or (2)
the Participant has no spouse; or (3) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Company. A Participant may at any time revoke his
designation of a Beneficiary or change his Beneficiary by filing written
notice of such revocation or change with the Company. However, the
Participant's spouse must again consent in writing to any such change or
revocation. Any consent by the Participant's spouse to waive any rights to
the death benefit must be in writing, must acknowledge the effect of such
waiver, and be witnessed by a Plan representative or a notary public. In
the event that no valid designation of Beneficiary exists at the time of
the Participant's death, and the Participant has no surviving spouse, the
death benefit shall be payable to his estate.
In the event that payments are made to a Beneficiary, on account of
the death of a Participant (or the death of a Participant's spouse), the
entire interest of the Participant shall be distributed to such Beneficiary
within five years after said death.
F. Segregated Accounts. Amounts credited to the accounts of
-- -------------------
Participants whose employment has terminated or Beneficiaries which are not
paid out may be held with other assets of the Trust or may be held
separately from the assets held for the benefit of other Participating
Employees. If so segregated, the Trustee shall invest such segregated
accounts in savings accounts, certificates of deposit, Treasury bills,
bonds, or similar interest-bearing investments, regardless of the
investment policy adopted by the Trustee respecting the balance of the
Trust assets. In so doing, the Trustee shall not discriminate in favor of
one or some retired Employees or Beneficiaries as against one or some other
retired Employees or Beneficiaries. Each such payee shall be credited or
charged with appropriate adjustments for earnings, losses, and revaluations
of the segregated amount being held for his benefit; all such adjustments
shall be made as of each Anniversary Date, in the same manner as
adjustments to other assets of the Trust. Nothing in this paragraph,
however, shall entitle such payee to share in any Company contributions to
the Trust in which he would not otherwise be entitled to share under the
provisions of this Agreement.
G. Location of Participant or Beneficiary Unknown. In the event that
-- ----------------------------------------------
all, or any portion, of the distribution payable to a Participant or his
Beneficiary hereunder shall, at the expiration of five (5) years after it
shall become payable, remain unpaid solely by reason of the inability of
the Administrator, after sending a registered letter, return receipt
-30-
<PAGE>
requested, to the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his Beneficiary, the
amount so distributable shall be reallocated in the same manner as
forfeitures are allocated pursuant to subparagraph 9. D. hereinabove. In
-- --
the event a Participant or Beneficiary is located subsequent to his benefit
being reallocated, such benefit shall be restored.
H. Special Distribution Rules Applicable to Qualified Domestic
-- -----------------------------------------------------------
Relations Order. In the event that all, or any portion of the amounts
---------------
credited to the accounts of a Participant are required to be paid to an
alternate payee in accordance with the terms of any Qualified Domestic
Relations Order ("QDRO"), as that term is defined in Paragraph 12. below,
---
the Trustee shall distribute to such designated alternate payee all amounts
required under the QDRO regardless of whether the Participant would be
entitled to a distribution of his account by virtue of termination of
employment or attainment of retirement age. The alternate payee under the
QDRO shall have the option to receive, at his or her election, the entire
amount required by the QDRO in the form of a cash lump sum as soon as
administratively feasible after the Company's receipt and verification of
the QDRO.
I. Direct Rollovers. This subparagraph applies to distributions
-- ----------------
made on or after January 1, 1993. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a distributee's election under
this subparagraph, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
For purposes of this Subparagraph 8.I., the following definitions
----
shall apply:
(1) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion of net unrealized
appreciation with respect to employer securities).
(2) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of the
Code, an annuity
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plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(3) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code. are distributees with regard
to the interest of the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
11. Loans to Participating Employees.
--- --------------------------------
The Trustee shall have the power to make loans from the Trust to all
Participating Employees and Beneficiaries (who are also parties in interest as
defined in ERISA) in accordance with the terms of this Paragraph 11. All such
---
loans will be administered by the Plan Administrator. All loan applications
will be submitted to the Plan Administrator. The maximum amount of any such
loan, when combined with all existing loans to the Participant from the Plan,
all other plans of the Employer, and any plan maintained by an employer
described in subsections (b), (c), (m) and/or (o) of Section 414 of the Code,
shall not exceed the lesser of: (i) $50,000 (reduced by the excess of the
highest outstanding loan balance from the Plan and other plans maintained by the
Company, during the period of one year ending on the day before the date of the
loan under consideration, over the outstanding balance of all such loans on the
date of the loan under consideration), or (ii) one-half of the nonforfeitable
account balance of the Employee under such plan or plans. The minimum amount of
any such loan shall be $1,000. Each such loan shall be repayable, by its terms,
within five years of the date of the loan; provided, however, that a loan used
to acquire a dwelling unit which within a reasonable time is to be used as the
principal residence of the Participant may be for a term in excess of five
years. All such loans may be secured by: (i) one-half of the Participant's
nonforfeitable account, and/or by (ii) such other security as deemed necessary
under the circumstances by the Plan Administrator for the full protection of the
Plan and Trust. All loans shall be made at a rate of interest not less than the
then prevailing rate of interest in the Duluth, Minnesota, area which would be
available under the circumstances from an institutional lender. Each loan shall
be evidenced by a promissory note, executed by the borrowing Participant,
requiring level amortization of such loan with payments of principal and
interest at stated intervals not less frequently than quarterly. The failure of
a Participant to repay a loan in accordance with the terms of the promissory
note within ten (10) days after written demand by the Plan Administrator
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<PAGE>
shall constitute a default. Upon default, the Trustee may accelerate the
Participant's obligation to repay the loan. If said loan is not then paid in
full, the Trustee may satisfy said loan by treating the amount of the
outstanding balance due under said loan as a distribution to the Participant of
said amount at the earliest time that such amount may be distributable to the
Participant under the terms of the Plan. If the loan is secured by additional
security, the Trustee may execute on the security in accordance with local law.
The Trustee may also take such other steps as permitted by law to protect the
Plan Assets. The outstanding principal balance due on a loan shall be offset
against and shall reduce any amounts otherwise payable to the Participant under
the Plan. The Trustee is authorized to follow instructions given by the Plan
Administrator in connection with all loans granted pursuant to this Paragraph
11. The Plan Administrator may adopt such other rules and procedures as it
- ---
deems appropriate to administer the granting of loans and/or to comply with all
applicable government regulations.
A Participant must obtain the consent of his or her spouse, if any, to use
of the account balance as security for the loan. Spousal consent shall be
obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed by a plan
representative or notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to that
loan. A new consent shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the loan.
12. Spendthrift Clause.
--- ------------------
Except as otherwise provided in this paragraph, the rights of a Participant
or Beneficiary to receive payments or benefits hereunder shall not be subject to
alienation or assignment, and shall not be subject to anticipation, encumbrance
or claims of creditors. Notwithstanding the foregoing, the Plan shall pay
benefits in accordance with the terms of any Qualified Domestic Relations Order,
provided that such Order (i) does not require the Plan to provide any type or
form of benefits, or any option, that is not otherwise provided hereunder, (ii)
does not require the Plan to provide increased benefits, and (iii) does not
require the payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another order previously determined to be
a Qualified Domestic Relations Order. For purposes of the preceding sentence, a
"Domestic Relations Order" shall mean any judgment, decree or order (including
approval of a property settlement agreement) which relates to the provision of
child support, alimony payments, or marital property rights to a spouse, former
spouse, child, or other dependent of a Participant and is made pursuant to a
state domestic relations law. "Qualified Domestic Relations Order" shall mean a
Domestic Relations Order which creates or recognizes the existence of an
alternate payee's right to, or assigns to an alternate payee the right to,
receive all or a portion of the benefits payable with respect to a Participant
under this Plan and which clearly specifies (i) the name and the last known
mailing address of the Participant and each
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<PAGE>
alternate payee covered by the Order, (ii) the amount or percentage of the
Participant's benefits to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be determined, (iii) the
number of payments or period to which such Order applies, and (iv) each plan to
which such Order applies. A distribution by the estate of a deceased Participant
or Beneficiary to an heir or legatee of a right to receive payments hereunder
shall not be deemed an alienation, assignment or anticipation for the purposes
of this Paragraph 12.
---
13. Administration of Trust.
--- -----------------------
In administering this Plan and Trust, the Trustee and the Company shall
administer the same for the benefit of all Participating Employees and
Beneficiaries as herein provided, without discrimination in favor of one or some
Participating Employees or Beneficiaries as against one or some other
Participating Employees or Beneficiaries.
Whenever action is required by the Company hereunder, the same may be taken
by any individual designated as agent for the purpose. The Company shall notify
the Trustee of any change of agent. The Trustee shall be entitled to rely upon
information or instructions received from the agent of the Company whose
authority to act was last certified by the Trustee. Any information or
instruction from the Company to the Trustee shall be in writing and shall be
effective upon delivery to the Trustee. The Trustee shall be under no duty or
responsibility to inquire into the acts or omissions of the Company, nor shall
the Trustee have any liability therefor. Should it become necessary to perform
some act hereunder and there is neither direction in this Plan nor information
nor instructions from the Company on file with the Trustee relating thereto, and
no such information or instructions can be obtained after reasonable inquiry,
the Trustee shall have full power and authority to act in the Trustee's
discretion, consistently with the purpose of this Plan; and in so acting or in
following any instructions from the Company, the Trustee shall be fully
protected and shall be absolved from all liability except from fraud or bad
faith.
The duties, powers and responsibilities of the Trustee shall be limited as
specifically provided herein. No person serving as a Trustee hereunder shall be
liable or responsible to anyone for any matter or thing whatsoever, provided
only that he has acted in good faith.
The Trustee in performing any act hereunder shall be entitled to rely upon
any affidavit, certificate, letter, notice, telegram or other paper or document
believed by the Trustee to be genuine and upon any information or evidence
believed by the Trustee to be sufficient; and the Trustee shall be protected in
all payments hereunder if made in good faith and without actual knowledge of the
happening of an event or a change in conditions which would affect such
payments.
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<PAGE>
The Trustee shall make any sale, investment or reinvestment of the Trust
property or any part thereof which the Company may from time to time direct, and
if such direction be given, the Trustee shall have no obligation with respect
thereto except for failure to carry out such direction. Without limiting the
generality of the foregoing, the Company may direct the investment of Trust
funds in stock and/or obligations of the Company and in stock and/or obligations
of the Trustee (if a corporate Trustee then be acting in such capacity under
this Trust). The Trustee shall have no liability for any depreciation or loss
with respect to any property acquired by the Trustee pursuant to such direction,
and shall have no duty to review or to make recommendations with respect
thereto.
14. Trustee's Administrative Powers.
--- -------------------------------
The Trustee shall receive, hold, invest and reinvest contributions to the
Trust fund and shall make disbursements from the Trust fund pursuant to the
terms of this Plan. Subject to the consent of the Trustee, the Company shall
have the right to make its contributions hereunder in property to the Trustee.
The Trustee shall make payments from the Trust fund only to such persons, in
such manner, at such times, and in such amounts as may be specified in written
directions from the Company and not otherwise, and the Trustee shall be fully
protected in making payments under the direction of the Company. For purposes
of accounting and valuation, the records of the Trust shall be maintained on a
cash receipts and disbursements basis. The Trustee from time to time shall
capitalize unexpended income and add the same to the principal of the Trust.
Subject only to such instructions, rules and restrictions as may from time
to time be adopted by the Company and communicated to the Trustee, the Trustee
shall have the following powers and rights in addition to those invested in the
Trustee by law:
(a) Investment Powers. To hold, manage and control the assets of the
-----------------
Trust, during the continuance of the Trust. The Trustee shall have full
power without any court order to improve, lease for any term irrespective
of the duration of the Trust, rent, sell, exchange, hold, control, invest
and reinvest the same in such manner and upon such terms as the Trustee
deems best, including (without limitation of these powers) the power to
purchase shares in investment trusts and stock in investment corporation,
irrespective of any statutes or rules or practices of courts now or
hereafter in force limiting the investments of trust companies or trustees
generally, with full power to convert realty into personalty and personalty
into realty. The Trustee hereunder shall not be required to dispose of any
property held hereunder in order to diversify the investments of the Trust
or because such holdings are of a kind not ordinarily considered as proper
investments for trust estates; nor shall the Trustee be precluded from
acquiring property which results in a nondiversification of the investments
of the Trust or which is of a kind not ordinarily considered as proper
investments for trust estates; therefore, the Trustee is granted the
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<PAGE>
right to retain property so long as the Trustee shall deem such investments
reasonably sound, and to acquire such property as the Trustee deems to be a
reasonably sound investment, regardless of the proportion of the Trust
which it represents and regardless of whether it is of a type ordinarily
deemed proper for trust investments. The Trustee is authorized to hold cash
uninvested at any time and from time to time. No purchaser from nor lender
to the Trustee need see to the application of the purchase or loan money to
the purposes of the Trust, but the receipt of the Trustee shall be a
complete discharge to any such person. The Trustee acting hereunder shall
not be held responsible for any loss sustained by the Trust through any
error of judgment made in good faith, but shall be liable only for the
Trustee's own willful misconduct. The Trustee hereunder shall not be
personally liable upon any contract of indebtedness of or claim against the
Trust or upon a mortgage, trust deed, note or other instrument executed
under the provisions of this Plan.
(b) Borrowing. To borrow money from the Trustee or others, upon such
---------
terms and conditions, at any time or times, and for such purposes of the
Trust as the Trustee may deem proper or desirable provided that such
borrowing does not result in a prohibited transaction under Code Section
4975(c). For sums borrowed, the Trustee may issue the Trustee's promissory
notes as Trustee and secure the payment thereof by mortgaging or pledging
any part or all of the Trust assets.
(c) Holding and Transferring Real Estate. To take and hold title to
------------------------------------
real estate or interests therein in the Trustee's name or in the name of
the Trustee's nominee without disclosing the Trust; and in accepting title
to the real estate, neither the Trustee nor the Trustee's nominee shall be
held to have assumed the payment of any encumbrances thereon, nor any
responsibility as to the validity of the title conveyed to or held by the
Trustee or the Trustee's nominee. All conveyances executed and delivered
by the Trustee or the Trustee's nominee shall be without covenants of
warranty except as against the Trustee's own acts.
(d) Voting and Related Powers. To vote any stocks, bonds, or other
-------------------------
securities, to give general or special powers of attorney with or without
power of substitution; to exercise any conversion privileges, subscription
rights or other options and to make any payments incidental thereto; to
consent to or otherwise participate in corporate reorganizations or other
changes affecting corporate securities and to delegate discretionary powers
and to pay any assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with respect to stocks,
bonds, securities or other property held in the Trust.
(e) Claims by or Against the Trust. To sue or defend in any suit or
------------------------------
legal proceedings by or against the Trust. The Trustee shall have full
power in the Trustee's discretion to compound, compromise and adjust all
claims and demands in favor of or
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<PAGE>
against the Trust upon such terms as the Trustee may deem best. In the
administration of the Trust, the Trustee shall not be obligated to take any
action which may subject the Trustee to any expense or liability unless the
Trustee is first indemnified to the Trustee's satisfaction for all expenses
and liabilities, including attorneys' fees, which the Trustee may incur in
connection with such action.
(f) Nominee. To register any investment held in the Trust in the
-------
Trustee's own name or in the name of a nominee and to hold any investment
in bearer form; provided, however, that the books and records of the
Trustee shall at all times show that all such investments are part of the
Trust fund, and provided further that such registration or holding shall
neither increase nor decrease the liability of the Trustee.
(g) Employment of Agents. To employ such agents, attorneys-in-fact,
--------------------
experts and investment and legal counsel, including any firm or corporation
with which the Trustee may be associated as a partner, director,
stockholder or otherwise, and to delegate discretionary powers to or to
rely upon information or advice furnished by such agents, attorneys-in-
fact, experts or counsel.
(h) Execution of Instruments. To execute and deliver any and all
------------------------
documents of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to carry out the powers herein granted, and
to perform any and all acts that may be necessary or convenient in the
proper administration of the Trust.
(i) Collective Investment Trust. To commingle assets of the Trust
---------------------------
with assets of other trusts, which in each case form a part of a pension or
profit-sharing plan qualified under the Code and constitute an exempt trust
within the meaning of the Code, (i) through the medium of any collective
investment trust for employee benefit trusts established and maintained by
any bank, or, to the extent permitted by law, or (ii) through the medium of
any collective investment trust for employee benefit trusts established and
maintained by any trust company. To the extent of the equitable share of
this Trust in any such investment trust, the instrument establishing such
investment trust, as the same has been or may be amended, and the trust
maintained thereunder, shall be deemed a part of this Plan and Trust as if
fully set forth herein.
(j) Necessary Acts. To do all acts whether or not expressly
--------------
authorized which may be necessary or proper for the protection of the
property held hereunder or for the carrying out of any duty under this Plan
or under the Trust fund.
15. Holding of Trust Assets.
--- -----------------------
Except as otherwise provided hereinabove, all the assets in the Trust shall
be held
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<PAGE>
collectively for all the Participants and Beneficiaries with no physical
division thereof until such time as distribution is actually made by the
Trustee.
16. Nonliability of Successor Trustee.
--- ---------------------------------
Each successor Trustee may accept as complete and correct and may rely upon
any accounting which shall have been made by or on behalf of any Trustee
hereunder prior to the date upon which such successor Trustee shall have
qualified as a Trustee under this instrument, and may rely upon any statement or
representation made by any Trustee then or theretofore acting hereunder as to
the assets comprising the Trust or as to any other fact bearing upon the prior
administration of the Trust created herein; and such successor Trustee shall not
be subject to any liability by reason of having accepted and relied upon such
accounting, statement or representation in case it is subsequently established
that the same was incomplete, inaccurate or untrue. No successor Trustee
hereunder shall be subject to any liability or responsibility with respect to
any act or omission of any other Trustee nor shall any successor Trustee have
any duty to enforce or to seek to enforce any claims of any kind against any
predecessor Trustee on account of or in connection with any act or omission of
any Trustee hereunder.
17. Decision of Majority of Trustees to Govern.
--- ------------------------------------------
Except as otherwise expressly provided, when there are three Trustees
authorized to act in any particular, the agreement of a majority of the Trustees
shall be required, and when there are two Trustees authorized to act in any
particular, the agreement of both Trustees shall be required. Each Trustee
shall be liable only for his own acts in the administration of this Trust. No
Trustee shall be in any way or to any extent liable to the Participants,
Beneficiaries or others for anything done hereunder by his Co-Trustee to which
he did not actively consent or of which he did not actively approve.
18. Accounts.
--- --------
The Trustee shall keep accurate and detailed accounts of all investments,
receipts and disbursements and other transactions hereunder, and all accounts,
books and records relating thereto shall be open to inspection by any person
designated by the Board of Directors of the Company at all reasonable times.
Not later than one hundred twenty (120) days after the end of each Plan Year,
and within sixty (60) days after the effective date of the removal or
resignation of a Trustee, the Trustee shall file with the Company a written
report setting forth all investments, receipts, disbursements, and other
transactions effected by the Trustee from the date of the prior such report to
the close of such Plan Year, or the date of removal or resignation of a Trustee,
as the case may be. Such report shall contain an exact description of all
securities and investments held at the close of such Plan Year or the effective
date of such removal or
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<PAGE>
resignation of a Trustee, as the case may be, and the cost of each item thereof,
as carried on the books of the Trustee. Upon the expiration of ninety (90) days
from the date of filing such report, the Trustee, including a Trustee who
resigned or was removed, shall be forever released and discharged from any
liability or accountability to anyone as respects the propriety of the Trustee's
acts or transactions shown in such report, except with respect to any such acts
or transactions as to which the Company shall within such 90-day period file
with the Trustee a written statement claiming fraud or bad faith on the part of
the Trustee; and neither the Company nor any other person shall have the right
to demand or be entitled to any further or different accounting by the Trustee.
19. Removal or Resignation of Trustee.
--- ---------------------------------
Any Trustee hereunder may be removed by resolution of the Board of
Directors of the Company upon delivery to such person of a certified copy of
such resolution of removal. Any Trustee hereunder may resign as Trustee, upon
written notice to that effect, delivered to the Company. Such removal or
resignation shall become effective upon the date specified in such resolution or
such notice, as the case may be, which shall be not less than fifteen (15) days
subsequent to the delivery of such certified copy of resolution or such notice.
In the event of the removal, resignation, death or inability to serve of any
Trustee hereunder, a successor shall be appointed by resolution of the Board, a
certified copy of which resolution shall be delivered to such successor. In the
event of the removal, resignation, death or inability to serve of any Trustee
hereunder after the Company shall have gone out of business or ceased to exist
or been dissolved, voluntarily or involuntarily, or had a receiver or trustee in
bankruptcy appointed, a successor may be appointed by election by a majority in
interest of the Participants and Beneficiaries then having an interest in the
Trust. A successor Trustee, upon accepting such appointment, shall become
vested with the same powers, duties, privileges, and immunities as if such
Trustee had been originally named in this Plan as a Trustee. In case of the
removal, resignation, death or inability to serve of a Trustee, said Trustee or
his personal representative shall forthwith turn over to the remaining or
succeeding Trustees all accounts and records in such Trustee's possession, and
shall execute such instruments as may be necessary to terminate such
trusteeship. No bond shall be required of the Trustee named in this Plan or any
of the Trustee's successors.
20. Allocation of Responsibilities.
--- ------------------------------
A. Administrative Responsibilities. The Company is the Named
-- -------------------------------
Fiduciary which has the authority to control and manage the operation and
administration of the Plan. The Company shall make such rules,
regulations, interpretations, and shall take such other actions to
administer the Plan as the Company may deem appropriate. In administering
the Plan, the Company shall act in a nondiscriminatory manner with
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<PAGE>
respect to Plan Participants and Beneficiaries, and shall at all times
discharge its duties with respect to the Plan in accordance with applicable
fiduciary standards.
B. Management of Plan Assets. The Company is the Named Fiduciary
-- -------------------------
with respect to control over and management of the Plan's assets only to
the extent that it (i) shall appoint one or more Trustees to hold the
assets of the Plan in trust, (ii) shall appoint one or more Investment
Managers for any Plan assets and enter into an investment management
agreement with each Investment Manager it appoints, and (iii) shall
exercise its authority to direct the sale, investment or reinvestment of
Plan assets in accordance with Paragraph 13. hereinabove. The Company
---
shall be responsible for diversifying the investments of the Plan only to
the extent that said authority to direct investments is exercised, and the
Trustee and the Investment Managers, if any, shall be responsible for
diversifying the specific investments in accounts under their management.
C. Trustee and Investment Managers. The Trustee shall have the
-- -------------------------------
exclusive authority and discretion to control and manage the assets of the
Plan held in trust by it, and shall be the Named Fiduciary with respect to
such control and management, except to the extent that the Company
exercises its authority to direct investment of the Plan's assets, or that
the authority to manage such assets is allocated by the Company to one or
more Investment Managers. Each Investment Manager appointed by the Company
shall have the authority to manage, including the power to acquire and
dispose of, such assets of the Plan as are assigned to it by the Company.
D. Delegation of Fiduciary Responsibilities. Except as otherwise
-- ----------------------------------------
expressly stated herein, the Company shall not allocate or delegate to any
other person any of its duties and responsibilities hereunder. The duties
and responsibilities of the Company shall be carried out by the Company's
Directors and officers, acting on behalf of and in the name of the Company
in their capacities as such, and not as individual fiduciaries. The
Company is specifically prohibited from designating any Director or officer
of the Company as a fiduciary and from allocating or delegating to any such
person any of the fiduciary responsibilities of the Company.
21. Amendments.
--- ----------
The Company reserves the right by action of its Board of Directors to amend
this Plan at any time without the consent of the Trustee, but no such amendment
shall cause or permit any portion of the corpus or income of the Trust to revert
to or become the property of or be used for the benefit of the Company. Any
amendment which is necessary to bring this Trust into conformity with government
laws or regulations in order to qualify the Plan and Trust for tax exemption may
be made retroactively. No amendment to this Plan may be made which would result
in a cutback of vested rights or rights to accrued benefits as provided in
Section
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<PAGE>
411(a)(10)(A) or 411(d)(6) of the Code. In the event that the vesting schedule,
if any, set forth in the Plan is amended, each Participant who has completed at
least three (3) Years of Service may elect to have his accrued benefit
determined under the vesting schedule in effect prior to the amendment.
22. Termination of Contributions.
--- ----------------------------
The Company has established this Plan with the bona fide intention and
expectation that from year to year it will be able to and will deem it advisable
to make its contributions as herein provided. However, the Company realizes
that circumstances not now foreseen or circumstances beyond its control may make
it either impossible or inadvisable to continue to make its contributions as
herein provided. In the event the Company decides it is impossible or
inadvisable for it to continue to make its contributions as herein provided, the
Company shall have the right to terminate its contributions.
In the event of complete termination of contributions by the Company, with
or without formal action by the Company, the Company shall make no further
contributions under the Plan, the Plan and Trust shall remain in existence, and
all the provisions of the Plan and Trust shall remain in force which are
necessary in the opinion of the Trustee, other than the provisions for
contributions by the Company and any provisions requiring forfeiture of a
Participating Employee's share in the Trust (the shares in the Trust of each
Participating Employee shall become fully vested in such Participant, regardless
of the length of his employment or his participation, upon such termination of
contributions); and all of the assets in the Trust on the date specified in such
resolutions shall be held, administered and distributed by the Trustee in the
manner provided herein.
23. Termination of Trust.
--- --------------------
In the event that the Company's contributions to the Trust have been
terminated completely in accordance with the provisions of Paragraph 22. above,
---
the Board shall also have the power to terminate the Plan and Trust completely
by appropriate resolutions specifying the date of such termination, certified
copies of which shall be delivered to the Trustee. Upon a complete or partial
termination of the Plan and Trust, with or without formal action by the Company,
any provision requiring forfeiture of the share in the Trust of a Participating
Employee affected by such termination shall become void, and the share in the
Trust of each such Participating Employee shall become fully vested in him.
After payment of all expenses and after adjustment of Participants' and
Beneficiaries' shares for expenses, profits, losses and any other adjustments
necessary to reflect accurately such shares in the Trust in accordance with the
provisions hereof, there shall be paid to each Participant and each Beneficiary
the amount of his share in the Trust, in accordance with the further terms of
this Plan.
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<PAGE>
24. Merger or Consolidation of Plan, Transfer of Plan Assets.
--- ------------------------------------------------- ------
In the event of any merger or consolidation with, or transfer of assets and
liabilities to, any other plan, provision shall be made to the effect that each
Participant and Beneficiary in this Plan will be entitled, after the merger,
consolidation or transfer, to a benefit equal to or greater than the benefit to
which he would have been entitled under this Plan, immediately prior to said
merger, consolidation or transfer, as if the Plan had terminated at such time.
25. Top-Heavy Provisions.
--- --------------------
A. Determination of Top-Heavy Status. As of each determination
-- ---------------------------------
date, the Company shall compute the aggregate amounts allocated to the
accounts of all "key employees" of the Company. The term "key employee"
shall mean any Employee, former Employee, or beneficiary thereof who, at
any time during the Plan Year or any of the four preceding Plan Years, is
or was (i) an officer of the Employer having an annual Compensation greater
than fifty percent (50%) of the dollar limitation then in effect under
Section 415(b)(1)(A) of the Code, (ii) one of the ten Employees having an
annual Compensation greater than the dollar limitation then in effect under
Section 415(c)(1)(A) of the Code and owning (or considered as owning within
the meaning of Section 318 of the Code) the largest interests in the
Company, (iii) a five percent (5%) owner of the Company or (iv) a one
percent (1%) owner of the Company who has annual Compensation from the
Company in excess of $150,000. For purposes of determining percentage
ownership in the foregoing sentence, the rules of Section 416(i)(1)(B) of
the Code shall apply and the rules of Sections 414(b), (c), and (m) shall
not apply. If the aggregate amount allocated to the accounts of all key
employees exceeds sixty percent (60%) of the aggregate amount allocated to
the accounts of all Participants, then the Plan will be deemed to be top-
heavy for the Plan Year next following such Anniversary Date (and in the
case of the initial Plan Year, for the Plan Year ending with such
Anniversary Date). For purposes of determining the aggregate amounts
allocated to the accounts of Participants, there shall be added any amount
of Company contributions required to be made for the Plan Year ending on
the determination date (unless this Plan is not subject to the minimum
funding requirements of Section 412 of the Code). The present value of
accrued benefits shall be determined based upon the interest and mortality
rates specified in the defined benefit plan. The account balances
attributable to a Participant who has not performed any services for the
Company at any time during the five-year period ending on any determination
date shall be disregarded. For purposes of making the above determination,
there shall be considered (i) all other qualified plans of the Company in
which a key employee is a participant, (ii) all other plans which enable
this Plan or plans described in (i) above to meet the requirements of
Sections 401(a)(4) or 410 of the Code, and (iii) all other qualified plans
which may have been terminated but which were
-42-
<PAGE>
maintained by the Employer within the five-year period ending on the
determination date. There shall also be considered any distributions made
with respect to any Participant within a five-year period ending on the
determination date. At the option of the Company, any other qualified plans
maintained by it may be included in the group of plans for purposes of
determining the top-heavy status of the Plan, provided that the group of
plans would continue to meet the requirements of Sections 401(a)(4) and 410
of the Code with such plans which are added at the option of the Company
being taken into account. If any plans of the Company are aggregated with
this Plan as described in the preceding sentence, this Plan shall be deemed
to be top-heavy only if the aggregate present value of accrued benefits of
key employees in the aggregated group of plans exceeds 60 percent of the
aggregate present value of accrued benefits of all employees in the
aggregated group of plans. For purposes of determining present value of
accrued benefits, the rules of Section 416(g) shall apply. Accrued benefits
shall be determined under the method which is used for accrual purposes for
all plans of the Company, or if there is no such method, then under the
slowest accrual rate permitted under Section 411(b)(1)(C) of the Code.
Determination date shall mean the last day of the preceding Plan Year.
However, for the first Plan Year the determination date shall be the last
day of that year. For purposes of determining whether an Employee is a key
employee, "Compensation" shall mean compensation as defined in Section
415(c)(3) of the Code, but including Salary Reduction Contributions made to
this Plan.
B. Minimum Allocations. For each Plan Year that the Plan is top-
-- -------------------
heavy, there shall be allocated to the account of each Participant who is
not a key employee and who is employed by the Company on the last day of
the Plan Year, irrespective of whether he has completed 1,000 Hours of
Service with the Company during the Plan Year, an amount not less than
three percent (3%) of each such Participant's W-2 Compensation (without
taking into account Social Security and similar contributions and
benefits). Notwithstanding the foregoing, if the contribution for any Plan
Year made by the Company is less than three percent (3%) of the aggregate
W-2 Compensation of all Participants, then the amount allocable to each
nonkey employee shall be such lesser percentage. If the Company maintains
both a defined contribution plan and a defined benefit plan with a nonkey
employee who participates, or could participate in both plans, then there
shall be allocated to the account of each Participant who otherwise would
be entitled to receive a minimum allocation as described above an amount
not less than five percent (5%) of such Participant's W-2 Compensation (but
without taking into account Social Security and similar contributions and
benefits). For purposes of this subparagraph C., all defined contribution
--
plans of the Company shall be aggregated to the end that the percentage
rules shall be satisfied if the aggregate contribution made to all defined
contribution plans equals five percent (5%) of any nonkey Participant's W-2
Compensation.
C. Effect on Section 415 Limitations. If the Company maintains both
-- ---------------------------------
a
-43-
<PAGE>
defined contribution plan and a defined benefit plan with a Participant who
participates, or could participate, in both plans, then for purposes of
computing the defined contribution fraction and defined benefit fraction
described in subparagraph 8. J. hereunder, the dollar limitation of
-- -
Sections 415(b)(1)(A) and 415(c)(1)(A) shall be multiplied by 1.0 in lieu
of 1.25, unless:
(1) the defined contribution plan allocates to the account of
each Participant who is not a key employee not less than seven and
one-half percent (7-1/2%) of each such Participant's W-2 Compensation
(without taking into account Social Security and similar contributions
and benefits); and
(2) the plan would not be top-heavy if 90 percent were
substituted for 60 percent in subparagraph A. above.
--
26. Expenses of Administration.
--- --------------------------
The Trustee's compensation shall be fixed by agreement from time to time
with the Company; provided, however, that no person compensated as an Employee
of the Company shall be compensated as a Trustee hereunder. The Company intends
to pay, in addition to the contributions hereinbefore provided for, any expenses
of administering the Trust, including the Trustee's compensation, if any, except
that any investment counsel fees incurred by the Trust, and any expenses
directly related to particular transactions involving purchases or sales of
property by the Trust or the production or collection of income, such as
transfer taxes, brokers' commissions, etc., shall be paid by the Trustee out of
the assets of the Trust.
27. Rights of Participants.
--- ----------------------
Participating in this Plan and Trust shall not give any Participant any
right to be retained in the service of the Company or any right or claim to any
benefits hereunder unless such benefits have accrued under the terms and
provisions of this Plan.
28. Claims Procedure.
--- ----------------
Claims for benefits under the Plan may be filed with the Plan Administrator
on forms supplied by it. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed. In the
event the claim is denied, the reasons for the denial shall be specifically set
forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided. In
addition, the claimant shall be
-44-
<PAGE>
furnished with an explanation of the Plan's claims review procedure, as
described below.
Any Employee or Beneficiary who has been denied a benefit shall be entitled
to request the Plan Administrator to give further consideration to his claim by
filing with the Plan Administrator (on a form which may be obtained from the
Plan Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Plan Administrator no later than 60 days after
receipt of the written notification furnished by the Plan Administrator with
respect to the claim. The Plan Administrator shall then conduct a hearing within
the next 60 days, at which the claimant may be represented by an attorney or any
other representative of his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of his
claim. At the hearing (or prior thereto upon 5 business days written notice to
the Plan Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the Plan Administrator
which are pertinent to the claim at issue and its disallowance. Either the
claimant or the Plan Administrator may cause a court reporter to attend the
hearing and record the proceedings. In such event, a complete written transcript
of the proceedings shall be furnished to both parties by the court reporter. The
full expense of any such court reporter and such transcripts shall be borne by
the party causing the court reporter to attend the hearing. A final decision as
to the allowance of the claim shall be made by the Plan Administrator within 60
days of receipt of the appeal (unless there has been an extension of 60 days due
to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
29. Construction.
--- ------------
It is intended that this Plan shall be construed so as to qualify as a tax-
free employees' profit-sharing plan and trust, contributions to which by the
Company shall be deductible from its net income.
30. Defense of Trust.
--- ----------------
The Company shall have the right to defend the position of the Trust
created under this Plan as a tax-free profit-sharing trust.
31. Ohio Trust.
--- ----------
-45-
<PAGE>
This Plan is executed and delivered in the State of Ohio and the Trust
hereby created shall be deemed an Ohio trust and shall in all respects be
construed and regulated by the laws of the State of Ohio.
32. Mistaken Contributions, Etc.
--- ----------------------------
Except as otherwise provided herein, the assets of the Plan shall not inure
to the benefit of the Company, and shall be held for the exclusive purposes of
providing benefits to Participants and Beneficiaries and defraying reasonable
expenses of administering the Plan. Notwithstanding the foregoing sentence:
(a) If a contribution is made by the Company under a mistake of fact,
such contribution may be returned, at the discretion of the Company, within
one (1) year after payment of such contribution.
(b) All contributions to the Plan are conditioned on initial
qualification of the Plan under Section 401 of the Code. If the Plan does
not so qualify for any Plan Year for which a contribution is made, such
contribution may be returned, at the discretion of the Company, within one
(1) year after the date of denial of initial qualification of the Plan
provided that the application for qualification is made by the time
prescribed by law for filing the Employer's tax return for the taxable year
in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) All contributions to the Plan are conditioned upon the
deductibility thereof, for Federal income tax purposes, under Section 404
of the Code. If and to the extent that such deduction is disallowed, the
Company's contribution (to the extent disallowed) may be returned, at the
discretion of the Company, within one (1) year after the disallowance of
the deduction.
Earnings attributable to the contributions to be returned to the Company
will not be returned to the Company, but losses attributable to such
contributions will reduce the amount to be returned. Notwithstanding the
foregoing, if the Plan fails to initially qualify under Section 401 of the Code,
the entire assets of the Plan may be returned to the Company.
33. Plan Administrator; Legal Agent.
--- -------------------------------
The Company shall serve as the Plan Administrator and as the legal agent
for service of process upon the Plan, to be served at the following address:
Advanstar Communications Inc.
-46-
<PAGE>
Attention: Vice President, Human Resources
131 West First Street
Duluth, Minnesota 55802
IN WITNESS WHEREOF, this Plan and Trust has been executed by the Company,
pursuant to action of its Board of Directors, and by the Trustee as of the day
and year first above written.
ADVANSTAR COMMUNICATIONS INC.
/s/ Edward Aster
By: ___________________________________
Edward Aster, President and
Chief Executive Officer
[Signatures continued on next page]
[Signatures continued from previous page]
/s/ Mary Abood
___________________________________
Mary Abood, Trustee
/s/ Teuta Cenaj
___________________________________
Teuta Cenaj, Trustee
/s/ Byron Glidden
___________________________________
Byron Glidden, Trustee
/s/ David Montgomery
___________________________________
David Montgomery, Trustee
-47-
<PAGE>
Phillip Stocker, Trustee
-48-
<PAGE>
FIRST AMENDMENT
TO THE ADVANSTAR COMMUNICATIONS INC.
EMPLOYEES' 401(k) PLAN AND TRUST
--------------------------------
(1993 RESTATEMENT)
THIS FIRST AMENDMENT is made this 31st day of March, 1994, by ADVANSTAR
COMMUNICATIONS INC. (the "company") to the Advanstar Communications Inc.
Employees' 401(k) Plan and Trust (the "Plan"), which was restated in its
entirety in 1993.
WHEREAS, the Omnibus Budget Reconciliation Act of 1993 requires that all
qualified plans limit the amount of participant compensation that may be taken
into account in determining allocations under said plans and it is desired to
incorporate such limitations into the Plan; and
WHEREAS, the Company acquired Aster Publishing Corporation and the Company
wishes to clarify that participants in the Aster Publishing Corporation Profit-
Sharing Plan are permitted to participate in the Plan; and
WHEREAS, the Company wishes to liberalize certain provisions relating to
the 401(k) provisions of the Plan, all as permitted by final Treasury
Regulations;
NOW THEREFORE, Pursuant to the provisions of Paragraph 21. of the Plan,
--
said Plan is hereby amended, as follows:
FIRST: Effective January 1, 1994, subparagraph 2.(e) is hereby deleted in
-
its entirety, and the following new subparagraph 2.(e) is substituted in lieu
-
thereof:
"(e) `Compensation' shall mean the total compensation paid by the Company
---
to an Employee for services rendered for the period under consideration
(other than compensation in the form of qualified or previously qualified
compensation) that is currently includible in gross income of the Employee
for income tax purposes. `Compensation' shall also include amounts that
are not includible in income of the Employee under Code Section 125 (except
for amounts not includible in income under Code Section 125 which are
applied to the payment of medical insurance premiums on behalf of such
Employee)."
SECOND: Effective January 1, 1994, subparagraph 2.(j) is hereby deleted in
--
its entirety, and the following new subparagraph 2.(j) is substituted in lieu
--
thereof:
"(j) `Gross Compensation' shall mean the total compensation paid by the
---
Company to an Employee for services rendered for the period under
consideration (other than compensation in the form of qualified or
previously qualified compensation) that is currently includible in gross
income of the Employee for income tax purposes, plus all amounts not
includible in income of the Employee under Code Section 125 and all amounts
deferred hereunder pursuant to a salary reduction agreement.
<PAGE>
For plan years commencing January 1, 1994 or later, the annual Gross
Compensation of each Participant taken into account under the Plan for any
plan year shall not exceed $150,000, as adjusted by the Commissioner of
Internal Revenue for increases in the cost-of-living in accordance with
Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over
which Gross Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than 12
months, the annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and
the denominator of which is 12.
In determining the Gross Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q) of the Code shall apply,
except in applying such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants of the Participant who
have not attained age 19 before the close of the year. If, as a result of
the application of such rules, the adjusted $150,000 limitation is
exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Gross Compensation, as
determined under this subparagraph prior to the application of this
limitation."
THIRD: Effective January 1, 1993, Paragraph 4. is hereby deleted in its
--
entirety, and the following new Paragraph 4. is substituted in lieu thereof:
--
"4. Plan Entry Requirements.
-- -----------------------
Each Employee of the Company shall enter the Plan on the first day of
the calendar month next following the later to occur of the end of the 12-
month period of service which constitutes a Year of Service with respect to
such Employee and his attainment of age twenty-one (21). Notwithstanding
the foregoing, if an Employee is a non-resident alien who receives no
earned income (within the meaning of Section 911(d)(2) of the Code) from
the Company which constitutes income from sources within the United States
(within the meaning of Section 861(a)(3) of the Code), such Employee shall
be ineligible to enter into a salary reduction agreement pursuant to
subparagraph 5.A. hereof.
----
Individuals who are United States citizens and who are employed by a
foreign subsidiary corporation or a domestic subsidiary whose operations
are largely foreign shall be considered as Employees of the Company and
shall be permitted to participate in this Plan (including the right to
enter into a salary reduction agreement) provided that the Company extends
social security coverage to such individuals and further provided that such
U.S. citizen employees are not provided contributions under a funded plan
of deferred compensation by any other person with respect to compensation
paid to such U.S. citizen employees by the foreign subsidiary or domestic
subsidiary with largely foreign operations.
With respect to an Employee who has met the eligibility requirements
of the Plan
-2-
<PAGE>
but who has incurred a One-Year Break in Service, such Employee shall be
eligible to re-enter the Plan commencing immediately upon his return. In
the event an Employee who is not a member of an eligible class of employees
becomes a member of an eligible class, such employee will participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a Participant. In
the event that the eligibility of any person to participate in the Plan
shall be disputed, the decision of the Trustee upon such eligibility shall
be controlling. For the purposes of enabling the Trustee to make such
determination, all information available to the Company which shall be
required by the Trustee shall be made available to the Trustee."
FOURTH: Effective January 1, 1994, subparagraph 6.B. (3) is hereby
---
deleted in its entirety, and the following new subparagraph 6.B.(3) is
substituted in lieu thereof:
"(3) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his spouse,
children, or dependents; or"
FIFTH: Effective January 1, 1989, subparagraph 7.A.(1) at page 17, is
-------
hereby deleted in its entirety, and the following new subparagraph 7.A.(1) is
-------
substituted in lieu thereof:
"(1) The combined actual deferral ratio for the family group (which
shall be treated as one Highly Compensated Employee) shall be determined by
aggregating Salary Reduction Contributions and Gross Compensation of all
eligible Family Members (including Highly Compensated Employees)."
SIXTH: Effective January 1, 1994, subparagraph 8.H.(1) is hereby deleted
-------
in its entirety, and the following new subparagraph 8.H.(1) is substituted in
-------
lieu thereof:
"(1) Any contributions made pursuant to a salary reduction agreement,
to the extent they would reduce the excess amount, will be returned to the
Participant;"
-3-
<PAGE>
IN WITNESS WHEREOF, this First Amendment has been executed by the Company,
pursuant to action of its Board of Directors, as of the day and year first above
written.
ADVANSTAR COMMUNICATIONS INC.
/s/ Edward Aster
By: _____________________________________
Edward Aster, President and
Chief Executive Officer
/s/ Mary Abood
_________________________________________
Mary Abood, Trustee
/s/ Teuta Cenaj
_________________________________________
Teuta Cenaj, Trustee
/s/ Byron Glidden
_________________________________________
Byron Glidden, Trustee
/s/ David Montgomery
_________________________________________
David Montgomery, Trustee
/s/ Phillip Stocker
_________________________________________
Phillip Stocker, Trustee
-4-
<PAGE>
SECOND AMENDMENT
TO THE ADVANSTAR COMMUNICATIONS INC.
EMPLOYEES' 401(K) PLAN AND TRUST
--------------------------------
(1993 RESTATEMENT)
THIS SECOND AMENDMENT is made this 18th day of August, 1994, by and among
ADVANSTAR COMMUNICATIONS INC. (the "Company") and MARY ABOOD, TEUTA CENAJ, BYRON
GLIDDEN, DAVID MONTGOMERY, and PHILLIP STOCKER (collectively the "Trustee"), to
the Advanstar Communications Inc. Plan and Trust (the "Plan"), which was
restated in its entirety in 1993.
Pursuant to the provisions of Paragraph 21. of the Plan, said Plan is
--
hereby amended, effective the 1st day of September, 1994, by the deletion of
subparagraph 2 (w) in its entirety and the substitution of the following new
-----
subparagraph 2 (w) in lieu thereof:
-----
"(w) "Vesting Year of Service" shall mean a period of twelve
(12) consecutive months during which a Participating Employee either
(i) completes at least One (1) Hour of Service and is employed on the
last day of the twelve-month period, or (ii) completes at least One
Thousand (1,000) Hours of Service without regard to employment on the
last day of the twelve-month period. Such twelve-month period shall
be calculated with reference to the Employee's "Employment
Commencement Date" (the first date of employment on which the Employee
is credited with an Hour of Service with the Company), and subsequent
twelve-month periods shall be calculated with reference to subsequent
anniversaries of said Employment Commencement Date.
The number of Hours of Service to be credited to an Employee for
determining whether a Vesting Year of Service has been completed shall
be computed on equivalencies based on periods of employment in
accordance with Department of Labor Regulation (S)2530.200b-3(e) as
follows:
If an Employee is paid on a weekly basis, the Employee shall be
credited with 45 Hours of Service for each week for which the Employee
would otherwise be credited with at least one Hour of Service pursuant
to subparagraph 2 (1).
-----
If an Employee is paid on a bi-weekly basis, the Employee shall
be credited with 90 Hours of Service for each such two-week period for
which the Employee would otherwise be credited with at least one Hour
of Service pursuant to subparagraph 2 (1).
------
In determining Vesting Years of Service, service with Harcourt
Brace Jovanovich, Inc. shall be considered as service with the
Company.
<PAGE>
An Employee who ceases to be a Participant, but who remains in
the employment of the company, shall continue to be credited with
Vesting Years of Service under this Plan so long as he remains in the
employment of the Company. An Employee who was in the employment of
the Company before he became an Employee for purposes of this Plan
shall receive credit for Vesting Years of Service as though he had
been an Employee during such prior period of employment with the
Company."
In no event shall any Participating Employee's Vesting Years of Service be
reduced by virtue of this amendment. If a Participating Employee satisfied the
requirements for a Vesting Year of Service prior to this amendment for a
particular twelve-month period, the Participating Employee shall continue to
receive credit for a Vesting Year of Service for such period, notwithstanding
this amendment.
IN WITNESS WHEREOF, this Second Amendment has been executed by the Company,
pursuant to action of its Board of Directors, and by the Trustee as of the day
and year first above written.
ADVANSTAR COMMUNICATIONS INC.
/s/ Richard B. Swank
By:___________________________________
Richard B. Swank
Chief Executive Officer
/s/ Mary Abood
______________________________________
Mary Abood, Trustee
/s/ Teuta Genaj
______________________________________
Teuta Genaj, Trustee
/s/ Byron Glidden
______________________________________
Byron Glidden, Trustee
/s/ David Montgomery
______________________________________
David Montgomery, Trustee
/s/ Phillip Stocker
______________________________________
Phillip Stocker, Trustee
<PAGE>
THIRD AMENDMENT TO THE
ADVANSTAR COMMUNICATIONS INC.
EMPLOYEES' 401 (K) PLAN AND TRUST
---------------------------------
(1993 RESTATEMENT)
THIS AMENDMENT is made this 10th day of January, 1996, by ADVANSTAR
COMMUNICATIONS INC. (the "Company") to the Advanstar Communications Inc.
Employees' 401(k) Plan and Trust (the "Plan"), which was restated in its
entirety in 1993.
WHEREAS, the Company wishes to clarify certain language in the plan with
respect to the determination of matching contributions and the performance of
certain nondiscrimination tests;
NOW, THEREFOR, pursuant to the provisions of Paragraph 21. of the Plan,
---
said Plan is hereby amended by the replacement of pages 11, 12 and 17 of the
Plan with the pages 11, 12 and 17 attached hereto.
IN WITNESS WHEREOF, this Amendment has been executed by the Company,
pursuant to action of its Board of Directors, as of the day and year first above
written.
ADVANSTAR COMMUNICATIONS INC.
/s/ David Montgomery
By:_________________________________
David Montgomery,
Chief Financial Officer
<PAGE>
(5) The Company may refrain from making contributions to this
Plan, in respect of the salary reduction agreement entered into by the
Participant, if the Company determines that such action is necessary
to insure that the Participant's annual additions for any Plan Year
will not exceed the limitations of subparagraphs 8. H. or 8. I.
-- -- -- --
hereinbelow, or to insure that the Actual Deferral Percentage Test
described in Paragraph 7. hereinbelow is met for such Plan Year. In
--
any such event, the Company may pay to the Participant the amount
which otherwise would have been paid prior to the Participant's
election to reduce his salary, rather than as a contribution made
pursuant to a salary reduction agreement.
(6) A salary reduction agreement shall not provide for a
reduction in excess of $7,000 (or such higher amount as determined by
the Secretary pursuant to Section 415(d) of the Code) under all plans
maintained by the Company with respect to any Employee's taxable year.
B. Matching Company Contributions. Not later than the time prescribed by
- ------------------------------
law for filing its federal income tax return including any extensions thereof)
for its current taxable year, the Company shall contribute to the Trustee, on
behalf of each Participant, as its Matching Company Contribution to the Trust
for the Plan Year which ends within or which is co-terminous with such taxable
year of the Company, to be held in trust, administered and distributed under the
terms of this Agreement, an amount to be determined as follows:
(1) With respect to Salary Reduction Contributions up to the
first two percent (2%) of the Participant's Compensation, the Matching
Company Contribution shall be equal to 100% of the Salary Reduction
Contribution;
(2) With respect to Salary Reduction Contributions in excess of
two percent (2%) of the Participant's Compensation and not in excess
of six percent (6%) of the Participant's Compensation, the Matching
Company Contribution shall be equal to 25% of such Salary Reduction
Contribution; and
(3) With respect to Salary Reduction Contributions in excess of
six percent (6%) of the Participant's Compensation, there shall be no
Matching Company Contribution. In no event shall the Matching Company
Contribution made on behalf of a Participant in a Plan Year exceed
three percent (3%) of the Participant's Compensation.
In determining the Matching Company Contribution, the computation of the
Salary Reduction Contribution as a percentage of Compensation shall be made on a
per payroll basis.
Notwithstanding the foregoing, the Company shall not contribute to the Plan
as a Matching Company Contribution any amount that would cause the limitation
set forth in Paragraph 7. to be exceeded, considering only Matching Company
--
Contributions, rather than Salary Reduction Contributions
<PAGE>
C. Discretionary Company Contributions. Not later than the time
- -----------------------------------
prescribed by law for filing its federal income tax return (including extensions
thereof) for its current taxable year and for each succeeding taxable year, the
Company may contribute to the Trust fund, as its contribution to this Trust for
the Plan Year which ends within or which is co-terminous with such taxable year
of the Company, to be held in trust, administered and distributed under the
terms of this Agreement, an amount or amounts which the Company, in its sole
discretion may determine. The Company may contribute such amount or amounts at
any time; and it may make such contribution in two or more installments.
The Company shall determine by resolution of its Board of Directors and
communicate to the Trustee before the close of each Plan Year either (i) the
amount in dollars to be contributed for such year, or (ii) a formula by which
such amount may be determined. These contributions shall be totally in the
discretion of the Company with respect to amount, timing and form, and they need
not be limited to the Employee group for a Plan Year, the average of the ratios,
calculated separately for each Participant in such group, of the amount of
Salary Reduction Contributions allocated to each participant's Salary Reduction
Contribution Account for such Plan Year to such Participant's Gross Compensation
for such Plan Year. The actual deferral ratio for each Participant and the
"Actual Deferral Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent.
For the purpose of determining the actual deferral ratio of a Highly
Compensated Employee who is subject to the Family Member aggregation rules of
Code Section 414(q)(6) because such Participant is either a "five percent owner"
of the Employer or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during this year, the following shall apply:
(1) The combined actual deferral ratio for the family group
(which shall be treated as one Highly Compensated Employee) shall be
determined by aggregating Salary Reduction Contributions and Gross
Compensation of all eligible Family Members (including Highly
Compensated Employees).
(2) The Salary Reduction Contributions and Gross Compensation of
all Family Members shall be disregarded for purposes of determining
the "Actual Deferral Percentage" of the Non-Highly Compensated
Employee group except to the extent taken into account in paragraph
(1) above.
(3) If a participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are members
of those family groups that include the Participant are aggregated as
one family group in accordance with paragraphs (1) and (2) above.
<PAGE>
FOURTH AMENDMENT TO THE
ADVANSTAR COMMUNICATIONS INC.
EMPLOYEES' 401(K) PLAN AND TRUST
--------------------------------
(1993 RESTATEMENT)
THIS FOURTH AMENDMENT is made this 18th day of September, 1996, by
ADVANSTAR COMMUNICATIONS INC. and ADVANSTAR HOLDINGS, INC. (collectively, the
"Company") to the Advanstar Communications Inc. Employees' 401(k) Plan and Trust
(the "Plan"), which was restated in its entirety in 1993.
WHEREAS, the Company wishes to amend the Plan to reflect that Advanstar
Holdings, Inc. shall be the primary sponsoring employer of the Plan, along with
such related corporations as approved by Advanstar Holdings, Inc.;
NOW, THEREFOR, pursuant to the provisions of Paragraph 21. of the Plan,
said Plan is hereby amended, effective immediately, as follows:
FIRST: Subparagraph 2(d) of the Plan is hereby deleted in its entirety, and
the following new subparagraph 2(d) is substituted in lieu thereof:
"(d) `Company' or `Employer' shall mean Advanstar Holdings, Inc. Any
corporation which is a member of a controlled group of corporations with
Advanstar Holdings, Inc. may also sponsor this Plan if such corporation has
been designated by Advanstar Holdings, Inc. as a sponsoring employer and
such corporation agrees to be bound by the terms of this Plan."
SECOND: Advanstar Holdings, Inc. designates Advanstar Communications Inc.
as a sponsoring employer of the Plan, and Advanstar Communications Inc. agrees
to continue to be bound by the terms of the Plan, as amended.
IN WITNESS WHEREOF, this Fourth Amendment has been executed by the Company,
<PAGE>
pursuant to action of its Board of Directors, as of the day and year first above
written.
ADVANSTAR HOLDINGS, INC.
By: /s/ Robert Krakoff
-----------------------------
Robert Krakoff,
Chief Executive Officer
ADVANSTAR COMMUNICATIONS INC.
By: /s/ David Montgomery
-----------------------------
David Montgomery,
Chief Financial Officer
<PAGE>
FIFTH AMENDMENT TO THE
ADVANSTAR HOLDINGS, INC.
EMPLOYEES' 401(k) PLAN AND TRUST
--------------------------------
(1993 RESTATEMENT)
THIS FIFTH AMENDMENT is made this 30th day of October, 1997, by
ADVANSTAR COMMUNICATIONS INC. and ADVANSTAR HOLDINGS, INC. (collectively, the
"Company") to the Advanstar Communications Inc. Employees' 401(k) Plan and Trust
(the "Plan"), which was restated in its entirety in 1993.
Pursuant to the provisions of Paragraph 21. of the Plan, said Plan is
---
hereby amended, as follows:
FIRST: Effective January 1, 1997, subparagraph 2.(g) is hereby deleted in
--
its entirety and following new subparagraph 2.(g) is substituted in lieu
--
thereof:
"(g) `Employee' shall mean any person employed by the Company (i.e., a
sponsoring employer), but excluding (i) any member of a collective
bargaining unit with which the Company is required to negotiate with
respect to retirement benefits (if retirement benefits have been the
subject of good faith negotiation); (ii) any person employed by the Company
that is eligible to participate in any other plan maintained by the Company
that is (or is intended to be) qualified under Section 401(a) of the Code;
and (iii) any person who is employed on an hourly basis. Employee shall
also include any Leased Employee deemed to be an Employee as provided in
Sections 414(n) or (o) of the Code."
SECOND: Effective September 18, 1996, subparagraph 2.(r) is hereby deleted
--
in its entirety and following new subparagraph 2.(r) is substituted in lieu
--
thereof:
"(r) `Plan" shall mean the Advanstar Holdings, Inc. Employees' 401(k)
Plan set forth in and by this Agreement and all subsequent amendments
thereto."
<PAGE>
EXHIBIT A
THIRD: Effective September 18, 1996, subparagraph 2.(u) is hereby deleted
--
in its entirety and following new subparagraph 2.(u) is substituted in lieu
--
thereof:
"(u) `Trust' shall mean the Advanstar Holdings, Inc. Employees'
401(k) Trust set forth herein."
FOURTH: Effective September 1, 1997, Advanstar Holdings, Inc. designates
Expocon Management Associates, Inc. as a sponsoring employer of the Plan, and
Expocon Management Associates, Inc. agrees to be bound by the terms of the Plan,
as amended. Notwithstanding the terms of subparagraph 9.B. of the Plan, a
----
Participant who was a participant in the Expocon Management Associates, Inc.
401(k) Plan as of August 31, 1997 shall be fully vested in all Accounts
maintained for such Participant under the Plan.
IN WITNESS WHEREOF, this Fifth Amendment has been executed by the Company,
pursuant to action of its Board of Directors, as of the day and year first above
written.
ADVANSTAR HOLDINGS, INC.
/s/ Robert Krakoff
By:_________________________________________
Robert Krakoff, Chief Executive Officer
ADVANSTAR COMMUNICATIONS, INC.
/s/ David Montgomery
By:_________________________________________
David Montgomery, Chief Financial Officer
EXPOCON MANAGEMENT ASSOCIATES, INC.
/s/ Robert Krakoff
By:_________________________________________
Robert Krakoff, President
-2-
<PAGE>
EXHIBIT 10.8
AMENDMENT ONE TO
AGREEMENT C-1041-R2 and AGREEMENT H-1066-R2
July 31,1997
THIS AMENDMENT ONE is made to those certain agreements by and between ADVANSTAR
COMMUNICATIONS, INC. ("Customer") and BANTA PUBLICATIONS GROUP (two divisions of
Banta Corporation, f/k/a The Hart Press and Clark Printing Company; collectively
and individually herein, "Printer") dated May 5, 1995, and identified as
Agreement C-104 1-R2 and Agreement H-1066-R2 (the "Agreements"), effective July
28, 1997.
WHEREAS, Customer and Printer desire to amend the Agreements, which shall remain
in full force and effect with the modifications and additions set forth below;
THEREFORE, in consideration of the mutual covenants contained herein, Customer
and Printer agree as follows:
(1) The terms of the Agreements are extended from December 31, 2000 to December
31, 2002.
(2) Effective with Printer's invoices dated July 28, 1997, Printer will reduce
Customer's current manufacturing prices by four percent (4%) and furnish
Customer a revised price schedule reflecting this change within fifteen (15)
days of Customer's acceptance. Such revised prices shall remain firm through
December 31, 1998.
(3) The annual escalation cap, as included in Section 3-A of the Agreements,
shall be reduced to one percent (1%) in 1999 and remain at two percent (2%) in
years 2000, 2001 and 2002.
(4) The Printer will rebate a certain percentage of the aggregate annual
billings, invoiced to Customer from Printer, excluding paper, ink and freight,
upon achieving the following annual sales levels:
<TABLE>
<CAPTION>
Sales Range excluding paper ink and freight: Progressive Rebate Percent
- -------------------------------------------- --------------------------
<S> <C>
- -$7.50 - $7.99 Million One Half (1/2%) percent
- -$8.00 - $8.50 Million One (1%) percent
- -$8.51 - $8.99 Million One and one half (1-1/2) percent
- -$9.00 - $9.50 Million Two (2%) percent
- -$9.51 - $9.99 Million Two and one half (2-1/2) percent
- -$10.00 - $10.50 Million Three (3%) percent
- -$10.51 - $10.99 Million Three and one half (3-1/2%) percent
- -$11.00 - $11.50 Million Four (4%) percent
- -$11.51 - $11.99 Million Four and one half (4-1/2%) percent
- -$12.00 Million and more Five (5%) percent
</TABLE>
<PAGE>
If the Customer's 1997 year-end aggregate annual billings, excluding paper, ink
and freight are below $7 Million, this chart will be re-calculated with the same
increments at value $500,000 higher than the Customer's 1997 year-end aggregate
annual billings, excluding paper, ink and freight.
The rebate will be calculated on a calendar year basis, beginning January 1,
1998, and include all work that is invoiced to Customer, by Printer, within the
calendar year. The rebate, if any, will be made within sixty (60) days of the
calendar year end and be applied as a credit to the Customer's account balance.
(5) Customer will begin to phase in its remaining mail prep requirements,
beginning in January, 1998, upon Printer's demonstrated ability and capability
to efficiently prepare and process Customer's mail lists. Mail prep requirements
will include list sortation, label output and other related postal requirements,
that Customer may request, from time to time.
(6) Printer has expressed an interest in furnishing Customer's paper
requirements and will submit a separate proposal to Customer. Upon receipt of
Printer's proposal, Customer will have the right to accept, in whole or part,
Printer's paper proposal. Customer shall not be obligated to accept Printer's
paper proposal, in whole or part, but has assured Printer that it will, in good
faith, evaluate Printer's proposal. If in the event Customer rejects Printer's
paper proposal, Customer will assist Printer to improve and/or enhance
runnability of paper furnished by Customer should such paper adversely affect
Printer's pressroom performance.
<TABLE>
<CAPTION>
Customer's Acceptance: Printer's Acceptance:
- ---------------------- ---------------------
<S> <C>
Advanstar Communications, Inc. Banta Publications Group
By: /s/ Francis Herd, Jr. By: /s/
_______________________________ ___________________________
Title: V.P. Publishing Operations Title: President
____________________________ ________________________
Date: 8/6/97 Date: 8/7/97
_____________________________ _________________________
</TABLE>
<PAGE>
H-1066-R2
PROPOSAL FOR
ADVANSTAR COMMUNICATIONS, INC.
SEPTEMBER 5, 1995
1. Subject of Agreement. Advanstar Communications, Inc. ("Customer"), a
---------------------
New York corporation located at 131 West First Street, Duluth, Minnesota 55802
and The Hart Press ("Printer"), a division of Banta Corporation, located at 100
Banta Road, Long Prairie, Minnesota 56347 agree that Printer shall print all of
Customer's requirements for the publication(s) identified as (Refer to Exhibit A
attached), commencing September 5, 1995 and continuing through December 31,
2000. Printer shall perform those printing services in accordance with the
specifications and within the time(s) set forth, respectively, in the attached
Specifications Schedule, and the Production Schedule either attached or (if not
attached) established by mutual agreement of the parties conforming to Section
25 below. This Agreement shall also apply to other, future work performed by
Printer for Customer, as provided in Section 22 below. Upon expiration of the
initial term, this Agreement shall be renewed for one (1) year, unless either
party gives written notice to the other of its intent to terminate this
Agreement not less than ninety (90) days prior to the expiration date of
December 31, 2000.
2. Prices. Prices for Printer's services are set forth in the attached
------
Price Schedule. Those prices are based upon (i) Printer's labor costs on the
date of this Agreement, (ii) Printer's material costs on the date of this
Agreement and (iii) Customer's specifications set forth in the Specifications
Schedule. Any volume or trade discounts earned with respect to materials or
services utilized by Printer or for which Printer contracts on behalf of
Customer in connection with Printer's performance under this Agreement shall be
and remain the property of the Printer.
Customer recognizes that Printer's prices are exclusive of: (a)
transportation charges, (b) charges for storage of paper and other materials
furnished by Customer and of finished goods produced by Printer and (c) any
manufacturer's, retailer's occupation, use, sales, excise, value added or other
tax, or any charge of any nature whatsoever imposed by any governmental
authority. Any such tax or charge shall be the responsibility of the Customer;
charges for storage and transportation by Printer shall be based on Printer's
standard rates in effect from time to time.
3. Price Adjustments.
-----------------
A. Except as provided in Section 2 above and in subsections 3B and 3C below,
prices in this Agreement shall remain firm through December 31, 1996.
Thereafter, prices shall be adjusted to proportionately reflect a increases or
decreases, since the effective date of this Agreement, in labor costs, including
state or federal social security taxes or other taxes related to labor
utilization. However, in no such case shall the annual increase exceed two (2%)
percent.
<PAGE>
-2-
B. Printer will, on or before the effective date of any price change under
this Agreement, provide to Customer notice and an explanation of such change,
together with appropriate supporting data.
4. Payment Terms.
-------------
A. Net payment shall be made in advance of the production date as outlined in
Exhibit B attached. Printer reserves the right to amend and/or adjust weekly
payment amounts as necessary.
B. Printer shall invoice Customer as follows:
(1) Preparatory work, plates, presswork, binding, cartons, pallets,
services preparatory for mailing finished work, freight and shipping
charges, and paper furnished by Printer - upon completion of Printer's
services with respect to each shipment of work under this Agreement;
provided, however, that if the Customer delays the performance of Printer's
services as established in the Production Schedule, printer may invoice for
services rendered to date.
(2) Storage of paper and other materials furnished by Customer and of
finished work produced by Printer - as provided for in Sections 14 and 15.
5. Production Schedule. Each of the parties will use its best efforts to
-------------------
comply with the Production Schedule at all times. Customer's delay in
furnishing and/or returning all paper, copy, specifications, artwork, proofs,
copies or other material in accordance with the Production Schedule may result
in an extension of scheduled delivery date(s) and/or additional charges to
Customer for accelerated production at Printer's standard overtime rates then in
effect. Any additional charges incurred by Printer on behalf of Customer, must
be pre-approved by Customer in advance of the charges incurred.
6. Proofs. Printer shall furnish Customer the proofs and materials set
------
forth in the Specifications Schedule; and Customer shall return to Printer one
set of proofs for each completed page indicating any and all changes (editorial
and art). Printer shall not be liable for errors or subsequent corrective costs
for work completed pursuant to Customer's approval or for errors due to
Customer's failure to order proofs, refusal to accept proofs, failure to return
proofs marked with changes, or Customer's instructions to proceed without
submission of proofs.
7. Materials Furnished by Customer. Paper stock, film (negatives and
-------------------------------
positives), and other materials furnished by Customer shall be properly packed,
free from dirt, grit, torn sheets, bad splices, etc. and shall comply with the
specifications set forth in the Specifications Schedule, and within S W O P
standards. Additional costs due to delays, impaired production or the necessity
to repair or replace such materials because of Customer's failure to meet such
standards shall be charged to Customer at Printer's standard rates then in
effect. Semi-finished materials or covers furnished by Customer shall include
manufacturing waste allowances Printer deems adequate and shall be adjusted to
Printer's count.
<PAGE>
-3-
Printer shall not be liable for the fitness of any materials furnished by
Customer unless directed by Customer, at additional cost to Customer, to make
corrections, repairs, or substitutions Printer deems necessary. In no event
does Printer assume responsibility for color fidelity of finished goods made
from film furnished by Customer, unless proofed by Customer to Printer's
requirements.
8. Responsibility for Content; Right to Rescind. Customer warrants that
--------------------------------------------
any matter it furnishes for printing pursuant to this Agreement does not
infringe any copyright or trademark, is not libelous, and does not otherwise
violate any law or infringe the rights of any third party. Customer agrees to
indemnify and hold Printer harmless against all losses, claims, damages,
liabilities and expenses, including Printer's attorneys' fees, which Printer may
incur as the result of any claims of such violation or infringement. Printer
shall have the right, without liability of any kind to Customer, to refuse to
print any publication containing material that, in Printer's good faith
judgment, may give rise to such claims.
9. Business Reply Mail. Customer shall be responsible for complying with
-------------------
all postal service requirements concerning business reply mail; and Printer
shall not be liable to Customer for any damages or claims whatsoever in the
event that business reply mail is rejected by the postal service.
10. Quantity Variation. Variations in quantity of 0% over and 0% under
------------------
quantities ordered shall constitute acceptable delivery; and the excess or
deficiency shall be charged or credited at the "additional thousands" rate set
forth in the Price Schedule.
11. Warranty. Printer warrants that its services shall be performed
--------
according to the terms of this Agreement and S W O P standards acceptable in the
printing industry. However, due to differences in equipment, paper, inks, and
other conditions between the color proofing and production pressroom operations,
a reasonable variation in color between color proofs and the completed job, and
a reasonable variation on press, may exist. Work containing such variations
shall be considered in conformity with this warranty. Customer however,
retains, sole and absolute discretion in determining whether standards of
quality are sufficient. In the event Customer reasonably concludes performance
of Printer is inadequate, then Customer may, with 30 days written notice, remove
affected publications(s) from Printer without penalty to Customer.
12. Risk of Loss. The risk of loss of finished work shall pass to the
------------
Customer F.O.B. the facilities at which the same was printed, upon the earlier
of Printer's delivery to carrier or postal service, or delivery into storage,
regardless of whether the transport medium or storage facilities are owned
and/or operated by Printer. The risk of loss of property furnished and/or owned
by Customer shall be on the Printer while such property is at the facilities at
which the printing is to occur. Customer shall bear the risk of loss while
property is in transit to and from Printer's facilities.
<PAGE>
-4-
13. Passage of Title. Title to finished goods shall pass to Customer upon
----------------
the earlier of Printer's delivery to carrier or postal service, or delivery into
storage, regardless of whether the transport medium or storage facilities are
owned and/or operated by Printer. Artwork, drawings, sketches, dummies, film
positives, negatives, and separations furnished by Printer shall become the
property of Customer upon completion of printing and payment therefor; provided,
however, that if such items are furnished by Printer by subcontracting the
production thereof, then title thereto shall pass to Customer upon shipment to
Printer. All printing plates shall be and remain the property of Printer.
14. Storage. Customer's materials which are in film form shall be stored
-------
without charge for a period of 12 months from the time of last use and
thereafter destroyed. If Customer's materials other than film are not shipped
within 24 hours after notification to Customer that they are ready to be
shipped, for any reason beyond Printer's reasonable control, including but not
limited to Printer's retention of such materials pursuant to Section 18 below,
Printer may store such materials at Customer's risk in a warehouse or at the
facilities at which printing occurred, and Customer shall pay all resulting
handling, transportation and storage charges as invoiced by Printer.
15. Customer Furnished Paper. If Customer furnishes paper, Printer agrees
------------------------
to provide storage, at no cost to Customer, for up to two (2) months supply.
Inventory levels exceeding two (2) months supply are subject to storage charges
which are included in the Price Schedule.
16. Contingencies. Printer shall not be liable for any delay or failure
-------------
to perform under this Agreement if such delay or failure to perform arises out
of causes beyond its reasonable control, including but not limited to labor
trouble, fires, severe weather and other acts of God, accidents, governmental
acts and regulations, inability to obtain materials or carrier space or
equipment, or delays of suppliers or carriers. Printer shall give notice to
Customer of any such condition within a reasonable time after it arises.
If Printer's operations are suspended for any of the above causes, Printer
shall have the right to have the work performed by one of its subsidiaries on
the same terms and conditions set forth in this Agreement.
If Printer is unable for any reason to have the work done by one of its
subsidiaries, Customer shall have the right to have the services covered by this
Agreement performed elsewhere, and to remove from Printer's plant any and all
completed work, proofs, film, paper and other material and uncompleted work only
upon payment to Printer for all services rendered and materials furnished or
ordered by Printer prior to the date of suspension of operations.
The parties agree that when Printer resumes operation, upon 30 days'
written notice to Customer, production shall resume and continue at Printer's
facilities under the terms and conditions of this Agreement.
17. Claims. All claims for defective or damaged product or for shortages
------
must be made by Customer in writing fully setting forth the nature of the
alleged defect, damage or
<PAGE>
-5-
shortage, within 30 days after Customer's receipt thereof. Customer's failure to
so notify Printer shall constitute irrevocable acceptance of the product and a
waiver of any claim of defect, damage or shortage. Claims for damage or loss in
transit must be made by Customer directly against the carrier.
18. Limitation of Remedies. Customer's sole and exclusive remedy for
----------------------
Printer's negligence or other tort, breach of warrant or contract or any other
claim arising out of or connected with to that portion of the work which is
nonconforming or, at Printer's option, printing of a correction in subsequent
work, if applicable.
IN NO EVENT SHALL PRINTER BE LIABLE FOR ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER FOR BREACH OF
CONTRACT OR WARRANTY, NEGLIGENCE OR OTHER TORT OR ON ANY
STRICT LIABILITY THEORY.
19. Printer's Security Interest and Rights Upon Customer's Default. If
--------------------------------------------------------------
any amount due Printer from Customer shall remain unpaid at the due date, or if
Customer defaults in the performance of any other covenant or condition of this
Agreement or any other agreement with Printer, Printer shall have the right to
terminate its obligations under this Agreement, to declare immediately due and
payable all obligations of the Customer for the work theretofore furnished by
the Printer under this Agreement, to retain possession of any product or
materials owned by Customer (including but not limited to work-in-process and
undelivered work) pending payment in full of all such obligations, to change
credit terms with respect to any further work furnished by Printer, and/or to
suspend or discontinue any further performance for Customer until overdue
amounts are paid in full and until cash or security satisfactory to Printer
covering further work, as may be require by Printer, is deposited in advance
with Printer. These rights of Printer shall be in addition to and not in
substitution for any other rights of Printer; and suspension or discontinuance
of work by Printer pursuant to this Section shall not in any way prejudice any
claim or right of action which Printer may have by reason of any breach of this
Agreement or any other agreement by Customer.
20. Right to Assurance. Whenever either party in good faith has reason to
------------------
question the ability or intent of the other party to perform, the party having
such question may demand in writing adequate assurance from the other party of
its ability or intent to perform, and may suspend performance under this
Agreement pending such assurance. In the event that such a demand is made and
such assurance is not given within a reasonable time, the party having made such
demand may treat that failure as an anticipatory repudiation of this Agreement
and exercise any appropriate remedy for repudiation.
21. Bankruptcy. If either party makes an assignment for the benefit of
----------
creditors, or admits in writing its failure or inability to pay its debts as
they become due, or becomes the subject of an "order for relief" within the
meaning of that phrase in the U.S. Bankruptcy Code, or applies for or consents
to the appointment of a receiver for any of its property, the other party
<PAGE>
-6-
may terminate this Agreement at any time, effective immediately upon notice.
Such termination shall not relieve either party from any obligations accrued
under this Agreement up to the date of notice of termination.
22. Waivers. No waiver by either party of any default by the other in the
-------
performance of or compliance with any provision, condition or requirement in
this Agreement shall be deemed to be a waiver of, or in any manner release such
other party from compliance with any such provision, condition or requirement in
the future; nor shall any delay or omission of either party to exercise any
right under this Agreement or otherwise in law in any manner impair the exercise
of any such right thereafter.
23. Other Work. In the event that, at any time during the term of this
----------
Agreement, Customer requests that Printer perform any work not related to the
publication(s) identified in Section 1 above, and Printer agrees to do so, all
rights and liabilities of Customer and Printer arising in connection with such
other work (as well as the rights and liabilities of the parties in connection
with Printer's work on the publication(s) identified in Section 1 above) shall
be governed exclusively by the terms and conditions contained in this Agreement;
provided, however, that, with respect to such other work, the Specifications,
Price and Production Schedules to this Agreement shall be superseded by
specifications, scheduling terms, quantities and prices set forth in accepted
orders, to the extent that the same are inconsistent with such Schedules. No
additional or different terms contained in any of Customer's forms or other
correspondence shall be of any force or effect.
24. Entire Agreement. The attached Specifications Schedule and Price
----------------
Schedule and the Production Schedule either attached or established in
accordance with this Agreement form a part of this Agreement. This Agreement,
together with such Schedules, is intended by the parties as the final and
exclusive expression of their agreement, superseding all prior oral or written
agreements, understandings, negotiations, representations and correspondence
between the parties, on the subject of this Agreement. There are no conditions
to this Agreement not expressed in this Agreement.
25. Term and Termination. This Agreement shall take effect September 5,
--------------------
1995 and shall remain in effect through December 31, 2000. Either party may
terminate this Agreement at any time upon written notice to the other, but only
by specific reference to this Agreement (by title and date) in such notice. Any
such termination shall have no effect upon the respective rights and liabilities
of the parties in connection with any work previously performed under this
Agreement or in process on the date of termination, or in connection with any
accepted order under this Agreement, including but not limited to the commitment
set forth in Section 1 above.
26. Amendment. Except as provided in Sections 2 and 3, this Agreement,
---------
including the Schedules made a part of this Agreement, may be amended or
supplemented only by a writing signed on behalf of both of the parties by their
duly authorized representatives. In the event that the Production Schedule is
not attached, mutual agreement to a Production Schedule shall be established
only by a writing so signed.
<PAGE>
-7-
27. Assignment. Neither party shall assign any of its rights under this
----------
Agreement without the prior written consent of the other party. Subject to any
required consent, this Agreement shall inure to the benefit of and shall bind
the successors and assigns of the parties to this Agreement.
28. Notices. Notice required or permitted by this Agreement shall be
-------
deemed given only upon enclosure of such notice in a adequately post-paid
envelope, deposited in a U.S. Post Office, sent certified mail - return receipt
requested, and addressed to the party to be given notification at the address to
which it has previously notified the party giving notice that notices are to be
sent or, otherwise, to the address for the party receiving notice first set
forth in this Agreement.
29. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the state in which the printing involved is
performed.
If the above terms are satisfactory, please sign two copies of this
document and return them. It will then be an offer, subject to acceptance by an
authorized agent of Printer at any time prior to 30 days after the date first
above written. Upon acceptance, Printer will return one fully executed copy of
the Agreement to Customer; and this Agreement will be a binding contract between
Printer and Customer.
Respectfully submitted,
By:___________________________________
Jim Robison
Sales Representative
Agreed to:
ADVANSTAR COMMUNICATIONS, INC.
("Customer")
By /s/
____________________________
Title V.P. Human Resources &
Publishing Operations
_________________________
Date 9/28/95
__________________________
Accepted: This new agreement supercedes
and replaces the old agreements.
<PAGE>
-8-
THE HART PRESS, a division of Banta Corporation
("Printer")
By /s/
______________________________________
Title Executive VP
___________________________________
Date 9/29/95
____________________________________
<PAGE>
================================================================================
EXHIBIT A
PUBLICATIONS LISTING
September 5, 1995
The following publications are included under this Agreement.
Production will commence in the month/year indicated:
Physician's Management Special Edition September, 1995
PC Graphics & Video September, 1995
Hospital Formulary September, 1995
Infotext September, 1995
Neurology September, 1995
Environmental Solutions September, 1995
Landscape Management September, 1995
Geriatrics September, 1995
Pit & Quarry September, 1995
Drug & Cosmetic Industry September, 1995
American Salon September, 1995
RSI September, 1995
Relax September, 1995
America's Network September, 1995
Response TV September, 1995
American Stylist September, 1995
American Big Twin February, 1996
Dealernews February, 1996
LP Gas February, 1996
Paperboard Packaging February, 1996
Pest Control February, 1996
Applied Clinical Trials December, 1995
Biopharm November, 1995
GEO Info Systems January, 1996
GPS World January, 1996
LC GC November, 1995
Pharmaceutical Technology December, 1995
Pharmaceutical Executive January, 1996
Spectroscopy November, 1995
Managed Heathcare November, 1995
Cadalyst December, 1995
Initials: /s/
_____________________________
/s/
_____________________________
===============================================================================
<PAGE>
[THIS PAGE ON BANTA PUBLICATIONS GROUP LETTERHEAD]
EXHIBIT B
December 20, 1994
Ms. Adele Hartwick, Treasurer and Controller
Advanstar Communications
131 W. 1st St.
Duluth MN 55802
Dear Adele:
I have taken the opportunity to summarize our conversation from last Friday and
to outline how Advanstar's account will be administered beginning in 1995. If
you have any question with any of the points below, please call me as soon as
possible.
1. Effective January 1, 1995, Advanstar's credit terms will be changed from
2%-10 days, Net 30 to "Cash in Advance."
2.. In consideration of cash in advance terms, Banta will abate the contractual
2% manufacturing price increase.
3. Since payments are to be made in advance, the 2% early pay discount will be
reflected in Advanstar's new (1995) price schedules.
4. Payment amounts will be broken down into equal weekly payments which are to
be received every Friday beginning on December 30, 1994.
5. Initial weekly payments, which include both production and postage, have
been set at $125,000 to The Hart Press and $60,000 to Clark Printing
Company.
6. Advanstar's account will be reviewed monthly. Changes, if any, to the
weekly payments will be assessed through anticipated production and
reconciliation of payments to actual invoices. Within Banta, this will
have to be a coordinated effort with Jim Robison-Sales Representative,
Customer Service, and the Controllers at both plants (Dave Wampole - The
Hart Press and Phil Zuptich - Clark Printing Co.).
You and I will need to remain in contact as these payment amounts are
determined. I will ask both Dave and Phil to provide appropriate support for
their recommended payment amounts.
<PAGE>
[THIS PAGE ON BANTA PUBLICATIONS GROUP LETTERHEAD]
Sincerely,
/s/ Scott A. Szybilski
Scott A. Szybilski
Group Controller
<TABLE>
<CAPTION>
cc: Clark Printing Carol Benbow - Credit Manager Phil Zuptich - Controller
Hart Press Steve Marsh - Credit Manager Dave Wampole - Controller
Banta Publ. Group Jim Robison - Sales Rep. Tim Sawtell - Mgr. Contracts &
<S> <C> <C> <C>
</TABLE>
<PAGE>
C-1041-R2
PROPOSAL FOR
ADVANSTAR COMMUNICATIONS, INC.
SEPTEMBER 5, 1995
1. Subject of Agreement. Advanstar Communications, Inc. ("Customer"), a
--------------------
New York corporation located at 131 West First Street, Duluth, Minnesota 55802
and Clark Printing Company ("Printer), a division of Banta Corporation, located
at 3401 Heartland Drive, Liberty, Missouri 64068 agree that Printer shall print
all of Customer's requirements for the publication(s) identified as (Refer to
Exhibit A attached), commencing September 5, 1995 and continuing through
December 31, 2000. Printer shall perform those printing services in accordance
with the specifications and within the time(s) set forth, respectively, in the
attached Specifications Schedule, and the Production Schedule either attached or
(if not attached) established by mutual agreement of the parties conforming to
Section 25 below. This Agreement shall also apply to other, future work
performed by Printer for Customer, as provided in Section 22 below. Upon
expiration of the initial term, this Agreement shall be renewed for one (1)
year, unless either party gives written notice to the other of its intent to
terminate this Agreement not less than ninety (90) days prior to the expiration
date of December 31, 2000.
2. Prices. Prices for Printer's services are set forth in the attached
------
Price Schedule. Those prices are based upon (i) Printer's labor costs on the
date of this Agreement, (ii) Printer's material costs on the date of this
Agreement and (iii) Customer's specifications set forth in the Specifications
Schedule. Any volume or trade discounts earned with respect to materials or
services utilized by Printer or for which Printer contracts on behalf of
Customer in connection with Printer's performance under this Agreement shall be
and remain the property of the Printer.
Customer recognizes that Printer's prices are exclusive of: (a)
transportation charges, (b) charges for storage of paper and other materials
furnished by Customer and of finished goods produced by Printer and (c) any
manufacturer's, retailer's occupation, use, sales, excise, value added or other
tax, or any charge of any nature whatsoever imposed by any governmental
authority. Any such tax or charge shall be the responsibility of the Customer;
charges for storage and transportation by Printer shall be based on Printer's
standard rates in effect from time to time.
3. Price Adjustments.
-----------------
A. Except as provided in Section 2 above and in subsections 3B and 3C below,
prices in this Agreement shall remain firm through December 31, 1996.
Thereafter, prices shall be adjusted to proportionately reflect any increases or
decreases, since the effective date of this Agreement, in labor costs, including
state or federal social security taxes or other taxes related to labor
utilization. However, in no such case shall the annual increase exceed two (2%)
percent.
<PAGE>
-2-
B. Printer will, on or before the effective date of any price change under this
Agreement, provide to Customer notice and an explanation of such change,
together with appropriate supporting data.
4. Payment Terms.
-------------
A. Net payment shall be made in advance of the production date as outlined in
Exhibit B attached. Printer reserves the right to amend and/or adjust weekly
payment amounts as necessary.
B. Printer shall invoice Customer as follows:
(1) Preparatory work, plates, presswork, binding, cartons, pallets, services
preparatory for mailing finished work, freight and shipping charges, and
paper furnished by Printer - upon completion of Printer's services with
respect to each shipment of work under this Agreement; provided, however,
that if the Customer delays the performance of Printer's services as
established in the Production Schedule, printer may invoice for services
rendered to date.
(2) Storage of paper and other materials furnished by Customer and of
finished work produced by Printer - as provided for in Sections 14 and 15.
5. Production Schedule. Each of the parties will use its best efforts to
-------------------
comply with the Production Schedule at all times. Customer's delay in
furnishing and/or returning all paper, copy, specifications, artwork, proofs,
copies or other material in accordance with the Production Schedule may result
in an extension of scheduled delivery date(s) and/or additional charges to
Customer for accelerated production at Printer's standard overtime rates then in
effect. Any additional charges incurred by Printer on behalf of Customer, must
be pre-approved by Customer in advance of the charges incurred.
6. Proofs. Printer shall furnish Customer the proofs and materials set
------
forth in the Specifications Schedule; and Customer shall return to Printer one
set of proofs for each completed page indicating any and all changes (editorial
and art). Printer shall not be liable for errors or subsequent corrective costs
for work completed pursuant to Customer's approval or for errors due to
Customer's failure to order proofs, refusal to accept proofs, failure to return
proofs marked with changes, or Customer's instructions to proceed without
submission of proofs.
7. Materials Furnished by Customer. Paper stock, film (negatives and
-------------------------------
positives), and other materials furnished by Customer shall be properly packed,
free from dirt, grit, torn sheets, bad splices, etc. and shall comply with the
specifications set forth in the Specifications Schedule, and within S W O P
standards. Additional costs due to delays, impaired production or the necessity
to repair or replace such materials because of Customer's failure to meet such
standards shall be charged to Customer at Printer's standard rates then in
effect. Semi-finished materials or covers furnished by Customer shall include
manufacturing waste allowances Printer deems adequate and shall be adjusted to
Printer's count.
<PAGE>
-3-
Printer shall not be liable for the fitness of any materials furnished by
Customer unless directed by Customer, at additional cost to Customer, to make
corrections, repairs, or substitutions Printer deems necessary. In no event
does Printer assume responsibility for color fidelity of finished goods made
from film furnished by Customer, unless proofed by Customer to Printer's
requirements.
8. Responsibility for Content; Right to Rescind. Customer warrants that
--------------------------------------------
any matter it furnishes for printing pursuant to this Agreement does not
infringe any copyright or trademark, is not libelous, and does not otherwise
violate any law or infringe the rights of any third party. Customer agrees to
indemnify and hold Printer harmless against all losses, claims, damages,
liabilities and expenses, including Printer's attorneys' fees, which Printer may
incur as the result of any claims of such violation or infringement. Printer
shall have the right, without liability of any kind to Customer, to refuse to
print any publication containing material that, in Printer's good faith
judgment, may give rise to such claims.
9. Business Reply Mail. Customer shall be responsible for complying with
-------------------
all postal service requirements concerning business reply mail; and Printer
shall not be liable to Customer for any damages or claims whatsoever in the
event that business reply mail is rejected by the postal service.
10. Quantity Variation. Variations in quantity of 0% over and 0% under
------------------
quantities ordered shall constitute acceptable delivery; and the excess or
deficiency shall be charged or credited at the "additional thousands" rate set
forth in the Price Schedule.
11. Warranty. Printer warrants that its services shall be performed
--------
according to the terms of this Agreement and S W O P standards acceptable in the
printing industry. However, due to differences in equipment, paper, inks, and
other conditions between the color proofing and production pressroom operations,
a reasonable variation in color between color proofs and the completed job, and
a reasonable variation on press, may exist. Work containing such variations
shall be considered in conformity with this warranty. Customer however,
retains, sole and absolute discretion in determining whether standards of
quality are sufficient. In the event Customer reasonably concludes performance
of Printer is inadequate, then Customer may, with 30 days written notice, remove
affected publication(s) from Printer without penalty to Customer.
12. Risk of Loss. The risk of loss of finished work shall pass to the
------------
Customer F.O.B. the facilities at which the same was printed, upon the earlier
of Printer's delivery to carrier or postal service, or delivery into storage,
regardless of whether the transport medium or storage facilities are owned
and/or operated by Printer. The risk of loss of property furnished and/or owned
by Customer shall be on the Printer while such property is at the facilities at
which the printing is to occur. Customer shall bear the risk of loss while
property is in transit to and from Printer's facilities.
13. Passage of Title. Title to finished goods shall pass to Customer upon
----------------
the earlier of Printer's delivery to carrier or postal service, or delivery into
storage, regardless of whether the
<PAGE>
-4-
transport medium or storage facilities are owned and/or operated by Printer.
Artwork, drawings, sketches, dummies, film positives, negatives, and separations
furnished by Printer shall become the property of Customer upon completion of
printing and payment therefor; provided, however, that if such items are
furnished by Printer by subcontracting the production thereof, then title
thereto shall pass to Customer upon shipment to Printer. All printing plates
shall be and remain the property of Printer.
14. Storage. Customer's materials which are in film form shall be stored
-------
without charge for a period of 12 months from the time of last use and
thereafter destroyed. If Customer's materials other than film are not shipped
within 24 hours after notification to Customer that they are ready to be
shipped, for any reason beyond Printer's reasonable control, including but not
limited to Printer's retention of such materials pursuant to Section 18 below,
Printer may store such materials at Customer's risk in a warehouse or at the
facilities at which printing occurred, and Customer shall pay all resulting
handling, transportation and storage charges as invoiced by Printer.
15. Customer Furnished Paper. If Customer furnishes paper, Printer agrees
------------------------
to provide storage, at no cost to Customer, for up to two (2) months supply.
Inventory levels exceeding two (2) months supply are subject to storage charges
which are included in the Price Schedule.
16. Contingencies. Printer shall not be liable for any delay or failure
-------------
to perform under this Agreement if such delay or failure to perform arises out
of causes beyond its reasonable control, including but not limited to labor
trouble, fires, severe weather and other acts of God, accidents, governmental
acts and regulations, inability to obtain materials or carrier space or
equipment, or delays of suppliers or carriers. Printer shall give notice to
Customer of any such condition within a reasonable time after it arises.
If Printer's operations are suspended for any of the above causes, Printer
shall have the right to have the work performed by one of its subsidiaries on
the same terms and conditions set forth in this Agreement.
If Printer is unable for any reason to have the work done by one of its
subsidiaries, Customer shall have the right to have the services covered by this
Agreement performed elsewhere, and to remove from Printer's plant any and all
completed work, proofs, film, paper and other material and uncompleted work only
upon payment to Printer for all services rendered and materials furnished or
ordered by Printer prior to the date of suspension of operations.
The parties agree that when Printer resumes operation, upon 30 days'
written notice to Customer, production shall resume and continue at Printer's
facilities under the terms and conditions of this Agreement.
17. Claims. All claims for defective or damaged product or for shortages
------
must be made by Customer in writing fully setting forth the nature of the
alleged defect, damage or shortage, within 30 days after Customer's receipt
thereof. Customer's failure to so notify Printer shall constitute irrevocable
acceptance of the product and a waiver of any claim of defect,
<PAGE>
-5-
damage or shortage. Claims for damage or loss in transit must be made by
Customer directly against the carrier.
18. Limitation of Remedies. Customer's sole and exclusive remedy for
---------------------
Printer's negligence or other tort, breach of warrant or contract or any other
claim arising out of or connected with to that portion of the work which is
nonconforming or, at Printer's option, printing of a correction in subsequent
work, if applicable.
IN NO EVENT SHALL PRINTER BE LIABLE FOR ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER FOR BREACH OF
CONTRACT OR WARRANTY, NEGLIGENCE OR OTHER TORT OR ON ANY
STRICT LIABILITY THEORY.
19. Printer's Security Interest and Rights Upon Customer's Default. If
--------------------------------------------------------------
any amount due Printer from Customer shall remain unpaid at the due date, or if
Customer defaults in the performance of any other covenant or condition of this
Agreement or any other agreement with Printer, Printer shall have the right to
terminate its obligations under this Agreement, to declare immediately due and
payable all obligations of the Customer for the work theretofore furnished by
the Printer under this Agreement, to retain possession of any product or
materials owned by Customer (including but not limited to work-in-process and
undelivered work) pending payment in full of all such obligations, to change
credit terms with respect to any further work furnished by Printer, and/or to
suspend or discontinue any further performance for Customer until overdue
amounts are paid in full and until cash or security satisfactory to Printer
covering further work, as may be require by Printer, is deposited in advance
with Printer. These rights of Printer shall be in addition to and not in
substitution for any other rights of Printer; and suspension or discontinuance
of work by Printer pursuant to this Section shall not in any way prejudice any
claim or right of action which Printer may have by reason of any breach of this
Agreement or any other agreement by Customer.
20. Right to Assurance. Whenever either party in good faith has reason to
------------------
question the ability or intent of the other party to perform, the party having
such question may demand in writing adequate assurance from the other party of
its ability or intent to perform, and may suspend performance under this
Agreement pending such assurance. In the event that such a demand is made and
such assurance is not given within a reasonable time, the party having made such
demand may treat that failure as an anticipatory repudiation of this Agreement
and exercise any appropriate remedy for repudiation.
21. Bankruptcy. If either party makes an assignment for the benefit of
----------
creditors, or admits in writing its failure or inability to pay its debts as
they become due, or becomes the subject of an "order for relief" within the
meaning of that phrase in the U.S. Bankruptcy Code, or applies for or consents
to the appointment of a receiver for any of its property, the other party may
terminate this Agreement at any time, effective immediately upon notice. Such
termination
<PAGE>
-6-
shall not relieve either party from any obligations accrued under this Agreement
up to the date of notice of termination.
22. Waivers. No waiver by either party of any default by the other in the
-------
performance of or compliance with any provision, condition or requirement in
this Agreement shall be deemed to be a waiver of, or in any manner release such
other party from compliance with any such provision, condition or requirement in
the future; nor shall any delay or omission of either party to exercise any
right under this Agreement or otherwise in law in any manner impair the exercise
of any such right thereafter.
23. Other Work. In the event that, at any time during the term of this
----------
Agreement, Customer requests that Printer perform any work not related to the
publication(s) identified in Section 1 above, and Printer agrees to do so, all
rights and liabilities of Customer and Printer arising in connection with such
other work (as well as the rights and liabilities of the parties in connection
with Printer's work on the publication(s) identified in Section 1 above) shall
be governed exclusively by the terms and conditions contained in this Agreement;
provided, however, that, with respect to such other work, the Specifications,
Price and Production Schedules to this Agreement shall be superseded by
specifications, scheduling terms, quantities and prices set forth in accepted
orders, to the extent that the same are inconsistent with such Schedules. No
additional or different terms contained in any of Customer's forms or other
correspondence shall be of any force or effect.
24. Entire Agreement. The attached Specifications Schedule and Price
----------------
Schedule and the Production Schedule either attached or established in
accordance with this Agreement form a part of this Agreement. This Agreement,
together with such Schedules, is intended by the parties as the final and
exclusive expression of their agreement, superseding all prior oral or written
agreements, understandings, negotiations, representations and correspondence
between the parties, on the subject of this Agreement. There are no conditions
to this Agreement not expressed in this Agreement.
25. Term and Termination. This Agreement shall take effect September 5,
--------------------
1995 and shall remain in effect through December 31, 2000. Either party may
terminate this Agreement at any time upon written notice to the other, but only
by specific reference to this Agreement (by title and date) in such notice. Any
such termination shall have no effect upon the respective rights and liabilities
of the parties in connection with any work previously performed under this
Agreement or in process on the date of termination, or in connection with any
accepted order under this Agreement, including but not limited to the commitment
set forth in Section 1 above.
26. Amendment. Except as provided in Sections 2 and 3, this Agreement,
---------
including the Schedules made a part of this Agreement, may be amended or
supplemented only by a writing signed on behalf of both of the parties by their
duly authorized representatives. In the event that the Production Schedule is
not attached, mutual agreement to a Production Schedule shall be established
only by a writing so signed.
<PAGE>
-7-
27. Assignment. Neither party shall assign any of its rights under this
----------
Agreement without the prior written consent of the other party. Subject to any
required consent, this Agreement shall inure to the benefit of and shall bind
the successors and assigns of the parties to this Agreement.
28. Notices. Notice required or permitted by this Agreement shall be
-------
deemed given only upon enclosure of such notice in a adequately post-paid
envelope, deposited in a U.S. Post Office, sent certified mail - return receipt
requested, and addressed to the party to be given notification at the address to
which it has previously notified the party giving notice that notices are to be
sent or, otherwise, to the address for the party receiving notice first set
forth in this Agreement.
29. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the state in which the printing involved is
performed.
If the above terms are satisfactory, please sign two copies of this
document and return them. It will then be an offer, subject to acceptance by an
authorized agent of Printer at any time prior to 30 days after the date first
above written. Upon acceptance, Printer will return one fully executed copy of
the Agreement to Customer; and this Agreement will be a binding contract between
Printer and Customer.
Respectfully submitted,
By:____________________________________
Jim Robison
Sales Representative
Agreed to:
ADVANSTAR COMMUNICATIONS, INC.
("Customer")
/s/
By____________________________
V.P. Human Resource &
Publishing Operations
Title_________________________
9/28/95
Date__________________________
Accepted: This new agreement supercedes
and replaces the old agreement
<PAGE>
-8-
CLARK PRINTING COMPANY, a division of Banta Corporation
("Printer")
By /s/
---------------------------
Title Executive V.P.
------------------------
Date 9/28/95
-------------------------
<PAGE>
================================================================================
EXHIBIT A
PUBLICATIONS LISTING
SEPTEMBER 5, 1995
The following publications are included under this Agreement.
Production will commence in the month/year indicated:
Hotel Motel Management September, 1995
Art Business News September, 1995
DVM September, 1995
Hearing Instruments September, 1995
Ophthalmology September, 1995
DVM New Product Review September, 1995
Afermarket Business September, 1995
AIDN September, 1995
AIDN - Asia September, 1995
AIDN - Latin September, 1995
America's Network Product Tab September, 1995
ITS Tab September, 1995
Hospitality Product News September, 1995
Environmental Solutions Tab September, 1995
Dermatology Times January, 1996
Urology Times January, 1996
Initials ________________________________
________________________________
================================================================================
<PAGE>
EXHIBIT B
December 20, 1994
Ms. Adele Hartwick, Treasurer and Controller
Advanstar Communications
131 W. Ist St.
Duluth MN 55802
Dear Adele:
I have taken the opportunity to summarize our conversation from last- Friday and
to outline how Advanstar's account will be administered beginning in 1995. If
you have any question with an of the points below, please call me as soon as
possible.
1. Effective January 1, 1995, Advanstar's credit terms will be changed from
2%-10 days, Net 30 to "Cash in Advance".
2.. In consideration of cash in advance terms, Banta will abate the contractual
2% manufacturing price increase.
3. Since payments are to be made in advance, the 2% early pay discount will be
reflected in Advanstar's new (1995) price schedules.
4. Payment amounts will be broken down into equal weekly payments which are to
be received every Friday beginning on December 30, 1994.
5. Initial weekly payments, which include both production and postage, have
been set at $125,000 tone Hart Press and $60,000 to Clark Printing Company.
6. Advanstar's account will be reviewed monthly. Changes, if any, to the
weekly payment will be assessed through anticipated production and
reconciliation of payments to actual invoices. Within Banta, this will
have to be a coordinated effort with Jim Robison Sales Representative,
Customer Service, and the Controllers at both plants (Dave Wampole - The
Hart Press and Phil Zuptich - Clark Printing Co.).
You and I will need to remain in contact as these payment amounts are
determined. I will ask both Dave and Phil to provide appropriate support for
their recommended payment amounts.
<PAGE>
Sincerely,
Scott A. Szybilski
Group Controller
<TABLE>
<CAPTION>
cc: Clark Printing Carol Benbow - Credit Manager Phil Suptich - Controller
Hart Press Steve Marsh - Credit Manager Dave Wampole - Controller
Banta Publ. Group Jim Robison - Sales Rep. Tim Sawtell - Mgr. Contracts &
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.9
LAS VEGAS CONVENTION CENTER
LEASE AGREEMENT #7833.1
This lease agreement made and entered into this 2nd day of February, 1996,
by and between the LAS VEGAS CONVENTION AND VISITORS AUTHORITY, 3150 Paradise
Road, Las Vegas, Nevada 89109, (702) 892-0711 (hereinafter referred to as
"LVCVA") and LESSEE.
MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
Mr. Joseph Loggia, COO & CFO
100 Wilshire Boulevard, Suite 1850
Santa Monica, CA 90401
310/393-7757
OVERALL DATES commencing at 12:01 a.m. August 27, 1998
and terminating at 11:59 p.m. September 6, 1998
ACTUAL SHOW/MEETING DATES: August 31-September 3, 1998
Special conditions, if applicable, are listed below and/or attached hereto and
marked as Exhibit(s) NONE and by this reference made a part hereof and
incorporated herein.
WITNESSETH
1. FACILITIES PAYMENT AND USE: NON-REFUNDABLE advance deposit of NONE to be
paid at execution of this lease agreement. Deposit credited when show is
invoiced. No interest will accrue by or be paid to Lessee on any deposit.
Balance due upon receipt of invoice. INTEREST will be assessed at 1-1/2% per
month on any balance due more than thirty (30) days after date of billing.
TOTAL number of movein/moveout days equal to one times number of show days at no
additional charge. ADDITIONAL movein/moveout days at 25% of minimum daily rate
per day.
The LVCVA does hereby grant to Lessee and Lessee does hereby lease the following
specified areas, on the dates, and at the rate for said facilities of the Las
Vegas Convention Center hereinafter set forth, for the following use and no
other purpose: to hold a Convention.
*MINIMUM RATE per show day of $0.15
-----------------------------------
per net sq. ft. (when used for commercial
-----------------------------------------
exhibits) per show day whichever is greater.
--------------------------------------------
<PAGE>
-2-
<TABLE>
<CAPTION>
AREA DATES
<S> <C> <C>
EXHIBIT HALLS:
N1, N1.1, N2 August 27-September 6, 1998 $ 9,000.00/per show day vs. *
S1 " " $ 6,700.00/per show day vs. *
S2 " " $ 6,500.00/per show day vs. *
S3 " " $13,575.00/per show day vs. *
S4 " " $ 6,000.00/per show day vs. *
S4.1 " " $ 6,000.00/per show day vs. *
S5 " " $ 5,400.00/per show day vs. *
S5.1 " " $ 4,300.00/per show day vs. *
OFFICES:
Diamond Office " " N/C*
S201-S202 " " N/C*
S203-S206 " " N/C*
MEETING ROOMS:
S101-S114 August 28-September 6, 1998 N/C*
N101-N120 " " N/C*
N201-N243 " " N/C*
BALLROOM:
N245-N251 " " N/C*
</TABLE>
THE DESERT INN ARTERIAL CONSTRUCTION COULD BE IN PROGRESS WHICH MAY HAVE AN
EFFECT ON THE PREMISES AND/OR THE PARKING AROUND THE PREMISES. THE LESSEE
EXPRESSLY ACKNOWLEDGES THAT THIS CONSTRUCTION WORK COULD INTERFERE WITH ITS
TENANCY.
2. CONDITIONS: This Lease Agreement shall have no force or effect whatsoever
unless and until executed by both parties, to wit: the Lessee and the President
of the LVCVA or his designee. Lessee covenants and agrees to well and truly
perform and abide by each and every term, condition, limitation and restriction
herein set forth, each of which shall be a condition subsequent to the effect of
this Lease Agreement. Any alteration to this document unless executed by both
parties will void this Lease Agreement.
The use of the facilities of the Las Vegas Convention Center herein described
includes corridors necessary to accommodate patrons and seating in or a part of
such facilities, together with such regularly provided heat, electrical power,
air conditioning, water and light, as may be required for use of said
facilities. Concourse and entrance plaza areas are a leased portion of the
premises that must be used concurrently with other shows, and within certain
guidelines set forth from time to time by the Las Vegas Convention Visitors
Authority. Exhibit floor plan must be approved by LVCVA's Fire Safety
Coordinator before sale of exhibit space to prospective exhibitors. Carpeted
areas will
<PAGE>
-3-
be protected when used for exhibits whether commercial or non-commercial. The
Lessee shall not permit the demised premises to be used for lodging rooms or for
any improper, immoral, illegal or objectionable purpose. The LVCVA reserves the
right to use meeting rooms during move-in and move-out period and show days
after show hours when Lessee is not using the same, such as at night, so long as
rooms are in proper order as and when required by Lessee. LVCVA will hold Lessee
harmless if the LVCVA uses meeting rooms when Lessee is not using the same.
LVCVA will not use meeting rooms assigned to Lessee for Lessee office space.
Lessee shall not be liable under any provisions herein provided should any loss
or damage occur during such period of time so used by a person or entity other
than Lessee. The Lessee will be given notice and a reasonable opportunity to
cure any default in their obligation under this case. The President of the LVCVA
will have the final authority but must act reasonably, to determine the
appropriate action relating to any default under this lease.
If Lessee or any exhibitor so desires, upon written order of Lessee, the LVCVA
will cause electric, gas or water service or connections to be installed,
adjusted or effected as follows:
ELECTRICITY: One-half normal illumination will be allowed for move-in and move-
out days. Additional lighting, heating and air conditioning requested by the
Lessee will be assessed a charge based on actual usage. Full illumination will
be permitted on day prior to show opening. The LVCVA agrees to make available
to Lessee, through its agent (electrical contractor) up to its existing
capacity, all electric power required, and the Lessee agrees that any agreement
with its agent (electrical contractor) will require said agent (electrical
contractor) to reimburse the LVCVA with a fifteen (15) percent surcharge on the
regular electric outlet rental fee charged exhibitors on all electric outlets
and floodlight charges levied by Lessee or its agent (electrical contractor) to
exhibitor on all power made available by the LVCVA. All electrical service
provided to Association spaces will be included when calculating charges.
Lessee further agrees that its agent (electrical contractor) will supply the
LVCVA with duplicate copies of all electrical charges made by said agent
(electrical contractor) to each exhibitor within thirty (30) days after
expiration of the Lease Agreement for the purpose of verifying the fifteen (15)
percent surcharge amount to be paid the LVCVA by said agent (electrical
contractor) and upon said agent's (electrical contractor) failure to pay said
amount, then Lessee hereunder agrees to pay the same to the LVCVA upon
submission of the documentation supporting a statement for the amount due LVCVA
hereunder.
GAS AND PLUMBING: At Lessee's expense, at the standard rate for connection and
consumption of gas or water, as per schedule to be established from time to time
by the LVCVA in accordance with the LVCVA's prevailing practice, and Lessee
shall be responsible for all charges arising from such contracts. Lessee shall
be responsible for expenses incurred by the LVCVA for Lessee or its exhibitors
for which the LVCVA has accepted a written order from the Lessee. The above and
foregoing approval shall apply to subcontractor(s) as well as contractors.
<PAGE>
-4-
3. EXCLUSIVE TELECOMMUNICATION, NEWSSTAND, GIFT SHOP AND BUSINESS CENTER
SERVICES: The LVCVA reserves the sole and exclusive right to handle for the
Lessee, and its sublessees, any telecommunications, newsstand, gift shop and
business center services including normal telephone services; cellular telephone
services; facsimile; copies; secretarial; baggage holding; small package
freight; business equipment; and any other services associated with
telecommunications, newsstand, gift shop or business center activities. The
Lessee, or its Sublessee, shall have no right to contract out these services.
The exclusion for gift shop goods and services shall not include the sale of
show merchandise.
4. FORFEITURE: If cancellation is made (either partial or complete
cancellation), then the non-refundable advance deposit amount called for on page
1 shall be forfeited by the Lessee in consideration of the LVCVA holding said
dates for exclusive use of the Lessee and rendering the same unavailable for
others and as liquidated damages therefore. The Lessee further covenants that
if any default is made in payment of the rent or any part thereof at the times
above specified, or if any default is made in the covenants or agreements herein
contained, this rental of the facilities at the option of the LVCVA shall cease
and terminate, and of the parties shall be the same in all respects as if said
term had fully expired. The LVCVA may reenter the said premises and hold the
same as of its former sate therein, removal all persons therefrom and resort to
any legal proceedings to obtain such possession. The Lessee shall
notwithstanding such reentry, pay the full amount of said rental as herein
agreed to be paid. If cancellation is made by Lessee less than three years
before show date, Lessee agrees to pay, as liquidated damages, twenty-five
percent (25%) of the minimum daily rate for the total number of show days on
lease. If cancellation is made by Lessee less than two years before show date,
Lessee agrees to pay, as liquidated damages, fifty percent (50%) of the minimum
daily rate for the total number of show days on lease. If cancellation is made
by Lessee less than one year before show date, Lessee agrees to pay, as
liquidated damages, one hundred (100%) of the minimum daily rate for the total
number of show days on lease. The LVCVA will make all reasonable efforts to re-
lease the Leased Premises upon written notification of the Lessee's default, but
any such re-lease shall not serve to relieve the Lessee from the payment of the
above referenced liquidated damages. The liquidated damages provisions in this
paragraph are a consequence of the fact that the amount of actual damages
resulting from Tenant's termination is impossible to ascertain. Any liquidated
damages paid by the Tenant is not to be construed as a penalty.
5. INSURANCE: Lessee agrees to obtain and furnish to the President of the
LVCVA at least thirty (30) days prior to the time of occupancy herein provided a
certificate showing that there is in effect a policy of a MINIMUM OF $1,000,000
combined single limit bodily injury and broad form property damage coverage,
including broad form contractual liability in which the Lessee and the LVCVA are
each named as additional insured. The parties agree that the specified
coverages or limits of insurance in no way limit the liability of the Lessee.
Coverage shall be for full period of the Lessee's occupancy of the Las Vegas
Convention Center. Said insurance shall cover the entire premises of the Las
Vegas Convention Center, including parking lots, when leased to
<PAGE>
-5-
tenants, approaches and sidewalks. During the periods of multiple tenant
occupancy, the Lessee shall only be responsible for and insure against bodily
injury and property damage caused by the acts or omissions of Lessee, its
sublessees, or their respective employees, representatives, servants, agents,
licensees, invitees, patrons, guests or contractors. Lessee will not do or
permit to be done anything in or upon any portion of the premises, or bring or
keep anything herein or thereon which will in any way conflict with the
conditions of any insurance policy upon the Las Vegas Convention Center or any
part thereof, or in anyway increase any rate of insurance upon the building or
any property kept there nor shall (without written consent of the President of
the LVCVA) put up or operate any engine or motor or machinery on the premises,
excepting normal equipment utilized to set up and dismantle exhibits, or use of
oils, burning fluids, camphene, kerosene, naphtha or gasoline for either
mechanical or other purposes, or any agent other than electricity for
illuminating purposes. The President of the LVCVA may refuse to allow any use of
the Las Vegas Convention Center facilities during any period when such insurance
is not in force.
6. INDEMNITY: The Lessee is responsible for any and all demands on account of
any injury or death, or damage to property (including, but not limited to, the
Las Vegas Convention Center premises) occurring in or upon any portion of the
Las Vegas Convention Center premises leased or used by Lessee which are caused
by the acts or omissions of Lessee, its sublessees, or their respective
employees, representatives, servants, agents, licensee, invitees, patrons,
guests or contractors. Lessee shall defend, indemnify and hold harmless LVCVA
excepting loss by negligent acts of LVCVA, its officers, employees, and agents
from and against any and all claims, demands, actions, causes of actions,
penalties, judgments and liabilities of every kind and description (including
court costs and reasonable attorneys' fees) for injury to and death of persons,
and damage to and loss of property which are caused by, arise from or grow out
of Lessee's use or occupancy of the premises or from any breach by Lessee of any
condition of this contract, or from any act or omission of Lessee, its
sublessees, or their respective employees, representatives, servants, agents,
invitees, patrons, guests, licensees, or contractors. The Lessee specifically
will indemnify and hold the LVCVA harmless for any actions taken by the Lessee
or its subcontractors, related to the removal of individuals or groups from the
leased premises. The LVCVA shall not be liable for injuries to any person, or
entity, or for damages to property owned or controlled by Lessee, excepting loss
by negligent acts of the LVCVA, its officers, employees and agents, or any other
entity when the claims for damages or injuries are incident to, arise from or
are in anyway connected with Lessee's use or occupancy of the premises or any
portion of the Las Vegas Convention Center, or for any act or omission of
Lessee, its sublessees, their respective employees, representatives, servants,
agents, invitees, patrons, guests, licensees, or contractors. However, this
contract shall not provide any right for any person, firm, corporation, or
association who is not a party to this Lease Agreement.
7. WAIVER OF LIABILITY AND WAIVER OF SUBROGATION: The LVCVA shall not be
responsible for any damage or injury that may happen to the Lessee or to the
Lessee's agents, servants, employees or property from any cause whatever,
excepting loss by
<PAGE>
-6-
negligent acts by LVCVA, its servants or employees, during the period covered by
this Lease Agreement, and the said Lessee hereby expressly releases said LVCVA
from and agrees to indemnify the LVCVA against any and all claims for any such
loss, damage or injury. The LVCVA and Lessee agree to waive the right of
subrogation by their insurance carriers, when allowed by said insurance carrier,
to recover losses sustained under the respective insurance contracts for real
and personal property, and Lessee agrees that each sublease shall require of the
sublessee a similar waiver of right to subrogation under their insurance
contracts, when allowed by sublessee's insurance company.
8. SERVICES: (a) The LVCVA will furnish additional services to the Lessee
such as equipment, materials, technicians, etc. (to the extent of the LVCVA's
available inventory) on the following terms and conditions: Normal service, but
not including technicians, stagehands, electricians, public address system
operators, projectionists, guards and other personnel not normally members of
the staff of the LVCVA. The LVCVA further reserves the right to name all
technicians who will operate the LVCVA's equipment, and the Lessee shall pay for
same.
(b) LVCVA services personnel will clean the show management's common use
public areas including uncarpeted registration area, meeting rooms (except when
utilized as exhibit area), restrooms and Association offices. Trash containers
will be provided in public areas, placed at strategic locations, and serviced
with concurrence of show management. These services are at no extra cost to
Lessee.
(c) All janitorial and cleaning service (except as described in b)
beginning with the opening day of move-in, during show days, and through the
final day of move-out shall be the responsibility of the Lessee. As part of
Lessee's contract with its service contractor(s), the Lessee shall require said
service contractor(s) to remove all "unusual" trash, including but not limited
to, pallets, shipping crates, wooden platforms and construction materials.
(d) In the event no aisle carpeting is used, the LVCVA will clean the
aisles before each show day opening. These services are at no additional cost to
Lessee.
(e) Additional services within the Las Vegas Convention Center
capabilities will be provided if requested, and charges for labor and equipment
will be invoiced at current rates. Under no condition will the LVCVA provide
services in violation of the contract with show management's service contractor.
(f) Meeting Rooms - One time setup per day - includes lights, heat, air,
custodial and sound service (one microphone per room or more if LVCVA inventory
allows). Lessee agrees to pay minimum daily room rate for any changeovers or
revised room setups.
9. SHOW RESERVATION SERVICE: Lessee shall not engage an independent
contractor to provide local hotel showroom reservation services to Lessee (or
group) and its members
<PAGE>
-7-
during the period of this lease term, nor will space in or upon said leased
premises be provided for such purpose during the term hereof, by Lessee or
LVCVA.
10. EXPIRATION OF OCCUPANCY: At the expiration of occupancy hereinabove set
forth, the Lessee shall quit and vacate the premises of the Las Vegas Convention
Center and return to the President of the LVCVA all equipment and facilities
procured from the President of the LVCVA, which premises, equipment and
facilities shall be in as good condition and repair as before the Lessee's use
thereof except for wear from ordinary use being excepted. In the event the
Lessee holds over and fails to surrender possession of the premises at the time
herein agreed, then and in that event, the Lessee agrees to pay for the hold-
over period at triple the rate herein provided for original term, and the same
does not preclude the LVCVA from collecting other damages in the event damages
do occur to the LVCVA as a result of such hold-over. If Lessee vacates the
premises prior to the expiration of the contracted time of occupancy, the LVCVA
will assume beneficial control of said premises and the contract will terminate
and the daily rate will not be charged by LVCVA.
11. PROPERTY LEFT ON PREMISES: The Lessee shall remove from the premises of
the Las Vegas Convention Center on or before the termination of occupancy
hereinabove agreed, all property, goods, and effects belonging to the Lessee or
sublessee, or caused by Lessee to be brought upon the said premises. If any
such property is not removed at the above stated time, the President of the
LVCVA shall have the right to store or cause to be stored any such property, for
which the Lessee agrees to pay a reasonable fee and all expenses incurred.
12. LOST ARTICLES: The President of the LVCVA, or his representatives, shall
have the sole right to collect and have custody of articles left in the building
or parking lot by persons attending any performance, exhibition or entertainment
event given or held on the Las Vegas Convention Center premises and the Lessee
shall not collect nor interfere with the collection or custody of such articles
by the LVCVA. Lost articles will be returned upon proper identification of
article and owner according to policies established by the LVCVA. The President
of the LVCVA will have the right, after a reasonable period of time, to dispose
of lost articles.
13. COMPLIANCE WITH LAWS: The Lessee, and the LVCVA, shall comply with all
laws of the United States and the State of Nevada, all ordinances of the County
of Clark, State of Nevada, and wherever applicable, all rules, regulations of
the Metropolitan Police Department and the Clark County Fire Department and
policies and criteria established by the LVCVA for the use of the facilities
under the jurisdiction of the LVCVA, and the Lessee will not suffer or permit to
be done anything on said premises in violation of such laws, ordinances, rules,
regulations, policies or criteria herein referred to. The Lessee shall be
responsible to provide readily achievable access to the show and provide
auxiliary aids to anyone in accordance with the Americans With Disabilities Act.
Additionally, it shall be the responsibility of the Lessee to submit to the
LVCVA in writing, a list of independent service companies (e.g. installation and
dismantle
<PAGE>
-8-
companies, florists, modeling agencies, or other exhibitor appointed
contractors) who are providing a service to exhibitors. The Lessee shall be
responsible for said companies to be properly licensed and insured prior to
entering the premises of the Las Vegas Convention Center.
14. HAZARDOUS MATERIALS: Lessee, and its sublessee, are responsible for the
proper care, handling, security, removal, and disposal of all hazardous
materials entered upon Las Vegas Convention Center premises by the Lessee or its
sublessee, as required by current Environmental Protection Agency, or other
applicable standards in effect at the time of occupancy. Upon request by LVCVA,
the Lessee shall provide proof of the method of transportation and disposal of
the hazardous materials. Any costs associated with the transportation and
disposal of materials left on the Lease Premises will be paid by the Lessee.
15. LICENSES: Lessee shall obtain all permits or licenses required by laws,
ordinances, rules and regulations mentioned herein and shall secure such
permits, and shall not suffer to be done anything on the premises during the
term hereof in violation of any such laws, ordinances, rules, regulations,
policies or criteria, and if attention of the Lessee is called to any such
violation on the part of the Lessee or of any person employed by or admitted to
the premises by the Lessee, such Lessee will immediately desist from and correct
or cause to be corrected such violation.
16. CARE OF PREMISES: Lessee, at Lessee's own expense, shall keep the premises
in a safe, sanitary and sightly condition in good repair, and shall restore and
yield the premises back to the LVCVA upon the expiration or termination of this
Lease in good condition and repair, ordinary wear and tear (and damage by the
elements, fire or act of God, or by other cause beyond the control of Lessee)
excepted. If the premises can be restored (without causing or constituting a
termination of the privilege or an interference for the possession of the
premises by Lessee) the LVCVA may do all things necessary to restore the
premises to the condition required, including but not limited to, removal of
signs, balloons, tape, and other things not removed by Lessee, its sublessees,
or their respective servants, agents, employees, invitees, licensees or
contractors charging the actual cost thereof to Lessee.
17. HELIUM BALLOONS: Helium balloons no smaller than 36 inches in diameter are
allowed only when they are anchored to exhibits. Absolutely no helium balloons
shall be permitted for giveaway or sale.
18. SIGNS AND POSTERS: Lessee shall not post or exhibit, or allow to be posted
or exhibited, any signs, advertisements, showbills, lithograph posters or cards
of any description on any part of the premises of the Las Vegas Convention
Center, except upon such space as is made available for such purpose by the
LVCVA, and Lessee will use, post or exhibit only such signs, advertisements,
showbills, lithograph, posters or cards upon said billboards as relate to the
performance or exhibition to be given under this
<PAGE>
-9-
contract and which meet the approval of the President of the LVCVA, and such
approval shall not be unreasonably withheld.
19. SECURITY/PARKING: Lessee shall be responsible for complete security in all
areas leased, including exhibit areas, meeting rooms, loading dock areas,
emergency exits, from the time of initial occupancy until completion of move-
out. Such services, when required, will be at the expense of the Lessee. All
security arrangements are subject to approval by the LVCVA, and such approval
shall not be unreasonably withheld. Lessee will provide a security placement
plan for stationary or roving posts to the LVCVA Chief of Security at least
thirty (30) days prior to show opening. The LVCVA maintains twenty-four (24)
hour security for protection of building perimeter. Only licensed Nevada
security agencies will be used. the use of voluntary security is not permitted.
The parking facilities, unless specifically leased by the lessee, shall be under
the direct and exclusive control of LVCVA. The lessee shall not rely upon the
availability of any parking lot or parking facility
20. SEATING CAPACITY: Lessee shall not sell or distribute, or permit to be
sold or distributed, tickets or passes in excess of the seating capacity or
authorized occupancy load of the facility or facilities hereinabove described.
Standing room is prohibited. The Lessee shall not admit to the leased premises
a larger number of persons than the seating capacity or authorized occupancy
load thereof will accommodate or can safely or freely move about in said leased
area. The LVCVA, being charged by law with operation of the Las Vegas
Convention Center, and in doing so, has the right to attend all functions.
Lessee acknowledges this requirement for such seating as may be required by
LVCVA and agrees to honor the same upon request of the President of the LVCVA.
21. CONCESSIONS: Unless otherwise expressly stated to the contrary in this
Lease Agreement, LVCVA reserves the sole and exclusive right to offer for sale
on, in, or about the premises covered by this Lease Agreement, beverages of any
type, food, souvenirs, or other merchandise of any sort, or LVCVA may lease all
concession rights to any party or parties designated by LVCVA. Any concession
rights granted in this Lease Agreement will be subject to existing concession
contracts which exist between LVCVA and third parties. In no event will Lessee,
its sublessees, exhibitors, agents, or guests, bring into the Las Vegas
Convention Center, or any of its facilities, any food, whether prepared or
unprepared, or beverages of any kind whatsoever, including but not limited to
alcoholic beverages, without the prior written consent of the President of the
LVCVA. This section is not intended to restrict the free distribution of small
quantities of product samples from a designated exhibit space. All samples
being distributed must be manufactured or produced directly by the exhibitor.
22. ACCESS TO PREMISES: The LVCVA reserves for its representatives, agents and
concessionaires, free access and right to enter any portion of the Las Vegas
Convention
<PAGE>
-10-
Center premises. The Las Vegas Convention Center, including the premises rented
hereby and the keys thereof, shall at all times be under the control of the
President of the LVCVA.
23. OBJECTIONABLE PERSONS: The LVCVA, through its President and its agents and
employees, reserves the right to eject any objectionable person or persons from
the Las Vegas Convention Center or any part thereof, if in the sole
determination of LVCVA such objectionable person or persons create a danger to
public health and safety. Upon exercise of this authority by the President of
the LVCVA, its agents or Metropolitan Police, Lessee specifically waives any
right to any claim for damages against the LVCVA for such actions. Every
reasonable effort will be made by the LVCVA to notify the Lessee of any pending
action in regards to any cause to which this section applies.
24. ADVERTISING: Lessee shall not, without the consent of the President of the
LVCVA, distribute or circulate or permit to be circulated or distributed, any
advertising material or program in or about the Las Vegas Convention Center
public areas, including the adjacent parking lots. This section is not intended
to restrict the distribution of normal advertising material or product
informational brochures from a designated meeting area or exhibit space.
Commercial exhibitor advertising will not be allowed in the public areas of the
Convention Center without payment of additional compensation as fixed by the
rental rate sheet promulgated by the LVCVA.
25. FORCE MAJEURE: If the (a) Las Vegas Convention Center or any potion
thereof shall be destroyed or damaged by fire or other calamity so as to prevent
the use of the premises for the purposes and during the periods specified in
this Lease Agreement, or (b) if the use of the premises by Lessee shall be
prevented by act of God, strike, lockout, material or labor restrictions by any
governmental authority, civil riot, flood or any other cause beyond the control
of the LVCVA, then this Lease Agreement shall terminate and Lessee hereby waives
any claim against the LVCVA for damages of reason by such termination except
that any unearned portion of the rent due hereunder shall abate, or, if
previously paid, shall be refunded by LVCVA to Lessee. The LVCVA shall, within
a reasonable time, provide notice to Lessee of any event to which this section
applies.
26. EVACUATION: It is mutually agreed by and between the parties that in the
event the Las Vegas Convention Center, or any part thereof, shall be evacuated
by reason of fire, strike, picketing, job action, riot, unruly demonstration,
bombing, bomb threat or other incident or occurrence, actual or threatened, the
Lessee, for itself and for its successors and assigns, shall and does hereby
release the LVCVA and all officials, officers, representatives, agents,
employees and servants of the LVCVA from any and all liability for injury, loss
of life, loss of or damage to property or other damage or loss of any nature
whatsoever, economic or otherwise suffered or sustained as a result of such
evacuation or direction to evacuate, excepting liability arising from negligent
acts of LVCVA, its officers, employees, and agents. The Lessee, for itself , and
for its successor and assigns, hereby covenants and agrees, in the event of such
evacuation or direction to evacuate, to indemnify and hold harmless the LVCVA,
their officials, officers, representatives, agents,
<PAGE>
-11-
employees and servants from any and all claims that may be asserted by third
persons for injury, loss of life, loss or damage to property or any damage or
loss of any nature whatsoever, economic or otherwise suffered or sustained as
the result of such evacuation or direction to evacuate, excepting liability
arising from negligent acts of LVCVA, its officers, employees, and agents. Under
emergency circumstances, the President of the LVCVA, or his designee, shall
regain complete control of the Las Vegas Convention Center. Every reasonable
effort will be made by the LVCVA to notify the Lessee of any pending action in
regards to emergency evacuation.
27. SCHEDULING AND TIME OF ESSENCE: Unless otherwise specified in writing, the
President of the LVCVA shall be privileged to book similar events within 30 days
from the opening day of the Lessee's show. Time, including, without limitation,
time of payment of monies due from Lessee, shall be of the essence of this
Agreement.
28. ACCEPTANCE OF PREMISES: Lessee and LVCVA shall jointly inspect the
Convention Center premises leased hereby and its equipment prior to move-in to
determine whether the Convention Center is in all respects in proper condition
for the sues contemplated by Lessee. Lessee and LVCVA shall jointly inspect the
Convention Center during move-out to determine whether any changes have occurred
in the condition of the Convention Center and/or its equipment, ordinary wear
and tear excepted, which are directly attributable to Lessee's occupancy and
use.
29. REENTRY RIGHT: Lessee agrees that if the premises or any part thereof
shall become vacant during the said term, the LVCVA or its representatives may
reenter the same either by force or otherwise without being liable for any
prosecution therefore, and may at its option relet the said premises as the
agent of the Lessee and receive the rent therefrom, applying the same first to
payment of such expenses as may be incurred in reentering and reletting said
premises and then to the payment of the rent due by these presents; the surplus,
if any, is to be paid over to the Lessee, and Lessee covenants that charges
herein agreed to be paid remaining after deducting the net rental resulting from
such reletting shall be paid by Lessee. However, nothing herein contained shall
be construed as imposing any obligation on the LVCVA to so relet or attempt to
relet the said premises or in any way affect the obligation of the Lessee to pay
the full amount of said rental in case said premises shall not be so relet.
30. TELEVISION AND BROADCASTING: No artistic performance or sporting event
presented in the Las Vegas Convention Center shall be broadcast or televised or
in any manner recorded for reproduction without an agreement in writing between
the Lessee and the LVCVA respecting the times and media of such broadcast, such
additional compensation to the LVCVA as the parties may agree upon, and in any
event, upon the express condition that all expenses pertaining thereto will be
prepaid in advance by the Lessee. This section does not restrict the normal
production of audio or video tapes of meeting or seminar sessions for
distribution or resale to attendees or Association membership.
<PAGE>
-12-
31. COPYRIGHT AND TRADEMARK INDEMNIFICATION: Lessee warrants and represents
that no music, literary or artistic work or other property protected by
copyright, nor the name of any performing individual or group protected by
trademark will be performed, reproduced or used in the performance of this Lease
Agreement unless the Lessee has previously thereto obtained written permission
from the copyright or trademark holder. Lessee acknowledges that Lessee acts
under this Lease Agreement as an independent contractor, charged with the
responsibility in his sole discretion for selection, performances, reproduction
and use of such musical, literary and artistic works and such individual
performer or group of performers as he deems appropriate and that he undertakes
strict compliance with all laws respecting copyrights (Federal Copyright Law of
1978 - 17 U.S.C. 101) and trademarks and the performance, reproduction and use
of musical, literary and artistic works or the use of the name of the performer
or performing individuals or group. Lessee warrants that in the performance of
this Lease Agreement Lessee will not infringe any statutory common law or other
right of any person in performing, reproducing, or otherwise making use of any
work or material or performer or performing group. Lessee will indemnify, save
and hold harmless the LVCVA and its officers, agents, employees and servants
from and against all claims, costs and expenses, including legal fees, demands,
actions and liabilities of every kind and character whatsoever with respect to
copyright and trademark rights, and the performance, reproduction and use of
musical, literary and artistic works or in the name of performing individual or
group. Lessee authorizes the withholding of payment under this Lease Agreement
pending final disposition of any claim which may result from the foregoing
indemnification.
32. ROYALTIES AND CLAIMS: Lessee agrees to pay when due all royalties, license
fees or other charges accruing or becoming due to any firm, person or
corporation by reason of any music, either live or recorded, or other
entertainment of any kind or nature, played, staged or produced by the Lessee,
its agents, employees, sub-tenants or licensees upon or within the premises
covered by this Lease Agreement, including but not limited to, royalties or
licensing fees due to BMI, ASCAP or SESAC. Lessee agrees to hold harmless the
LVCVA, its agents and employees against any and all such claims and charges, and
to defend, at its own expense, any and all such claims and charges. Lessee
shall have the right, however, to protect and if desired, to litigate and
adjudicate any and all such claims.
33. ASSIGNMENTS\ARBITRATION CLAUSE: Neither this Lease Agreement nor any
rights of the Lessee hereunder may be assigned by Lessee without the consent of
the LVCVA, by and through its President. Any dispute, cause of action or claim
for relief, between the LVCVA and Lessee (including any Sublessee), regarding
the terms, enforcement, interpretation, administration or performance of this
Lease shall be submitted to the Nevada Arbitration Association for binding
arbitration pursuant to the Uniform Arbitration Act as codified in Nevada
Revised Statutes 38,010 et.seq.
34. BINDING EFFECT OF LEASE AGREEMENT: All terms and conditions of this Lease
Agreement shall be binding upon the parties, their heirs or representatives and
assigns
<PAGE>
-13-
and cannot be varied or waived by any oral representation or promise or any
agent or other person of the parties hereto unless the same be in writing and
mutually signed by duly authorized agent or agents of the parties who executed
this Lease Agreement. Lease Agreement must be signed and returned within Forty-
five (45) days from date of issue. Failure to comply will void the terms and
conditions of the Lease Agreement. Any alteration of the terms of this agreement
in any manner will void the Lease Agreement.
35. GOVERNING LAW\MERGER CLAUSE: The parties to this Lease Agreement agree
that the same was entered into in Las Vegas, Clark County, Nevada. This
contract shall be interpreted and enforced under Nevada Law, and this contract
can only be entered and/or interpreted in the State or Federal courts in the
State of Nevada. Lessee, by signing this lease, submits to the jurisdiction of
any and all Nevada Courts. All prior negotiations and understandings are merged
herein and no change or additional agreement shall be of any effect unless in
writing and signed by the party to be changed. This agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous documents or
undertakings whether written, oral or implied.
<PAGE>
-14-
IN WITNESS WHEREOF, the parties hereto have hereunto caused these presents
to be signed in their corporate names and capacities, by their duly authorized
officers, this _______________ and acknowledges that this Lease has been read in
its entirety.
MEN'S APPAREL GUILD IN LAS VEGAS CONVENTION AND
CALIFORNIA (MAGIC) VISITORS AUTHORITY
By: /s/ Joseph Loggia By: /s/ Manuel Cortez
___________________________ ___________________________
MANUEL J. CORTEZ, PRESIDENT
Attest:
______________________________
<PAGE>
EXHIBIT 10.10
LAS VEGAS CONVENTION CENTER
Lease Agreement #7964
This lease agreement made and entered into this 24th day of December, 1996,
by and between the LAS VEGAS CONVENTION AND VISITORS AUTHORITY, 3150 Paradise
Road, Las Vegas, Nevada 89109, (702) 892-0711 (hereinafter referred to as
"LVCVA") and LESSEE,
MEN'S APPAREL GUILD IN CALIFORNIA
Mr. Joseph Loggia, President
6200 Canoga Avenue, Suite 303
Woodland Hills, CA 91367
818/593-5000
OVERALL DATES commencing at 12:01 a.m. February 25, 1999
and terminating at 11:59 a.m. March 6, 1999
ACTUAL SHOW/MEETING DATES: March 1-4, 1999
Special conditions, if applicable, are listed below and/or attached hereto and
marked as Exhibit(s) NONE and by this reference made a part hereof and
incorporated herein.
WITNESSETH
1. FACILITIES PAYMENT AND USE: NON-REFUNDABLE advance deposit of NONE to be
paid at execution of this lease agreement. Deposit credited when show is
invoiced. No interest will accrue by or be paid to Lessee on any deposit.
Balance due upon receipt of invoice. INTEREST will be assessed at 1-1/2% per
month on any balance due more than thirty (30) days after date of billing.
TOTAL number of movein/moveout days equal to one times number of show days at no
additional charge. ADDITIONAL movein/moveout days at 25% of minimum daily rate
per day.
The LVCVA does hereby grant to Lessee and Lessee does hereby lease the following
specified areas, on the dates, and at the rate for said facilities of the Las
Vegas Convention Center hereinafter set forth, for the following use and no
other purpose: to hold a Convention.
<PAGE>
-2-
*MINIMUM RATE per show day or $0.15
----------------------------------
per net sq. ft (when used for
-----------------------------
commercial exhibits) per show day
---------------------------------
whichever is greater
--------------------
<TABLE>
<CAPTION>
<S> <C> <C>
AREA
EXHIBIT HALLS: DATES
N1-N2** February 25 - March 6, 1999 $ 9,000.00/show day vs. *
S1 - - $ 6,700.00/show day vs. *
S2 - - $ 6,500.00/show day vs. *
S3 - - $13,575.00/show day vs. *
S4 - - $ 6,000.00/show day vs. *
S4.1 - - $ 6,000.00/show day vs. *
S5 - - $ 5,400.00/show day vs. *
S5.1 - - $ 4,300.00/show day vs. *
- -
OFFICES: - -
- -
Diamond Office - - N/C*
S201-S206 - - N/C*
- -
MEETING ROOMS:
S101-S114 - - N/C*
N101-N120 - - N/C*
N201-N230 - - N/C*
N231-N243 - - N/C*
BALL ROOM:
N245-N251 - - N/C*
</TABLE>
**Construction scheduled for 1997 will involve expansion of the existing N
Halls. Due to the increase in useable space, the minimum rate of Halls N1 and N2
will change and will be calculated on the base rental formula currently in the
use at the time of the lease.
2. CONDITIONS: This Lease Agreement shall have no force or effect whatsoever
unless and until executed by both parties, to wit: the Lessee and the President
of the LVCVA or his designee. Lessee covenants and agrees to well and truly
perform and abide by each and every term, condition, limitation and restriction
herein set forth, each of which shall be a condition subsequent to the effect of
this Lease Agreement. Any
<PAGE>
-3-
alteration to this document unless executed by both parties will void this Lease
Agreement.
The use of the facilities of the Las Vegas Convention herein described includes
corridors necessary to accommodate patrons and seating in or a part of such
facilities, together with such regularly provided heat, electrical power, air
conditioning, water and light, as may be required for use of said facilities.
Concourse and entrance plaza areas are a leased portion of the premises that
must be used concurrently with other shows, and within certain guidelines set
forth from time to time by the Las Vegas Convention Visitors Authority. Exhibit
floor plan must be approved by LVCA's Fire Safety Coordinator before sale of
exhibit space to prospective exhibitors. Carpeted areas will be protected when
used for exhibits whether commercial or non-commercial. The Lessee shall not
permit the demised premises to be used for lodging rooms or for any improper,
immoral, illegal or objectionable purpose. The LVCVA reserves the right to use
meeting rooms during move-in and move-out period and show days after show hours
when Lessee is not using the same, such as at night, so long as rooms are in
proper order as and when required by Lessee. LVCVA will hold Lessee harmless if
the LVCVA uses meeting rooms when Lessee is not using the same. LVCVA will not
use meeting rooms assigned to Lessee for Lessee office space. Lessee shall not
be liable under any provisions herein provided should any loss or damage occur
during such period of time so used by a person or entity other than Lessee. the
Lessee will be given notice and a reasonable opportunity to cure any default in
their obligation under this lease The President of LVCVA will have the final
authority, but must act reasonably, to determine the appropriate action relating
to any default under this lease.
If Lessee or any exhibitor so desires, upon written order of Lessee, the LVCVA
will cause electric, gas or water service or connections to be installed,
adjusted or effected as follows:
ELECTRICITY: One-half normal illumination will be allowed for move-in and move-
out days. Additional lighting, heating and air conditioning requested by the
Lessee will be assessed a charge based on actual usage. Full illumination will
be permitted on day prior to show opening. The LVCVA agrees to make available
to Lessee, through its agent (electrical contractor) up to its existing
capacity, all electric power required, and the Lessee agrees that any agreement
with its agent (electrical contractor) will require said agent (electrical
contractor) to reimburse the LVCVA with a fifteen (15) percent surcharge on the
regular electric outlet rental fee charged exhibitors on all electric outlets
and floodlight charges levied by Lessee or its agent (electrical contractor) to
exhibitor on all power made available by the LVCVA. All electrical service
provided to Lessee spaces will be included when calculating charges. Lessee
further agrees that its agent (electrical contractor) will supply the LVCVA with
duplicate copies of all electrical charges made by said agent (electrical
contractor) to each exhibitor within thirty (30) days after expiration of the
Lease Agreement for the purpose of verifying the fifteen (15) percent surcharge
amount to be paid the LVCVA by said agent (electrical contractor) and upon said
agent's (electrical contractor) failure to pay said amount, then Lessee
hereunder
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agrees to pay the same to the LVCVA upon submission of the documentation
supporting a statement for the amount due LVCV A hereunder.
GAS AND PLUMBING: At Lessee's expense, at the standard rate for connection and
consumption of gas or water, as per schedule to be established from time to time
by the LVCVA in accordance with the LVCVA's prevailing practice, and lessee
shall be responsible for all charges arising from such contacts. Lessee shall
be responsible for expenses incurred by the LVCVA for Lessee or its exhibitors
for which the LVCVA has accepted a written order from the Lessee. The above and
foregoing approval shall apply to subcontractor(s) as well as contractors.
3. EXCLUSIVE TELECOMMUNICATIONS, NEWSSTAND, GIFT SHOP AND BUSINESS CENTER
SERVICE: The LVCVA reserves the sole and exclusive right to handle for the
Lessee, and its sublessees, any telecommunications, newsstand, gift shop and
business center services, including normal telephone services; cellular
telephone services; facsimile; copies; secretarial, baggage holding; small
package freight; business equipment; and any other services associated with
telecommunications, newsstand, gift shop or business center activities. The
Lessee, or its sublessee, shall have no right to contract out these services.
The exclusion for gift shop goods and services shall not include the sale of
show merchandise.
4. FORFEITURE: If cancellation is made (either partial or complete
cancellation), then the non-refundable advance deposit amount called for on page
1 shall be forfeited by the Lessee in consideration of the LVCVA holding said
dates for exclusive use of the Lessee and rendering the same unavailable for
others and as liquidated damages therefore. The Lessee further covenants that
if any default is made in payment of the rent or any part thereof at the times
above specified, or if any default is made in the covenants or agreements herein
contained, this rental of the facilities at the option of the LVCVA shall cease
and terminate, and the relation of the parties shall be the same in all respects
as if said term had fully expired. the LVCVA may reenter the said premises and
hold the same as of its former state therein, remove all persons therefrom and
resort to any legal proceedings to obtain such possession. the Lessee shall
notwithstanding such reentry, pay the full amount of said rental as herein
agreed to be paid. If cancellation is made by Lessee less than three years
before show date, Lessee agrees to pay, as liquidated damages, twenty-five
percent (25%) of the minimum daily rate for the total number of show days on
lease. If cancellation is made by Lessee less than two years before show date,
Lessee agrees to pay, as liquidated damages fifty percent (50%) of the minimum
daily rate for the total number of show days on lease. If cancellation is made
by Lessee less than one year before show date, Lessee agrees to pay, as
liquidated damages, one hundred percent (100%) of the minimum daily rate for the
total number of show days on lease. The LVCVA will make all reasonable efforts
to re-lease the Leased Premises upon written notification of the Lessee's
default, but any such re-lease shall not serve to relieve the Lessee from the
payment of the above referenced liquidated damages. The liquidated damages
provisions in this paragraph are a consequence of the fact that the amount of
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actual damages resulting from Tenant's termination is impossible to ascertain.
Any liquidated damages paid by the Tenant is not to be construed as a penalty.
5. INSURANCE: Lessee agrees to obtain and furnish to the President of the
LVCVA at least thirty (30) days prior to the time of occupancy herein provided a
certificate showing that there is in effect a policy of a MINIMUM OF $1,000,000
combined single limit bodily injury and broad form property damage coverage,
including broad form contractual liability in which the Lessee and the LVCVA are
each named as additional insured. The parties agree that the specified coverage
or limits of insurance in no way limit the liability of the Lessee. Coverage
shall be for full period of the Lessee's occupancy of the Las Vegas Convention
Center. Said insurance shall cover the entire premises of the Las Vegas
Convention Center, including parking lots, when leased to tenants, approaches
and sidewalks. During the periods of multiple tenant occupancy, the Lessee
shall only be responsible for and insure against bodily injury and property
damage caused by the acts or omissions of Lessee, its sublessees, or their
respective employees, representatives, servants, agents, licensees, invitees,
patrons, guests or contractors. Lessee will not do or permit to be done
anything in or upon any portion of the premises, or bring or keep anything
herein or thereon which will in any way conflict with the conditions of any
insurance policy upon the Las Vegas Convention Center or any part thereof, or in
anyway increase any rate of insurance upon the building or any property kept
there nor shall (without written consent of the President of the LVCVA) put up
or operate any engine or motor or machinery on the premises, excepting normal
equipment utilized to set up and dismantle exhibits, illuminating purposes. The
President of the LVCVA may refuse to allow any use of the Las Vegas Convention
Center facilities during any period when such insurance is not in force.
6. INDEMNITY: The Lessee is responsible for any and all demands on account of
any injury or death, or damage to property (including, but not limited to, the
Las Vegas Convention Center premises) occurring in or upon any portion of the
Las Vegas Convention Center premises leased or used by Lessee which are caused
by the acts or omissions of Lessee, its sublessees, or their respective
employees, representatives, servants, agents, license, invitees, patrons, guests
or contractors. Lessee shall defend, indemnify and hold harmless LVCVA
excepting loss by negligent acts of LVCVA, its officers, employees, and agents
from and against any and all claims, demands, actions, causes of actions,
penalties, judgments and liabilities of every kind and description (including
court costs and reasonable attorneys' fees) for injury to and death of persons,
and damage to and loss of property which are caused by, arise from or grow out
of Lessee's use or occupancy of the premises or from any breach by Lessee of any
condition of this contract, or from any act or omission of Lessee, its
sublessees, or their respective employees, representatives, servants, agents,
invitees, patrons, guests, licensees, or contractors. The Lessee specifically
will indemnify and hold the LVCVA harmless for any actions taken by the Lessee
or its subcontractors, related to the removal of individuals or groups from the
leased premises. The LVCVA shall not be liable for injuries to any person, or
entity, or for damages to property owned or controlled by Lessee, excepting loss
by negligent acts of the LVCVA, its officers, employees and agents, or any other
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entity when the claims for damages or injuries are incident to, arise from or
are in anyway connected with lessee's use or occupancy of the premises or any
portion of the Las Vegas Convention Center, or for any act or omission of
Lessee, its sublessees, their respective employees, representatives, servants,
agents, invitees, patrons, guests, licensees, or contractors. However, this
contract shall not provide any right for any person, firm corporation, or
association who is not a party to this Lease Agreement.
7. WAIVER OF LIABILITY AND WAIVER OF SUBROGATION: the LVCVA shall not be
responsible for any damage or injury that may happen to the Lessee or to the
Lessee's agents, servants, employees or property from any cause whatever,
excepting loss by negligent acts by LVCVA, its servants or employees, during the
period covered by this Lease Agreement, and the said Lessee hereby expressly
releases said LVCVA from and agrees to indemnify the LVCVA against any and all
claims for any such loss, damage or injury. The LVCVA and Lessee agree to waive
the right of subrogation by their insurance carriers, when allowed by said
insurance carrier, to recover loss sustained under the respective insurance
contracts for real and personal property, and Lessee agrees that each sublease
shall require of the sublessee a similar waiver of right to subrogation under
their insurance contracts when allowed by sublessee's insurance company.
8. SERVICES: (a) The LVCVA will furnish additional services to the lessee such
as equipment, materials, technicians, etc. (to the extent of the LVCVA's
available inventory) on the following terms and conditions: Normal service, but
not including technicians, stagehands, electricians, public address system
operators, projectionists, guards and other personnel not normally members of
the staff of the LVCVA. The LVCVA further reserves the right to name all
technicians who will operate the LVCVA's equipment, and the Lessee shall pay for
same.
(b) LVCVA services personnel will clean the show management's common
use public areas including uncarpeted registration area, meeting rooms (except
when utilized as exhibit area), restrooms and Association offices. Trash
containers will be provided in public areas, placed at strategic locations, and
serviced with concurrence of show management. These services are at no extra
cost to Lessee.
(c) All janitorial and cleaning service (except as described in b)
beginning with the opening day of move-in, during show days, and through the
final day of move-out shall be the responsibility of the Lessee. As part of
Lessee's contract with its service contractor(s), the Lessee shall require said
service contractor(s) to remove all "unusual" trash, including but not limited
to, pallets, shipping crates, wooden platforms and construction materials.
(d) In the event no aisle carpeting is used, the LVCVA will clean the
aisles before each show day opening. These services are at no additional cost
to Lessee.
(e) Additional services within the Las Vegas Convention Center
capabilities will be provided if requested, and charges for labor and equipment
will be invoiced at
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current rates. Under no condition will the LVCVA provide services in violation
of the contract with show management's service contractor.
(f) Meeting Rooms - One time setup per day - includes lights, heat,
air, custodial and sound service (one microphone per room or more if LVCVA
inventory allows). Lessee agrees to pay minimum daily room rate for any
changeovers or revised room setups.
9. SHOW RESERVATION SERVICE: Lessee shall not engage an independent
contractor to provide local hotel showroom reservation services to Lessee (or
group) and its members during the period of this lease term, nor will space in
or upon said leased premises to be provided for such purpose during the term
hereof, by Lessee or LVCVA.
10. EXPIRATION OF OCCUPANCY: At the expiration of occupancy hereinabove set
forth, the Lessee shall quit and vacate the premises of the Las Vegas Convention
Center and return to the President of the LVCVA all equipment and facilities
procured from the President of the LVCVA, which premises, equipment and
facilities shall be in as good condition and repair as before the Lessee's use
thereof except for wear from ordinary use being excepted. In the event the
Lessee holds over and fails to surrender possession of the premises at the time
herein agreed, then and in that event, the Lessee agrees to pay for the hold-
over period at triple the rate herein provided for original term, and the same
does not preclude the LVCVA from collecting other damages in the event damages
do occur to the LVCVA as a result of such hold-over. If Lessee vacates the
premises prior to the expiration of the contracted tome of occupancy, the LVCVA
will assume beneficial control of said premises and the contract will terminate
and the daily rate will not be charged by LVCVA.
11. PROPERTY LEFT ON PREMISES: The lessee shall remove from the premises of
the Las Vegas Convention Center on or before the termination of occupancy
hereinabove agreed, all property, goods, and effects belonging to the Lessee or
sublessee, or caused by lessee to be brought upon the said premises. If any
such property is not removed at the above stated time, the President of the
LVCVA shall have the right to store or cause to be stored any such property, for
which the Lessee agrees to pay a reasonable fee and all expenses incurred.
12. LOST ARTICLES: The President of the LVCVA, or his representatives, shall
have the sole right to collect and have custody of articles left in the building
or parking lot by persons attending any performance, exhibition or entertainment
event given or held on the Las Vegas Convention Center premises and the Lessee
shall not collect nor interfere with the collection or custody of such articles
by the LVCVA. Lost articles will be returned upon proper identification of
article and owner according to policies established by the LVCVA. The President
of the LVCVA will have the right, after a reasonable period of time, to dispose
of lost articles.
<PAGE>
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13. COMPLIANCE WITH LAWS: The Lessee, and the LVCVA, shall comply with all
laws of the United States and the State of Nevada, all ordinances of the County
of Clark, State of Nevada, and wherever applicable, all rules, regulations of
the Metropolitan Police Department and the Clerk County Fire Department and
policies and criteria established by the LVCVA for the use of the facilities
under the jurisdiction of the LVCVA, and the Lessee will not suffer or permit to
be done anything on said premises in violation of such laws, ordinances, rules,
regulations, policies or criteria herein referred to. The Lessee shall be
responsible to provide readily achievable access to the show and provide
auxiliary aids to anyone in accordance with the Americans With Disabilities Act.
Additionally, it shall be the responsibility of the Lessee to submit to the
LVCVA in writing, a list of independent service companies (e.g. installation and
dismantle companies, florists, modeling agencies, or other exhibitor appointed
contractors) who are providing a service to exhibitors. The Lessee shall be
responsible for said companies to be properly licensed and insured prior to
entering the premises of the Las Vegas Convention Center.
14. HAZARDOUS MATERIALS: Lessee, and its sublessee, are responsible for the
proper care, handling, security, removal, and disposal of all hazardous
materials entered upon Las Vegas Convention Center premises by the Lessee or its
sublessee, as required by current Environmental Protection Agency, or other
applicable standards in effect at the time of occupancy. Upon request by LVCVA,
the Lessee shall provide proof of the method of transpiration and disposal of
the hazardous materials. Any costs associated with the transportation and
disposal of materials left on the Lease Premises will be paid by the Lessee.
15. LICENSES: Lessee shall obtain all permits or licenses required by laws,
ordinances, rules and regulations mentioned herein and shall secure such
permits, and shall not suffer to be done anything on the premises during the
term hereof in violation of any such laws, ordinances, rules, regulations,
policies or criteria, and if attention of the Lessee is called to any such
violation on the part of the Lessee or of any person employed by or admitted to
the premises by the Lessee, such Lessee will immediately desist from and correct
or cause to be corrected such violation.
16. CARE OF PREMISES: Lessee, at Lessee's own expense, shall keep the premises
in a safe, sanitary and sightly condition in good repair, and shall restore and
yield the premises back to the LVCVA upon the expiration or termination of this
Lease in good condition and repair, ordinary wear and tear (and damage by the
elements, fire or act of God, or by other cause beyond the control of Lessee)
excepted. If the premises can be restored (without causing or constituting a
termination of the privilege or an interference for the possession of the
premises by Lessee) the LVCVA may do all things necessary to restore the
premises to the condition required, including but not limited to, removal of
signs, balloons, tape, and other things not removed by Lessee, its sublessees,
or their respective servants, agents, employees, invitees, licensees or
contractors charging the actual cost thereof to Lessee.
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17. HELIUM BALLOONS: Helium balloons no smaller than 36 inches in diameter are
allowed only when they are anchored to exhibits. Absolutely no helium balloons
shall be permitted for giveaway or sale.
18. SIGNS AND POSTERS: Lessee shall not post or exhibit, or allow to be posted
or exhibited, any signs, advertisements, showbills, lithograph posters or cards
of any description on any part of the premises of the Las Vegas Convention
Center, except upon such space as its made available for such purpose by the
LVCVA, and Lessee will use, post or exhibit only such signs, advertisements,
showbills, lithograph, posters or cards upon said billboards as relate to the
performance or exhibition to be given under this contract and which meet the
approval of the President of the LVCVA, and such approval shall not be
unreasonably withheld.
19. SECURITY/PARKING: Lessee shall be responsible for complete security in all
areas leased, including exhibit areas, meeting rooms, loading dock areas,
emergency exits, from the time of initial occupancy until completion of move-
out. Such services, when required, will be at the expense of the Lessee. All
security arrangements are subject to approval by the LVCVA, and such approval
shall not be unreasonably withheld. Lessee will provide a security placement
plan for stationary or roving posts to the LVCVA Chief of Security at least
thirty (30) days prior to show opening. The LVCVA maintains twenty-four (24)
hour security for protection of building perimeter. Only licensed Nevada
security agencies will be used. The use of voluntary security is not permitted.
The parking facilities, unless specifically leased by the Lessee, shall be under
the direct and exclusive control of LVCVA. The Lessee shall not rely upon the
availability of any parking lot or parking facility.
20. SEATING CAPACITY. Lessee shall not sell or distribute, or permit to be
sold or distributed, tickets or passes in excess of the seating capacity or
authorized occupancy load of the facility or facilities hereinabove described.
Standing room is prohibited. The Lessee shall not admit to the leased premises
a larger number of persons than the seating capacity or authorized occupancy
load thereof will accommodate or can safely or freely move about in said leased
areas. The LVCVA, being charged by law with operation of the Las Vegas
Convention Center, and in doing so, has the right to attend all functions.
Lessee acknowledges this requirement for such seating as may be required by
LVCVA and agrees to honor the same upon request of the President of the LVCVA.
21. CONCESSIONS: Unless otherwise expressly stated to the contrary in this
Lease Agreement, LVCVA reserves the sale and exclusive right to offer for sale
on, in, or about the premises covered by this Lease Agreement, beverages of any
type, food, souvenirs, or other merchandise of any sort, or LVCVA may lease all
concession rights to any party or parties designated by LVCVA. Any concession
rights granted in this Lease Agreement will be subject to existing concession
contracts which exist between LVCVA and third parties. In no event will Lessee,
its sublessees, exhibitors, agents, or guests, bring into the Las Vegas
Convention Center, or any of its facilities, any food, whether prepared or
unprepared, or beverages of any kind whatsoever, including but not limited to
alcoholic
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beverages, without the prior written consent of the President of the LVCVA. This
section is not intended to restrict the free distribution of small quantities of
product samples from a designated exhibit space. All samples distributed must be
manufactured or produced directly by the exhibitor.
22. ACCESS TO PREMISES: The LVCVA reserves for its representatives, agents and
concessionaires, free access and right to enter any portion of the Las Vegas
Convention Center premises. The Las Vegas Convention Center, including the
premises rented hereby and the keys thereof, shall at all times be under the
control of the President of the LVCVA.
23. OBJECTIONABLE PERSONS: The LVCVA, through its President and its agents and
employees, reserves the right to eject any objectionable person or persons from
the Las Vegas Convention Center or any part thereof, if in the sole
determination of LVCVA such objectionable person or persons create a danger to
public health and safety. Upon exercise of this authority by the President of
the LVCVA, its agents or Metropolitan Police, Lessee specifically waives any
right to any claim for damages against the LVCVA for such actions. Every
reasonable effort will be made by the LVCVA to notify the Lessee of any pending
action in regards to any cause to which this section applies.
24. ADVERTISING: Lessee shall not, without the consent of the President of the
LVCVA, distribute or circulate or permit to be circulated or distributed, any
advertising material or program in or about the Las Vegas Convention Center
public areas, including the adjacent parking lots. This section is not intended
to restrict the distribution of normal advertising material or product
informational brochures from a designated meeting area or exhibit space.
Commercial exhibitor advertising will not be allowed in the public areas of the
Convention Center without payment of additional compensation as fixed by the
rental rate sheet promulgated by the LVCVA.
25. FORCE MAJEURE: If the (a) Las Vegas Convention Center or any portion
thereof shall be destroyed or damaged by fire or other calamity so as to prevent
the use of the premises for the purposes and during the periods specified in
this Lease Agreement, or (b) if the use of the premises by Lessee shall be
prevented by act of God, strike, lockout, material or labor restrictions by any
governmental authority, civil riot, flood or any other cause beyond the control
of the LVCVA, then this Lease Agreement shall terminate and Lessee hereby waives
any claim against the LVCVA for damages by reason of such termination except
that any unearned portion of the rent due hereunder shall abate, or, if
previously paid, shall be refunded by LVCVA to Lessee. The LVCVA shall, within
a reasonable time, provide notice to Lessee of any event to which this section
applies.
26. EVACUATION: It is mutually agreed by and between the parties that in the
event the Las Vegas Convention center, or any part thereof, shall be evacuated
by reason of fire, strike, picketing, job action, riot, unruly demonstration,
bombing, bomb threat or other incident or occurrence, actual or threatened, the
Lessee, for itself and for its successors and assigns, shall and does hereby
release the LVCVA and all officials, officers,
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representatives, agents, employees and servants of the LVCVA from any and all
liability for injury, loss of life, loss of or damage to property or other
damage or loss of any nature whatsoever, economic or otherwise suffered or
sustained as a result of such evacuation or direction to evacuate, excepting
liability arising from negligent acts of LVCVA, its officers, employees, and
agents. The lessee, for itself, and for its successor and assigns, hereby
covenants and agrees, in the event of such evacuation or direction to evacuate,
to indemnify and hold harmless the LVCVA, their officials, officers,
representatives, agents, employees and servants from any and all claims that may
be asserted by third persons for injury, loss of life, loss of damage to
property or any damage or loss or any nature whatsoever, economic or otherwise
suffered or sustained as the result of such evacuation or direction to evacuate,
excepting liability arising from negligent acts of LVCVA, its officers,
employees, and agents. Under emergency circumstances, the President of the
LVCVA, or his designee, shall regain complete control of the Las Vegas
Convention Center. Every reasonable effort will be made by the LVCVA to notify
the Lessee of any pending action in regards to emergency evacuation.
27. SCHEDULING AND TIME OF ESSENCE: Unless otherwise specified in writing, the
President of the LVCVA shall be privileged to book similar events within 30 days
from the opening day of the Lessee's show. Time, including without limitation,
time of payment of monies due from Lessee, shall be of the essence of this
Agreement.
28. ACCEPTANCE OF PREMISES: Lessee and LVCVA shall jointly inspect the
Convention Center Premises leased hereby and its equipment prior to move-in to
determine whether the Convention Center is in all respects in proper condition
for the uses contemplated by Lessee. Lessee and LVCVA shall jointly inspect the
Convention Center during move-out to determine whether any changes have occurred
in the condition of the Convention Center and/or its equipment, ordinary wear
and tear excepted, which are directly attributable to Lessee's occupancy and
use.
29. REENTRY RIGHT: Lessee agrees that if the premises or any part thereof
shall become vacant during the said term, the LVCVA or its representatives may
reenter the same either by force or otherwise without being liable for any
prosecution therefore, and may at its option relet the said premises as the
agent of the Lessee and receive the rent therefrom, applying the same first to
payment of such expenses as may be incurred in reentering and reletting said
premises and then to the payment of the rent due by these presents; the surplus,
if any, is to be paid over to the Lessee, and Lessee covenants that charges
herein agreed to be paid remaining after deducting the net rental resulting from
such reletting shall be paid by Lessee. However, nothing herein contained shall
be construed as imposing any obligation on the LVCVA to so relet or attempt to
relet the said premises or in any way affect the obligation of the Lessee to pay
the full amount of said rental in case said premises shall not be so relet.
30. TELEVISION AND BROADCASTING: No artistic performance or sporting event
presented in the Las Vegas Convention Center shall be broadcast or televised or
in any manner recorded for reproduction without an agreement in writing between
the Lessee
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and the LVCVA respecting the times and media of such broadcast, such additional
compensation to the LVCVA as the parties may agree upon and, in any event, upon
the express condition that all expenses pertaining thereto will be prepaid in
advance by the Lessee. This section does not restrict the normal production of
audio or video tapes of meeting or seminar sessions for distribution or resale
to attendees or Association membership.
31. COPYRIGHT AND TRADEMARK INDEMNIFICATION: Lessee warrants and represents
that no music, literary or artistic work or other property protected by
copyright, nor the name of any performing individual or group protected by
trademark will be performed, reproduced or used in the performance of this Lease
Agreement unless the Lessee has previously thereto obtained written permission
from the copyright or trademark holder. Lessee acknowledges that Lessee acts
under this Lease Agreement as an independent contractor, charged with the
responsibility in his sole discretion for selection, performances, reproduction
and use of such musical, literary and artistic works and such individual
performer or group of performers as he deems appropriate and that he undertakes
strict compliance with all laws respecting copyrights (Federal Copyright Law of
1978 - 17 U.S.C. 101) and trademarks and the performance, reproduction and use
of musical, literary and artistic works or the use of the name of the performer
or performing individuals or group. Lessee warrants that in the performance of
this Lease Agreement Lessee will not infringe any statutory or common law or
other right of any person in performing, reproducing or otherwise making use of
any work or material or performer or performing group. Lessee will indemnify,
save and hold harmless the LVCVA and its officers, agents, employees and
servants from and against all claims, costs and expenses, including legal fees,
demands, actions and liabilities of every kind and character whatsoever with
respect to copyright and trademark rights, and the performance, reproduction and
use of musical, literary and artistic works or in the name of performing
individual or group. Lessee authorizes the withholding of payment under this
Lease Agreement pending final disposition of any claim which may result from the
foregoing indemnification.
32. ROYALTIES AND CLAIMS: Lessee agrees to pay when due all royalties, license
fees or other charges accruing or becoming due to any firm, person or
corporation by reason of any music, either live or recorded, or other
entertainment of any kind or nature, played, staged or produced by the Lessee,
its agents, employees, sub-tenants or licensees upon or within the premises
covered by this Lease Agreement, including but not limited to, royalties or
licensing fees due to BMI, ASCAP or SESAC. Lessee agrees to hold harmless the
LVCVA, its agents and employees against any and all such claims and charges, and
to defend, at its own expense, any and all such claims and charges. Lessee
shall have the right, however, to protest and if desired, to litigate and
adjudicate any and all such claims.
33. ASSIGNMENTS/ARBITRATION CLAUSE: Neither this Lease Agreement nor any
rights of the Lessee hereunder may be assigned by Lessee without the consent of
the LVCVA, by and through its President. Any dispute, cause of action or claim
for relief, between the
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LVCVA and Lessee (including any Sublessee ), regarding the terms, enforcement,
interpretation, administration or performance of this Lease shall be submitted
to the Nevada Arbitration Association for binding arbitration pursuant to the
Uniform Arbitration Act as codified in Nevada Revised Statutes 38.010 et. seq.
34. BINDING EFFECT OF LEASE AGREEMENT: All terms and conditions of this Lease
Agreement shall be binding upon the parties, their heirs or representatives and
assigns and cannot be varied or waived by any oral representation or promise or
any agent or other person of the parties hereto unless the same be in writing
and mutually signed by a duly authorized agent or agents of the parties who
executed this Lease Agreement. Lease Agreement must be signed and returned
within Forty-five (45) days from date of issue. Failure to comply will void the
terms and conditions of the Lease Agreement. Any alteration of the terms of
this agreement in any manner will void the Lease Agreement.
35. GOVERNING LAW/MERGER CLAUSE: The parties to this Lease Agreement agree
that the same was entered into in Las Vegas, Clark County, Nevada. This
contract shall be interpreted and enforced under Nevada Law, and this contract
can only be entered and/or interpreted in the State or Federal courts in the
State of Nevada. Lessee, by signing this lease, submits to the jurisdiction of
any and all Nevada Courts. All prior negotiations and understandings are merged
herein and no change or additional agreement shall be of any effect unless in
writing and signed by the party to be changed. This agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous documents or
understandings whether written, oral or implied.
<PAGE>
-14-
IN WITNESS WHEREOF, the parties hereto have hereunto caused these
presents to be signed in their corporate names and capacities, by their duly
authorized officers, this ________________________ and acknowledge that this
Lease has been read in its entirety.
MEN'S APPAREL GUILD IN CALIFORNIA
By: /s/ Joseph Loggia LAS VEGAS CONVENTION AND
_________________________ VISITORS AUTHORITY
By: /s/ Manuel Cortez
_______________________________
MANUEL J. CORTEZ, PRESIDENT
Attest:
____________________________
<PAGE>
Exhibit 10.11
CONTRACT #98-021-A
------------------
SANDS
- --------------------------------------------------------------------------------
EXPO AND CONVENTION CENTER
- --------------------------------------------------------------------------------
201 E. SANDS AVENUE, LAS VEGAS, NV 89109 . 702-733-5556 . Fax 702-733-5353
SHOW NAME: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
FACILITIES RENTAL AGREEMENT
This agreement made and entered into this 25th day of September, 1996 by and
---- ---------------
between INTERFACE GROUP - NEVADA, INC. (hereinafter "Licensor") and MEN'S
APPAREL GUILD IN CALIFORNIA (MAGIC) (hereinafter "Licensee"). The Sands Expo and
Convention Center (hereinafter the "Facilities") is located at 201 E. Sands
Avenue, Las Vegas, Nevada. The Facilities are owned by Las Vegas Sands, Inc., a
Nevada corporation, with offices at 3355 Las Vegas Boulevard South, Las Vegas,
Nevada (hereinafter "Owner"). The Licensor has master-leased the Facilities from
Owner and is the sole operator of the Facilities with the exclusive right to
license the use of the exhibition and convention space in the Facilities. The
Licensor and Licensee agree as follows:
ARTICLE I - BASIC LICENSE PROVISIONS
SECTION 1.1 INTRODUCTION. The following sets forth basic data and, where
appropriate, constitutes definitions of the terms hereinafter listed.
SECTION 1.2 BASIC DATA.
Date of Agreement: SEPTEMBER 25, 1996
------------------
Licensee: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
Licensee's Address: 6200 CANOGA AVE., #303
----------------------
WOODLAND HILLS, CA 91367
-------------------------
Guarantor:
Authorized Area: The space licensed is as listed: HALLS "A", "B", AND "C"
-----------------------
FOURTEEN (14) MEETING ROOMS
---------------------------
<PAGE>
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which is (a portion)/(all) of the exhibition and convention space at the
Facilities. The Licensee shall also have the non-exclusive right to use in
common with others, public or common lobbies, hallways, stairways and walkways
designated by Licensor and necessary for access to the Authorized Area; but such
rights shall always be subject to the rules and regulations from time to time
established by the Licensor pursuant to Section 9.4 and to the right of the
Licensor to divide, designate or change from time to time those common areas to
be used.
The foregoing notwithstanding:
(i) The Licensor shall not permit any person to utilize the common areas other
than for legitimate business dealings between the person and the Licensor;
(ii) The Licensor shall not permit any person to utilize or occupy any of the
common areas for any purpose which may have the effect of interfering with the
Licensee's ability to conduct the event(s) for which it has licensed the
Facilities, and;
(iii) The Licensor shall, upon request of the Licensee, take all reasonable
steps to remove any person(s) from the common areas who are interfering with the
Licensee's ability to conduct the event(s) for which it has licensed the
Facilities at the request of the Licensee.
Purpose and Use of Authorized Area: The Authorized Area shall be used solely
for the purpose of EXHIBITS, MEETINGS, FASHION SHOWS, FOOD AND BEVERAGE
----------------------------------------------------
FUNCTIONS AND ALL OTHER ACTIVITIES ANCILLARY TO THE MEN'S APPAREL GUILD IN
- --------------------------------------------------------------------------
CALIFORNIA (MAGIC) TRADE SHOW (hereinafter referred to as the "Event").
- -----------------------------
License Period: The license is granted commencing at 12:01 o'clock AM on AUGUST
------
27, 1998 and ending at 11:59 o'clock PM on SEPTEMBER 5, 1998 including the
- -------- -----------------
following periods designated for:
<TABLE>
<S> <C> <C>
(a) Move In - A period from: 12:01 AM AUGUST 27, 1998 to 11:59 PM AUGUST 30, 1998
--------------- ---------------
(b) Show Period - A period from: 12:01 AM AUGUST 31, 1998 to 11:59 PM SEPTEMBER 3, 1998
--------------- -----------------
(c) Move Out - A period from: 12:01 AM SEPTEMBER 4, 1998 to 11:59 PM SEPTEMBER 5, 1998
----------------- -----------------
</TABLE>
Time is of the essence of this Agreement.
Hours of Operation: T.B.D.
------
<PAGE>
-3-
Exhibition Area(s): T.B.D.
------
Meeting Room(s): T.B.D.
------
Basic Fee and Payment: Licensee agrees to pay Licensor as the Basic Fee for the
use of Authorized Area the minimum sum of $612,500.00. A final count of the net
-----------
square footage of exhibition space used by Licensee shall be taken on SEPTEMBER
---------
1, 1998. Should the net square footage used exceed 250,000 square feet, the
- ------- -------
Licensee shall be billed at $.175 per net square foot for each square foot in
-----
excess of 250,000 square feet for move-in and move-out days, and $.35 per net
------- ----
square foot for each such square foot actually used for displays for Show Days
as additional Basic Fee. The Licensee shall pay the sum of $122,500.00 upon
----------- ----
signing this License Agreement as a Reservation Fee to reserve the dates
- -------
licensed hereunder and to be credited against the Basic Fee. The balance of the
Basic Fee shall be paid as follows:
$245,000.00 on AUGUST 27, 1997, and $245,000.00 on FEBRUARY 27, 1998 paid by
- ----------- --------------- --------------- -----------------
check payable directly to Sands Expo and Convention Center, or by wire transfer.
Additional Fees: In addition to the Basic Fee (including Reservation Fee), the
Licensee shall pay the following Additional Fees: $400.00 PER MEETING ROOM, PER
-----------------------------
DAY.
- ---
Security Deposit: The Licensee shall pay $5,000.00 on JULY 27, 1998 to be held
--------- -------------
thereafter by the Licensor as Security Deposit pursuant to the provisions of
Article V.
Additional Insureds and Indemnities: In accordance with Article VI, the
Additional Insureds and Indemnities are: LAS VEGAS SANDS, INC., INTERFACE GROUP
- - MASSACHUSETTS, INC., AND INTERFACE GROUP - NEVADA, INC.
<PAGE>
-4-
ARTICLE II - LICENSE AND USE OF AUTHORIZED AREA
SECTION 2.1 LICENSE OF AUTHORIZED AREA. The Licensor hereby licenses the use
by the Licensee of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement
and only for the hours of operation indicated herein and the Licensee hereby
agrees to the use of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement.
SECTION 2.2 PROHIBITED USES. The Licensee shall not use or allow the
Facilities or Authorized Areas therein to be used for any purpose not set forth
in Article 1; for any improper, immoral, objectionable or unlawful purposes, in
any manner which could cancel the insurance or increase the rate of insurance on
the Facilities; in any manner which constitutes waste or nuisance; in any manner
which causes damage to the Facilities, including, without limiting the
generality thereof, driving any nails, hooks, tacks, screws or other devices
into any part of the Facilities or affixing any matter thereto by paste, tape or
other adhesive or altering the Facilities in any respect without the prior
written approval of Licensor; or in violation of the Facilities Rules and
Regulations as such may exist from time to time. The propriety or morality of
any use of the Facilities or Authorized Area by the Licensee shall be determined
in light of the community standards and based on the reasonable good faith
assessment of the Licensor after consultation with the Licensee.
SECTION 2.3 DEVELOPMENT OF PLAN OF OPERATION UNDER LICENSE. The Licensee
shall provide the Licensor, at least ninety (90) days prior to the beginning of
the License Period, all information then reasonably available to the Licensee
pertinent to the activities to be undertaken in the Authorized Area pursuant to
the License (herein "plan of operation"), including but not limited to:
(i) Floor plans. (4 copies) indicating the design, nature and proposed
location of all exhibits and meeting space;
(ii) Utility and construction plans, including plans of all intended rigging;
(iii) All certificates of insurance required hereunder;
(iv) A security plan indicating the number, hours, and location of required
security personnel;
(v) Copies of all license applications for licenses required by the Licensee
for the purposes and uses of the Authorized Areas set forth in Article 1;
(vi) Copies of all approvals obtained from the Fire Marshal and other municipal
agencies required by the Licensee before using the Authorized Areas for the
purpose set forth in Article 1;
(vii) Such other information as the Licensor may reasonably request.
The Licensor reserves the right, by written notice to the Licensee within twenty
(20) days of the receipt of the plan of operation, to require the Licensee to
make such changes, deletions, and additions to the plan of operation as the
Licensor may reasonably deem necessary or desirable for the purpose of insuring
the safe and orderly operation of the Facilities and the Authorized Area.
Failure by the Licensee to make any such changes, additions, or deletions
required by the Licensor within ten (10) days after such notice shall constitute
an Event of Default as set forth in Article VIII.
<PAGE>
-5-
SECTION 2.4 LICENSOR'S CONTROL AND RIGHT OF ENTRY. In permitting use of the
Authorized Areas by the Licensee, the Licensor retains and does not relinquish
the right to issue and enforce such rules, regulations and directives as it may
deem necessary for the safe, orderly and commercially sound operation of the
Facilities. The Licensor and its authorized representatives may enter the
Authorized Area after giving prior notice to Licensee, for the purpose of
inspecting and checking the same and the uses thereof; of making necessary
repairs thereto; adjusting apparatus or equipment therein; of abating waste,
nuisances or violations of law or Rules and Regulations promulgated by the
Licensor; of preparing food or readying other concessions; and of ejecting any
objectionable person or persons from therein. The Licensee agrees that it will
not allow any person at, in or about the Facilities who shall, upon reasonable,
non-discriminatory grounds, be objected to by the Licensor and such person's
right to use the Facilities and the Authorized Area therein may be revoked by
the Licensor.
ARTICLE III - PAYMENT OF FEES, COSTS, CHARGES AND DEPOSITS
SECTION 3.1 The Licensee shall (in addition to the Basic Fee including
Reservation Fee) pay when due all Additional Fees, Additional Charges and
Security Deposit to the Licensor at 201 E. Sands Avenue, Las Vegas, Nevada 89109
by check payable directly to Sands Expo and Convention Center, or by wire
transfer.
SECTION 3.2 The Licensee shall pay to the Licensor all Basic Fees including
Reservation Fees, and Additional Fees as set forth in Article I and Article IV.
Additional Charges, as set forth in Article VII and Article VIII, shall be paid
within thirty (30) days after being billed therefore to Licensor subject to the
provisions of Section 3.4 and with pre-approved credit from the Licensor.
SECTION 3.3 All monies paid to the Licensor by the Licensee, including the
Reservation Fee, Basic Fee, Additional Fee, Security Deposit and Additional
Charges are non-refundable, except as specifically provided in this Agreement.
Licensee acknowledges that all deposits are not refundable and that payments
made pursuant to the liquidated damage provisions set forth in Section 8.6 are
fair and reasonable consideration for Licensor's holding the Authorized Areas
for the dates indicated for the exclusive use of Licensee and rendering the same
unavailable for others. The Licensor shall have no obligation to the Licensee to
pay interest on any fees or deposits, and the Licensor shall have the right to
commingle such monies with the Licensor's other funds.
SECTION 3.4 Any payment required hereunder not paid when due shall bear
interest at the rate of eighteen (18%) percent per annum from the date due and
shall be payable forthwith on demand by the Licensor. This right to collect
interest does not preclude the Licensor from asserting any other rights against
the Licensee, including, but not limited to, those set forth in Article VIII.
Notwithstanding the foregoing, interest, should not be due on any amounts
Licensee reasonably claims to be in dispute; provided, however, that Licensee
pays all undisputed amount when due.
<PAGE>
-6-
ARTICLE IV - SERVICES PROVIDED TO AND BY LICENSEE
SECTION 4.1 SERVICES PROVIDED BY LICENSOR FOR BASIC FEE. The Licensor shall
provide, during the show period's hours of operation, without cost to the
Licensee, heating, ventilating and air conditioning, permanent overhead
lighting, permanent public address system, as available, restroom facilities and
janitorial services consisting of cleaning of common areas. During move-in and
move-out periods, Licensor shall provide only sufficient work lighting in
Authorized Areas and janitorial services in common areas only.
SECTION 4.2 CONTRACTUAL SERVICES NOT INCLUDED IN BASIC FEE. For all
services, other than those set forth in Section 4.1 which are the only services
covered by the Basic Fee, Licensee agrees that it will, and will require all of
its exhibitors and other invitees to, utilize Contractual Services either
provided directly by Licensor or by an Authorized Contractor of Licensor. For
purposes of this Agreement "Contractual Services" means the labor, equipment,
utilities and materials whether sold, rented, or otherwise provided which are
required to set up, maintain, protect and remove displays, exhibits, and other
items which are constructed or brought into the Facilities as part of the Event
and all related services which customarily are utilized by Licensee, its
exhibitors or other invitees when holding or participating in the Event. For
purposes of this Agreement, "Authorized Contractor" means those persons who
having received the prior written approval of Licensor will be permitted to
provide Contractual Services at the Facilities. Those Contractual Services which
must be provided by Licensor and not by an Authorized Contractor ("Exclusive
Contractual Services") include:
(i) Electrical wiring and services;
(ii) Plumbing, as and compressed air services;
(iii) Telephone systems wiring, services and operation;
(iv) General cleaning and maintenance of Authorized Areas, and trash collection
and disposal.
Licensee shall pay Licensor for Exclusive Contractual Services at the rates
which are attached hereto on "Exhibit CS." Or, if no such Exhibit is attached,
or if a service is provided for which no rate is stated, then Licensee shall pay
Licensor at a rate to be agreed upon. Licensee shall provide Licensor with
notice of the Exclusive Contractual Services it requires when it files its plan
of operation in accordance with Section 2.3. Authorized Contractors shall bill
Licensee directly at rates agreed to by them and payment shall be made directly
to the Authorized Contractor. All bills for Contractual Services rendered by
Licensor or Authorized Contractors to Licensee's exhibitors or invitees shall be
rendered to and paid directly by the exhibitor or invitee. Licensor shall be
under no obligation to provide a Contractual Service unless it or an Authorized
Contractor is reasonably capable of providing the service. No Contractual
Services shall be utilized or employed by Licensee except as provided in this
Section 4.2 or as approved in advance in writing by Licensor. To facilitate
Licensor's provision of Contractual Services hereunder, Licensee is requested to
provide Licensor, at least 120 days prior to the beginning of the License
Period, with a list of all exhibitors or other invitees planning to use the
Authorized Areas during the License Period, with the business address, telephone
number and name of the appropriate person to be contacted at each such exhibit.
SECTION 4.3 SECURITY OF FACILITIES.
<PAGE>
-7-
(a) The Licensor shall neither be responsible for any property brought into the
Facilities by the Licensee or any person claiming under the Licensee, nor be
obligated to watch, guard or protect the same; nor shall the Licensor be liable
for any failure to do so by any guard, watchman or protection service employed
by the Licensor or by any guard, watchman or protection service contracted for
by the Licensee.
(b) After reviewing Licensee's plan of operation, Licensor and Licensee shall
jointly determine the minimum number of security guards reasonably necessary to
preserve order and to protect persons and property during the License Period.
(c) Except by arrangement with the Licensor and/or its designated security
guard service provider, no guard, watchman or protection service shall at any
time be stationed in the Facilities by the Licensee or any other person claiming
thereunder; and except by such arrangement, no person shall be allowed in or
remain in the Facilities after it has closed.
SECTION 4.4 REGISTERED NURSE OR OTHER MEDICAL PERSONNEL. The Licensee shall
maintain at the Facilities at all times during the show period a registered
nurse or other medical personnel (at Licensor's direction), fully licensed as
such in the State of Nevada. The Licensee shall, at its expense, contract with
the Licensor's exclusive service provider for such services.
SECTION 4.5 CONCESSIONS AND CATERING. The Licensor reserves, and at all
times shall have, the sole right to operate or have operated in its behalf all
commercial enterprises, including all concessions, bars and catering operations
and to sell or otherwise provide flowers, food, refreshments, beverages, cigars,
cigarettes, candies and periodicals, and to grant concessions to designated
airlines, auto rentals, delivery services and others. The Sands Expo and
Convention Center and the adjoining hotel complex, to be named at a later date,
offer a full range of food, beverage, function, and hospitality services both at
the Facilities and the Hotel. Licensee agrees to designate the Hotel as an
official headquarters location in all pre-show direct mail and advertising where
hotel accommodations are discussed and/or listed, and to use the Licensee's best
efforts to assist Licensor in its solicitation of Licensee's exhibitors and
invitees for their food, beverage, function, and hospitality business.
SECTION 4.6 ADVERTISEMENTS, POSTERS AND MARQUEE. The Licensee agrees not to
post or exhibit or allow to be posted or exhibited signs, advertisements, show-
bills, lithographs, posters, or cards of any description (herein "signage") in
any area of the Facilities other than within the Authorized Areas except with
the prior approval of the Licensor. If such approval is granted by Licensor,
Licensee shall pay the Additional Fee as set forth on Exhibit CS. Any signage to
be posted or exhibited in any area of the Facilities other than the Authorized
Areas shall be upon the regular billboards, if any, provided by the Licensor
therefore. The Licensee will use, post or exhibit only such signage as it
related to the Event in the Authorized Areas and during the hours for which this
License was granted and for such period of time designated by the Licensor.
SECTION 4.7 USE OF LICENSOR'S EQUIPMENT. Any equipment provided by the
Licensor to the Licensee which requires an operator or technician, such operator
or technician may, if required by the Licensor, be supplied by it to operate
such equipment, and the Licensee shall pay for such equipment and technician or
operator the amount set forth on Exhibit CS.
<PAGE>
-8-
ARTICLE V - SECURITY DEPOSIT AND PERFORMANCE BOND OR GUARANTY
SECTION 5.1 SECURITY DEPOSIT. With respect to the Security Deposit specified
in Article I, the Licensee agrees that the same will be paid on the date set
forth in Article I, and that the Licensor shall hold the same throughout the
License Period as security for the performance by the licensee of all
obligations on the part of the Licensee hereunder. The Licensor shall have the
right from time to time, without prejudice or any other right or remedy the
Licensor may have hereunder or by law, to apply, without notice to the Licensee,
such deposit, or any part thereof, to the Licensor's damages arising from any
Event of Default caused by the Licensee or to pay any of the Licensee's
obligations for any of the Exclusive Contractual Services contracted for by the
Licensee pursuant to Article IV. If the Licensee is not in default under this
Agreement at the time of final accounting, the Licensor shall return the
Security Deposit, or so much thereof as shall not theretofore have been applied
in accordance with the terms of this Section 5.1, to the Licensee.
SECTION 5.2 PERFORMANCE BOND OR GUARANTY. Upon request by the Licensor, the
Licensee shall furnish to the Licensor a performance bond or sufficient guaranty
in substance and amount determined by Licensor.
ARTICLE VI - INSURANCE, INDEMNIFICATION AND WAIVER OF SUBROGATION
SECTION 6.1 INSURANCE.
(a) The Licensee shall provide and keep in force during the License Period the
following insurance (in addition to any other insurance Licensor may deem
necessary):
(i) Workers' compensation insurance in accordance with Nevada Law covering
Licensees' employees.
(ii) Employer's Liability insurance for Nevada operations in minimum limits of
One Million Dollars ($1,000,000) per occurrence.
(iii) Commercial General Liability insurance including blanket contractual
liability and personal injury coverage with limits of Liability of at least One
Million Dollars ($1,000,000) in any one occurrence.
(iv) Comprehensive Automobile Liability insurance insuring any owned, non-
owned, and hired vehicles to be used in and out of the "Facilities" in the
amount of One Million Dollars ($1,000,000) in any one occurrence.
All insurance required shall be issued by companies authorized to do business in
the State of Nevada. Licensee shall have completed by its insurance agent the
Certificate of Insurance provided by Licensor and/or separate certificates for
Nevada Workers' Compensation. Licensee shall deliver such completed certificates
of insurance to Licensor at least ninety (90) days prior to the beginning of the
License Period. All required insurance policies shall name as additional insured
those entities set forth in Article 1 as "Additional Insureds and Indemnities".
All required insurance policies shall provide that (i) the insurance carrier
will give written notice to Licensor at least thirty (30) days prior to any
material change in, cancellation, or non-renewal of the policy. Licensee's
failure to provide such certificates or policies, as the case may be, within the
period specified herein shall constitute a breach of the Licensee's duties and
obligations hereunder.
<PAGE>
-9-
(b) The Licensee shall obtain and maintain during the License Period insurance
policies on all personal property owned, leased or hired or in the care, control
or custody of the Licensee during the License Period. Such policies shall
provide coverage for "all risks," including earthquake, flood and theft, with a
deductible per loss of not more than $1,000.00.
SECTION 6.2 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT.
(a) The Licensee hereby releases and discharges and indemnifies, and agrees to
keep indemnified, defend, protect and save harmless the Licensor and those named
Additional Indemnities set forth in Article I (herein "Indemnities") of and from
any and all claims, demands, liabilities, damages, costs, losses and expenses
(including attorneys' fees) for any injury to, including death (whether they be
third persons or employees of either the Licensor or Licensee) and any loss
(through theft or otherwise) of or damage to property (whether it be that of the
Licensor or the Licensee or a third person) caused by, growing out of, or
happening in connection with or with respect to the use by the Licensee, or of
any other person or legal entity with the permission (express or implied) of the
Licensee, of the Facilities or its equipment. Such indemnification by the
Licensee shall apply unless such damage or injury results from the sole
negligence, gross negligence or willful misconduct of the Licensor or any person
contracted or hired by Licensor to perform Exclusive Contractual Services.
(b) Without limiting the foregoing, the Licensee assumes all costs and expenses
arising from the use of patented, trademarked, or copyrighted materials,
equipment, devices, processes, or dramatic rights used during or incorporated in
the conduct of its operation hereunder; and the Licensee agrees to indemnify and
hold harmless the Indemnities from all damages, costs and expenses at law or for
equitable relief for or on account of any patented, trademarked or copyrighted
materials, equipment, devices, processes or dramatic rights furnished to or used
by the Licensee or its exhibitors, or any infringement with respect thereto in
connection with this License, including the costs and expenses in defending any
such action, even if it be groundless or fraudulent.
(c) Without limiting the foregoing, the Licensee shall also indemnify and save
harmless the Indemnities from all claims, demands, liabilities, damages, costs,
losses and expenses made against or incurred by any of the Indemnities arising
out of injury or loss to third parties caused by Licensee's failure to return
the Authorized Area to the Licensor, vacate the Facilities, relinquish the
Licensor's or Authorized Contractor's equipment at the end of the License
Period, or Licensee's breach of any contract or agreement with a third party to
provide contractual or other services.
SECTION 6.3 WAIVER OF SUBROGATION. The Licensee hereby waives any and every
claim which arises in its favor and against the Licensor, against any of the
Additional Indemnities set forth in Article I, for any and all loss or damage
covered by valid and collectible insurance policies to the extent of the
insurance proceeds paid with respect thereto. Such waiver shall be in addition
to, and not, in derogation of, any other waiver or release contained in this
License with respect to any loss or damage to property of the Licensees.
Inasmuch as the waiver will preclude the assignment of any aforesaid claim by
way of subrogation (or otherwise) to an insurance company (or any other person),
the Licensee shall notify its insurers of such waiver.
<PAGE>
-10-
ARTICLE VII - LICENSEE'S OBLIGATION AT END OF LICENSE PERIOD
SECTION 7.1 RETURN OF AUTHORIZED AREA. At the end of the License Period, the
Licensee shall vacate the Facilities and return the Authorized Area and the
Licensor's equipment to the Licensor, all in the same broom clean condition and
repair as originally furnished to the Licensor, normal wear and tear excepted.
At such time, the Licensee shall remove completely from the Facilities all
goods, wares, merchandise and property of any and all kinds and description
placed therein (herein "Property").
SECTION 7.2 REPAIR OF AUTHORIZED AREA. The Licensee agrees that if the
Authorized Area, or any other part of the Facilities, shall be damaged by the
act, default or negligence of the Licensee, or the Licensee's agents, employees,
patrons, guests or invitees, the Licensee will pay to the Licensor upon demand
such sum as shall be necessary to restore said areas to their present condition
at the commencement of the License Period. The Licensee hereby assumes full
responsibility for the character, acts and conduct of all persons acting for or
on behalf of said Licensee.
SECTION 7.3 FAILURE TO RETURN THE AUTHORIZED AREA OR VACATE THE FACILITIES.
In the event the Licensee shall fail to return the Authorized Area to the
Licensor or to vacate the Facilities in accordance with the provisions of
Section 7.1, the Licensor is authorized, at the Licensee's expense, to remove
therefrom and to store or return to the Licensee or, except where the Licensee's
failure to do so is caused by an event beyond the Licensee's control, such as a
strike beyond its control, a national emergency or an Act of God, to treat the
same as abandoned and discarded property and accordingly dispose of the
Property. The Licensor shall not be liable for any damages or loss to the
Property which may be sustained either in the course of such removal or in the
course of storage, or in the course of transit, or by virtue of the Licensor's
disposal of the Property and the Licensor is hereby expressly released from any
and all such claims for damages of whatsoever kind or nature. The Licensor shall
be under no duty, however, to so remove, store or return the Property.
SECTION 7.4 EXTENDED USE CHARGE. The Licensee shall pay an Extended Use
Charge equal to twice the per diem Basic Fee applicable to Short Days for each
day or portion of a day after the end of the License Period that the Licensee
has failed to return all or any part of the Authorized Area to the Licensor and
vacate the Facilities in accordance with the provisions of Section 7.1, unless
said failure is caused by any of the following events, to the extent that such
event is beyond the Licensee's reasonable control: fire, flood, riot,
earthquake, civil commotion or Act of God. The liability to pay an Extended Use
Charge does not in any way extend the License Period; is not liquidated damages;
intended as a penalty against the Licensee for use of the Facility or the
Authorized Area beyond the License Period; and does not preclude the Licensor
from asserting any other rights against the Licensee, including, but not limited
to, those set forth in Section 7.3 and Article VII. The Extended Use Charge is
due and payable at the end of each day for which the Charge is assessed.
SECTION 7.5 FAILURE TO COMPLY LIST. Licensor and Licensee shall conduct a
walk through of the Authorized Area within forty-eight (48) hours of the end of
the License Period for the purpose of
<PAGE>
-11-
preliminary identifying any failure of the Licensee to comply with the
provisions of Section 7.1. In addition, Licensor shall provide to Licensee a
final, comprehensive and complete list of Licensee's failure(s) to comply with
the provisions of Section 7.1 no later than the earlier of the following:
(i) Seven (7) days after the end of the applicable License period, or;
(ii) The commencement of any use of the hall or any portion of the Authorized
Area by any person other than the Licensee. The Licensee shall not be
responsible for any alleged non-compliance with Section 7.1 not specifically
identified in the list.
ARTICLE VII - DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
be considered an "Event of Default":
(a) The Licensee shall fail to pay in full and when due any payment required
hereunder, whether said payment was required to be paid to the Licensor or any
Authorized Contractor;
(b) The Licensee shall fail to pay promptly any sales, use, excise or other
taxes when due or fail, upon request of the Licensor, to provide evidence of the
same to the Licensor;
(c) The Licensee shall fail to obtain or pay for any and all necessary permits
and licenses, including union or trade organization clearance and Fire Marshal
approvals, when and where required, or fail, upon the Licensor's request, to
provide evidence of such permits or license to the Licensor;
(d) Any other default or breach of any covenant or agreement contained herein
including the specific duty to provide evidence of insurance coverage as
provided in article VI.
(e) the Licensee shall make an assignment for the benefit of creditors or shall
file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, State or other statute,
law or regulation for the relief of debtors, shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of the
Licensee or of all or any substantial part of its properties, or shall admit in
writing its inability to pay its debts generally as they become due;
(f) A petition shall be filed against the Licensee in bankruptcy or under any
other law seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief.
(g) Licensee shall materially diverge from the plan of operation without the
prior written consent of Licensor.
SECTION 8.2 LICENSOR'S REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence
of any of the Events of Default set forth in Section 8.1 elsewhere in this
Agreement which default continues for a period of five (5) days after written
notice from Licensor specifying the nature of such default, Licensor may
exercise any and all of the following:
(a) accelerate payment of the Basic Fee;
(b) require that Licensor give additional security for Licensee's performance
of its obligations;
(c) declare this Agreement terminated and revoke the license given hereby;
<PAGE>
-12-
(d) enter and take exclusive possession of and remove all persons and property
from the Authorized Areas and the Facility;
(e) assert and enforce claims against any bond provided under this Agreement,
or
(f) refuse to commence, or discontinue the rendition of all services or
utilities to Licensee and the Authorized Areas.
Licensee waives any right it may have as to notice or hearing prior to the
exercise of the powers set forth above. The rights and remedies of Licensor
shall be cumulative, and none shall exclude other rights or remedies allowed by
law or at equity, or set forth in other sections of this Agreement.
SECTION 8.3 REMEDYING DEFAULTS. The Licensor may, but shall not be required
to, pay such sums or to do any act which requires the expenditure of monies or
services which may be necessary or appropriate by reason of the failure or
neglect of the Licensee to perform any of the provisions of this License. In the
event of the exercise of such right by the Licensor, the Licensee agrees to pay
the License forthwith upon demand all sums expended by the Licensor (or the fair
value thereof, whichever is greater), together with interest there at the rate
of eighteen (18%) percent per annum, as an Additional Charge.
SECTION 8.4 TERMINATION WITHOUT DEFAULT. In the event that the Authorized
Area or the Facilities of which is a part or any portion thereof are destroyed
or damaged by fire or other casualty so that in the reasonable judgment of the
Licensor its or the Licensee's use thereof would be substantially interfered
with, or in the event of a taking of all or a portion of the Facilities by
eminent domain, condemnation or foreclosure, then the Licensor may terminate
this Agreement upon giving to the Licensee notice of termination not more than
ninety(90) days following the event of destruction, damage or taking and this
Agreement shall terminate on the date set forth in such notice of termination,
all with the same force and effect as though the License Period of this
Agreement had originally been scheduled to expire on such date, and Licensor
shall return to the Licensee all monies theretofore paid by the Licensee to the
Licensor as a Security Deposit, Reservation Fee, Basic Fee, or Additional Fee.
SECTION 8.5 RIGHT TO RE-ENTER. If this License shall have been terminated as
provided in this Article, or if any execution or attachment shall be issued
against the Licensee or its Property whereupon the Authorized Area shall be
taken or occupied by someone other than the Licensee, then the Licensor may,
without notice, re-enter the Authorized Area, without being liable for any
prosecution thereof, and remove the Licensee and all other persons and any and
all property from the same, as if the License was not in effect.
SECTION 8.6 LIQUIDATED DAMAGES. The parties agree that, if the Licensee
shall cancel the Event covered by this License, the damages that would be
suffered by the Licensor, including all of the ancillary revenues that would be
lost, are presently difficult to estimate and therefore in case of such
cancellation, the Licensor shall retain or the Licensee shall pay to the
Licensor, as the case may be, the Reservation Fee, the remainder of the Basic
Fee set forth in Article I and any Additional Fees and Additional Charges, all
as liquidated damages and not as penalty.
<PAGE>
-13-
SECTION 8.7 LIENS. To secure the Licensee's obligation hereunder, Licensee
hereby grants the Licensor the first right of lien against all ticket office
receipts and Property of the Licensee hereunder. The Licensor is empowered to
withhold from ticket office receipts such amount is outstanding and owed by the
Licensee hereunder. If the total ticket office receipts are insufficient to
cover such unpaid amounts the Licensor shall have the right to impound the
Licensee's Property at the Facilities, or elsewhere, at the Licensee's expense.
If such unpaid amounts remain unpaid for a period of ten (10) days after the
termination of this License, the Licensor shall have the right to sell the
impounded Property at public auction and to apply the cash proceeds from the
auction less its cost, including attorneys' fees, to the retirement of said
unpaid amounts.
SECTION 8.8 ACTIONS. Any actions by one party to this License against
another arising hereunder shall be maintained in the State of Nevada; and the
Licensee hereunder consents to same and to the maintenance of such action by the
Licensor against it in said State of Nevada.
SECTION 8.9 CUMULATIVE REMEDIES. All rights, powers and privileges contained
hereunder upon the Licensor shall be cumulative and shall not be restricted to
those given by law.
SECTION 8.10 FORCE MAJEURE. In the event that the Licensor's obligations to
the Licensee under this Agreement be delayed, prevented rendered impractical by
any of the following events: fire, flood, riot, earthquake, civil commotion,
strike, lockout, labor disturbance, explosion, sabotage, accident, war, other
casualty, Act of God, or any law, ordinance, rule or regulation which becomes
effective after the date of this License or any other cause beyond Licensor's
reasonable control the Licensor shall not be liable to the Licensee for such
delay or failure to perform. The Licensee hereby waives any claim for damages or
compensation for such delay or failure to perform, other than a return to it of
any monies paid directly to the Licensor, but no other.
SECTION 8.11 DEFAULT BY LICENSOR. If the Licensor fails or refuses to make
the Facilities and/or the Authorized Areas available to the Licensee on the
dates set forth in this Agreement for any reason other than those specified in
Section 8.4 and 8.10 above, then, in addition to any claims, rights or remedies
the Licensee may have, the Licensor shall return to the Licensee all monies paid
to the Licensor along with interest on those monies at the rate of eighteen
percent (18%) per annum from the date the monies were remitted to the Licensor.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 9.1 NON-DISCRIMINATION. The Licensee shall not discriminate against
any person or persons in connection with admission, service or privileges
offered to or enjoyed by the general public because of race, creed, ancestry,
sexual orientation, disability, color, sex, marital status, age, religion or
national origin.
SECTION 9.2 RULES AND REGULATIONS. The Liensor's Rules and Regulations are
hereby incorporated into this Agreement by reference. Copy of such Rules and
Regulations have been provided to the Licensee and the Licensee hereby
acknowledges receipt thereof. The License reserves the right to change such
Rules and Regulations in writing from time to time and will
<PAGE>
-14-
provide the Licensee with such changed Rules and Regulations which shall be
binding upon the Licensee. If there is at any time a conflict between the
provisions of this Agreement and the Rules and regulations, the provisions of
this Agreement shall control.
SECTION 9.3 WAIVER. The failure of either party hereto at any time or times
to require performance of any provisions hereof shall in no manner affect its
right at a later time to enforce the same provision. Any waiver by any party or
the breach of any provision contained in the Agreement in any one or more
instances shall not be deemed to be a waiver of any other breach of the same
provision or any other provision contained herein.
SECTION 9.4 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered by customary
overnight delivery service, or if sent by certified or registered mail, postage
prepaid, to the Licensor or the Licensee, as the case may be, at the address set
forth for each in Article I of this Agreement or to such other address as any
party shall have provided to other parties from time to time in accordance with
the provisions of this Section 9.5.
SECTION 9.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereto
and supersedes all proposals, negotiations and understandings of any nature
whatsoever. This Agreement may be changed or amended only by a written
instrument duly signed by all of the parties hereto. This agreement must be
signed by Licensee and returned within thirty (30) days from the date of
Agreement set forth in Article I. If not so returned to Licensor this Agreement
shall, at Licensor's option rendered null and void. In any event, this Agreement
shall not be enforceable until signed by Licensor.
SECTION 9.6 BINDING EFFECT, ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representative, successors and assigns. This Agreement or any rights
hereunder may not be assigned by the Licensee without the express written
consent of Licensor, which consent will not be unreasonably withheld.
SECTION 9.7 CAPTIONS. The captions of the several provisions of this
Agreement have been inserted for convenience only and do not constitute a part
of this Agreement.
SECTION 9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed wholly within such state.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
SECTION 9.10 SIGNATURES. If you are in agreement with the contents of this
contract, please sign on the space indicated and return January 15, 1997. If not
executed and returned by said date, this offer shall automatically terminate.
Space is confirmed on a definite basis ONLY after
<PAGE>
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receipt of this agreement signed by you and counter-signed by the Convention
Center General Manager.
IN WITNESS WHEREOF, the Licensor and Licensee have caused this agreement to be
duly executed under seal by persons hereunto duly authorized, as of the Date of
Agreement set forth in Article 1.
LICENSOR: LICENSEE:
INTERFACE GROUP - NEVADA, INC. MEN'S APPAREL GUILD IN CALIFORNIA
(MAGIC)
/s/ Richard Heller /s/ Joseph Loggia
By:________________________________ By:_________________________________
RICHARD HELLER, JOE LOGGIA, PRESIDENT,
V.P./GENERAL MANAGER CHIEF OPERATING OFFICER
1/15/97 1/8/97
DATE:______________________________ DATE:_______________________________
<PAGE>
EXHIBIT 10.12
CONTRACT # 99-008D
-------
SANDS
EXPO
================================================================================
201 EAST SANDS AVENUE , LAS VEGAS, NEVADA 89109 . 702-733-5556
SHOW NAME: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
FACILITIES LICENSE AGREEMENT
This agreement date and entered into this 5TH day of SEPTEMBER, 1997 by and
--- ---------------
between INTERFACE GROUP - NEVADA, INC. (hereinafter "Licensor") and MEN'S
APPAREL GUILD IN CALIFORNIA (MAGIC) (hereinafter "Licensee"). The Sands Expo
and Convention Center (hereinafter the "Facilities") is located at 201 E. Sands
Avenue, Las Vegas, Nevada. The facilities are owned by Interface Group -
Nevada, Inc. a Nevada corporation, with offices at 201 E. Sands Avenue, Las
Vegas, Nevada (hereinafter "Owner"). The Licensor and Licensee agree as
follows:
ARTICLE 1 - BASIC LICENSE PROVISIONS
SECTION 1.1 INTRODUCTION. The following sets forth basic data and, where
appropriate, constitutes definitions of the terms hereinafter listed.
SECTION 1.2 BASIC DATA.
Date of Agreement: SEPTEMBER 5, 1997
-----------------
Licensee: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
Licensee's Address: 6200 CANOGA AVENUE, SUITE 303
-----------------------------
WOODLAND HILLS, CA 91367
-------------------------
Guarantor:
Authorized Area: The space licensed is as listed: HALLS "A", "B", AND "C"
-----------------------
FOURTEEN (14) MEETING ROOMS
---------------------------
which is (a portion)/(all) of the exhibition and convention space at the
Facilities. The Licensee shall also have the non-exclusive right to use in
common with others, public or common lobbies, hallways, stairways and walkways
designated by Licensor and necessary for access to the Authorized Area; but such
rights shall always be subject tot he rules and regulations from time to
<PAGE>
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time established by the Licensor pursuant to Section 9.4 and to the right of the
Licensor to divide, designate or change form time to time those common areas to
be used. The foregoing notwithstanding, the common areas shall remain in the
control of the Licensor, however, the Licensor agrees that the common areas
shall not be used by any person or company that is operating a business or
performing a service deemed to be in competition within the apparel industry.
Purpose and Use of Authorized Area: The Authorized Area shall be used solely
for the purpose of EXHIBITS, MEETINGS, FASHION SHOWS, FOOD AND BEVERAGE
----------------------------------------------------
FUNCTIONS, AND ALL OTHER ACTIVITIES ANCILLARY TO THE MEN'S APPAREL GUILD IN
- ---------------------------------------------------------------------------
CALIFORNIA (MAGIC) A TRADE SHOW (hereinafter referred to as the "Event").
- -------------------------------
License Period: The license is granted commencing at 12:01 o'clock AM on
-----
FEBRUARY 27, 1999 and ending at 11:59 o'clock PM on MARCH 6, 1999 including the
- ----------------- ----- -------------
following periods designated for:
(a) Move In - A period from: 12:01 AM February 27, 1999 to 11:59 PM
-----------
February 28, 1999
- -----------------
(b) Show Period - A period from: 12:01 AM March 1, 1999 to 11:59 PM
-------------
March 4, 1999
- -------------
(c) Move Out - A period from: 12:01 AM March 5, 1999 to 11:59 PM March 6, 1999
------------- ----- -------------
This is of the essence of this Agreement.
Hours of Operation: 24 Hrs.
-------
Exhibition Area(s): 24 Hrs.
-------
Meeting Room(s): 24 Hrs.
-------
Basic Fee and Payment: Licensee agrees to pay Licensor as the Basic Fee for the
use of Authorized Area the minimum sum of $567,000.00. A final count of the net
-----------
square footage of exhibition space used by Licensee shall be taken on MARCH 2,
--------
1999. Should the net square footage used exceed the required minimum per hall
- ----
as follows:
Hall "A" 90,000 sq. ft.
------
Hall "B" 90,000 sq. ft.
------
Hall "C" 90,000 sq. ft.
------
Hall "G" N/A sq. ft.
---
then the Licensee shall be billed at $.175 per net square foot for each square
-----
foot in excess of 270,000 net square feet for move-in and move-out days, and
-------
$.35 per net square foot for each such square foot actually used for displays
- ----
for Show Days as additional Basic Fee. The Licensee shall pay the sum of
$189,000 due upon signing this License Agreement as a Reservation Fee to reserve
- -------- ------------
the dates licensed hereunder and to be credited against the Basic Fee. The
balance of the
<PAGE>
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Basic Fee shall be paid as follows: $189,000.00 on MARCH 11, 1998, and
----------- --------------
$189,000.00 on SEPTEMBER 11, 1998 paid by check made payable directly to "Sands
- ----------- ------------------
Expo and Convention Center" or by wire transfer.
Additional Fees: In addition to the Basic Fee (including Reservation Fee), the
Licensee shall pay the following Additional Fees:
MEETING ROOMS ARE $400.00 PER ROOM PER DAY.
- -------------------------------------------
Security Deposit: The Licensee shall pay $5,000.00 on FEBRUARY 1, 1999 to be
--------- ----------------
held thereafter by the Licensor as Security Deposit pursuant to the provisions
of Article V.
Additional Insureds and Indemnities: In accordance with Article VI, the
Additional Insureds and Indemnities are: LAS VEGAS SANDS INC., THE INTERFACE
GROUP - MASSACHUSETTS, INC., INTERFACE GROUP - NEVADA, INC., AND THE HOLDER OF
ANY MORTGAGE (AS DEFINED BELOW).
ARTICLE II - LICENSE AND USE OF AUTHORIZED AREA
-----------------------------------------------
SECTION 2.1 LICENSE OF AUTHORIZED AREA. The Licensor hereby licenses the use by
the License of the Authorized Area during the License Period only for the use
and purpose and upon the terms and conditions set forth in this Agreement and
only for the hours of operation indicated herein and Licensee hereby agrees tot
he use of the Authorized Area during the License Period only for the use and
purpose and upon the terms and conditions set forth in this Agreement. Licensee
agrees to provide Licensor a thirty (30) foot space along the west exterior wall
of Hall "C" to assist a Licensor any egress problems that may occur as a result
of the construction of Hall "D".
SECTION 2.2 PROHIBITED USES. The Licensee shall not use or allow the Facilities
or Authorized Area therein to be used for any purpose not set forth in Article
1; for any improper, immoral, objectionable or unlawful purposes, in any manner
which could cancel the insurance or increase the rate of insurance on the
Facilities; in any manner which constitutes waste or nuisance; in any manner
which causes damage to the Facilities, including, without limiting the
generality thereof, driving any nails, hooks, tacks, screws or other devices
into any part of the Facilities or affixing any matter there paste, tape or
other adhesive or altering the Facilities in any respect without the prior
written approval of Licensor; or in violation of the Facilities Rules and
Regulations as such may exist from time to time. Licensee is prohibited from
possessing, storing, or bringing onto the property, materials constitute
hazardous materials as defined by federal, state, or local law without prior
approval by the Sands Expo and Convention Center. Any requests for approval
must include all federal, state or local permits for the possession, storage,
use, and transportation of such hazardous material. Approval may be withheld by
the Sands Expo and Convention Center for any reason whatsoever in its sole
discretion. The propriety or morality of any of the facilities or Authorized
Area by the Licensee shall be determined in light of the community standards and
based on the reasonable, good assessment of the Licensor after consultation with
the Licensee.
<PAGE>
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SECTION 2.3 DEVELOPMENT OF PLAN OF OPERATION UNDER LICENSE. The Licensee shall
provide the Licensor, at least ninety (90) days prior to the beginning of the
License Period, all information then reasonably available to the Licensee
pertinent to the activities to be undertaken in the Authorized Area pursuant to
the License (herein "plan of operation"), including but not limited to:
(i) Floor plans. (4 copies) indicating the design, nature and proposed
location of all exhibits and meeting space;
(ii) Utility and construction plans, including plans of all intended rigging;
(iii) All certificates of insurance required hereunder;
(iv) A security plan indicating the number, hours, and location of required
security personnel;
(v) Copies of all license applications for licenses required by the Licensor
for the purposes and uses of the Authorized Areas set forth in Article I.
(vi) Copies of all approvals obtained from the Fire Marshal and other municipal
agencies required by the Licensor before using the Authorized Area the purpose
set forth in Article 1.
(vii) Such other information as the Licensor may reasonably request.
The Licensor reserves the right, by written notice to the Licensee within twenty
(20) days of the receipt of the plan of operation, to require the Licensee to
make such changes, deletions, and additions to the plan of operation as the
Licensor may reasonably deem necessary or desirable for the purpose of insuring
the safe and orderly operation of the Facilities and the Authorized Area.
Failure by the Licensee to make any such changes, addition deletions required by
the licensor within ten (10) days after such notice shall constitute an Event of
Default, as set forth in Article VIII.
SECTION 2.4 LICENSOR'S CONTROL AND RIGHT OF ENTRY. In permitting use of the
Authorized Areas by the Licensee, the Licensor retains and does not relinquish
the right to issue and enforce such rules, regulations and directives as it may
deem necessary for the safe, orderly and commercially sound operation of the
Facilities. The Licensor and its authorized representatives may enter the
Authorized Area after giving prior notice to Licensee, for the purpose of
inspecting and checking the same and the uses thereof; of making necessary
repairs thereto; of adjusting apparatus or equipment therein; of abating waste,
nuisances or violation of law or Rules and Regulations promulgated by the
Licensor; of preparing food or readying other concessions; and of ejecting any
objectionable person or persons from therein. The Licensee agrees that it will
not allow any person at, in or about the Facilities who shall, upon reasonable,
non-discriminatory grounds, be objected to by the Licensor and such person's
right to use the Facilities and the Authorized Area that may be revoked by the
Licensor.
ARTICLE III - PAYMENT OF FEES, COSTS, CHARGES AND DEPOSITS
SECTION 3.1 The Licensee shall (in addition to the Basic Fee including
Reservation Fee) pay when due all Additional Fees, Additional Charges, and
Security Deposit to the Licensor at 201 E. Sands Avenue, Las Vegas, Nevada
89109 by check payable directly to Sands Expo and Convention Center, or wire
transfer.
<PAGE>
-5-
SECTION 3.2 The Licensee shall pay to the Licensor all Basic Fees including
Reservation Fees, and Additional Fees as set forth in Article 1 and Article IV.
Additional Charges, as set forth in Article VII and Article VIII, shall be paid
within thirty (30) days after being billed therefore by Licensor subject to
provisions of Section 3.4 and with pre-approved credit from the Licensor.
SECTION 3.3 All monies paid to the Licensor by the Licensee, including the
Reservation Fee, Basic Fee, Additional Fees, Security Deposit and Additional
Charges are non-refundable, except as specifically provided in this Agreement.
Licensee acknowledged that all deposits are non-refundable and payments made
pursuant to the liquidated damage provisions set forth in Section 8.6 are fair
and reasonable consideration for Licensor's holding Authorized Areas for the
dates indicated for the exclusive use of Licensee and rendering the same
unavailable for others. The Licensor shall have obligation to the Licensee to
pay interest on any fees or deposits, and the Licensor shall have the right to
commingle such monies with the License other funds.
SECTION 3.4 Any payment required hereunder not paid when due shall bear
interest at the rate of eighteen (18%) percent per annum from the date and shall
be payable forthwith on demand by the Licensor. This right to collect interest
does not preclude the Licensor from asserting any other right against the
Licensee, including, but not limited to, those set forth in Article VIII.
Notwithstanding the foregoing, interest shall not be due on any among Licensee
reasonably claims to be in dispute; provided, however, that Licensee pays all
undisputed amounts when due.
ARTICLE IV - SERVICES PROVIDED TO AND BY LICENSEE
SECTION 4.1 SERVICES PROVIDED BY LICENSOR FOR BASIC FEE. The Licensor shall
provide, during the show period's hours of operation, without cost Licensee,
heating, ventilating and air conditioning, permanent overhead lighting,
permanent public address system, as available, rest-room facilities and
janitorial services consisting of cleaning of common areas. During move-in and
move-out periods, Licensor shall provide only sufficient work in Authorized
Areas and janitorial services in common areas only. Licensor shall not be held
responsible for and Licensee shall hold Licensor harmless from loss of lighting,
air conditioning, electricity, water, gas, heating, or other utilities,
facilities or services not caused by the intentional wrong of Licensor.
SECTION 4.2 CONTRACTUAL SERVICES NOT INCLUDED IN BASIC FEE. For all services,
other than those set forth in Section 4.1 which are the only a covered by the
Basic Fee, Licensee agrees that it will, and will require all of its exhibitors
and other invitees to, utilize Contractual Services provided directly by
Licensor or by an Authorized Contractor of Licensor. For purposes of this
Agreement "Contractual Services" means the equipment, utilities and materials
whether sold, rented, or otherwise provided which are required to set up,
maintain, protect and remove displays exhibits, and other items which are
constructed or brought into the Facilities as part of the Event, and all related
services which customarily are by Licensee, its exhibitors or other invitees
when holding or participating in the Event. For purposes of this Agreement,
"Authorized Contractor" those persons or companies Licensor has approved to
provide Contractual Services at the Facilities as of the date Licensee execute
this Agreement or as approved as provided below. Licensor reserves the right to
withdraw approval of any Authorized Contractor for any reason prior to Licensor
approval of Licensee's Plan of Operation, or at any time thereafter for cause.
<PAGE>
-6-
The Contractual Services to be provided exclusively by Licensor or by an
Authorized Contractor include, but shall not be limited to, the following:
(i) Electrical wiring and services;
(ii) Plumbing, gas and compressed air services;
(iii) Telephone systems wiring, services and operation;
(iv) General cleaning and maintenance of Authorized Areas, and trash collection
and disposal;
(v) Customer Service Center Facilities;
(vi) Rigging;
(vii) Food and beverage services.
Licensee shall pay Licensor for any Contractual Services provided by Licensor
according to the rates shown in the Show Managers Handbook as amended. Any
additional Contractual Services, and the rates associated therewith, shall be
identified in a separate exhibit to this Agreement. If not added in the Show
Managers Handbook, or if a service is provided for which no rate is stated, then
Licensee shall pay Licensor at rate to be upon by the parties. Licensee shall
provide Licensor with notice of the Contractual Services it requires when it
files its Plan of Operation in accordance with Section 2.3. Authorized
Contractors shall bill Licensee directly at rates agreed to by them and payment
shall be made directly to the Authorized Contractor. All bills for Contractual
Services rendered by Licensor or Authorized Contractors to Licensee's exhibitors
or invitees shall be rendered and paid directly by the exhibitor or invitee.
Licensor shall be under no obligation to provide a Contractual Service it has
specifically undertaken provide unless it or an Authorized Contractor is
reasonably capable of providing the service. The ability of Licensor or an
Authorized Contractor provide particular Contractual Services shall be
determined at the time the parties agree upon Licensee's Plan of Operation. No
Contractual Services shall be utilized or employed by Licensee except as
provided in the Section 4.2 or as approved in advance in writing by Licensor.
Licensor shall retain, at all times during the License period, the right to
sell, advertise, and promote both authorized and Exclusive Contractual Services
to License exhibitors. To facilitate Licensor's provision of Contractual
Services hereunder Licensee is required to provide Licensor, at least 120 days
prior beginning of the License Period, with a list of all exhibitors or other
invitees planning to use the Authorized Areas during the License Period, and
with the business address, telephone number and name of the appropriate person
to be contracted for each such exhibit.
SECTION 4.3 SECURITY OF FACILITIES.
(a) The Licensor shall neither be responsible for any property brought into the
Facilities by the Licensee or any person claiming under the License nor be
obligated to watch, guard or protect the same; nor shall the Licensor be liable
for any failure to do so by any guard, watchman or protection service employed
by the Licensor or by any guard, watchman or protection service contracted for
by the Licensee. (b) After reviewing Licensee's plan of operation, Licensor and
Licensee shall jointly determine the minimum number of security guards
reasonably necessary to preserve order and to protect persons and property
during the License Period. (c) Except by arrangement with the Licensor and/or
its designated security guard service provider, no guard, watchman or protection
service shall, at any time be stationed in the Facilities by the Licensee or
<PAGE>
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any other person claiming thereunder; and except by such arrangement, no person
shall be allowed in or remain in the Facilities after it has closed.
SECTION 4.4 REGISTERED NURSE OR OTHER MEDICAL PERSONNEL. The Licensee shall
maintain at the Facilities at all times during the License period a registered
nurse or other medical personnel (at Licensor's direction), fully licensed as
such in the State of Nevada. The Licensee shall, at its expense, contract with
the Licensor's exclusive service provider for such services.
SECTION 4.5 CONCESSIONS AND CATERING. The Licensor reserves, and at all times
shall have, the sole right to operate or have operated in its behalf all
commercial enterprises, including all concessions, bars and catering operations
and to sell or otherwise provide flowers, food, refreshments, beverages, cigars,
cigarettes, candies and periodicals, and to grant concessions to designated
airlines, auto rentals, delivery services, shoe shine, and other.
SECTION 4.6 HEADQUARTERS HOTEL. The Sands Hotel and Casino, located adjacent to
the Sands Expo and Convention Center, has been demolished and a new property
offering 6,000 sleeping rooms, and a convention complex featuring large
ballrooms and breakout meeting space, over 150,000 square feet of casino space,
multiple restaurants, and approximately 500,000 square feet of retail space is
being developed on the site it previously occupied. Licensee agrees to
designate the new property as an official headquarters location for its show.
Further, Licensee will use its best efforts to Licensor in its solicitation of
Licensee's exhibitors and invitees for their food, beverage, function, and
hospitality business.
SECTION 4.7 ADVERTISEMENTS, POSTERS AND MARQUEE. The Licensee agrees not to
post or exhibit or allow to be posted or exhibited signs, advertisement show-
bills, lithographs, posters, or cards of any description (herein "signage") in
any area of the Facilities other than within the Authorized Areas except with
the prior written approval of the Licensor. If such approval is granted by
Licensor, Licensee shall pay a fifteen (15%) percent commission from the gross
revenues paid by the advertising entity. The advertising entity is defined as
the party whose organization, business or concern is advertised on the signs,
advertisements, show bills, banners, lithographs, posters, or cards. Any
signage to be posted or exhibited in any area of the Facilities other than the
Authorized Areas shall be upon the regular billboards, if any, provided by the
Licensor therefore. The Licensee will use, post or exhibit only such signage as
is related to the Event in the Authorized Areas and during the hours for which
this License was granted and for such period time as designated by the Licensor.
SECTION 4.8 USE OF LICENSOR'S EQUIPMENT. If any equipment provided by the
Licensor to the Licensee requires an operator or technician, such operator or
technician may, if required by the Licensor, be supplied by it to operate such
equipment, and the Licensee shall pay for such equipment and technician or
operator the amount set forth in the Show Manager's Handbook.
ARTICLE V - SECURITY DEPOSIT AND PERFORMANCE BOND OR GUARANTY
SECTION 5.1 SECURITY DEPOSIT. With respect to the Security Deposit specified
in Article I, the Licensee agrees that the same will be paid on the date set
forth in Article I, and that the Licensor
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shall hold the same throughout the License Period as security for the
performance by the licensee of all obligations on the part of the Licensee
hereunder. The Licensor shall have the right from time to time, without
prejudice to any other right or remedy the Licensee may have hereunder or by
law, to apply, without notice to the Licensee, such deposit, or any part
thereof, to the Licensor's damages arising from an Event of Default caused by
the Licensee or to pay any of the Licensee's obligations for any of the
Exclusive Contractual Services contracted for by the Licensee pursuant to
Article IV. If the Licensee is not in default under this Agreement at the time
of final accounting, the Licensor shall return the Security Deposit, or so much
thereof as shall not theretofore have been applied in accordance with the terms
of this Section 5.1, to the Licensee.
SECTION 5.2 PERFORMANCE BOND OR GUARANTY. Upon request by the Licensor, the
Licensee shall furnish to the Licensor a performance bond or sufficient guaranty
in substance and amount determined by Licensor.
ARTICLE VI - INSURANCE, INDEMNIFICATION AND WAIVER OF SUBROGATION
SECTION 6.1 INSURANCE.
(a) The Licensee shall provide and keep in force during the License Period the
following insurance (in addition to any other insurance Licensor may deem
necessary):
(i) Workers' compensation insurance in accordance with Nevada Law covering
Licensees' employees.
(ii) Employers' Liability insurance for Nevada operations in minimum limits of
One Million Dollars ($1,000,000) per occurrence.
(iii) Commercial General Liability insurance including blanket contractual
liability and personal injury coverage with limits of Liability of at least One
Million Dollars ($1,000,000) in any one occurrence.
(iv) Comprehensive Automobile Liability insurance insuring any owned, non-
owned, and hired vehicles to be used in and out of the "Facilities" in the
amount of One Million Dollars ($1,000,000) in any one occurrence.
All insurance required shall be issued by companies authorized to do business in
the State of Nevada. Licensee shall have completed by its insurance agent the
Certificate of Insurance provided by Licensor and/or separate certificates for
Nevada Workers' Compensation. Licensee shall deliver such completed
certificates of insurance to Licensor at least ninety (90) days prior to the
beginning of the License Period. All required insurance policies shall name as
additional insured those entities set forth in Article I as "Additional Insureds
and Indemnities".
All required insurance policies shall provide that (i) the insurance carrier
will give written notice to Licensor at least thirty (30) days prior to any
material change in, cancellation, or non-renewal of the policy. Licensee's
failure to provide such certificates or policies, as the case may be, within the
period specified herein shall constitute a breach of the Licensee's duties and
obligations hereunder.
(b) The Licensee shall obtain and maintain during the License Period insurance
polices on all personal property owned, leased or hired by, or in the care,
control or custody of the Licensee during the License Period. Such policies
shall provide coverage for "all risks", including earthquake, flood and theft
with a deductible per loss of not more than $1,000.00.
<PAGE>
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SECTION 6.2 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT.
(a) The Licensee hereby releases and discharges and indemnifies, and agrees to
keep indemnified, defend, protect and save harmless the Licensor and those named
Additional Indemnities set forth in Article I (herein "Indemnities") of and from
any and all claims, demands, liabilities, damages, costs, losses and expenses
(including attorneys' fees and disbursements) for any injury to, including death
(whether they be third persons or employees of either the Licensor or the
Licensee) and any loss (through theft or otherwise) of or damage to property
(whether it be that of the Licensor or the Licensee or third person) caused by,
growing out of, or happening in connection with or with respect to the use by
the Licensee, or of any other person or legal entity with the permission
(express or implied) of the Licensee, of the Facilities or its equipment. Such
indemnification by the Licensee shall apply unless such damage or injury results
from the sole negligence, gross negligence or willful misconduct o the Licensor
or any person contracted or hired by Licensor to perform Exclusive Contractual
Services.
(b) Without limiting the foregoing, the Licensee assumes all costs and expenses
arising from the use of broadcast, performance or publications, including
musical or other audio or visual presentation, of patented, trademarked, or
copyrighted materials, equipment, devices, processes, or dramatic right used
during or incorporated in the conduct of its operation hereunder; and the
Licensee agrees to indemnify and hold harmless the Indemnities from all damages,
costs and expenses at law or for equitable relief for or on account of any
patented, trademarked or copyrighted materials, equipment devices, processes or
dramatic rights furnished to or used by the Licensee or its exhibitors, or any
infringement with respect thereto in connection with this License, including the
costs and expenses of defending any such action, even if it be groundless or
fraudulent.
(c) Without limiting the foregoing, the Licensee shall also indemnify and save
harmless the Indemnities from all claims, demands, liabilities, damages costs,
losses and expenses made against or incurred by any of the Indemnities arising
out of injury or loss to third parties caused by Licensee's failure to return
the Authorized Area to the Licensor, vacate the Facilities, relinquish the
Licensor's or Authorized Contractor's equipment at the end of the License
Period, or Licensee's breach of any contract or agreement with a third party to
provide contractual or other services.
SECTION 6.3 WAIVER OF SUBROGATION. The Licensee hereby waives any and every
claim which arises in its favor and against the Licensor, or against any of the
Additional Indemnities set forth in Article I, for any and all loss or damage
covered by valid and collectible insurance policies to the extent of the
insurance proceeds paid with respect thereto. Such waiver shall be in addition
to, and not, derogation of, any other waiver or release contained in the License
with respect to any loss or damage to property of the Licensees. Inasmuch as
the waiver will preclude the assignment of any aforesaid claim by way of
subrogation (or otherwise) to an insurance company (or any other person), the
Licensee shall notify its insurers of such waiver.
ARTICLE VII - LICENSEE'S OBLIGATION AT END OF LICENSE PERIOD
SECTION 7.1 RETURN OF AUTHORIZED AREA. At the end of the License Period, the
Licensee shall vacate the Facilities and return the Authorized Area the
Licensor's equipment to the Licensor, all
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in the same broom clean condition and repair as originally furnished to the
Licensee, normal wear and excepted. At such time, the Licensee shall remove
completely from the Facilities all goods, wares, merchandise and property of any
and all kinds description placed therein (herein "Property").
SECTION 7.2 REPAIR OF AUTHORIZED AREA. The Licensee agrees that if the
Authorized Area, Lobbies, Hallways, Restrooms or other Public Space, or other
part of the Facilities, shall be damaged by the act, default or negligence of
the Licensee, or of the Licensee's agents, employees, patrons, guests or
invitees, the Licensee will pay to the Licensor upon demand such sum as shall be
necessary to restore said areas to their condition immediately prior to the
commencement of the License Period. The Licensee hereby assumes full
responsibilities for the character, acts and conduct of all persons acts for or
on behalf of said Licensee.
SECTION 7.3 FAILURE TO RETURN THE AUTHORIZED AREA OR VACATE THE FACILITIES. In
the event the Licensee shall fail to return the Authorized Area to Licensor or
to vacate the Facilities in accordance with the provisions of Section 7.1, the
Licensor is authorized, at the Licensee's expense, to remove therefrom and to
store or return to the Licensee or, except where the Licensee's failure to do so
is caused by an event beyond the Licensee's control, such as a strike beyond its
control, a national emergency or an Act of God, to treat the same as abandoned
and discarded property and accordingly dispose of the Property. The Licensor
shall not be liable for any damage or loss to the Property which may be
sustained either in the course of such removal or in the course of storage, or
in the course of transit, or by virtue of the Licensor's disposal of the
Property and the Licensor is hereby expressly released from any and all such
claims for damages of whatsoever kind or nature. The Licensor shall be under no
duty, however, to so remove, at or return the Property.
SECTION 7.4 EXTENDED USE CHARGE. The Licensee shall pay an Extended Use Charge
equal to twice the per diem Basic Fee applicable to Show Days each day or
portion of a day after the end of the License Period that the Licensee has
failed to return all or any part of the Authorized Area to Licensor and vacate
the Facilities in accordance with the provisions of Section 7.1, unless said
failure is caused by any of the following events, to the extent that such event
is beyond the Licensee's reasonable control: fire, flood, riot, earthquake,
civil commotion, or Act of God. The liability to pay an Extended Use Charge
does not in any way extend the License Period; is not liquidated damages; is
intended as a penalty against the Licensee use of the Facilities or the
Authorized Area beyond the License Period; and does not preclude the Licensor
from asserting any other rights against Licensee, including, but not limited to,
those set forth in Section 7.3 and Article VIII. The Extended Use Charge is due
and payable at the end of each day for which the Charge is assessed.
SECTION 7.5 FAILURE TO COMPLY LIST. Licensor and Licensee shall conduct a walk
through of the Authorized Area within twenty-four (24) hours of end of the
License Period for the purpose of preliminary identifying any failure of the
Licensee to comply with the provisions of Section 7.1. In addition, Licensor
shall provide to Licensee a final, comprehensive and complete list of Licensee's
failure(s) to comply with the provisions of Section 7.1 no later than the
earlier of the following: (i) seven (7) days after the end of the applicable
License Period or (ii) the
<PAGE>
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commencement of any use of the hall or a portion of the Authorized Area by any
person other than the Licensee. The Licensee shall not be responsible for any
alleged non-compliance with Section 7.1 not specifically identified in the list.
ARTICLE VIII - DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall be
considered an "Event of Default":
(a) The Licensee shall fail to pay in full and when due any payment required
hereunder, whether said payment was required to be paid to the Licensee or any
Authorized Contractor;
(b) The Licensee shall fail to pay promptly any sales, use, excise or other
taxes when due or fail, upon request of the Licensor, to provide evidence same
to the Licensor;
(c) The Licensee shall fail to obtain or pay for any and all necessary permits
and licenses, including union or trade organization clearances, and Fire Marshal
approvals, when and where required, or fail, upon the Licensor's request, to
provide evidence of such permits or licenses to the Licensor;
(d) Any other default or breach of any covenant or agreement contained herein
including the specific duty to provide evidence of insurance covers as provided
in Article VI.
(e) The Licensee shall make an assignment for the benefit of creditors or shall
file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall, file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, State or other statute,
law or regulation for the relief of debtors, or shall seek or consent to
acquiesce in the appointment of any trustee, receiver or liquidator of the
Licensee or of all or any substantial part of its properties, or shall admit in
writing its inability to pay its debts generally as they become due;
(f) A petition shall be filed against the licensee in bankruptcy or under any
other law seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief.
(g) Licensee shall materially diverge from the plan of operation without the
prior written consent of Licensor.
SECTION 8.2 LICENSOR'S REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of
any of the Events of Default set forth in Section 8.1 or elsewhere this
Agreement which default continues for a period of five (5) days after written
notice from Licensor specifying the nature of such default, Licensor may
exercise any or all of the following:
(a) accelerate payment of the Basic Fee;
(b) require the Licensee give additional security for Licensee's performance of
its obligations;
(c) declare this Agreement terminated and revoke the license given hereby;
(d) enter and take exclusive possession of and remove all persons and property
from the Authorized areas and the Facility;
(e) assert and enforce claims against any bond provided under this Agreement;
(f) refuse to commence, or discontinue the rendition of all services or
utilities to Licensee and the Authorized Area;
(g) apply monies from Licensee's show account to satisfy or reduce debt;
<PAGE>
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(h) for a late payment of one contract, cancel any of all subsequent contracts
at Licensor's option.
Licensee waives any right it may have as to notice or hearing prior to the
exercise of the powers set forth above. The rights and remedies of Licensee
shall be cumulative, and none shall exclude other rights or remedies allowed by
law or at equity, or set forth in other sections of this Agreement.
SECTION 8.3 REMEDYING DEFAULTS. The Licensor may, but shall not be required
to, pay such sums or to do any act which requires the expenditure of monies or
services which may be necessary or appropriate by reason of the failure or
neglect of the Licensee to perform any of the provisions License. In the event
of the exercise of such right by the Licensor, the Licensee agrees to pay to the
Licensor forthwith upon demand all sums expended by the Licensor (or the fair
value thereof, whichever is greater), together with interest thereon at the rate
of eighteen (18%) percent annum, as an Additional Charge.
SECTION 8.4 TERMINATION WITHOUT DEFAULT. In the event that the Authorized Area
or the Facilities of which it is a part or any portion thereof, are destroyed or
damaged by fire or other casualty so that in the reasonable judgment of the
Licensor its or the Licensee's use thereof would be substantially interfered
with, or in the event of a taking of all or a portion of the Facilities by
eminent domain, condemnation or foreclosure, then the Licensor terminate this
Agreement upon giving to the Licensee notice of termination not more than ninety
(90) days following the event of destruction, damage, or taking and this
Agreement shall terminate on the date set forth in such notice of termination,
all with the same force and effect as though the License Period of this
Agreement had originally been scheduled to expire on such date, and Licensor
shall return to the Licensee all monies theretofore the Licensee to the Licensor
as a Security Deposit, Reservation Fee, Basic Fee or Additional Fee (to the
extent not applied by Licensor in accordance with the terms hereof).
SECTION 8.5 RIGHT TO RE-ENTER. If this License shall have been terminated as
provided in this Article, or if any execution or attachment shall be issued
against the Licensee or its Property whereupon the Authorized Area shall be
taken or occupied by someone other than the Licensee, then the Licensor, may,
without notice, re-enter the Authorized Area, without being liable for any
prosecution thereof, and remove the Licensee and all other persons any and all
property from the same, as if this License was not in effect.
SECTION 8.6 LIQUIDATED DAMAGES. If the Licensee cancels the Event covered by
this License, the Licensee agrees to pay to the Licensor, as liquidated damages
and not as a penalty an amount equal to the Reservation Fee and the remainder of
the Basic Fee, as set forth in Article I. The parties agree that such amounts
constitute reasonable provision for liquidated damages and acknowledge that the
amount of actual damages will be difficult to establish except as provided in
Sections 2.1, 4.2, and 8.11.
In any event, and in addition to the foregoing, the Licensee also agrees to pay
any monies due for Additional Fees and Additional Charges. The foregoing shall
not constitute Licensor's sole
<PAGE>
-13-
remedy for such cancellation and shall be in addition to such other legal and
equitable rights and remedies be available to Licensor.
SECTION 8.7 LIENS. To secure the Licensee's obligation hereunder, Licensee
hereby grants the Licensor the first right of lien against all ticket receipts
and Property of the Licensee hereunder. The Licensor is empowered to withhold
from ticket office receipts such amount as is outstanding owed by the Licensee
hereunder. If the total ticket office receipts are insufficient to cover such
unpaid amounts the Licensor shall have the right to impound the Licensee's
Property at the Facilities, or elsewhere, at the Licensee's expense. If such
unpaid amounts remain unpaid for a period of ten (10) days after the termination
of this License, the Licensor shall have the right to sell the impounded
Property at public auction and to apply the cash proceeds from the auction less
its costs, including attorneys' fees, to the retirement of said unpaid amounts.
SECTION 8.8 ACTIONS. Any action by one party to this License against another
arising hereunder shall be maintained in the State of Nevada; and the Licensee
hereunder consents to same and to the maintenance of such actin by the Licensor
against it in said State of Nevada.
SECTION 8.9 CUMULATIVE REMEDIES. All rights, powers and privileges contained
hereunder upon the Licensor shall be cumulative and shall not be restricted to
those given by law.
SECTION 8.10 FORCE MAJEURE. In the event that the Licensor's obligations to
the Licensee under this Agreement be delayed, prevented or rendered impractical
by any of the following events: fire, flood, riot, earthquake, civil commotion,
strike, lockout, labor disturbances, explosion, sabotage, accident, war, other
casualty, Act of God, or any law, ordinance, rule or regulation which becomes
effective after the date of this License or any cause beyond Licensor's
reasonable control the Licensor shall not be liable to the Licensee for such
delay or failure to perform. The Licensee waives any claim for damages or
compensation for such delay or failure to perform, other than a return to it of
any monies paid directly to the Licensor, but no other.
SECTION 8.11 SUBORDINATION. This Agreement and any renewals, extensions or
amendments hereof, and all of Licensee's rights and obligations hereof or
thereunder now or hereafter existing, are unconditionally subject, inferior and
subordinate in priority to any mortgage, deed of trust or other security
interest or lien encumbering the Facilities (or any portion thereof) from time
to time and to the lien of any renewals, extensions, amendment refinancing
thereof (each, a "Mortgage") and the rights, powers and privileges of any
beneficiary or trustee thereunder. Notwithstanding the foregoing at the
election of such holder or beneficiary, exercisable in its sole discretion at
any time, its Mortgage shall be subject, inferior and subordinate Agreement. If
such holder or beneficiary shall make such election, and if the holder of such
Mortgage shall exercise any remedies under or in connection with such Mortgage
(or in lieu thereof) after a default by Licensor under such Mortgage then, at
the option of any owner of the Facilities (applicable portion thereof) (after
giving effect to such exercise) the Licensee shall recognize such new owner and
this Agreement shall remain force and effect as between such new owner, as
Licensor, and Licensee, as licensee.
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SECTION 8.12 LICENSE AND NOT A LEASE. Notwithstanding anything to the contrary
contained herein, this Agreement is a license and not a lease and Agreement
shall be construed to be a license and not a lease.
SECTION 8.13 DEFAULT BY LICENSOR. If the Licensor fails or refuses to make the
Facilities and/or the Authorized Areas available to the Licensee on the dates
set forth in this Agreement for any reason other than those specifies in
Sections 8.4 and 8.10 above, then, in addition to any claims, rights on remedies
the Licensee may have, the Licensor shall return to the Licensee all monies paid
to the Licensor along with interest on those monies rate of eighteen percent
(18%) per annum from the date the monies were remitted to the Licensor.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 9.1 NON-DISCRIMINATION. The Licensee shall not discriminate against
any person or persons in connection with admission, services or private offered
to or enjoyed by the general public because of race, creed, ancestry, sexual
orientation, disability, color, sex, marital status, age, religion national
origin.
SECTION 9.2 AUDIO/VISUAL PRESENTATIONS. The Sands Expo and Convention Center
does not regulate, control, approve or disapprove any broadcast performance or
publication of music or any other audio or visual presentations. The Sands Expo
and Convention Center does not play or perform any music, nor does it offer
referrals or contracts with anyone who does. If the Licensee, or an exhibitor,
wishes to use copyrighted music or other copyrighted material it will be
necessary for Licensee to make arrangements with the appropriate owners of such
material or agents of such owners for a license to use or perform such
copyrighted music or material or to otherwise qualify for an exemption. The
Sands Expo and Convention Center retains the right to regulate the volume of any
sound, whether it be music, voice, special or artificial effects to the extent
that the same interferes with other licensees within the facilities or is
determined to be offensive or otherwise violates the rules and regulations or
License Agreement.
SECTION 9.3 RULES AND REGULATIONS. The Licensor's Rules and Regulations are
hereby incorporated into this Agreement by reference. Copies of such Rules and
Regulations have been provided to the Licensee and the Licensee hereby
acknowledges receipt thereof. The Licensor reserves the right change such Rules
and Regulations in writing from time to time and will provide the Licensee with
such changed Rules and Regulations which shall binding upon the Licensee. If
there is at any time a conflict between the provisions of this Agreement and the
Rules and Regulations, the provisions of this Agreement shall control.
SECTION 9.4 WAIVER. The failure of either party hereto at any time or times to
require performance of any provisions hereof shall in no manner affecting its
right at a later time to enforce the same provision. Any waiver by any party or
the breach of any provision contained in this Agreement in any or more instances
shall not be deemed to be a waiver of any other breach of the same provision or
any other provision contained herein.
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SECTION 9.5 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered by a customs overnight
delivery service, or if sent by certified or registered mail, postage prepaid,
to the Licensor or the Licensee, as the case may be, at the address as set forth
for each in Article I of this Agreement or to such other address as any party
shall have provided to the other parties from time to time accordance with the
provisions of this Section 9.5
SECTION 9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereto and
supersedes all proposals, negotiations and understandings of any nature
whatsoever. This Agreement may be changed or amended only by a written
instrument duly signed by all of the parties hereto. This agreement must be
signed by Licensee and returned within thirty (30) days from the date Agreement
set forth in Article I. If not so returned to Licensor this Agreement shall, at
Licensor's option be rendered null and void. In any event, the Agreement shall
not be enforceable until signed by Licensor.
SECTION 9.7 BINDING EFFECT, ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heir
legal representatives, successors and assigns. This Agreement or any rights
hereunder may not be assigned by the Licensee without the express written
consent of Licensor, which consent will not be unreasonably withheld.
SECTION 9.8 CAPTIONS. The captions of the several provisions of this Agreement
have been inserted for convenience only and do not constitute a part of this
Agreement.
SECTION 9.9 GOVERNING LAW. This Agreement shall be governed and constructed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed wholly within such state.
SECTION 9.10 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.
SECTION 9.11 SIGNATURES. If you are in agreement with the contents of this
contract, please sign on the space indicated and return by OCTOBER, 1997. If
-------------
not executed and returned by said date, this offer shall automatically
terminate. Space is confirmed on definite basis ONLY after receiving of this
agreement singed by you and counter-signed by the Convention Center General
Manger.
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IN WITNESS WHEREOF, the Licensor and Licensee have caused this agreement to be
duly executed under seal by persons hereunto duly authorized as of the Date of
Agreement set forth in Article 1.
LICENSOR: LICENSEE:
INTERFACE GROUP-NEVADA, INC. MEN'S APPAREL GUILD
IN CALIFORNIA (MAGIC)
/s/ Richard Heller /s/ Joseph Loggia
BY:_____________________________ BY:_______________________________
RICHARD HELLER, JOE LOGGIA, PRESIDENT,
V.P./GENERAL MANAGER CHIEF OPERATING OFFICER
10/7/97 9/29/97
DATE:___________________________ DATE:_____________________________
<PAGE>
EXHIBIT 10.13
CONTRACT # 99-009D
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SANDS EXPO
201 EAST SANDS AVENUE . LAS VEGAS, NEVADA 89109 . 702-733-5556
SHOW NAME: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
FACILITIES LICENSE AGREEMENT
This Agreement made and entered into this 5TH day of SEPTEMBER, 1997 by and
--- ---------------
between INTERFACE GROUP - NEVADA, INC. (hereinafter "Licensor") and MEN'S
-----
APPAREL GUILD IN CALIFORNIA (MAGIC) (hereinafter "Licensee"). The Sands Expo
- -----------------------------------
and Convention Center (hereinafter the "Facilities") is located at 201 E. Sands
Avenue, Las Vegas, Nevada. The Facilities are owned by Interface Group -
Nevada, Inc. a Nevada corporation, with offices at 201 E. Sands Avenue, Las
Vegas, Nevada (hereinafter "Owner"). The Licensor and Licensee agree as
follows:
ARTICLE I - BASIC LICENSE PROVISIONS
SECTION 1.1 INTRODUCTION. The following sets forth basic data and, where
appropriate, constitutes definitions of the terms hereinafter listed.
SECTION 1.2 BASIC DATA.
Date of Agreement: SEPTEMBER 5, 1997
-----------------
Licensee: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
Licensee's Address: 6200 CANOGA AVENUE, SUITE 303
-----------------------------
WOODLAND HILLS, CA 91367
-------------------------
Guarantor:
Authorized Area: The space licensed is as listed: HALLS "A", "B", AND "C"
-----------------------
FOURTEEN (14) MEETING
-----------------------
ROOMS
-----
which is (a portion)/(all) of the exhibition and convention space at the
Facilities. The Licensee shall also have the non-exclusive right to use in
common with others, public or common lobbies, hallways, stairways and walkways
designated by Licensor and necessary for access to the Authorized Area; but such
rights shall always be subject to the rules and regulations from time to time
established by the Licensor pursuant to Section 9.4 and to the right of the
Licensor to divide, designate or change from time to time those common areas to
be used. The foregoing notwithstanding, the common areas shall remain in the
control of the Licensor, however, the Licensor agrees that the common
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areas shall not be used by any person or company that is operating a business or
performing a service deemed to be in competition within the apparel industry.
Purpose and Use of Authorized Area: The Authorized Area shall be used solely for
the purpose of EXHIBITS, MEETINGS, FASHION SHOWS, FOOD AND BEVERAGE FUNCTIONS,
--------------------------------------------------------------
AND ALL OTHER ACTIVITIES ANCILLARY TO THE MEN'S APPAREL GUILD IN CALIFORNIA
- ---------------------------------------------------------------------------
(MAGIC) A TRADE SHOW (hereinafter referred to as the "Event").
License Period: The license is granted commencing at 12:01 o'clock AM on AUGUST
----- ------
26, 1999 and ending at 11:59 o'clock PM on SEPTEMBER 4, 1999 including the
- -------- ----- -----------------
following periods designated for:
(a) Move In - A period from: 12:01 AM AUGUST 26, 1999 to 11:59 PM
---------------
AUGUST 29, 1999
- ---------------
(b) Show Period - A period from: 12:01 AM AUGUST 30, 1999 to 11:59 PM
---------------
SEPTEMBER 2, 1999
- -----------------
(c) Move Out - A period from: 12:01 AM SEPTEMBER 3, 1999 to 11:59 PM
-----------------
SEPTEMBER 4, 1999
- -----------------
Time is of the essence of this Agreement.
Hours of Operation: 24 Hrs.
-------
Exhibition Area(s): 24 Hrs.
-------
Meeting Room(s): 24 Hrs.
-------
Basic Fee and Payment: Licensee agrees to pay Licensor as the Basic Fee for the
use of Authorized Area the minimum sum of $661,500.00. A final count of the net
-----------
square footage of exhibition space used by Licensee shall be taken on AUGUST 31,
----------
1999. Should the net square footage used exceed the required minimum per hall
- ----
as follows:
Hall "A" 90,000 sq. ft.
------
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Hall "B" 90,000 sq. ft.
------
Hall "C" 90,000 sq. ft.
------
Hall "G" N/A sq. ft.
---
then the Licensee shall be billed at $.175 per net square foot for each square
-----
foot in excess of 270,000 net square feet for move-in and move-out days, and
-------
$.35 per net square foot for each such square foot actually used for displays
- ----
for Show Days as additional Basic Fee. The Licensee shall pay the sum of
$220,500.00 due FEBRUARY 27, 1998 as a Reservation Fee to reserve the dates
- ----------- -----------------
licensed hereunder and to be credited against the Basic Fee. The balance of the
Basic Fee shall be paid as follows:
$220,500.00 on AUGUST 31, 1998, and $220,500.00 on FEBRUARY 26, 1999 paid by
- ----------- --------------- --------------- -----------------
check made payable directly to "Sands Expo and Convention Center" or by wire
transfer. Additional Fees: In addition to the Basic Fee (including Reservation
Fee), the Licensee shall pay the following Additional Fees: MEETING ROOMS ARE
-----------------
$400.00 PER ROOM, PER DAY.
- -----------
Security Deposit: The Licensee shall pay $5,000.00 on FEBRUARY 11, 1999 to be
--------- -----------------
held thereafter by the Licensor as Security Deposit pursuant to the provisions
of Article V. Additional Insureds and Indemnities: In accordance with article
VI, the Additional Insureds and Indemnities are: LAS VEGAS SANDS INC., THE
INTERFACE GROUP - MASSACHUSETTS, INC., INTERFACE GROUP - NEVADA, INC., AND THE
HOLDER OF ANY MORTGAGE (AS DEFINED BELOW).
ARTICLE II - LICENSE AND USE OF AUTHORIZED AREA
SECTION 2.1 LICENSE OF AUTHORIZED AREA. The Licensor hereby licenses the use
by the Licensee of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement
and only for the hours of
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operation indicated herein and Licensee hereby agrees to the use of the
Authorized Area during the License Period only for the use and purpose and upon
the terms and conditions set forth in this agreement. Licensee agrees to
provide Licensor a thirty (30) foot space along the west exterior wall of Hall
"C" to assist Licensor with any egress problems that may occur as a result of
the construction of Hall "D."
SECTION 2.2 PROHIBITED USES. The Licensee shall not use or allow the
Facilities or Authorized Area therein to be used for any purpose not set forth
in Article 1; for any improper, immoral, objectionable or unlawful purposes, in
any manner which could cancel the insurance or increase the rate of insurance on
the Facilities; in any manner which constitutes waste or nuisance; in any manner
which causes damage to the Facilities, including, without limiting the
generality thereof, driving any nails, hooks, tacks, screws or other devices
into any part of the Facilities or affixing any matter thereto with paste, tape
or other adhesive or altering the Facilities in any respect without the prior
written approval of Licensor; or in violation of the Facilities Rules and
Regulations as such may exist from time to time. Licensee is prohibited from
possessing, storing, or bringing onto the property, materials that constitute
hazardous materials as defined by federal, state, or local law without prior
approval by the Sands Expo and Convention Center. Any request for approval must
include all federal, state or local permits for the possession, storage, use,
and transportation of such hazardous material. Approval may be withheld by the
Sands Expo and Convention Center for any reason whatsoever in its sole
discretion. The propriety or morality of any use of the Facilities or
Authorized Area by the Licensee shall be determined in light of the community
standards and based on the reasonable, good faith assessment of the Licensor
after consultation with the Licensee.
SECTION 2.3 DEVELOPMENT OF PLAN OF OPERATION UNDER LICENSE. The Licensee shall
provide the Licensor, at least ninety (90) days prior to the beginning of the
License Period, all information then reasonably available to the Licensee
pertinent to the activities to be undertaken in the Authorized Area pursuant to
the License (herein "plan of operation"), including but not limited to:
(i) Floor plans. (4 copies) indicating the design, nature and proposed
location of all exhibits and meeting space;
(ii) Utility and construction plans, including plans of all intended
rigging;
(iii) All certificates of insurance required hereunder;
(iv) A security plan indicating the number, hours, and location of
required security personnel;
(v) Copies of all license applications for licenses required by the
Licensor for the purposes and uses of the Authorized Areas set forth in Article
I;
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(vi) Copies of all approvals obtained from the Fire Marshal and other
municipal agencies required by the Licensor before using the Authorized Areas
for the purpose set forth in Article 1.
(vii) Such other information as the Licensor may reasonably request.
The Licensor reserves the right, by written notice to the Licensee within twenty
(20) days of the receipt of the plan of operation, to require the Licensee to
make such changes, deletions, and additions to the plan of operation as the
Licensor may reasonably deem necessary or desirable for the purpose of insuring
the safe and orderly operation of the Facilities and the Authorized Area.
Failure by the Licensee to make any such changes, additions, or deletions
required by the licensor within ten (10) days after such notice shall constitute
an Event of Default, as set forth in Article VIII.
SECTION 2.4 LICENSOR'S CONTROL AND RIGHT OF ENTRY. In permitting use of the
Authorized Areas by the Licensee, the Licensor retains and does not relinquish
the right to issue and enforce such rules, regulations and directives as it may
deem necessary for the safe, orderly and commercially sound operation of the
Facilities. The Licensor and its authorized representatives may enter the
Authorized Area after giving prior notice to Licensee, for the purpose of
inspecting and checking the same and the uses thereof; of making necessary
repairs thereto; of adjusting apparatus or equipment therein; of abating waste,
nuisances or violations of law or Rules and Regulations promulgated by the
Licensor; of preparing food or readying other concessions; and of ejecting any
objectionable person or persons from therein. The Licensee agrees that it will
not allow any person at, in or about the Facilities who shall, upon reasonable,
non-discriminatory grounds, be objected to by the Licensor and such person's
right to use the Facilities and the Authorized Area therein may be revoked by
the Licensor.
ARTICLE III - PAYMENT OF FEES, COSTS, CHARGES AND DEPOSITS
SECTION 3.1 The Licensee shall (in addition to the Basic Fee including
Reservation Fee) pay when due all Additional Fees, Additional Charges, and
Security Deposit to the Licensor at 201 E. Sands Avenue, Las Vegas, Nevada
89109 by check payable directly to Sands Expo and Convention Center, or by wire
transfer.
SECTION 3.2 The Licensee shall pay to the Licensor all Basic Fees including
Reservation Fees, and Additional Fees as set forth in Article I and Article IV.
Additional Charges, as set forth in Article VII and Article VIII, shall be paid
within thirty (30) days after being billed therefore by Licensor subject to the
provisions of Section 3.4, and with pre-approved credit from the Licensor.
SECTION 3.3 All monies paid to the Licensor by the Licensee, including the
Reservation Fee, Basic Fees, Additional Fees, Security Deposit and Additional
Charges are non-refundable, except as specifically provided in this Agreement.
Licensee acknowledges that all deposits are non-refundable and that payments
made pursuant to the liquidated
<PAGE>
-6-
damage provisions set forth in Section 8.6 are fair and reasonable consideration
for Licensor's holding the Authorized Areas for the dates indicated for the
exclusive use of Licensee and rendering the same unavailable for others. The
Licensor shall have no obligation to the Licensee to pay interest on any fees or
deposits, and the Licensor shall have the right to commingle such monies with
the Licensor's other funds.
SECTION 3.4 Any payment required hereunder not paid when due shall bear
interest at the rate of eighteen (18%) percent per annum from the date due and
shall be payable forthwith on demand by the Licensor. This right to collect
interest does not preclude the Licensor from asserting any other rights against
the Licensee, including, but not limited to, those set forth in Article VIII.
Notwithstanding the foregoing, interest shall not be due on any amount Licensee
reasonably claims to be in dispute; provided, however, that Licensee pays all
undisputed amounts when due.
ARTICLE IV - SERVICES PROVIDED TO AND BY LICENSEE
SECTION 4.1 SERVICES PROVIDED BY LICENSOR FOR BASIC FEE. The Licensor shall
provide, during the show period's hours of operation, without cost to the
Licensee, heating, ventilating and air conditioning, permanent overhead
lighting, permanent public address system, as available, restroom facilities and
janitorial services consisting of cleaning of common areas. During move-in and
move-out periods, Licensor shall provide only sufficient work lighting in
Authorized Areas and janitorial services in common areas only. Licensor shall
not be held responsible for and Licensee shall hold Licensor harmless from loss
of lighting, air conditioning, electricity, water, gas, heating, or other
utilities, facilities or services not caused by the intentional wrongful act of
Licensor.
SECTION 4.2 CONTRACTUAL SERVICES NOT INCLUDED IN BASIC FEE. For all services,
other than those set forth in Section 4.1 which are the only services covered by
the Basic Fee, Licensee agrees that it will, and will require all of its
exhibitors and other invitees to, utilize Contractual Services either provided
directly by Licensor or by an Authorized Contractor of Licensor. For purposes
of this Agreement "Contractual Services" means the labor, equipment, utilities
and materials whether sold, rented, or otherwise provided which are required to
set up, maintain, protect and remove displays, exhibits, and other items which
are constructed or brought into the Facilities as part of the Event, and all
related services which customarily are utilized by Licensee, its exhibitors or
other invitees when holding or participating in the Event. For purposes of this
Agreement, "Authorized Contractor" means those persons or companies Licensor has
approved to provide Contractual Services at the Facilities as of the date
Licensee executes this Agreement, or as approved as provided below. Licensor
reserves the right to withdraw approval of any Authorized Contractor for any
reason prior to Licensor's approval of Licensee's Plan of Operation, or at any
time thereafter for cause. The Contractual Services to be provided exclusively
by Licensor and not by an Authorized Contractor include, but shall not be
limited to, the following:
(i) Electrical wiring and services;
<PAGE>
-7-
(ii) Plumbing, gas and compressed air services;
(iii) Telephone systems wiring, services and operation;
(iv) General cleaning and maintenance of Authorized Areas, and trash collection
and disposal;
(v) Customer Service Center Facilities;
(vi) Rigging;
(vii) Food and beverage services.
Licensee shall pay Licensor for any Contractual Services provided by Licensor
according to the rates shown in the Show Managers Handbook as amended. Any
additional Contractual Services, and the rates associated therewith, shall be
identified in a separate exhibit to this Agreement. If not added in the Show
Managers Handbook, or if a service is provided for which no rate is stated, then
Licensee shall pay Licensor at a rate to be agreed upon by the parties.
Licensee shall provide Licensor with notice of the Contractual Services it
requires when it files its Plan of Operation in accordance with Section 2.3.
Authorized Contractors shall bill Licensee directly at rates agreed to by them
and payment shall be made directly to the Authorized Contractor. All bills for
Contractual Services rendered by Licensor or Authorized Contractors to
Licensee's exhibitors or invitees shall be rendered to and paid directly by the
exhibitor or invitee. Licensor shall be under no obligation to provide a
Contractual Service it has specifically undertaken to provide unless it or an
Authorized Contractor is reasonably capable of providing the service. The
ability of Licensor or an Authorized Contractor to provide particular
Contractual Services shall be determined at the time the parties agree upon
Licensee's Plan of Operation. No Contractual Service shall be utilized or
employed by Licensee except as provided in the Section 4.2 or as approved in
advance in writing by Licensor. Licensor shall retain at all times during the
License period, the right to sell, advertise, and promote both authorized and
Exclusive Contractual Services to Licensee's exhibitors. To facilitate
Licensor's provision of Contractual Services hereunder Licensee is required to
provide Licensor, at least 120 days prior to the beginning of the License
Period, with a list of all exhibitors or other invitees planning to use the
Authorized Areas during the License Period, and with the business address,
telephone number and name of the appropriate person to be contracted for each
such exhibit.
SECTION 4.3 SECURITY OF FACILITIES.
(a) The Licensor shall neither be responsible for any property brought into the
Facilities by the Licensee or any person claiming under the Licensee, nor be
obligated to watch, guard or protect the same; nor shall the Licensor be liable
for any failure to do so by any guard, watchman or protection service employed
by the Licensor or by any guard, watchman or protection service contracted for
by the Licensee.
(b) After reviewing Licensee's plan of operation, Licensor and Licensee shall
jointly determine the minimum number of security guards reasonably necessary to
preserve order and to protect persons and property during the License Period.
(c) Except by arrangement with the Licensor and/or its designated security
guard service provider, no guard, watchman or protection service shall at any
time be stationed in the Facilities by the Licensee or any other person claiming
thereunder; and except by
<PAGE>
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such arrangement, no person shall be allowed in or remain in the Facilities
after it has closed.
SECTION 4.4 REGISTERED NURSE OR OTHER MEDICAL PERSONNEL. The Licensee shall
maintain at the Facilities at all times during the License period a registered
nurse or other medical personnel (at Licensor's direction), fully licensed as
such in the State of Nevada. The Licensee shall, at its expense, contract with
the Licensor's exclusive service provider for such services.
SECTION 4.5 CONCESSIONS AND CATERING. The Licensor reserves, and at all times
shall have, the sole right to operate or have operated in its behalf all
commercial enterprises, including all concessions, bars and catering operations
and to sell or otherwise provide flowers, food, refreshments, beverages, cigars,
cigarettes, candies and periodicals, and to grant concessions to designated
airlines, auto rentals, delivery services, shoe shine, and others.
SECTION 4.6 HEADQUARTERS HOTEL. The Sands Hotel and Casino, located adjacent
to the Sands Expo and Convention Center, has been demolished and a new property
offering 6,000 sleeping rooms, and a convention complex featuring large
ballrooms and breakout meeting space, over 150,000 square feet of casino space,
multiple restaurants, and approximately 500,000 square feet of retail space is
being developed on the site it previously occupied. Licensee agrees to
designate the new property as an official headquarters location for its show.
Further, Licensee will use its best efforts to assist Licensor in its
solicitation of Licensee's exhibitors and invitees for their food, beverage,
function, and hospitality business.
SECTION 4.7 ADVERTISEMENTS, POSTERS AND MARQUEE. The Licensee agrees not to
post or exhibit or allow to be posted or exhibited signs, advertisement show-
bills, lithographs, posters, or cards of any description (therein "signage") in
any area of the Facilities other than within the Authorized Areas except with
the prior written approval of the Licensor. If such approval is granted by
Licensor, Licensee shall pay a fifteen (15%) percent commission from the gross
revenues paid by the advertising entity. The advertising entity is defined as
the party whose organization, business or concern is advertising on the signs,
advertisements, show bills, banners, lithographs, posters, or cards. Any
signage to be posted or exhibited in any area of the Facility other than the
Authorized Areas shall be upon the regular billboards, if any, provided by the
Licensor therefore. The Licensee will use, post or exhibit only such signage as
is related to the Event in the Authorized Areas and during the hours for which
this License was granted and for such period of time as designated by the
Licensor.
SECTION 4.8 USE OF LICENSOR'S EQUIPMENT. If any equipment provided by the
Licensor to the Licensee requires an operator or technician, such operator or
technician may, if required by the Licensor, be supplied by it to operate such
equipment, and the Licensee shall pay for such equipment and technician or
operator the amount set forth in the Show Manager's Handbook.
<PAGE>
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ARTICLE V - SECURITY DEPOSIT AND PERFORMANCE BOND OR GUARANTY
SECTION 5.1 SECURITY DEPOSIT. With respect to the Security Deposit specified
in Article I, the Licensee agrees that the same will be paid on the date set
forth in Article I, and that the Licensor shall hold the same throughout the
License Period as security for the performance by the licensee of all
obligations on the part of the Licensee hereunder. The Licensor shall have the
right from time to time, without prejudice to any other right or remedy the
Licensor may have hereunder or by law, to apply, without notice to the Licensee,
such deposit, or any part thereof, to the Licensor's damages arising from an
Event of Default caused by the Licensee or to pay any of the Licensee's
obligations for any of the Exclusive Contractual Services contracted for by the
Licensee pursuant to Article IV. If the Licensee is not in default under this
Agreement at the time of final accounting, the Licensor shall return the
Security Deposit, or so much thereof as shall not theretofore have been applied
in accordance with the terms of this Section 5.1, to the Licensee.
SECTION 5.2 PERFORMANCE BOND OR GUARANTY. Upon request by the Licensor, the
Licensee shall furnish to the Licensor a performance bond or sufficient guaranty
in substance and amount determined by Licensor.
ARTICLE VI - INSURANCE, INDEMNIFICATION AND WAIVER OF SUBROGATION
SECTION 6.1 INSURANCE.
(a) The Licensee shall provide and keep in force during the License Period the
following insurance (in addition to any other insurance Licensor may deem
necessary):
(i) Workers' compensation insurance in accordance with Nevada Law covering
Licensees' employees.
(ii) Employers' Liability insurance for Nevada operations in minimum limits of
One Million Dollars ($1,000,000) per occurrence.
(iii) Commercial General Liability insurance including blanket contractual
liability and personal injury coverage with limits of Liability of at least One
Million Dollars ($1,000,000) in any one occurrence.
(iv) Comprehensive Automobile Liability insurance insuring any owned, non-
owned, and hired vehicles to be used in and out of the "Facilities" in an amount
of One Million Dollars ($1,000,000) in any one occurrence.
All insurance required shall be issued by companies authorized to do business in
the State of Nevada. Licensee shall have completed by its insurance agent the
Certificate of Insurance provided by Licensor and/or separate certificates for
Nevada Workers' Compensation. Licensee shall deliver such completed
certificates of insurance to Licensor at least ninety (90) days prior to the
beginning of the License Period. All required insurance policies shall name as
additional insured those entities set forth in Article I as "Additional Insureds
and Indemnities".
<PAGE>
-10-
All required insurance policies shall provide that (i) the insurance carrier
will give written notice to Licensor at least thirty (30) days prior to any
material change in, cancellation, or non-renewal of the policy. Licensee's
failure to provide such certificates or policies, as the case may be, within the
period specified herein shall constitute a breach of the Licensee's duties and
obligations hereunder.
(b) The Licensee shall obtain and maintain during the License Period insurance
policies on all personal property owned, leased or hired by, or in the care,
control or custody of the Licensee during the License Period. Such policies
shall provide coverage for "all risks," including earthquake, flood and theft
with a deductible per loss of not more than $1,000.00.
SECTION 6.2 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT.
(a) The Licensee hereby releases and discharges and indemnifies, and agrees to
keep indemnified, defend, protect and save harmless the Licensor and those named
Additional Indemnities set forth in Article I (herein "Indemnities") of and from
any and all claims, demands, liabilities, damages, costs, losses and expenses
(including attorneys' fees and disbursements) for any injury to, including death
(whether they be third persons or employees of either the Licensor or the
Licensee) and any loss (through theft or otherwise) of or damage to property
(whether it be that of the Licensor or the Licensee or a third person) caused
by, growing out of, or happening in connection with or with respect to the use
by the Licensee, or of any other person or legal entity with the permission
(express or implied) of the Licensee, of the Facilities or its equipment. Such
indemnification by the Licensee shall apply unless such damage or injury results
from the sole negligence, gross negligence or willful misconduct of the Licensor
or any person contracted or hired by Licensor to perform Exclusive Contractual
Services.
(b) Without limiting the foregoing, the Licensee assumes all costs and expenses
arising from the use of, broadcast, performance or publication, including
musical or other audio or visual presentation, of patented, trademarked, or
copyrighted materials, equipment, devices, processes, or dramatic rights used
during or incorporated in the conduct of its operation hereunder; and the
Licensee agrees to indemnify and hold harmless the Indemnities from all damages,
costs and expenses at law or for equitable relief for or on account of any
patented, trademarked or copyrighted materials, equipment, devices, processes or
dramatic rights furnished to or used by the Licensee or its exhibitors, or any
infringement with respect thereto in connection with this License, including the
costs and expenses of defending any such action, even if it be groundless or
fraudulent.
(c) Without limiting the foregoing, the Licensee shall also indemnify and save
harmless the Indemnities from all claims, demands, liabilities, damages, costs,
losses and expenses made against or incurred by any of the indemnities arising
out of injury or loss to third parties caused by Licensee's failure to return
the Authorized Area to the Licensor,
<PAGE>
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vacate the Facilities, relinquish the Licensor's or Authorized Contractor's
equipment at the end of the License Period, or Licensee's breach of any contract
or agreement with a third party to provide contractual or other services.
SECTION 6.3 WAIVER OF SUBROGATION. The Licensee hereby waives any and every
claim which arises in its favor and against the Licensor, or against all of the
Additional Indemnities set forth in Article I, for any and all loss or damage
covered by valid and collectible insurance policies to the extent of the
insurance proceeds paid with respect thereto. Such waiver shall be in addition
to, and not, derogation of, any other waiver or release contained in this
License with respect to any loss or damage to property of the Licensees.
Inasmuch as the waiver will preclude the assignment of any aforesaid claim by
way of subrogation (or otherwise) to an insurance company (or any other person),
the Licensee shall notify its insurers of such waiver.
ARTICLE VII - LICENSEE'S OBLIGATION AT END OF LICENSE PERIOD
SECTION 7.1 RETURN OF AUTHORIZED AREA. At the end of the License Period, the
Licensee shall vacate the Facilities and return the Authorized Area and the
Licensor's equipment to the Licensor, all in the same broom clean condition and
repair as originally furnished to the Licensee, normal wear and tear excepted.
At such time, the Licensee shall remove completely from the Facilities all
goods, wares, merchandise and property of any and all kinds and description
placed therein (herein "Property").
SECTION 7.2 REPAIR OF AUTHORIZED AREA. The Licensee agrees that if the
Authorized Area, Lobbies, Hallways, Restrooms or other Public Space, or any
other part of the Facilities, shall be damaged by the act, default or negligence
of the Licensee, or of the Licensee's agents, employees, patrons, or invitees,
the Licensee will pay to the Licensor upon demand such sum as shall be necessary
to restore said areas to their condition immediately prior to the commencement
of the License Period. The Licensee hereby assumes full responsibility for the
character, acts and conduct of all persons acting for or on behalf of said
Licensee.
SECTION 7.3 FAILURE TO RETURN THE AUTHORIZED AREA OR VACATE THE FACILITIES. In
the event the Licensee shall fail to return the Authorized Area to the Licensor
or to vacate the Facilities in accordance with the provisions of Section 7.1,
the Licensor is authorized, at the Licensee's expense, to remove therefrom and
to store or return to the Licensee or, except where the Licensee's failure to do
so is caused by an event beyond the Licensee's control, such as a strike beyond
its control, a national emergency or an Act of God, to treat the same as
abandoned and discarded property and accordingly dispose of the Property. The
Licensor shall not be liable for any damages or loss to the Property which may
be sustained either in the course of such removal or in the course of storage,
or in the course of transit, or by virtue of the Licensor's disposal of the
Property and the Licensor is hereby expressly released from any and all such
claims for damages of whatsoever kind or nature. The Licensor shall be under no
duty, however, to so remove, store or return the Property.
<PAGE>
-12-
SECTION 7.4 EXTENDED USE CHARGE. The Licensee shall pay an Extended Use Charge
equal to twice the per diem Basic Fee applicable to Show Days for each day or
portion of a day after the end of the License Period that the Licensee has
failed to return all or any part of the Authorized Area to the licensor and
vacate the Facilities in accordance with the provisions of Section 7.1, unless
said failure is caused by any of the following events, to the extent that such
event is beyond the Licensee's reasonable control: fire, flood, riot,
earthquake, civil commotion, or Act of God. The liability to pay an Extended
Use Charge does not in any way extend the License Period; is not liquidated
damages; is intended as a penalty against the Licensee for use of the Facilities
or the Authorized Area beyond the License Period; and does not preclude the
Licensor from asserting any other rights against the Licensee, including, but
not limited to, those set forth in Section 7.3 and Article VIII. The Extended
Use Charge is due and payable at the end of each day for which the Charge is
assessed.
SECTION 7.5 FAILURE TO COMPLY LIST. Licensor and Licensee shall conduct a walk
through of the Authorized Area within twenty-four (24) hours of the end of the
License Period for the purpose of preliminarily identifying any failure of the
Licensee to comply with the provisions of Section 7.1. In addition, Licensor
shall provide to Licensee a final, comprehensive and complete list of Licensee's
failure(s) to comply with the provisions of Section 7.1 no later than the
earlier of the following: (i) seven (7) days after the end of the applicable
License Period or (ii) the commencement of any use of the hall or any portion of
the Authorized Area by any person other than the Licensee. The Licensee shall
not be responsible for any alleged non-compliance with Section 7.1 not
specifically identified in the list.
ARTICLE VIII - DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall be
considered an "Event of Default":
(a) The Licensee shall fail to pay in full and when due any payment required
hereunder, whether said payment was required to be paid to the Licensor or any
Authorized Contractor;
(b) The Licensee shall fail to pay promptly any sales, use, excise or other
taxes when due or fail, upon request of the Licensor, to provide evidence same
to the Licensor;
(c) The Licensee shall fail to obtain or pay for any and all necessary permits
and licenses, including union or trade organization clearances, and Fire Marshal
approvals, when and where required, or fail, upon the Licensor's request, to
provide evidence of such permits or licenses to the Licensor;
(d) Any other default or breach of any covenant or agreement contained herein
including the specific duty to provide evidence of insurance coverage as
provided in Article VI.
(e) The Licensee shall make an assignment for the benefit of creditors or shall
file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition,
<PAGE>
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readjustment, liquidation, dissolution or a relief for itself under any present
or future Federal, State or other statute, law or regulation for the relief of
debtors, or shall seek or consent acquiesce in the appointment of any trustee,
receiver or liquidator of the Licensee or of all or any substantial part of its
properties, or shall admit in writing its inability to pay its debts generally
as they become due;
(f) A petition shall be filed against the Licensee in bankruptcy or under any
other law seeking any reorganization, arrangement, composing readjustment,
liquidation, dissolution, or similar relief.
(g) Licensee shall materially diverge from the plan of operation without the
prior written consent of Licensor.
SECTION 8.2 LICENSOR'S REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of
any of the Events of Default set forth in Section 8.1 or elsewhere, in this
Agreement which default continues for a period of five (5) days after written
notice from Licensor specifying the nature of such default, Licensor may
exercise any or all of the following:
(a) accelerate payment of the Basic Fee;
(b) require that Licensee give additional security for Licensee's performance
of its obligations;
(c) declare this Agreement terminated and revoke the license given hereby;
(d) enter and take exclusive possession of and remove all persons and property
from the Authorized Areas and the Facility;
(e) assert and enforce claims against any bond provided under this Agreement;
(f) refuse to commence, or discontinue the rendition of all services or
utilities to Licensee and the Authorized Area;
(g) apply monies from Licensee's show account to satisfy or reduce debt;
(h) for late payment of one contract, cancel any or all subsequent contracts at
Licensor's option.
Licensee waives any right it may have as to notice or hearing prior to the
exercise of the powers set forth above. The rights and remedies of Licensee
shall be cumulative, and none shall exclude other rights or remedies allowed by
law or at equity, or set forth in other sections of this Agreement.
SECTION 8.3 REMEDYING DEFAULTS. The Licensor may, but shall not be required
to, pay such sums or to do any act which requires the expenditure monies or
services which may be necessary or appropriate by reason of the failure or
neglect for the Licensee to perform any of the provisions of this License. In
the event of the exercise of such right by the Licensor, the Licensee agrees to
pay to the Licensor forthwith upon demand all such sums expended by the Licensor
(or the fair value thereof, whichever is greater), together with interest
thereon at the rate of eighteen (18%) percent per annum, as an Additional
Charge.
SECTION 8.4 TERMINATION WITHOUT DEFAULT. In the event that the Authorized Area
or the Facilities of which it is a part or any portion thereof, are destroyed or
damaged by fire or other casualty so that in the reasonable judgment of the
Licensor its or the Licensee's use thereof would be substantially interfered
with, or in the event of a taking of all or a
<PAGE>
-14-
portion of the Facilities by eminent domain, condemnation or foreclosure, then
the Licensor may terminate this Agreement upon giving to the Licensee notice of
termination not more than ninety (90) days following the event of destruction,
damages or taking and this Agreement shall terminate on the date set forth in
such notice of termination, all with the same force and effect as though the
License Period of this Agreement had originally been scheduled to expire on such
date, and Licensor shall return to the Licensee all monies theretofore paid by
the Licensee to the Licensor as a Security Deposit, Reservation Fee, Basic Fee
or Additional Fee (to the extent not applied by Licensor in accordance with the
terms hereof).
SECTION 8.5 RIGHT TO RE-ENTER. If this License shall have been terminated as
provided in this Article, or if any execution or attachment shall be issued
against the Licensee or its Property whereupon the Authorized Area shall be
taken or occupied by someone other than the Licensee, then the Licensor may,
without notice, re-enter the Authorized Area, without being liable for any
prosecution thereof, and remove the Licensee and all other persons and any and
all property from the same, as if this License was not in effect.
SECTION 8.6 LIQUIDATED DAMAGES. If the Licensee cancels the Event covered by
this License, the Licensee agrees to pay to the Licensor, as liquidated damages
and not as a penalty an amount equal to the Reservation Fee and the remainder of
the Basic Fee, as set forth in Article I. The parties hereto agree that such
amounts constitute reasonable provision for liquidated damages and acknowledge
that the amount of actual damages will be difficult to establish except as
provided in Sections 2.1, 4.2, and 8.11.
In any event, and in addition to the foregoing, the Licensee also agrees to pay
any monies due for Additional Fees and Additional Charges. The foregoing shall
not constitute Licensor's sole remedy for such cancellation and shall be in
addition to such other legal and equitable rights and remedies as may be
available to Licensor.
SECTION 8.7 LIENS. To secure the Licensee's obligation hereunder, Licensee
hereby grants the Licensor the first right of lien against all ticket office
receipts and Property of the Licensee hereunder. The Licensor is empowered to
withhold from ticket office receipts such amount as is outstanding and owed by
the Licensee hereunder. If the total ticket office receipts are insufficient to
cover such unpaid amounts the Licensor shall have the right to impound the
Licensee's Property at the Facilities, or elsewhere, at the Licensee's expense.
If such unpaid amounts remain unpaid for a period of ten (10) days after the
termination of this License, the Licensor shall have the right to sell the
impounded Property at public auction and to apply the cash proceeds from the
auction less its costs, including attorneys' fees, to the retirement of said
unpaid amounts.
SECTION 8.8 ACTIONS. Any action by one party to this License against another
arising hereunder shall be maintained in the State of Nevada,; and the Licensee
hereunder consents to same and to the maintenance of such action by the Licensor
against it in said State of Nevada.
<PAGE>
-15-
SECTION 8.9 CUMULATIVE REMEDIES. All rights, powers and privileges contained
hereunder upon the Licensor shall be cumulative and shall not be restricted to
those given by law.
SECTION 8.10 FORCE MAJEURE. In the event that the Licensor's obligations to
the Licensee under this Agreement be delayed, prevented or rendered impractical
by any of the following events: fire, flood, riot, earthquake, civil commotion,
strike, lockout, labor disturbances, explosion, sabotage, accident, war, other
casualty, Act of God, or any law, ordinance, rule or regulation which becomes
effective after the date of this License or any other cause beyond Licensor's
reasonable control the Licensor shall not be liable to the Licensee for such
delay or failure to perform. The Licensee hereby waives any claim for damages
or compensation for such delay or failure to perform, other than a return to it
of any monies paid directly to the Licensor but no other.
SECTION 8.11 SUBORDINATION. This Agreement and any renewals, extensions or
amendments hereof, and all of Licensee's rights and obligations hereunder or
thereunder now or hereafter existing, are unconditionally subject, inferior and
subordinate in priority to any mortgage, deed of trust or other security
interest or lien encumbering the Facilities (or any portion thereof) from time
to time and to the lien of any renewals, extensions, amendments or refinancings
thereof (each, a "Mortgage") and the rights, powers and privileges of any
beneficiary or trustee thereunder. Notwithstanding the foregoing at the
election of such holder or beneficiary, exercisable in its sole discretion at
any time, its Mortgage shall be subject, inferior and subordinate to the
Agreement. If such holder or beneficiary shall make such election, and if the
holder of such Mortgage shall exercise any remedies under or in connection with
such Mortgage (or in lieu thereof) after a default by Licensor under such
Mortgage then, at the option of any owner of the Facilities (or the applicable
portion thereof) (after giving effect to such exercise) the Licensee shall
recognize such new owner and this Agreement shall remain in full force and
effect as between such new owner, as Licensor, and Licensee, as licensee.
SECTION 8.12 LICENSE AND NOT A LEASE. Notwithstanding anything to the contrary
contained herein, this Agreement is a license and not a lease and this Agreement
shall be construed to be a license and not a lease.
SECTION 8.13 DEFAULT BY LICENSOR. If the Licensor fails or refuses to make the
Facilities and/or the Authorized Areas available to the Licensee on the dates
set forth in this Agreement for any reason other than those specifies in
Sections 8.4 and 8.10 above, then, in addition to any claims, rights or remedies
the Licensee may have, the Licensor shall return to the Licensee all monies paid
to the Licensor along with interest on those monies at the rate of eighteen
percent (18%) per annum from the date the monies were remitted to the Licensor.
<PAGE>
-16-
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 9.1 NON-DISCRIMINATION. The Licensee shall not discriminate against
any person or persons in connection with admission, services or privileges
offered to or enjoyed by the general public because of race, creed, ancestry,
sexual orientation, disability, color, sex, marital status, age, religion or
national origin.
SECTION 9.2 AUDIO/VISUAL PRESENTATIONS. The Sands Expo and Convention Center
does not regulate, control, approve or disapprove any broadcast performance or
publication of music or any other audio or visual presentations. The Sands Expo
and Convention Center does not play or perform any music, nor does it offer
referrals or contracts with anyone who does. If the Licensee, or an exhibitor,
wishes to use copyrighted music or other copyrighted material it will be
necessary for Licensee to make arrangements with the appropriate owners of such
material or agents of such owners for a license to use or perform such
copyrighted music or material or to otherwise qualify for an exemption. The
Sands Expo and Convention retains the right to regulate the volume of any sound,
whether it be music, voice, special or artificial effects to the extent that the
same interferes with other licensees within the facilities or is determined to
be offensive or otherwise violates the rules and regulations or License
Agreement.
SECTION 9.3 RULES AND REGULATIONS. The Licensor's Rules and Regulations are
hereby incorporated into this Agreement by reference. Copies of Rules and
Regulations have been provided to the Licensee and the Licensee hereby
acknowledges receipt thereof. The Licensor reserves the right to change such
Rules and Regulations in writing from time to time and will provide the Licensee
with such changed Rules and Regulations which shall be binding upon the
Licensee. If there is at any time a conflict between the provisions of this
Agreement and the Rules and Regulations, the provisions of for this Agreement
shall control.
SECTION 9.4 WAIVER. The failure of either party hereto at any time or times to
require performance of any provisions hereof shall in no manner effect its right
at a later time to enforce the same provision. Any waiver by any party or the
breach of any provision contained in this Agreement in any one or more instances
shall not be deemed to be a waiver of any other breach of the same provision or
any other provision contained herein.
SECTION 9.5 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered by a customary overnight
delivery service, or if sent by certified or registered mail, postage prepaid,
to the Licensor or the Licensee, as the case may be, at the address as set forth
for each in Article I of this Agreement or to such other address as any party
shall have provided to the other parties from time to time in accordance with
the provisions of this Section 9.5.
SECTION 9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereto and
supersedes all proposals, negotiations and understandings of any nature
whatsoever. This Agreement
<PAGE>
-17-
may be changed or amended only by a written instrument duly signed by all of the
parties hereto. This agreement must be signed by Licensee and returned within
thirty (30) days from the date of Agreement set forth in Article I. If not so
returned to Licensor this agreement shall, at Licensor's option be rendered null
and void. In any event, the Agreement shall not be enforceable until signed by
Licensor.
SECTION 9.7 BINDING EFFECT, ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. This Agreement or any rights
hereunder may not be assigned by the Licensee without the express written
consent of Licensor, which consent will not be unreasonably withheld.
SECTION 9.8 CAPTIONS. The captions of the several provisions of this
Agreement have been inserted for convenience only and do not constitute a part
of this Agreement.
SECTION 9.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed wholly within such state.
SECTION 9.10 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.
SECTION 9.11 SIGNATURES. If you are in agreement with the contents of this
contract, please sign on the space indicated and return by OCTOBER 1, 1997. If
----------------
not executed and returned by said date, this offer shall automatically
terminate. Space is confirmed on a definite basis ONLY after receipt of this
agreement signed by you and counter-signed by the Convention Center General
Manager.
IN WITNESS WHEREOF, the Licensor and Licensee have caused this agreement to be
duly executed under seal by persons hereunto duly authorized as of the Date of
Agreement set forth in Article 1.
LICENSOR: LICENSEE:
INTERFACE GROUP - NEVADA, INC. MEN'S APPAREL GUILD IN
CALIFORNIA (MAGIC)
/s/ Richard Heller /s/ Joseph Loggia
BY:_____________________________ BY:_________________________________
RICHARD HELLER, JOE LOGGIA, PRESIDENT, CHIEF
V.P./GENERAL MANAGER OPERATING OFFICER
10/7/97 9/29/97
DATE:___________________________ DATE:_______________________________
<PAGE>
EXHIBIT 10.14
CONTRACT # 2000-06-B
---------
SANDS EXPO
201 EAST SANDS AVENUE . LAS VEGAS, NEVADA 89109 . 702-733-5556
SHOW NAME: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
FACILITIES LICENSE AGREEMENT
This agreement made and entered into this 5TH day of SEPTEMBER, 1997 by and
--- ---------------
between INTERFACE GROUP - NEVADA, INC. (hereinafter "Licensor") and MEN'S
-----
APPAREL GUILD IN CALIFORNIA (MAGIC) (hereinafter "Licensee"). The Sands Expo
- -----------------------------------
and Convention Center (hereinafter the "Facilities") is located at 201 E. Sands
Avenue, Las Vegas, Nevada. The Facilities are owned by Interface Group -
Nevada, Inc. a Nevada corporation, with offices at 201 E. Sands Avenue, Las
Vegas, Nevada (hereinafter "Owner"). The Licensor and Licensee agree as
follows:
ARTICLE I - BASIC LICENSE PROVISIONS
SECTION 1.1 INTRODUCTION. The following sets forth basic data and, where
appropriate, constitutes definitions of the terms hereinafter listed.
SECTION 1.2 BASIC DATA.
Date of Agreement: SEPTEMBER 5, 1997
-----------------
Licensee: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
Licensee's Address: 6200 CANOGA AVENUE, SUITE 303
-----------------------------
WOODLAND HILLS, CA 91367
-------------------------
Guarantor:
Authorized Area: The space licensed is as listed: HALLS "A", "B", AND "C"
-----------------------
FOURTEEN (14) MEETING ROOMS
---------------------------
which is (a portion)/(all) of the exhibition and convention space at the
Facilities. The Licensee shall also have the non-exclusive right to use in
common with others, public or common lobbies, hallways, stairways and walkways
designated by Licensor and necessary for access to the
<PAGE>
-2-
Authorized Area; but such rights shall always be subject to the rules and
regulations from time to time established by the Licensor pursuant to Section
9.4 and to the right of the Licensor to divide, designate or change from time to
time those common areas to be used. The foregoing notwithstanding, the common
areas shall remain in the control of the Licensor, however, the Licensor agrees
that the common areas shall not be used by any person or company that is
operating a business or performing a service deemed to be in competition within
the apparel industry.
Purpose And Use Of Authorized Area: The Authorized Area shall be used solely
for the purpose of EXHIBITS, MEETINGS, FASHION SHOWS, FOOD AND BEVERAGE
----------------------------------------------------
FUNCTIONS, AND ALL OTHER ACTIVITIES ANCILLARY TO THE MEN'S APPAREL GUILD IN
- ---------------------------------------------------------------------------
CALIFORNIA (MAGIC) A TRADE SHOW (hereinafter referred to as the "Event").
- -------------------------------
License Period: The license is granted commencing at 12:01 o'clock AM on
-----
FEBRUARY 10, 2000 and ending at 11:59 o'clock PM on FEBRUARY 19, 2000 including
- ----------------- ----- -----------------
the following periods designated for:
(a) Move In - A period from: 12:01 AM FEBRUARY 19, 2000 to 11:59 PM FEBRUARY
----------------- --------
13, 2000
--------
(b) Show Period - A period from: 12:01 AM FEBRUARY 14, 2000 to 11:59 PM
-----------------
FEBRUARY 17, 2000
- -----------------
(C) Move Out - A period from: 12:01 AM FEBRUARY 18, 2000 to 11:59 PM FEBRUARY
----------------- --------
19, 2000
- --------
Time is of the essence of this Agreement.
Hours of Operation: 24 Hrs.
-------
Exhibition Area(s): 24 Hrs.
-------
Meeting Room(s): 24 Hrs.
-------
Basic Fee and Payment: Licensee agrees to pay Licensor as the Basic Fee for the
use of Authorized Area the minimum sum of $661,500.00. A final count of the net
-----------
square footage of exhibition space used by Licensee shall be taken on FEBRUARY
--------
15, 2000. Should the net square footage used exceed the required minimum per
- --------
hall as follows:
<TABLE>
<S> <C> <C>
Hall "A" 90,000 sq. ft.
------
Hall "B" 90,000 sq. ft.
------
Hall "C" 90,000 sq. ft.
------
Hall "G" N/A sq. ft.
------
</TABLE>
<PAGE>
-3-
then the Licensee shall be billed at $.175 per net square foot for each square
-----
foot in excess of 270,000 net square feet for move-in and move-out days, and
-------
$.35 per net square foot for each such square foot actually used for displays
- ----
for Show Days as additional Basic Fee. The Licensee shall pay the sum of
$220,500.00 due FEBRUARY 10, 1998 as a Reservation Fee to reserve the dates
- ----------- -----------------
licensed hereunder and to be credited against the Basic Fee. The balance of the
Basic Fee shall be paid as follows: $220,500.00 on FEBRUARY 10, 1998, and
----------- ----------------- ---
$220,500.00 on AUGUST 10, 1999 paid by check made payable directly to "Sands
- ----------- ---------------
Expo and Convention Center" or by wire transfer.
Additional Fees: In addition to the Basic Fee (including Reservation Fee), the
Licensee shall pay the following Additional Fees: MEETING ROOMS ARE $400.00 PER
-----------------------------
ROOM, PER DAY.
- -------------
Security Deposit: The Licensee shall pay $5,000.00 on FEBRUARY 1, 2000 to be
--------- ----------------
held thereafter by the Licensor as Security Deposit pursuant to the provisions
of Article V.
Additional Insureds and Indemnities: In accordance with Article VI, the
Additional Insureds and Indemnities are: LAS VEGAS SANDS INC., THE INTERFACE
GROUP - MASSACHUSETTS, INC., INTERFACE GROUP - NEVADA, INC., AND THE HOLDER OF
ANY MORTGAGE (AS DEFINED BELOW).
ARTICLE II - LICENSE AND USE OF AUTHORIZED AREA
SECTION 2.1 LICENSE OF AUTHORIZED AREA. The Licensor hereby licenses the use
by the Licensee of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement
and only for the hours of operation indicated herein and Licensee hereby agrees
to the use of the Authorized Area during the License Period only for the use and
purpose and upon the terms and conditions set forth in this Agreement. Licensor
shall retain the right to modify the area or configuration of a designated hall
for any reason, with thirty (30) days prior written notice to Licensee.
SECTION 2.2 PROHIBITED USES. The Licensee shall not use or allow the
Facilities or Authorized Area therein to be used for any purpose not set forth
in Article 1; for any improper, immoral, objectionable or unlawful purposes, in
any manner which could cancel the insurance or increase the rate of insurance on
the Facilities; in any manner which constitutes waste or nuisance; in any manner
which causes damage to the Facilities, including, without limiting the
generality thereof,
<PAGE>
-4-
driving any nails, hooks, tacks, screws or other devices into any part of the
Facilities or affixing any matter thereto by paste, tape or other adhesive or
altering the Facilities in any respect without the prior written approval of
Licensor; or in violation of the Facilities Rules and Regulations as such may
exist from time to time. Licensee is prohibited from possessing, storing, or
bringing onto the property, materials that constitute hazardous materials as
defined by federal, state, or local law without prior approval by the Sands Expo
and Convention Center. Any request for approval must include all federal, state
or local permits for the possession, storage, use, and transportation of such
hazardous material. Approval may be withheld by the Sands Expo and Convention
Center for any reason whatsoever in its sole discretion. The propriety or
morality of any use of the Facilities or Authorized Area by the Licensee shall
be determined in light of the community standards and based on the reasonable,
good faith assessment of the Licensor after consultation with the Licensee.
SECTION 2.3 DEVELOPMENT OF PLAN OF OPERATION UNDER LICENSE. The Licensee shall
provide the Licensor, at least ninety (90) days prior to the beginning of the
License Period, all information then reasonably available to the Licensee
pertinent to the activities to be undertaken in the Authorized Area pursuant to
the License (herein "plan of operation"), including but not limited to:
(i) Floor plans. (4 copies) indicating the design, nature and proposed
location of all exhibits and meeting space;
(ii) Utility and construction plans, including plans of all intended rigging;
(iii) All certificates of insurance required hereunder;
(iv) A security plan indicating the number, hours, and location of required
security personnel;
(v) Copies of all license applications for licenses required by the Licensor
for the purposes and uses of the Authorized Areas set forth in Article 1;
(vi) Copies of all approvals obtained from the Fire Marshal and other
municipal agencies required by the Licensor before using the Authorized Areas
for the purpose set forth in Article 1.
(vii) Such other information as the Licensor may reasonably request.
The Licensor reserves the right, by written notice to the Licensee within twenty
(20) days of the receipt of the plan of operation, to require the Licensee to
make such changes, deletions, and additions to the plan of operation as the
Licensor may reasonably deem necessary or desirable for the purpose of insuring
the safe and orderly operation of the Facilities and the Authorized Area.
Failure by the Licensee to make any such changes, additions, deletions required
by the Licensor within ten (10) days after such notice shall constitute an Event
of Default, as set forth in Article VIII.
SECTION 2.4 LICENSOR'S CONTROL AND RIGHT OF ENTRY. In permitting use of the
Authorized Areas by the Licensee, the Licensor retains and does not relinquish
the right to issue and enforce such rules, regulations and directives as it may
deem necessary for the safe, orderly and commercially sound operation of the
Facilities. The Licensor and its authorized representatives may enter the
Authorized Area after giving prior notice to Licensee, for the purpose of
inspecting and checking the same and the uses thereof; of making necessary
repairs thereto; of adjusting apparatus or equipment therein; of abating waste,
nuisances or violations of law or Rules and Regulations
<PAGE>
-5-
promulgated by the Licensor; of preparing food or readying other concessions;
and ejecting of any objectionable person or persons from therein. The Licensee
agrees that it will not allow any person at, in or about the Facilities who
shall upon reasonable, non-discriminatory grounds, be objected to by the
Licensor and such person's right to use the Facilities and the Authorized Area
therein may be revoked by the Licensor.
ARTICLE III - PAYMENT OF FEES, COSTS, CHARGES AND DEPOSITS
SECTION 3.1 The Licensee shall (in addition to the Basic Fee including
Reservation Fee) pay when due all Additional Fees, Additional Charges, and
Security Deposit to the Licensor at 201 E. Sands Avenue, Las Vegas, Nevada
89109 by check payable directly to Sands Expo and Convention Center, or wire
transfer.
SECTION 3.2 The Licensee shall pay to the Licensor all Basic Fees including
Reservation Fees, and Additional Fees as set forth in Article I and Article IV.
Additional Charges, as set forth in Article VII and Article VIII, shall be paid
within thirty (30) days after being billed therefore by Licensor subject to the
provisions of Section 3.4, and with pre-approved credit from the Licensor.
SECTION 3.3 All monies paid to the Licensor by the Licensee, including the
Reservation Fee, Basic Fee, Additional Fees, Security Deposit and Additional
Charges are non-refundable, except as specifically provided in this Agreement.
Licensee acknowledges that all deposits are non-refundable and that payments
made pursuant to the liquidated damage provisions set forth in Section 8.6 are
fair and reasonable consideration for Licensor's holding the Authorized Areas
for the dates indicated for the exclusive use of Licensee and rendering the same
unavailable for others. The Licensor shall have no obligation to the Licensee
to pay interest on any fees or deposits, and the Licensor shall have the right
to commingle such monies with the Licensor's other funds.
SECTION 3.4 Any payment required hereunder not paid when due shall bear
interest at the rate of eighteen (18%) percent per annum from the date due and
shall be payable forthwith on demand by the Licensor. This right to collect
interest does not preclude the Licensor from asserting any other right against
the Licensee, including, but not limited to, those set forth in Article VIII.
Notwithstanding the foregoing, interest shall not be due on any amounts Licensee
reasonably claims to be in dispute; provided, however, that Licensee pays all
undisputed amounts when due.
ARTICLE IV - SERVICES PROVIDED TO AND BY LICENSEE
SECTION 4.1 SERVICES PROVIDED BY LICENSOR FOR BASIC FEE. The Licensor shall
provide, during the show period's hours of operation, without cost to Licensee,
heating, ventilating and air conditioning, permanent overhead lighting,
permanent public address system, as available, restroom facilities and
janitorial services consisting of cleaning of common areas. During move-in and
move-out periods, Licensor shall provide only sufficient work lighting in
Authorized
<PAGE>
-6-
Areas and janitorial services in common areas only. Licensor shall not be held
responsible for and Licensee shall hold Licensor harmless from loss of lighting,
air conditioning, electricity, water, gas, heating or other utilities,
facilities or services not caused by the intentional wrongful act of Licensor.
SECTION 4.2 CONTRACTUAL SERVICES NOT INCLUDED IN BASIC FEE. For all services,
other than those set forth in Section 4.1 which are the only services covered by
the Basic Fee, Licensee agrees that it will, and will require all of its
exhibitors and other invitees to, utilize Contractual Services either provided
directly by Licensor or by an Authorized Contractor of Licensor. For purposes
of this agreement "Contractual Services" means the labor equipment, utilities
and materials whether sold, rented, or otherwise provided which are required to
set up, maintain, protect and remove displays, exhibits, and other items which
are constructed or brought into the Facilities as part of the Event, and all
related services which customarily are utilized by Licensee, its exhibitors or
other invitees when holding or participating in the Event. For purposes of this
Agreement, "Authorized Contractor" means those persons or companies Licensor has
approved to provide Contractual Services at the Facilities as of the date
Licensee executes this Agreement or as approved as provided below. Licensor
reserves the right to withdraw approval of any Authorized Contractor for any
reason prior to Licensor's approval of Licensee's Plan of Operation, or at any
time thereafter for cause. The Contractual Services to be provided exclusively
by Licensor and not by an Authorized Contractor include, but shall not be
limited to, the following:
(i) Electrical wiring and services;
(ii) Plumbing, gas and compressed air services;
(iii) Telephone systems wiring, services and operation;
(iv) General cleaning and maintenance of Authorized Areas, and trash
collection and disposal;
(v) Customer Service Center Facilities;
(vi) Rigging;
(vii) Food and beverage services.
Licensor reserves the right to identify additional Contractual Services that may
be performed only by Licensor; provided, that absent such identification these
Contractual Services may be performed by an Authorized Contractor. Licensor
shall identify those additional Contractual Services it intends to provide on an
exclusive basis no later than ninety (90) days prior to the deadline for receipt
of Licensee's Plan of Operation, as set forth in Section 2.3. Those additional
Contractual Services include, but are not limited to, the following:
(i) Floral and plant services
(ii) Custom signage;
(iii) Security services;
(iv) Furniture and Equipment Rental;
(v) Drayage/freight handling;
(vi) General labor services; and;
(vii) Decorator/General Service Contractor Services.
<PAGE>
-7-
Licensee shall pay Licensor for any Contractual Services provided by Licensor
according to the rates shown in the Show Managers Handbook as amended. Any
additional Contractual Services, and the rates associated therewith, shall be
identified in a separate exhibit to this Agreement. If not added in the Show
Managers Handbook, or if a service is provided for which no rate is stated, then
Licensee shall pay Licensor at a rate to be agreed upon by the parties. Licensee
shall provide Licensor with notice of the Contractual Services it requires when
it files its Plan of Operation in accordance with Section 2.3. Authorized
Contractors shall bill Licensee directly at rates agreed to by them and payment
shall be made directly to the Authorized Contractor. All bills for Contractual
Services rendered by Licensor or Authorized Contractors to Licensee's exhibitors
or invitees shall be rendered to and paid directly by the exhibitor or invitee.
Licensor shall be under no obligation to provide a Contractual Service it has
specifically undertaken to provide unless it or an Authorized Contractor is
reasonably capable of providing the service. The ability of Licensor or an
Authorized Contractor to provide particular Contractual Services shall be
determined at the time the parties agree upon Licensee's Plan of Operation. No
Contractual Service shall be utilized or employed by Licensee except as provided
in the Section 4.2 or as approved in advance in writing by Licensor. Licensor
shall retain, at all times during the License period, the right to sell,
advertise, and promote both authorized and Exclusive Contractual Services to
Licensee's exhibitors. To facilitate Licensor's provision of Contractual
Services hereunder Licensee is required to provide Licensor, at least 120 days
prior to the beginning of the License Period, with a list of all exhibitors or
other invitees planning to use the Authorized Areas during the License Period,
and with the business address, telephone number and name of the appropriate
person to be contracted for each such exhibit.
SECTION 4.3 SECURITY OF FACILITIES.
(a) The Licensor shall neither be responsible for any property brought into the
Facilities by the Licensee or any person claiming under the Licensee, nor be
obligated to watch, guard or protect the same; nor shall the Licensor by liable
for any failure to do so by any guard, watchman or protection service employed
by the Licensor or by any guard, watchman or protection service contracted for
by the Licensee.
(b) After reviewing Licensee's plan of operation, Licensor and Licensee shall
jointly determine the minimum number of security guards reasonably necessary to
preserve order and to protect persons and property during the License Period.
(c) Except by arrangement with the Licensor and/or its designated security
guard service provider, no guard, watchman or protection service shall at any
time be stationed in the Facilities by the Licensee or any other person claiming
thereunder; and except by such arrangement, no person shall be allowed in or
remain in the Facilities after it has closed.
SECTION 4.4 REGISTERED NURSE OR OTHER MEDICAL PERSONNEL. The Licensee shall
maintain at the Facilities at all times during the License period a registered
nurse or other medical personnel (at Licensor's direction), fully licensed as
such in the State of Nevada. The Licensee shall, at its expense, contract with
the Licensor's exclusive service provider for such services.
<PAGE>
-8-
SECTION 4.5 CONCESSIONS AND CATERING. The Licensor reserves, and at all times
shall have, the sold right to operate or have operated in its behalf any
commercial enterprises, including all concessions, bars and catering operations
and to sell or otherwise provide flowers, food, refreshments, beverages, cigars,
cigarettes, candies and periodicals, and to grant concessions to designated
airlines, auto rentals, delivery services, shoe shine, and others.
SECTION 4.6 HEADQUARTERS HOTEL. The Sands Hotel and Casino, located adjacent
to the Sands Expo and Convention Center, has been demolished and a new property
offering 6,000 sleeping rooms, and a convention complex featuring large
ballrooms and breakout meeting space, over 150,000 square feet of casino space,
multiple restaurants, and approximately 500,000 square feet of retail space is
being developed on the site it previously occupied. Licensee agrees to
designate the new property as an official headquarters location for its show.
Further, Licensee will use its best efforts to assist Licensor in its
solicitation of Licensee's exhibitors and invitees for their food, beverage,
function, and hospitality business.
SECTION 4.7 ADVERTISEMENTS, POSTERS AND MARQUEE. The Licensee agrees not to
post or exhibit or allow to be posted or exhibited signs, advertisement, show-
bills, lithographs, posters, or cards of any description (herein "signage") in
any area of the Facilities other than within the Authorized Areas except with
the prior written approval of the Licensor. If such approval is granted by
Licensor, Licensee shall pay a fifteen (15%) percent commission from the gross
revenues paid by the advertising entity. The advertising entity is defined as
the party whose organization, business or concern is advertising on the signs,
advertisements, show bills, banners, lithographs, posters, or cards. Any
signage to be posted or exhibited in any area of the Facilities other than the
Authorized Areas shall be upon the regular billboards, if any, provided by the
Licensor therefore. The Licensee will use, post or exhibit only such signage as
is related to the Event in the Authorized Areas and during the hours for which
this License was granted and for such period of time as designated by the
Licensor.
SECTION 4.8 USE OF LICENSOR'S EQUIPMENT. If any equipment provided by the
Licensor to the Licensee requires and operator or technician, such operator or
technician may, if required by the Licensor, be supplied by it to operate such
equipment, and the Licensee shall pay for such equipment and technician or
operator the amount set forth in the Show Manager's Handbook.
ARTICLE V - SECURITY DEPOSIT AND PERFORMANCE BOND OR GUARANTY
SECTION 5.1 SECURITY DEPOSIT. With respect to the Security Deposit specified
in Article I, the Licensee agrees that the same will be paid on the date set
forth in Article I, and that the Licensor shall hold the same throughout the
License Period as security for the performance by the Licensee of all
obligations on the part of the Licensee hereunder. The Licensor shall have the
right from time to time, without prejudice to any other right or remedy the
Licensor may have hereunder or by law, to apply, without notice to the Licensee,
such deposit, or any part thereof, to the Licensor's damages arising from any
Event of Default caused by the Licensee or to pay any of the Licensee's
obligations for any of the Exclusive Contractual Services contracted for by the
Licensee pursuant to Article IV. If the Licensee is not in default under this
Agreement at the
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time of final accounting, the Licensor shall return the Security Deposit, or so
much thereof as shall not theretofore have been applied in accordance with the
terms of this Section 5.1, to the Licensee.
SECTION 5.2 PERFORMANCE BOND OR GUARANTY. Upon request by the Licensor, the
Licensee shall furnish to the Licensor a performance bond or sufficient guaranty
in substance and amount determined by Licensor.
ARTICLE VI - INSURANCE, INDEMNIFICATION AND WAIVER OF SUBROGATION
SECTION 6.1 INSURANCE.
(a) The Licensee shall provide and keep in force during the License Period
the following insurance (in addition to any other insurance Licensor may deem
necessary):
(i) Workers' compensation insurance in accordance with Nevada Law covering
Licensees' employees.
(ii) Employers' Liability insurance for Nevada operations in minimum limits of
One Million Dollars ($1,000,000) per occurrence.
(iii) Commercial General Liability insurance including blanket contractual
liability and personal injury coverage with limits of Liability of at least One
Million Dollars ($1,000,000) in any one occurrence.
(iv) Comprehensive Automobile Liability insurance insuring any owned, non-
owned, and hired vehicles to be used in and out of the "Facilities" in the
amount of One Million Dollars ($1,000,000) in any one occurrence.
All insurance required shall be issued by companies authorized to do business in
the State of Nevada. Licensee shall have completed by its insurance agent the
Certificate of Insurance provided by Licensor and/or separate certificates for
Nevada Workers' Compensation. Licensee shall deliver such completed
certificates of insurance to Licensor at least ninety (90) days prior to the
beginning of the License Period. All required insurance policies shall name as
additional insured those entities set forth in Article I as "Additional Insureds
and Indemnities."
All required insurance policies shall provide that (i) the insurance carrier
will give written notice to Licensor at least thirty (30) days prior to any
material change in, cancellation, or non-renewal of the policy. Licensee's
failure to provide such certificates or policies, as the case may be, within the
period specified herein shall constitute a breach of the Licensee's duties and
obligations hereunder.
(b) The Licensee shall obtain and maintain during the License Period
insurance policies on all personal property owned, leased or hired by, or in the
care, control or custody of the Licensee during the License Period. Such
policies shall provide coverage for "all risks," including earthquake, flood and
theft with a deductible per loss of not more than $1,000.00.
SECTION 6.2 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT.
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(a) The Licensee hereby releases and discharges and indemnifies, and agrees to
keep indemnified, defend, protect and save harmless the Licensor and those named
Additional Indemnities set forth in Article I (herein "Indemnities") of and from
any and all claims, demands, liabilities, damages, costs, losses and expenses
(including attorneys' fees and disbursements) for any injury to, including death
(whether they be third persons or employees of either the Licensor or the
Licensee) and any loss (through theft or otherwise) of or damage to property
(whether it be that of the Licensor or the Licensee or a third person) caused
by, growing out of, or happening in connection with or with respect to the use
by the Licensee, or of any other person or legal entity with the permission
(express or implied) of the Licensee, of the Facilities or its equipment. Such
indemnification by the Licensee shall apply unless such damage or injury results
from the sole negligence, gross negligence or willful misconduct of the Licensor
or any person contracted or hired by Licensor to perform Exclusive Contractual
Services.
(b) Without limiting the foregoing, the Licensee assumes all costs and expenses
arising from the use of, broadcast, performance or publication, including
musical or other audio or visual presentation, of patented, trademarked, or
copyrighted materials, equipment, devices, processes, or dramatic rights used
during or incorporated in the conduct of its operation hereunder; and the
Licensee agrees to indemnify and hold harmless the Indemnities from all damages,
costs and expenses at law or for equitable relief for or on account of any
patented, trademarked or copyrighted materials, equipment, devices, processes or
dramatic rights furnished to or used by the Licensee or its exhibitors, or any
infringement with respect thereto in connection with this License, including the
costs and expenses of defending any such action, even if it be groundless or
fraudulent.
(c) Without limiting the foregoing, the Licensee shall also indemnify and save
harmless the Indemnities from all claims, demands, liabilities, damages, costs,
losses and expenses made against or incurred by any of the Indemnities arising
out of injury or loss to third parties caused by Licensee's failure to return
the Authorized Area to the Licensor, vacate the Facilities, relinquish the
Licensor's or Authorized Contractor's equipment at the end of the License
Period, or Licensee's breach of any contract or agreement with a third party to
provide contractual or other services.
SECTION 6.3 WAIVER OF SUBROGATION. The Licensee hereby waives any and every
claim which arises in its favor and against the Licensor, or against any of the
Additional Indemnities set forth in Article I, for any and all loss or damage
covered by valid and collectible insurance policies to the extent of the
insurance proceeds paid with respect thereto. Such waiver shall be in addition
to, and not, derogation of, any other waiver or release contained in this
License with respect to any loss or damage to property of the Licensees.
Inasmuch as the waiver will preclude the assignment of any aforesaid claim by
way of subrogation (or otherwise) to an insurance company (or any other person),
the Licensee shall notify its insurers of such waiver.
ARTICLE VII - LICENSEE'S OBLIGATION AT END OF LICENSE PERIOD
<PAGE>
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SECTION 7.1 RETURN OF AUTHORIZED AREA. At the end of the License Period, the
Licensee shall vacate the Facilities and return the Authorized Area and the
Licensor's equipment to the Licensor, all in the same broom clean condition and
repair as originally furnished to the Licensee, normal wear and tear excepted.
At such time, the Licensee shall remove completely from the Facilities all
goods, wares, merchandise and property of any and all kinds and description
placed therein (herein "Property").
SECTION 7.2 REPAIR OF AUTHORIZED AREA. The Licensee agrees that if the
Authorized Area, Lobbies, Hallways, Restrooms or other Public Space, or any
other part of the Facilities, shall be damaged by the act, default or negligence
of the Licensee, or of the Licensee's agents, employees, patrons, guests or
invitees, the Licensee will pay to the Licensor upon demand such sum as shall be
necessary to restore said areas to their condition immediately prior to the
commencement of the License Period. The Licensee hereby assumes full
responsibility for the character, acts and conduct of all persons acting for or
on behalf of said Licensee.
SECTION 7.3 FAILURE TO RETURN THE AUTHORIZED AREA OR VACATE THE FACILITIES. In
the event the Licensee shall fail to return the Authorized Area to the Licensor
or to vacate the Facilities in accordance with the provisions of Section 7.1,
the Licensor is authorized, at the Licensee's expense, to remove therefrom and
to store or return to the Licensee or, except where the Licensee's failure to do
so is caused by an event beyond the Licensee's control, such as a strike beyond
its control, a national emergency or an Act of God, to treat the same as
abandoned and discarded property and accordingly dispose of the Property. The
Licensor shall not be liable for any damages or loss to the Property which may
be sustained either in the courts of such removal or in the course of storage,
or in the course of transit, or by virtue of the Licensor's disposal of the
Property and the Licensor is hereby expressly released from any and all such
claims for damages of whatsoever kind or nature. The Licensor shall be under no
duty, however, to so remove, store or return the Property.
SECTION 7.4 EXTENDED USE CHARGE. The Licensee shall pay an Extended Use Charge
equal to twice the per diem Basic Fee applicable to Show Days for each day or
portion of a day after the end of the License Period that the Licensee has
failed to return all or any part of the Authorized Area to the Licensor and
vacate the Facilities in accordance with the provisions of Section 7.1, unless
said failure is caused by any of the following events, to the extent such event
is beyond the Licensee's reasonable control: fire, flood, riot, earthquake,
civil commotion, or Act of God. The liability to pay an Extended Use Charge
does not in any way extend the License Period; is not liquidated damages, is
intended as a penalty against the Licensee for use of the Facilities or the
Authorized Area beyond the License Period; and does not preclude the Licensor
from asserting any other rights against the Licensee, including, but not limited
to, those set forth in Section 7.3 and Article VIII. The Extended Use Charge is
due and payable at the end of each day for which the Charge is assessed.
SECTION 7.5 FAILURE TO COMPLY LIST. Licensor and Licensee shall conduct a walk
through of the Authorized Area within twenty-four (24) hours of the end of the
License Period for the purpose of preliminary identifying any failure of the
Licensee to comply with the provisions of Section 7.1. In addition, Licensor
shall provide to Licensee a final, comprehensive and complete list of
<PAGE>
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Licensee's failure(s) to comply with the provisions of Section 7.1 no later than
the earlier of the following: (i) seven (7) days after the end of the applicable
License Period or (ii) the commencement of any use of the hall or any portion of
the Authorized Area by any person other than the Licensee. The Licensee shall
not be responsible for any alleged non-compliance with Section 7.1 not specially
identified in the list.
ARTICLE VIII - DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall be
considered an "Event of Default":
(a) The Licensee shall fail to pay in full and when due any payment required
hereunder, whether said payment was required to be paid to the Licensor or any
Authorized Contractor;
(b) The Licensee shall fail to pay promptly any sales, use, excise or other
taxes when due or fail, upon request of the Licensor, to provide evidence of
same to Licensor;
(c) The Licensee shall fail to obtain or pay for any and all necessary permits
and licenses, including union or trade organization clearances, and Fire
Marshall approvals, when and where required, or fail, upon the Licensor's
request, to provide evidence of such permits or licenses to the Licensor;
(d) Any other default or breach of any covenant or agreement contained herein
including the specific duty to provide evidence of insurance coverage as
provided in Article VI;
(e) The Licensee shall make an assignment for the benefit of creditors or shall
file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, State or other statute,
law or regulation for the relief of debtors, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of the
Licensee or of all or any substantial part of its properties, or shall admit in
writing its inability to pay its debts generally as they become due;
(f) A petition shall be filed against the Licensee in bankruptcy or under any
other law seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief.
(g) Licensee shall materially diverge from the plan of operation without the
prior written consent of Licensor.
SECTION 8.2 LICENSOR'S REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of
any of the Events of Default set forth in Section 8.1 or elsewhere in this
Agreement which default continues for a period of five (5) days after written
notice from Licensor specifying the nature of such default, Licensor may
exercise any or all of the following:
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(a) accelerate payment of the Basic Fee;
(b) require that Licensee give additional security for Licensee's performance of
its obligations;
(c) declare this Agreement terminated and revoke the license given hereby;
(d) enter and take exclusive possession of and remove all persons and property
from the Authorized Areas and the Facility;
(e) assert and enforce claims against any bond provided under this Agreement;
(f) refuse to commence, or discontinue the rendition of all services or
utilities to Licensee and the Authorized Area;
(g) apply monies from Licensee's show account to satisfy or reduce debt;
(h) for late payment of one contract, cancel any or all subsequent contracts at
Licensor's option.
Licensee waives any right it may have as to notice or hearing prior to the
exercise of the powers set forth above. The rights and remedies of Licensor
shall be cumulative, and none shall exclude other rights or remedies allowed by
law or at equity, or set forth in other sections of this Agreement.
SECTION 8.3 REMEDYING DEFAULTS. The Licensor may, but shall not be required
to, pay such sums or to do any act which requires the expenditure of monies or
services which may be necessary or appropriate by reason of the failure or
neglect of the Licensee to perform any of the provisions of the License. In the
event of the exercise of such right by the Licensor, the Licensee agrees to pay
to the Licensor forthwith upon demand all such sums expended by the Licensor (or
the fair value thereof, whichever is greater), together with interest thereon at
the rate of eighteen (18%) percent per annum, as an Additional Charge.
SECTION 8.4 TERMINATION WITHOUT DEFAULT. In the event that the Authorized Area
or the Facilities of which it is a part or any potion thereof, are destroyed or
damaged by fire or other casualty so that in the reasonable judgment of the
Licensor its or the Licensee's use thereof would be substantially interfered
with, or in the event of a taking of all or a portion of the Facilities by
eminent domain, condemnation or foreclosure, then the Licensor may terminate
this Agreement upon giving to the Licensee notice of termination not more than
ninety (90) days following the event of destruction, damage or taking and this
Agreement shall terminate on the date set forth in such notice of termination,
all with the same force and effect as though the License Period of this
Agreement had originally been scheduled to expire on such date, and Licensor
shall return to the Licensee all monies theretofore paid the Licensee to the
Licensor as a Security Deposit, Reservation Fee, Basic Fee or Additional Fee (to
the extent not applied by Licensor in accordance with the term hereof).
SECTION 8.5 RIGHT TO RE-ENTER. If this License shall have been terminated as
provided in this Article, or if any execution or attachment shall be issued
against the Licensee or its Property
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whereupon the Authorized Area shall be taken or occupied by someone other than
the Licensee, then the Licensor may, without notice, re-enter the Authorized
Area, without being liable for any prosecution thereof, and remove the Licensee
and all other persons and any and all property from the same, as if this License
was not in effect.
SECTION 8.6 LIQUIDATED DAMAGES. If the Licensee cancels the Event covered by
this License, the Licensee agrees to pay to the Licensor, as liquidated damages
and not as a penalty an amount equal to the Reservation Fee and the remainder of
the Basic Fee, as set forth in Article I. The parties hereto agree that such
amounts constitute reasonable provision for liquidated damages and acknowledge
that the amount of actual damages will be difficult to establish except as
provided in Section 2.1, 4.2, and 8.11.
In any event, and in addition to the foregoing, the Licensee also agrees to pay
any monies due for Additional Fees and Additional Charges. The foregoing shall
not constitute Licensor's sole remedy for such cancellation and shall be in
addition to such other legal and equitable rights and remedies as may be
available to Licensor.
SECTION 8.7 LIENS. To secure the Licensee's obligation hereunder, Licensee
hereby grants the Licensor the right of lien against all ticket office receipts
and Property of Licensee hereunder. The Licensor is empowered to withhold from
ticket office receipts such amount as is outstanding and owed by the Licensee
hereunder. If the total ticket office receipts are insufficient to cover such
unpaid amounts the Licensor shall have the right to impound the Licensee's
Property at the Facilities, or elsewhere, at the Licensee's expense. If such
unpaid amounts remain unpaid for a period of ten (10) days after the termination
of this License, the Licensor shall have the right to sell the impounded
Property at public auction and to apply the cash proceeds from the auction less
its costs, including attorneys' fees, to the retirement of said unpaid amounts.
SECTION 8.8 ACTIONS. Any action by one party to this License against another
arising hereunder shall be maintained in the State of Nevada; and the Licensee
hereunder consents to same and to the maintenance of such action by the Licensor
against it in said State of Nevada.
SECTION 8.9 CUMULATIVE REMEDIES. All rights, powers and privileges contained
hereunder upon the Licensor shall be cumulative and shall not be restricted to
those given by law.
SECTION 8.10 FORCE MAJEURE. In the event that the Licensor's obligations to
the Licensee under this Agreement be delayed, prevented or rendered impractical
by any of the following events: fire, flood, riot, earthquake, civil commotion,
strike, lockout, labor disturbances, explosion, sabotage, accident, war, other
casualty, Act of God, or any law, ordinance, rule or regulation which becomes
effective after the date of this License or any other cause beyond Licensor's
reasonable control the Licensor shall not be liable to the Licensee for such
delay or failure to perform. The Licensee hereby waives any claim for damages
or compensation for such delay or failure to perform, other than a return to it
of any monies paid directly to the Licensor, but no other.
SECTION 8.11 SUBORDINATION. This Agreement and any renewals, extensions or
amendments hereof, and all of Licensee's rights and obligations hereunder or
thereunder now or hereafter
<PAGE>
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existing, are unconditionally subject, inferior and subordinate in priority to
any mortgage, deed of trust or other security interest or lien encumbering the
Facilities (or any portion thereof) from time to time and to the lien of any
renewals, extensions, amendments or refinancings thereof (each, a "Mortgage")
and the rights, powers and privileges of any beneficiary or trustee thereunder.
Notwithstanding the foregoing, at the election of such holder or beneficiary,
exercisable in its sole discretion at any time, its Mortgage shall be subject,
inferior and subordinate to this Agreement. If such holder or beneficiary, shall
made such election, and if the holder of such Mortgage shall exercise any
remedies under or in connection with such Mortgage (or in lieu thereof) after a
default by Licensor under such Mortgage then, at the option of any owner of the
Facilities (or the applicable portion thereof) (after giving effect to such
exercise) the Licensee shall recognize such new owner and this Agreement shall
remain in full force and effect as between such new owner, as Licensor, and
Licensee, as licensee.
SECTION 8.12 LICENSE AND NOT A LEASE. Notwithstanding anything to the contrary
contained herein, this Agreement is a license and not a lease and this Agreement
shall be construed to be a license and not a lease.
SECTION 8.13 DEFAULT BY LICENSOR. If the Licensor fails or refuses to make the
Facilities and/or the Authorized Areas available to the Licensee on the dates
set forth in this Agreement for any reason other than those specifies in Section
8.4 and 8.10 above, then, in addition to any claims, rights or remedies the
Licensee may have, the Licensor shall return to the Licensee all monies paid to
the Licensor along with interest on those monies at the rate of eighteen percent
(18%) per annum from the date the monies were remitted to the Licensor.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 9.1 NON-DISCRIMINATION. The Licensee shall not discriminate against
any person or persons in connection with admission, services or privilege
offered to or enjoyed by the general public because of race, creed, ancestry,
sexual orientation, disability, color, sex, marital status, age, religion, or
national origin.
SECTION 9.2 AUDIO/VISUAL PRESENTATIONS. The Sands Expo and Convention Center
does not regulate, control, approve or disapprove any broadcast, performance or
publication of music or any other audio or visual presentations. The Sands Expo
and Convention Center does not play or perform any music, nor does it offer
referrals or contracts with anyone who does. If the Licensee, or an exhibitor,
wishes to use copyrighted music or other copyrighted material it will be
necessary for Licensee to make arrangements with the appropriate owners of such
material or agents of such owners for a license to use or perform such
copyrighted music or material or to otherwise qualify for an exemption. The
Sands Expo and Convention Center retains the right to regulate the volume of any
sound, whether it be music, voice, special or artificial effects to the extent
that the same interferes with other licensees within the facilities or is
determined to be offensive or otherwise violates the rules and regulations or
License Agreement.
SECTION 9.3 RULES AND REGULATIONS. The Licensor's Rules and Regulations are
hereby incorporated into this Agreement by reference. Copies of such Rules and
Regulations have been
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provided to the Licensee and the Licensee hereby acknowledges receipt thereof.
The Licensor reserves the right to change such Rules and Regulations in writing
from time to time and will provide the Licensee with such changed Rules and
Regulations which shall be binding upon the Licensee. If there is at any time a
conflict between the provisions of this Agreement and the Rules and Regulations,
the provisions of this Agreement shall control.
SECTION 9.4 WAIVER. The failure of either party hereto at any time or times to
require performance of any provisions hereof shall in no manner affect its right
at a later time to enforce the same provision. Any waiver by any party or the
breach of any provision contained in this Agreement in any one or more instances
shall not be deemed to be a waiver of any other breach of the same provision or
any other provision contained herein.
SECTION 9.5 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered by a customary overnight
delivery service, or if sent by certified or registered mail, postage prepaid,
to the Licensor or the Licensee, as the case may be, at the address as set forth
for each in Article I of this Agreement or to such other address as any party
shall have provided to the other parties from time to time in accordance with
the provisions of this Section 9.5.
SECTION 9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereto and
supersedes all proposals, negotiations and understandings of any nature
whatsoever. This Agreement may be changed or amended only by a written
instrument duly signed by all of the parties hereto. This agreement must be
signed by Licensee and returned within thirty (30) days from the date of
Agreement set forth in Article I. If not so returned to Licensor this Agreement
shall, at Licensor's option be rendered null and void. In any event, this
Agreement shall not be enforceable until signed by Licensor.
SECTION 9.7 BINDING EFFECT, ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. This Agreement or any rights
hereunder may not be assigned by the Licensee without the express written
consent of Licensor, which consent will not be unreasonably withheld.
SECTION 9.8 CAPTIONS. The captions of the several provisions of this Agreement
have been inserted for convenience only and do not constitute a part of this
Agreement.
SECTION 9.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed wholly within such state.
SECTION 9.10 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.
SECTION 9.11 SIGNATURES. If you are in agreement with the contents of this
contract, please sign on the space indicated and return by OCTOBER 1, 1997. If
---------------
not executed and returned by said
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date, this offer shall automatically terminate. Space is confirmed on a definite
basis ONLY after receipt of this agreement signed by you and counter-signed by
the Convention Center General Manager.
IN WITNESS WHEREOF, the Licensor and Licensee have caused this agreement to be
duly executed under seal by persons hereunto duly authorized, as of the Date of
Agreement set forth in Article 1.
LICENSOR: LICENSEE:
INTERFACE GROUP - NEVADA, INC. MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
/s/ Richard Heller /s/ Joseph Loggia
By:_______________________________ By:_________________________________
RICHARD HELLER, V.P./GENERAL JOE LOGGIA, PRESIDENT, CHIEF
MANAGER OPERATING OFFICER
10/7/97 9/29/97
DATE:_____________________________ DATE:______________________________
<PAGE>
EXHIBIT 10.15
CONTRACT #2000-07
-----------------
SANDS
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EXPO AND CONVENTION CENTER
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201 E. SANDS AVENUE, LAS VEGAS, NV 89109 . 702-733-5556
SHOW NAME: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
FACILITIES LICENSE AGREEMENT
This agreement made and entered into this 5TH day of SEPTEMBER, 1997 by and
--- ---------------
between INTERFACE GROUP - NEVADA, INC. (hereinafter "Licensor") and MEN'S
-----
APPAREL GUILD IN CALIFORNIA (MAGIC) (hereinafter "Licensee"). The Sands Expo
- -----------------------------------
and Convention Center (hereinafter the "Facilities") is located at 201 E. Sands
Avenue, Las Vegas, Nevada. The Facilities are owned by Interface Group -Nevada,
Inc., a Nevada corporation, with offices at 201 E. Sands Avenue, Las Vegas,
Nevada (hereinafter "Owner"). The Licensor and Licensee agree as follows:
SECTION 1.1 INTRODUCTION. The following sets forth basic data and, where
appropriate, constitutes definitions of the terms hereinafter listed.
SECTION 1.2 BASIC DATA.
Date of Agreement: SEPTEMBER 5, 1997
-----------------
Licensee: MEN'S APPAREL GUILD IN CALIFORNIA (MAGIC)
-----------------------------------------
Licensee's Address: 6200 CANOGA AVE., Suite 303
---------------------------
WOODLAND HILLS, CA 91367
-------------------------
Guarantor:
Authorized Area: The space licensed is as listed: HALLS "A", "B", AND "C"
-----------------------
FOURTEEN (14) MEETING ROOMS
---------------------------
which is (a portion)/(all) of the exhibition and convention space at the
Facilities. The Licensee shall also have the non-exclusive right to use in
common with others, public or common lobbies, hallways, stairways and walkways
designated by Licensor and necessary for access to the
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Authorized Area; but such rights shall always be subject to the rules and
regulations from time to time established by the Licensor pursuant to Section
9.4 and to the right of the Licensor to divide, designate or change from time to
time those common areas to be used. The foregoing notwithstanding, the common
areas shall remain in the control of the Licensor, however, the Licensor agrees
that the common areas shall not be used by any person or company that is
operating a business or performing a service deemed to be in competition within
the apparel industry.
Purpose And Use of Authorized Area: The Authorized Area shall be used solely
for the purpose of EXHIBITS, MEETINGS, FASHION SHOWS, FOOD AND BEVERAGE
----------------------------------------------------
FUNCTIONS, AND ALL OTHER ACTIVITIES ANCILLARY TO THE MEN'S APPAREL GUILD IN
- ---------------------------------------------------------------------------
CALIFORNIA (MAGIC) A TRADE SHOW (hereinafter referred to as the "Event").
- -------------------------------
License Period: The licensee is granted commencing at 12:01 o'clock AM on
-----
AUGUST 26, 2000 and ending at 11:59 o'clock PM on SEPTEMBER 2, 2000 including
- --------------- ----- -----------------
the following period designated for:
<TABLE>
<S> <C> <C>
(a) Move In - A period 12:01 AM AUGUST 26, 2000 to 11:59 PM AUGUST 27, 2000
from :
(b) Show Period - A period 12:01 AM AUGUST 28, 2000 to 11:59 PM AUGUST 31, 2000
from:
(c)Move Out - A period from 12:01 AM SEPTEMBER 1, 2000 to 11:59 PM SEPTEMBER 2, 2000
</TABLE>
Time is of the essence of this Agreement.
Hours of Operation: 24 Hrs.
Exhibit Area(s): 24 Hrs.
Meeting Room(s): 24 Hrs.
Basic Fee and Payment: Licensee agrees to pay Licensor as the Basic Fee for the
use of Authorized Area the minimum sum of $567,000.00. A final count of the net
-----------
square footage of exhibition space used by Licensee shall be taken on AUGUST 29,
----------
2000. Should the net square footage used exceed the required minimum per hall
- ----
as follows:
Hall "A" 90,000 sq. ft.
------
Hall "B" 90,000 sq. ft.
------
Hall "C" 90,000 sq. ft.
------
Hall "G" N/A sq. ft.
---
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then the Licensee shall be billed at $.175 per net square foot for each square
-----
foot in excess of 270,0000 net square feet for move-in and move-out days, and
--------
$.35 per net square foot for each such square foot actually used for displays
- ----
for Show Days as additional Basic Fee. The Licensee shall pay the sum of
$189,000.00 due AUGUST 28, 1998 as a Reservation fee to reserve the dates
- ----------- ---------------
licensed hereunder and to be credited against the Basic Fee. The balance of the
Basic Fee shall be paid as follows:
$189,000.00 on AUGUST 30, 1999, and $189,000.00 on FEBRUARY 28, 2000 paid by
- ----------- --------------- ----------- -----------------
check made payable directly to "Sands Expos and Convention Center" or by wire
transfer.
Additional Fees: In addition to the Basic Fee (including Reservation Fee), the
Licensee shall pay the following Additional Fees: MEETING ROOMS ARE $400.00 PER
-----------------------------
ROOM PER DAY.
- ------------
Security Deposit: The Licensee shall pay $5,000.00 on JULY 10, 2000 to be held
--------- -------------
thereafter by the Licensor or Security Deposit pursuant to the provisions of
Article V.
Additional Insureds and Indemnities: In accordance with Article VI, the
Additional Insureds and Indemnities are: LAS VEGAS SANDS INC., THE INTERFACE
GROUP - MASSACHUSETTS, INC., INTERFACE GROUP - NEVADA, INC., AND THE HOLDER OF
ANY MORTGAGE (AS DEFINED BELOW).
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ARTICLE II - LICENSE AND USE OF AUTHORIZED AREA
SECTION 2.1 LICENSE OF AUTHORIZED AREA. The Licensor hereby licenses the use
by the Licensee of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement
and only for the hours of operation indicated herein and the Licensee hereby
agrees to the use of the Authorized Area during the License Period only for the
use and purpose and upon the terms and conditions set forth in this Agreement.
Licensor shall retain the right to modify the area or configuration of a
designated hall for any reason, with thirty (30) days prior written notice to
Licensee.
SECTION 2.2 PROHIBITED USES. The Licensee shall not use or allow the
Facilities or Authorized Area therein to be used for any purpose not set forth
in Article 1; for any improper, immoral, objectionable or unlawful purposes, in
any manner which could cancel the insurance or increase the rates of insurance
on the Facilities; in any manner which constitutes waste or nuisance; in any
manner which causes damage to the Facilities, including, without limiting the
generality thereof, driving any nails, hooks, tacks, screws or other devices
into any part of the Facilities or affixing any matter thereto paste, tape or
other adhesive or altering the Facilities in any respect without the prior
written approval of Licensor; or in violation of the Facilities Rules and
Regulations as such may exist from time to time. Licensee is prohibited from
possessing, storing, or bringing onto the property, materials that constitute
hazardous materials as defined by federal, state, or local law without the prior
approval by the Sands Expo and Convention Center. Any request for approval must
include all federal, state or local permits for the possession, storage, use and
transportation of such hazardous material. Approval may be withheld by the Sands
Expo and Convention Center for any reason whatsoever in its sole discretion. The
propriety or morality of any use of the Facilities or Authorized Area by the
Licensee shall be determined in light of the community standards and based on
the reasonable, good fair assessment of the Licensor after consultation with the
Licensee.
SECTION 2.3 DEVELOPMENT OF PLAN OF OPERATION UNDER LICENSE. The Licensee
shall provide the Licensor, at least ninety (90) days prior to the beginning of
the License Period, all information then reasonably available to the Licensee
pertinent to the activities to be undertaken in the Authorized Area pursuant to
the License (herein "plan of operation"), including but not limited to:
(i) Floor plans. (4 copies) indicating the design, nature and proposed
location of all exhibits and meeting space;
(ii) Utility and construction plans, including plans of all intended rigging;
(iii) All certificates of insurance required hereunder;
(iv) A security plan indicating the number, hours, and location of required
security personnel;
(v) Copies of all license applications for licenses required by the Licensor
for the purposes and uses of the Authorized Areas set forth in Article I;
(vi) Copies of all approvals obtained from the Fire Marshal and other municipal
agencies required by the Licensor before using the Authorized Areas for the
purpose set forth in Article 1.
(vii) Such other information as the Licensor may reasonably request.
The Licensor reserves the right, by written notice to the Licensee within twenty
(20) days of the receipt of the plan of operation, to require the Licensor to
make such changes, deletions, and
<PAGE>
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additions to the plan of operation as the Licensor may reasonably deem necessary
or desirable for the purpose of insuring the safe and orderly operation of the
Facilities and the Authorized Area. Failure by the Licensee to make any such
changes, additions, deletions required by the Licensor within ten (10) days
after such notice shall constitute an Event of Default, as set forth in Article
VIII.
SECTION 2.4 LICENSER'S CONTROL AND RIGHT OF ENTRY. In permitting use of the
Authorized Areas by the Licensee, the Licensor retains and does not relinquish
the right to issue and enforce such rules, regulations and directives as it may
deem necessary for the safe, orderly and commercially sound operation of the
Facilities. The Licensor and its authorized representatives may enter the
Authorized Area after giving prior notice to Licensee, for the purpose of
inspecting and checking the same and the uses thereof; of making necessary
repairs thereto; of adjusting apparatus or equipment therein; of abating waste,
nuisances or violations of law or Rules and Regulations promulgated by the
Licensor; of preparing food or readying other concessions; and on ejecting any
objectionable person or persons from therein. The Licensee agrees that it will
not allow any person at, in or about the Facilities who shall, upon reasonable,
non-discriminatory grounds, be objected to by the Licensor and such person's
right to use the Facilities and the Authorized Area therein may be revoked by
the Licensor.
ARTICLE III - PAYMENT OF FEES, COSTS, CHARGES AND DEPOSITS
SECTION 3.1 The Licensee shall (in addition to the Basic Fee including
Reservation Fee) pay when due all Additional Fees, Additional Charges, and
Security Deposit to the Licensor at 201 E. Sands Avenue, Las Vegas, Nevada 89109
by check payable directly to Sands Expo and Convention Center, or by wire
transfer.
SECTION 3.2 The Licensee shall pay to the Licensor all Basic Fees including
Reservation Fees, and Additional Fees as set forth in Article I and Article IV.
Additional Charges, as set forth in Article VII and Article VIII, shall be paid
within thirty (30) days after being billed therefore by Licensor subject to the
provisions of Section 3.4, and with pre-approval credit from the Licensor.
SECTION 3.3 All monies paid to the Licensor by the Licensee, including the
Reservation Fee, Basic Fee, Additional Fees, Security Deposit and Additional
Charges are non-refundable, except as specifically provided in this Agreement.
Licensee acknowledges that all deposits are non-refundable and that payments
made pursuant to the liquidated damages provisions set forth in Section 8.6 are
fair and reasonable consideration for Licensor's holding the Authorized Areas
for the dates indicated for the exclusive use of Licensee and rendering the same
unavailable for others. The Licensor shall have no obligation to the Licensee to
pay interest on any fees for deposits, and the Licensor shall have the right to
commingle such monies with the Licensor's other funds.
SECTION 3.4 Any payment required hereunder not paid when due shall bear
interest at the rate of eighteen (18%) percent per annum from the date due and
shall be payable forthwith on demand by the Licensor. This right to collect
interest does not preclude the Licensor from asserting any against the Licensee,
including, but not limited to, those set forth in Article VIII.
<PAGE>
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Notwithstanding the foregoing, interest shall not be due on any amount Licensee
reasonably claims to be in dispute; provided, however, that Licensee pays all
undisputed amounts when due.
ARTICLE IV - SERVICES PROVIDED TO AND BY LICENSEE
SECTION 4.1 SERVICES PROVIDED BY LICENSOR FOR BASIC FEE. The Licensor shall
provide, during the show period's hours of operation, without cost to the
Licensee, heating, ventilating and air conditioning, permanent overhead
lighting, permanent public address system, as available, restroom facilities and
janitorial services consisting of cleaning of common areas. During move-in and
move-out periods, Licensor shall provide only sufficient work lighting in
Authorized Areas and janitorial services in common areas only. Licensor shall
not be held responsible for and Licensee shall hold Licensor harmless from loss
of lighting, air conditioning, electricity, water, gas, heating, or other
utilities, facilities or services not caused by the intentional wrongful act of
Licensor.
SECTION 4.2 CONTRACTUAL SERVICES NOT INCLUDED IN BASIC FEE. For all
services, other than those set forth in Section 4.1 which are the only services
covered by the Basic Fee, Licensee agrees that it will, and will require all of
its exhibitors and other invitees to, utilize Contractual Services either
provided directly by Licensor or by an Authorized Contractor of Licensor. For
purposes of this Agreement "Contractual Services" means the labor, equipment,
utilities and materials whether sold, rented, or otherwise provided which are
required to set up, maintain, protect and remove displays by Licensee, its
exhibitors or other invitees when holding or participating in the Event. For
purposes of this Agreement, "Authorized Contractor" means those persons or
companies Licensor has approved to provide Contractual Services at the
Facilities as of the date Licensee executes this Agreement or as approved as
provided below. Licensor reserves the right to withdraw approval of any
Authorized Contractor for any reason prior to Licensor's approval of Licensee's
Plan of Operation, or at any time thereafter for cause. The Contractual Services
to be provided exclusively by Licensor and not by an Authorized Contractor
include, but shall not be limited to, the following:
(i) Electrical wiring and services;
(ii) Plumbing, gas and compressed air services;
(iii) Telephone systems wiring, services and operation;
(iv) General cleaning and maintenance of Authorized Areas, and trash collection
and disposal;
(v) Customer Service Center Facilities;
(vi) Rigging;
(vii) Food and beverage services.
Licensor reserves the right to identify additional Contractual Services that may
be performed only by Licensor; provided, that absent such identification, these
Contractual Services may be performed by an Authorized Contractor. Licensor
shall identify those additional Contractual Services it intends to provide on an
exclusive basis no later than ninety (90) days prior to the deadline for receipt
of Licensee's Plan of Operation, as set forth in Section 2.3. Those additional
Contractual Services include, but are not limited to, the following:
<PAGE>
-7-
(i) Floral and plant services;
(ii) Custom signage;
(iii) Security services;
(iv) Furniture and Equipment Rental;
(v) Drayage/freight handling;
(vi) General labor services; and
(vii) Decorator/General Service Contractor Services.
Licensee shall pay Licensor for any Contractual Services provided by Licensor
according to the rates shown in the Show Managers Handbook as amended. Any
additional Contractual Services, and the rates associated therewith, shall be
identified in a separate exhibit to this Agreement. If not added in the Show
Managers Handbook, or if a service is provided for which no rate is stated, then
Licensee shall pay Licensor at a rate to be agreed upon by the parties. Licensee
shall provide Licensor with notice of the Contractual Services it requires when
it files its Plan of Operation in accordance with Section 2.3. Authorized
Contractors shall bill Licensee directly at rates agreed to by them and payment
shall be made directly to the Authorized Contractor. All bills for Contractual
Services rendered by Licensor or Authorized Contractors to Licensee's exhibitors
or invitees shall be rendered to and paid directly by the exhibitor or invitee.
Licensor shall be under no obligation to provide a Contractual Service it has
specifically undertaken to provide unless it or an Authorized Contractor is
reasonably capable of providing the service. The ability of Licensor or an
Authorized Contractor to provide particular Contractual Services shall be
determined at the time the parties agree upon Licensee's Plan of Operation. No
Contractual Services shall be utilized or employed by Licensee except as
provided in the Section 4.2 or as approved in advance in writing by Licensor.
Licensor shall retain, at all times during the License period, the right to
sell, advertise, and promote both authorized and Exclusive Contractual Services
to Licensee's exhibitors. To facilitate Licensor's provision of Contractual
Services hereunder Licensee is required to provide Licensor, at least 120 days
prior to the beginning of the License Period, with a list of all exhibitors or
other invitees planning to use the Authorized Areas during the License Period,
and with the business address, telephone number and name of the appropriate
person to be contracted for each such exhibit.
SECTION 4.3 SECURITY OF FACILITIES.
(a) The Licensor shall neither be responsible for any property brought into the
Facilities by the Licensee or any person claiming under the Licensee, nor be
obligated to watch, guard or protect the same; nor shall the Licensor be liable
for any failure to do so by any guard, watchman or protection service employed
by the Licensor or by any guard, watchman or protection service contracted for
by the Licensee.
(b) After reviewing Licensee's plan of operation, Licensor and Licensee shall
jointly determine the minimum number of security guards reasonably necessary to
preserve order and to protect persons and property during the License Period.
(c) Except by arrangement with the Licensor and/or its designated security
guard service provide, no guard, watchman or protection service shall at any
time be stationed in the Facilities by the Licensee or any other person claiming
thereunder; and except by such arrangement, no person shall be allowed in or
remain in the Facilities after it has closed.
<PAGE>
-8-
SECTION 4.4 REGISTERED NURSE OR OTHER MEDICAL PERSONNEL. The Licensee shall
maintain at the Facilities at all times during the License period a registered
nurse or other medical personnel (at Licensor's direction), fully licensed as
such in the State of Nevada. The Licensee shall, at its expense, contract with
the Licensor's exclusive service provider for such services.
SECTION 4.5 CONCESSIONS AND CATERING. The Licensor reserves, and at all
times shall have, the sole right to operate or have operated in its behalf all
commercial enterprises, including all concessions, bars and catering operations
and to sell or otherwise provide flowers, food, refreshments, beverages, cigars,
cigarettes, candies and periodicals, and to grant concessions to designated
airlines, auto rentals, delivery services, shoe shine, and others.
SECTION 4.6 HEADQUARTERS HOTEL. The Sands Hotel and Casino, located adjacent
to the Sands Expo and Convention Center, has been demolished and a new property
offering 6,000 sleeping rooms, and a convention complex featuring large
ballrooms and breakout meeting space, over 150,000 square feet of casino space,
multiple restaurants, and approximately 500,000 square feet of retail space is
being developed on the site it previously occupied. Licensee agrees to designate
the new property as an official headquarters location for its show. Further,
Licensee will use its best efforts to assist Licensor in its solicitation of
Licensee's exhibitors and invitees for their food, beverage, function, and
hospitality business.
SECTION 4.7 ADVERTISEMENTS, POSTERS AND MARQUEE. The Licensee agrees not to
post or exhibit or allow to be posted or exhibited signs, advertisements, show-
bills, lithographs, posters, or cards of any description (herein "signage") in
any area of the Facilities other than within the Authorized Areas except with
the prior written approval of the Licensor. If such approval is granted by
Licensor, Licensee shall pay a fifteen (15%) percent commission from the gross
revenues paid by the advertising entity. The advertising entity is defined as
the party whose organization, business or concern is advertised on the signs,
advertisements, show bills, banners, lithographs, posters, or cards. Any signage
to be posted or exhibited in any area of the Facilities other than the
Authorized Areas shall be upon the regular billboards, if any, provided by the
Licensor therefore. The Licensee will use, post or exhibit only such signage as
is related to the Event in the Authorized Areas and during the hours for which
this License was granted and for such period of time as designated by the
Licensor.
SECTION 4.8 USE OF LICENSOR'S EQUIPMENT. If any equipment provided by the
Licensor to the Licensee requires an operator or technician, such operator or
technician may, if required by the Licensor, be supplied by it to operate such
equipment, and the Licensee shall pay for such equipment and technician or
operator the amount set forth in the Show Manager's Handbook.
ARTICLE V - SECURITY DEPOSIT AND PERFORMANCE BOND OR GUARANTY
SECTION 5.1 SECURITY DEPOSIT. With respect to the Security Deposit specified
in Article I, the Licensee agrees that the same will be paid on the date set
forth in Article I, and that the Licensor shall hold the same throughout the
License Period as security for the performance by the licensee of all
obligations on the part of the Licensee hereunder. The Licensor shall have the
right from time to time, without prejudice to any other right or remedy the
Licensor may have hereunder or
<PAGE>
-9-
by law, to apply, without notice to the Licensee, such deposit, or any part
thereof, to the Licensor's damages arising from any Event of Default caused by
the Licensee or to pay any of the Licensee's obligations for any of the
Exclusive Contractual Services contracted for by the Licensee pursuant to
Article IV. If the Licensee is not in default under this Agreement at the time
of final accounting, the Licensor shall return the Security Deposit, or so much
thereof as shall not theretofore have been applied in accordance with the terms
of this Section 5.1, to the Licensee.
SECTION 5.2 PERFORMANCE BOND OR GUARANTY. Upon request by the Licensor, the
Licensee shall furnish to the Licensor a performance bond or sufficient guaranty
in substance and amount determined by Licensor.
ARTICLE VI - INSURANCE, INDEMNIFICATION AND WAIVER OF SUBROGATION
SECTION 6.1 INSURANCE.
(a) The Licensee shall provide and keep in force during the License
Period the following insurance (in addition to any other insurance Licensor may
deem necessary):
(i) Workers' compensation insurance in accordance with Nevada Law
covering Licensees' employees.
(ii) Employers' Liability insurance for Nevada operations in minimum
limits of One Million Dollars ($1,000,000) per occurrence.
(iii) Commercial General Liability insurance including blanket contractual
liability and personal injury coverage with limits of Liability of at
least One Million Dollars ($1,000,000) in any one occurrence.
(iv) Comprehensive Automobile Liability insurance insuring any owned, non-
owned, and hired vehicles to be used in and out of the "Facilities"
in the amount of One Million Dollars ($1,000,000) in any one
occurrence.
All insurance required shall be issued by companies authorized to do business in
the State of Nevada. Licensee shall have completed by its insurance agent the
Certificate of Insurance provided by Licensor and/or separate certificates for
Nevada Workers' Compensation. Licensee shall deliver such completed certificates
of insurance to Licensor at least ninety (90) days prior to the beginning of the
License Period. All required insurance policies shall name as additional insured
those entities set forth in Article I as "Additional Insureds and Indemnities".
All required insurance policies shall provide that (i) the insurance carrier
will give written notice to Licensor at least thirty (30) days prior to any
material change in, cancellation, or non-renewal of the policy. Licensee's
failure to provide such certificates or policies, as the case may be, within the
period specified herein shall constitute a breach of the Licensee's duties and
obligations hereunder.
(b) The Licensee shall obtain and maintain during the License Period
insurance policies on all personal property owned, leased or hired by, or in the
care, control or custody of
<PAGE>
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the Licensee during the License Period. Such policies shall provide coverage for
"all risks", including earthquake, flood and theft with a deductible per loss of
not more than $1,000.00.
SECTION 6.2 INDEMNIFICATION AND HOLD HARMLESS AGREEMENT.
(a) The Licensee hereby releases and discharges and indemnifies, and
agrees to keep indemnified, defend, protect and save harmless the Licensor and
those named Additional Indemnities set forth in Article I (herein "Indemnities")
of and from any and all claims, demands, liabilities, damages, costs, losses and
expenses (including attorneys' fees and disbursements) for any injury to,
including death (whether they be third persons or employees of either the
Licensor or the Licensee) and any loss (through theft or otherwise) of or damage
to property (whether it be that of the Licensor or the Licensee or a third
person) caused by, growing out of, or happening in connection with or with
respect to the use by the Licensee, or of any other person or legal entity with
the permission (express or implied) of the Licensee, of the Facilities or its
equipment. Such indemnification by the Licensee shall apply unless such damage
or injury results from the sole negligence, gross negligence or willful
misconduct of the Licensor or any person contracted or hired by Licensor to
perform Exclusive Contractual Services.
(b) Without limiting the foregoing, the Licensee assumes all costs and
expenses arising from the use of, broadcast, performance or publication,
including musical or other audio or visual presentation, of patented,
trademarked, or copyrighted materials, equipment, devices, processes, or
dramatic rights used during or incorporated in the conduct of its operation
hereunder; and the Licensee agrees to indemnify and hold harmless the
Indemnities from all damages, costs and expenses at law or for equitable relief
for or on account of any patented, trademarked or copyrighted materials,
equipment, devices, processes or dramatic rights furnished to or used by the
Licensee or its exhibitors, or any infringement with respect thereto in
connection with this License, including the costs and expenses of defending any
such action, even if it be groundless or fraudulent.
(c) Without limiting the foregoing, the Licensee shall also indemnify and
save harmless the Indemnities from all claims, demands, liabilities, damages,
costs, losses and expenses made against or incurred by any of the Indemnities
arising out of injury or loss to third parties caused by Licensee's failure to
return the Authorized Area to the Licensor, vacate the Facilities, relinquish
the Licensor's or Authorized Contractor's equipment at the end of the License
Period, or Licensee's breach of any contract or agreement with a third party to
provide contractual or other services.
SECTION 6.3 WAIVER OF SUBROGATION. The Licensee hereby waives any and every
claim which arises in its favor and against the Licensor, or against any of the
Additional Indemnities set forth in Article I, for any and all loss or damage
covered by valid and collectible insurance policies to the extent of the
insurance proceeds paid with respect thereto. Such waiver shall be in addition
to, and not, derogation of, any other waiver or release contained in this
License with respect to any loss or damage to property of the Licensees.
Inasmuch as the waiver will preclude the assignment of any aforesaid claim by
way of subrogation (or otherwise) to an insurance company (or any other person),
the Licensee shall notify its insurers of such waiver.
<PAGE>
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ARTICLE VII - LICENSEE'S OBLIGATION AT END OF LICENSE PERIOD
SECTION 7.1 RETURN OF AUTHORIZED AREA. At the end of the License Period, the
Licensee shall vacate the Facilities and return the Authorized Area and the
Licensor's equipment to the Licensor, all in the same broom clean condition and
repair as originally furnished to the Licensee, normal wear and tear excepted.
At such time, the Licensee shall remove completely from the Facilities all
goods, wares, merchandise and property of any and all kinds and description
placed therein (herein "Property").
SECTION 7.2 REPAIR OF AUTHORIZED AREA. The Licensee agrees that if the
Authorized Area, Lobbies, Hallways, Restrooms or other Public Space, or any
other part of the Facilities, shall be damaged by the act, default or negligence
of the Licensee, or of the Licensee's agents, employees, patrons, gusts or
invitees, the Licensee will pay to the Licensor upon demand such sum as shall be
necessary to restore said areas to their conditional immediately prior to the
commencement of the License Period. The Licensee hereby assumes full
responsibility for the character, acts and conduct of all persons acting for or
on behalf of said Licensee.
SECTION 7.3 FAILURE TO RETURN THE AUTHORIZED AREA OR VACATE THE FACILITIES.
In the event the Licensee shall fail to return the Authorized Area to the
Licensor or to vacate the Facilities in accordance with the provisions of
Section 7.1, the Licensor is authorized, at the Licensee's expense, to remove
therefrom and to store or return to the Licensee or, except where the Licensee's
failure to do so is caused by an event beyond the Licensee's control, such as a
strike beyond its control, a national emergency or an Act of God, to treat the
same as abandoned and discarded property and accordingly dispose of the
Property. The Licensor shall not be liable for any damages or loss to the
Property which may be sustained either in the course of such removal or in the
course of storage, or in the course of transit, or by virtue of the Licensor's
disposal of the Property and the Licensor is hereby expressly released from any
and all such claims for damages of whatsoever kind or nature. The Licensor shall
be under no duty, however, to so remove, store or return the Property.
SECTION 7.4 EXTENDED USE CHARGE. The Licensee shall pay an Extended Use
Charge equal to twice the per diem Basic Fee applicable to Show Days for each
day or portion of a day after the end of the License Period that the Licensee
has failed to return all or any part of the Authorized Area to the Licensor and
vacate the Facilities in accordance with the provisions of Section 7.1, unless
said failure is caused by any of the following events, to the extent that such
event is beyond the Licensee's reasonable control: fire, flood, riot,
earthquake, civil commotion, or Act or God. The liability to pay an Extended Use
Charge does not in any way extend the License Period; is not liquidated damages;
is intended as a penalty against the Licensee for use of the Facilities or the
Authorized Area beyond the License Period; and does not preclude the Licensor
from asserting any other rights against the Licensee, including, but not limited
to, those set forth in Section 7.3 and Article VIII. The Extended Use Charge is
due and payable at the end of each day for which the Charge is assessed.
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SECTION 7.5 FAILURE TO COMPLY LIST. Licensor and Licensee shall conduct a
walk through of the Authorized Area within twenty-four (24) hours of the end of
the License Period for the purpose of preliminary identifying any failure of the
Licensee to comply with the provisions of Section 7.1. In addition, Licensor
shall provide to Licensee a final, comprehensive and complete list of Licensee's
failure(s) to comply with the provisions of Section 7.1 no later than the
earlier of the following: (i) seven (7) days after the end of the applicable
License Period or (ii) the commencement of any use of the hall or any portion of
the Authorized Area by any person other than the Licensee. The Licensee shall
not be responsible for any alleged non-compliance with Section 7.1 not
specifically identified in the list.
ARTICLE VIII - DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
be considered an "Event of Default":
(a) The Licensee shall fail to pay in full and when due any payment required
hereunder, whether said payment was required to be paid to the Licensor or
any Authorized Contractor;
(b) The Licensee shall fail to pay promptly any sales, use, excise or other
taxes when due or fail, upon request of the Licensor, to provide evidence
of same to the Licensor;
(c) The Licensee shall fail to obtain or pay for any and all necessary permits
and licenses, including union or trade organization clearances, and Fire
Marshal approvals, when and where required, or fail, upon the Licensor's
request, to provide evidence of such permits or licenses to the Licensor;
(d) Any other default or breach of any covenant or agreement contained herein
including the specific duty to provide evidence of insurance coverage as
provided in Article VI.
(e) The Licensee shall make an assignment for the benefit of creditors or shall
file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, state or other
statue, law or regulation for the relief of debtors, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Licensee or of all or any substantial part of its
properties, or shall admit in writing its inability to pay its debts
generally as they become due;
(f) A petition shall be filed against the Licensee in bankruptcy or under any
other law seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief.
(g) Licensee shall materially diverge from the plan of operation without the
prior written consent of Licensor.
SECTION 8.2 LICENSOR'S REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence
of any of the Events of Default set forth in Section 8.1 or elsewhere in this
Agreement which default continues for a period of five (5) days after written
notice from Licensor specifying the nature of such default, Licensor may
exercise any or all of the following:
(a) accelerate payment of the Basic Fee;
(b) require that Licensee give additional security for Licensee's performance
of its obligations;
(c) declare this Agreement terminated and revoke the license given hereby;
<PAGE>
-13-
(d) enter and take exclusive possession of and remove all persons and property
from the Authorized Areas and the Facility;
(e) assert and enforce claims against any bond provided under this Agreement;
(f) refuse to commence, or discontinue the rendition of all services or
utilities to Licensee and the Authorized Area;
(g) apply monies from Licensee's show account to satisfy or reduce debt;
(h) for late payment of one contract, cancel any or all subsequent contracts at
Licensor's option.
Licensee waives any right it may have as to notice or hearing prior to the
exercise of the powers set forth above. The rights and remedies of Licensor
shall be cumulative, and no one shall exclude other rights or remedies allowed
by law or at equity, or set forth in other sections of this Agreement.
SECTION 8.3 REMEDYING DEFAULTS. The Licensor may, but shall not be required
to, pay such sums or to do any act which requires the expenditure of monies or
services which may be necessary or appropriate by reason of the failure or
neglect of the Licensee to perform any of the provisions of this License. In the
event of the exercise of such right by the Licensor, the Licensee agrees to pay
to the Licensor forthwith upon demand all such sums expended by the Licensor (or
the fair value thereof, whichever is greater), together with interest thereon at
the rate of eighteen (18%) percent per annum, as an Additional Charge.
SECTION 8.4 TERMINATION WITHOUT DEFAULT. In the event that the Authorized
Area or the Facilities of which it is a part or any portion thereof, are
destroyed or damaged by fire or other casualty so that in the reasonable
judgment of the Licensor its or the Licensee's use thereof would be
substantially interfered with, or in the event of a taking of all or a portion
of the Facilities by eminent domain, condemnation or foreclosure, then the
Licensor may terminate this Agreement upon giving to the Licensee notice of
termination not more than ninety (90) days following the event of destruction,
damage or taking and this Agreement shall terminate on the date set forth in
such notice of termination, all with the same force and effect as though the
Licensed Period of this Agreement had originally been scheduled to expire on
such date, and Licensor shall return to the Licensee all monies theretofore paid
by the Licensee to the Licensor as a Security Deposit, Reservation Fee, Basic
Fee or Additional Fee (to the extent not applied by Licensor in accordance with
the terms hereof).
SECTION 8.5 RIGHT TO RE-ENTER. If this License shall have been terminated as
provided in this Article, or if any execution or attachment shall be issued
against the Licensee or its Property whereupon the Authorized Area shall be
taken or occupied by someone other than the Licensee, then the Licensor may,
without notice, re-enter the Authorized Area, without being liable for any
prosecution thereof, and remove the Licensee and all other persons and any and
all property from the same, as if this License was not in effect.
SECTION 8.6 LIQUIDATED DAMAGES. If the Licensee cancels the Event covered by
this License, the Licensee agrees to pay to the Licensor, as liquidated damages
and not as a penalty an amount equal to the Reservation Fee and the remainder of
the Basic Fee, as set forth in Article 1. The
<PAGE>
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parties hereto agree that such amounts constitute reasonable provision for
liquidated damages and acknowledge that the amount of actual damages will be
difficult to establish except as provided in Sections 2.1, 4.2, and 8.11.
In any event, and in addition to the foregoing, the Licensee also agrees to pay
any monies due for Additional Fees and Additional Charges. The foregoing shall
not constitute Licensor's sole remedy for such cancellation and shall be in
addition to such other legal and equitable rights and remedies as may be
available to Licensor.
SECTION 8.7 LIENS. To secure the Licensee's obligation hereunder, Licensee
hereby grants the Licensor the first right of lien against all ticket office
receipts and Property of the Licensee hereunder. The Licensor is empowered to
withhold from ticket office receipts such amount as is outstanding and owed by
the Licensee hereunder. If the total ticket office receipts are insufficient to
cover such unpaid amounts the Licensor shall have the right to impound the
Licensee's Property at the Facilities, or elsewhere, at the Licensee's expense.
If such unpaid amounts remain unpaid for a period of ten (10) days after the
termination of this License, the Licensor shall have the right to sell the
impounded Property at public auction and to apply the cash proceeds from the
auction less its costs, including attorneys' fees, to the retirement of said
unpaid amounts.
SECTION 8.8 ACTIONS. Any action by one party to this License against another
arising hereunder shall be maintained in the State of Nevada; and the Licensee
hereunder consents to same and to the maintenance of such action by the Licensor
against it in said State of Nevada.
SECTION 8.9 CUMULATIVE REMEDIES. All rights, powers and privileges contained
hereunder upon the Licensor shall be cumulative and shall not be restricted to
those given by law.
SECTION 8.10 FORCE MAJEURE. In the event that the Licensor's obligations to
the Licensee under this Agreement be delayed, prevented or rendered impractical
by any of the following events: fire, flood, riot, earthquake, civil commotion,
strike, lockout, labor disturbances, explosion, sabotage, accident, war, other
casualty, Act of God, or any law, ordinance, rule or regulation which becomes
effective after the date of this License or any other cause beyond Licensor's
reasonable control the Licensor shall not be liable to the Licensee for such
delay or failure to perform. The Licensee hereby waives any claim for damages or
compensation for such delay or failure to perform, other than a return to it of
any monies paid directly to the Licensor, but no other.
SECTION 8.11 SUBORDINATION. This Agreement and any renewals, extensions or
amendments hereof, and all of Licensee's rights and obligations hereunder or
thereunder now or hereafter existing, are unconditionally subject, inferior and
subordinate in priority to any mortgage, deed of trust or other security
interest or lien encumbering the Facilities (or any portion thereof) from time
to time and to the lien of any renewals, extensions, amendments or refinancings
thereof (each, a "Mortgage") and the rights, powers and privileges of any
beneficiary or trustee thereunder. Notwithstanding the foregoing, at the
election of such holder or beneficiary, exercisable in its sole discretion at
any time, its Mortgage shall be subject, inferior and subordinate to this
Agreement. If such holder or beneficiary shall make such election, and if the
<PAGE>
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holder of such Mortgage shall exercise any remedies under or in connection with
such Mortgage (or in lieu thereof) after a default by Licensor under such
Mortgage then, at the option of any owner of the Facilities (or the applicable
portion thereof) (after giving effect to such exercise) the Licensee shall
recognize such new owner and this Agreement shall remain in full force and
effect as between such new owner, as Licensor, and Licensee, as licensee.
SECTION 8.12 LICENSE AND NOT A LEASE. Notwithstanding anything to the
contrary contained herein, this Agreement is a license and not a lease and this
Agreement shall be construed to be a license and not a lease.
SECTION 8.13 DEFAULT BY LICENSOR. If the Licensor fails or refuses to make
the Facilities and/or the Authorized Areas available to the Licensee on the
dates set forth in this Agreement for any reason other than those specified in
Sections 8.4 and 8.10 above, then, in addition to any claims, rights or remedies
the Licensee may have, the Licensor shall return to the Licensee all monies paid
to the Licensor along with interest on those monies at the rate of eighteen
percent (18%) per annum from the date the monies were remitted to the Licensor.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 9.1 NON-DISCRIMINATION. The Licensee shall not discriminate against
any person or persons in connection with admission, services or privileges
offered to or enjoyed by the general public because of race, creed, ancestry,
sexual orientation, disability, color, sex, marital status, age, religion or
national origin.
SECTION 9.2 AUDIO/VISUAL PRESENTATIONS. The Sands Expo and Convention Center
does not regulate, control, approve or disapprove any broadcast, performance or
publication of music or any other audio or visual presentations. The Sands Expo
and Convention Center does not play or perform any music, nor does it offer
referrals or contracts with anyone who does. If the Licensee, or an exhibitor,
wishes to use copyrighted music or other copyrighted material it will be
necessary for Licensee to make arrangements with the appropriate owners of such
material or agents of such owners for a license to use or perform such
copyrighted music or material or to otherwise qualify for an exemption. The
Sands Expo and Convention Center retains the right to regulate the volume of any
sound, whether it be music, voice, special or artificial effects to the extent
that the same interferes with other licensees within the facilities or is
determined to be offensive or otherwise violates the rules and regulations or
License Agreement.
SECTION 9.3 RULES AND REGULATIONS. The Licensor's Rules and Regulations are
hereby incorporated into this Agreement by reference. Copies of such Rules and
Regulations have been provided to the Licensee and the Licensee hereby
acknowledges receipt thereof. The Licensor reserves the right to change such
Rules and Regulations in writing from time to time and will provide the Licensee
with such changed Rules and Regulations which shall be binding upon the
Licensees. If there is at any time a conflict between the provisions of this
Agreement and the Rules and Regulations, the provisions of this Agreement shall
control.
SECTION 9.4 WAIVER. The failure of either party hereto at any time or times
to require performance of any provisions hereof shall in no manner affect its
right at a later time to enforce
<PAGE>
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the same provision. Any waiver by any party or the breach of any provision
contained in this Agreement in any one or more instances shall not be deemed to
be a waiver of any other breach of the same provision or any other provision
contained herein.
SECTION 9.5 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered by a customary
overnight delivery service, or if sent by certified or registered mail, postage
prepaid, to the Licensor or the Licensee, as the case may be, at the address as
set forth for each in Article 1 of this Agreement or to such other address as
any party shall have provided to the other parties from time to time in
accordance with the provisions of this Section 9.5.
SECTION 9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereto
and supersedes all proposals, negotiations and understandings of any nature
whatsoever. This Agreement may be changed or amended only by a written
instrument duly signed by all of the parties hereto. This agreement must be
signed by Licensee and returned within thirty (30) days from the date of
Agreement set forth in Article 1. If not so returned to Licensor this Agreement
shall, at Licensor's option be rendered null and void. In any event, this
Agreement shall not be enforceable until signed by Licensor.
SECTION 9.7 BINDING EFFECT, ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. This Agreement or any rights
hereunder may not be assigned by the Licensee without the express written
consent of Licensor, which consent will not be unreasonably withheld.
SECTION 9.8 CAPTIONS. The captions of the several provisions of this
Agreement have been inserted for convenience only and do not constitute a part
of this Agreement.
SECTION 9.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed wholly within such state.
SECTION 9.10 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.
SECTION 9.11 SIGNATURES. If you are in agreement with the contents of this
contract, please sign on the space indicated and return by OCTOBER 1, 1997. If
---------------
not executed and returned by said date, this offer shall automatically
terminate. Space is confirmed on a definite basis ONLY after receipt of this
agreement signed by you and counter-signed by the Convention Center General
Manager.
<PAGE>
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IN WITNESS WHEREOF, the Licensor and Licensee have caused this Agreement to be
duly executed under seal by persons hereunder duly authorized, as of the Date of
Agreement set forth in Article 1.
LICENSOR: LICENSEE:
INTERFACE GROUP - NEVADA, INC. MEN'S APPAREL GUILD IN
CALIFORNIA (MAGIC)
BY: /s/ Richard Heller BY: /s/ Joseph Loggia
------------------------ --------------------------
RICHARD HELLER, V.P./ JOE LOGGIA, PRESIDENT,
GENERAL MANAGER CHIEF OPERATING OFFICER
DATE: 10-7-97 DATE: 9/29/97
----------------------------- -----------------------------------
<PAGE>
EXHIBIT 10.16
CONVENTION AGREEMENT
LAS VEGAS HILTON
March 19, 1998
<PAGE>
CONVENTION AGREEMENT
LAS VEGAS HILTON
March 19, 1998
COMPANY NAME MAGIC INTERNATIONAL
NAME OF EVENT Fall 1998 Show
CONTACT Mr. Joe Loggia
President
MAGIC INTERNATIONAL
6200 Canoga Ave. - Suite 303
Woodland Hills, CA 91367
TELEPHONE NUMBER (818) 593-5000
PREPARED BY Thomas E. Page, Vice President of Sales
HEADQUARTERS HOTEL LAS VEGAS HILTON
DATE ROOMS RESERVED August 26-September 5, 1998
GUEST ROOM COMMITMENT 2,400
INCLUDING SUITES
ROOM ARRIVAL AND DEPARTURE PATTERN
DAYS DATES ARRIVAL DEPARTURE IN-HOUSE
Wednesday August 26 30 0 30
Thursday August 27 30 0 60
Friday August 28 240 0 300
Saturday August 29 400 0 700
Sunday August 30 1,465 0 2,165
Monday August 31 35 0 2,400
Tuesday September 1 0 0 2,400
Wednesday September 2 0 280 2,120
Thursday September 3 0 1,220 900
Friday September 4 0 830 70
Saturday September 5 0 70 0
TOTAL ROOM NIGHTS: 11,145
------
Suite Commitment: 100 suites are included in the overall room commitment.
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Magic International
March 19, 1998
Page 2
GUEST ROOM AND SUITE RATES
At this time, we are pleased to confirm the following special convention rate to
apply over the above dates, as follows:
Singles/Doubles/Twins: $179.00
Additional person: $25.00
All room rates are net non-commissionable and are quoted exclusive of
appropriate state and local taxes, which currently are nine percent (9%). Suites
will be provided at the published/prevailing rate in effect at the time of your
meeting.
The above rates are inclusive of a $2.00 per room night rebate to be credited to
the MAGIC master account at the conclusion of the event.
CUTOFF DATE
All the rooms provided for in your room block will be reserved on a definite
basis for you upon signing of this contract. In order to assign specific room
types to your attendees we ask that all room requests be received thirty (30)
days prior to your major arrival day of SUNDAY, AUGUST 20, 1998. After that
date, the hotel will continue to hold any rooms in your block not assigned to a
specific attendee of your group if you pay for them in full at that time.
Advance payments will be refunded by the hotel after your convention dates if
rooms you paid for in advance were later paid for by your attendees. If you
prefer, after consultation with you, the hotel will offer unassigned rooms in
your block to other individuals or groups in an effort to reduce damages you may
be required to pay pursuant to the Performance Clause as outlined in this
agreement. Members of your group may still request rooms after the cut off date
of JULY 30, 1998. Such rooms will be available at the hotel's prevailing rate.
RESERVATIONS
We understand that reservations for your meeting will be made by rooming list.
The LAS VEGAS HILTON will make reasonable efforts to ensure that reservations
for your meeting are not accepted from individuals who are not identified on the
list. MAGIC INTERNATIONAL agrees to provide the rooming list to the LAS VEGAS
HILTON's Sales/Convention Service Department no later than JULY 30 1998.
CHECK-IN/CHECK-OUT TIME
The LAS VEGAS HILTON's check-in time is 3:00 p.m., and its check-out time is
12:00 noon. All guests arriving before 3:00 p.m. will be accommodated as rooms
become available. The LAS
2
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Magic International
March 19, 1998
Page 3
VEGAS HILTON's bell captain can arrange to check baggage for guests arriving
early if rooms are unavailable and for guests attending functions on departure
day.
DEPOSITS
All reservations will require a one (1) night advance deposit per room, plus
tax, to guarantee accommodations. All non-guaranteed reservations are subject to
cancellation two (2) weeks after the date the reservation is made. The hotel
will accept all major credit cards for advance deposit. All advance reservation
deposits are completely refundable if cancelled two (2) weeks prior to arrival.
Checks and major credit cards are acceptable to establish prepayment. All credit
cards used to prepay will be charged immediately. The hotel will deduct any
collected non-refundable prepayment fees from the amount you may owe as
performance or cancellation damages.
GUARANTEED ROOM AVAILABILITY
If confirmed rooms are not available on the arrival date for any reason caused
by the LAS VEGAS HILTON (except accident, fire, water damage or other conditions
beyond the control of the LAS VEGAS HILTON), the LAS VEGAS HILTON will provide
to the individual a comparable room in another hotel and will pay for the first
night's lodging and transportation to and from the other hotel.
COMPLIMENTARY ROOMS
In consideration of your guest room commitment, we are pleased to extend one (1)
complimentary room night per every fifty (50) revenue room nights actually
utilized by your MAGIC INTERNATIONAL. Our standard one-bedroom suites are
counted as three (3) units, a standard two-bedroom suite is counted as four (4)
units, 28th/29th Floor luxury one-bedroom suites are counted as five (5) units.
MAGIC INTERNATIONAL agrees to provide a list of names in order of preference for
complimentary room assignment. Complimentary units earned will be credited to
your master account at the conclusion of your convention/meeting.
In addition to the above and for the privilege of serving as your headquarters
hotel, we are pleased to provide one (1) luxury 2-bedroom suite complimentary
over and above our standard policy. This suite is reserved for arrival on
Friday, August 28, 1998 and departure on Friday, September 4, 1998.
CREDIT ARRANGEMENTS/MASTER ACCOUNT
It is understood and agreed that hotel will establish a Master Account for your
meeting or credit arrangements for payment after your meeting if an application
for credit has been approved in advance and in writing by the LAS VEGAS HILTON's
Credit Manager. Such application will be submitted to hotel no later than JULY
15, 1998. The specific terms and conditions of any such Master Account or Credit
Arrangement will be determined by mutual agreement of the parties.
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March 19, 1998
Page 4
CREDIT ARRANGEMENTS/MASTER ACCOUNT
(continued)
It is agreed and understood that all individuals attending your meeting will be
responsible for their own room, tax and incidental charges upon checkout unless
MAGIC INTERNATIONAL specifically authorizes that these charges may be made to
the Master Account with the above procedures. If a Master Account is
established, or if credit arrangements are made, hotel reserves the right to
request a deposit be made in an amount determined by hotel.
If a Master Account is not established or if credit arrangements are not made,
MAGIC INTERNATIONAL agrees to one hundred percent (100%) pre-payment.
Should the master account remain unpaid after 60 days, in addition to its other
remedies, MAGIC INTERNATIONAL and the LAS VEGAS HILTON agree that the LAS VEGAS
HILTON, at its sole option, may elect to cancel any subsequent arrangements
agreed upon herein or any agreements separately made by that time between MAGIC
INTERNATIONAL and the LAS VEGAS HILTON of additional conventions/meetings to be
held in the future, and that in such event, no fees, charges, damages or
penalties shall be due from the LAS VEGAS HILTON as a result of the cancellation
and no claim shall be brought against the LAS VEGAS HILTON as a result of the
cancellation.
FUNCTION SPACE
At this time, we are protecting the following public space for your use:
6:00am Saturday, August 29, 1998 to 5:00pm Friday, September 4, 1998
--------------------------------------------------------------------
BALLROOM
PAVILION
HILTON CENTER
2:00pm Sunday, August 30, 1998 to 11:59pm Thursday, September 3, 1998
---------------------------------------------------------------------
BOARD ROOM
CONFERENCE ROOM 1-14
EAST TOWER SALONS
If extensive meeting room set-ups or elaborate staging is required, there will
be a setup charge to reimburse the LAS VEGAS HILTON for this cost and the
additional labor.
The LAS VEGAS HILTON reserves the night to charge a rental fee pursuant to the
hotel's fee schedule attached, for meeting space and function space utilized by
suppliers, allied and affiliated groups who are conducting meetings or holding
functions in conjunction with the MAGIC INTERNATIONAL'S convention.
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Magic International
March 19, 1998
Page 5
FUNCTION SPACE
(continued)
A schedule of our rental prices as of the date of this Agreement is attached.
However, for purposes of this paragraph, rental price will be that price in
effect at the time of your meeting.
BANQUET SERVICES
Menu prices for planned food and beverage functions will be established not
earlier than six (6) months prior to your convention/meeting. The LAS VEGAS
HILTON agrees to provide copies of proposed menus upon request. It is understood
and agreed that prices quoted in such menus do not include taxes and gratuities,
which are currently seven percent (7%) tax and seventeen percent (17%) gratuity.
The Las Vegas Hilton is licensed to serve food and beverages. No food or
beverages may be brought into the Las Vegas Hilton by MAGIC INTERNATIONAL for
service at an event.
EXHIBIT SPACE
Type, Size, and Number: T.B.A.
Set-Up Date: Saturday-August 29, 1998
Hour for Set-Up: 6:00am
TearDown Date: Friday-September 4, 1998
Hour for Complete Removal from Hotel: 5:00pm
The rental rate for exhibitor space will be the greater of thirty-two cents
($0.32) per net square foot or $11,000.00 per show day for the Hilton Center;
forty-two cents ($0.42) per net square foot or a flat rate of $9,000.00 per show
day for the Pavilion; and fifty-two cents ($0.52) per net square foot or flat
rate of $9,000.00 per show day for the Ballroom. There will be no charge for
move-in or move-out.
HOTEL GUIDELINES FOR EXHIBITS
A. Use of exhibit space does not include drayage, decoration such as tables
and chairs, guard service, labor such as carpenters, electricians, plumbers
and draperymen, cleaning of booths and aisles, booth and aisle carpeting,
storage space for crates.
B. Hotel unfortunately does not have storage space for crates.
5
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Magic International
March 19, 1998
Page 6
HOTEL GUIDELINES FOR EXHIBTS
(continued)
C. MAGIC INTERNATIONAL agrees on behalf of itself and the Exhibitors to
indemnify and hold harmless hotel and its servicing agents from any and all
liability resulting from damage or accident that might ensue from any cause
resulting or connected with the transportation, placement, removal or
display of exhibits. MAGIC INTERNATIONAL agrees to the terms and conditions
of the Responsibility Clause attached hereto and marked Exhibit A.
D. MAGIC INTERNATIONAL agrees to be responsible for obtaining any necessary
governmental approvals of exhibit plans.
E. MAGIC INTERNATIONAL agrees to submit to the LAS VEGAS HILTON a copy of the
Exhibitors Contract before it is sent to exhibitors.
F. Cleaning of Facilities: The LAS VEGAS HILTON will provide the exhibit space
in a clean condition. "Exhibit space" means exhibit floor, pantry areas,
freight dock areas and dumpsters. It is the responsibility of the
Convention Service companies to return these facilities in the same clean
condition, or a charge will be assessed.
SECURITY
If required, in our sole judgment, in order to maintain adequate security
measures in light of the size and/or nature of your function, you will provide,
at your expense, security personnel supplied by a reputable licensed guard or
security agency doing business in the city or county in which we are located,
which agency will be subject to our prior approval.
CONVENTION SERVICE PROCEDURES
At the time this agreement is executed, our Convention Services Department will
forward an outline of our standard convention procedures. This outline is
designed to assist you in preparation of your event.
MEETING PLANNERS
MAGIC INTERNATIONAL hereby acknowledges and warrants that the LAS VEGAS HILTON
is not responsible to any meeting planner, organizer, or other third party hired
by MAGIC INTERNATIONAL to assist with the development, marketing, organization,
or implementation of the convention/meeting. MAGIC INTERNATIONAL agrees to
indemnify and hold harmless the LAS VEGAS HILTON from and against any and all
claims made by any such third parties.
6
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Magic International
March 19, 1998
Page 7
CANCELLATION POLICY
The LAS VEGAS HILTON has agreed to offer the favorable terms presented to MAGIC
INTERNATIONAL based on its expectation that your event will generate revenue to
the LAS VEGAS HILTON from sleeping rooms, function space usage, food and
beverage events and ancillary services such as restaurant outlets, telephone,
movies, room service and other services offered by the hotel at additional cost
to guests. If your event does not take place at this hotel for any reason, LAS
VEGAS HILTON will not only have lost this revenue, but will incur the costs
involved in attempting to find other individuals or groups to replace the lost
business. The closer in time to the date of your event that a cancellation
occurs, the less likely it is that the LAS VEGAS HILTON will be able to replace
any or all of your business.
MAGIC INTERNATIONAL agrees that should it change its meeting site to another
hotel, or cancel this commitment for any reason except as defined below, actual
damages would be difficult to determine. The following schedule represents a
reasonable effort on behalf of the LAS VEGAS HILTON to establish its actual
damages for such cancellation. It is agreed that such schedule shall represent
liquidated damage to be paid by MAGIC INTERNATIONAL for cancellation of this
contract.
Cancellation within one (1) year of convention date:
- -- 60% of anticipated gross revenues (derived from sleeping rooms, food and
beverage functions and ancillary enterprises) if your meeting was held as
scheduled.
In the event that this meeting is canceled prior to the time that specific
sleeping room rates are agreed upon, menu prices are established, or exhibit
space rates are established, then our current room rates, current menu prices
and current exhibit space rates, as set forth herein, will be used in
calculating the hotel's anticipated gross revenues. Ancillary revenues will be
calculated using the average daily per occupied room ancillary revenue for the
same month as the convention from the most recent year available.
FORCE MAJEURE
Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, Acts
of God, inability to obtain labor or materials or reasonable substitutes
therefor, governmental restrictions, governmental regulations, governmental
controls, enemy or hostile governmental actions, civil commotion, riots, fires,
floods, explosions, quarantine, power shortages, power outages, or other causes
beyond the reasonable control of the party obligated to perform shall excuse the
performance by such party for a period of time equal to such prevention, delay
or stoppage. However, if the length of the prevention, delay or stoppage on the
party of one party as a result of a force majeure is such that continuation of
the contract becomes commercially impractical, the other party may terminate the
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Magic International
March 19, 1998
Page 8
FORCE MAJEURE
(continued)
contract upon notice to the party which is unable to perform, and neither party
shall have any further liability to the other party.
AMERICANS WITH DISABILITIES ACT
The hotel represents and MAGIC INTERNATIONAL acknowledges that beginning on
January 1, 1992, and continuing thereafter in accordance with the compliance
dates established or required under Title III of the Americans With Disabilities
Act and the regulations promulgated thereunder ("ADA"), the hotel facilities
being rented to MAGIC INTERNATIONAL under this Agreement, its guest rooms,
common areas and its transportation services will be in compliance with the
public accommodation requirements of the ADA.
AUXILIARY AIDS
MAGIC INTERNATIONAL agrees that by JUNE 26, 1998, it will furnish to the hotel a
list of any auxiliary aids needed in any meeting room or function space by its
attendees. Should such auxiliary aids be required, MAGIC INTERNATIONAL shall pay
all charges associated with the acquisition, rental or provision of such aids.
When requests for sleeping room assignments are made, please ask your attendees
to notify the hotel of their auxiliary aid needs, so that we may notify you as
to the names of businesses with which you may contract to obtain those aids.
OPTION STATUS
These arrangements are first-come, first serve. Space is confirmed definitely
only after receipt of the signed and counter-signed agreement. By signing and
returning this Agreement to the LAS VEGAS HILTON, you will enable the LAS VEGAS
HILTON to establish these arrangements on a definite basis, provided the dates
can be cleared.
INSURANCE
You agree, if requested by us, to obtain and keep in force, during the term of
its occupancy and use of our premises for your event, policies of general
liability insurance, specifically referring to and including the contractual
liability referred to in the indemnification paragraph above, premises
operations, broad form property damage, independent contractors coverage, and
personal injury liability with limits of $1,000,000.00 with such responsible
insurance companies satisfactory to us; and, if applicable, worker's
compensation insurance to statutory limits, employer's liability insurance with
limits of $100,000.00 and automobile liability insurance covering all owned,
non-owned and hired vehicles with limits satisfactory to us. The lndemnitees
named below shall be
8
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Magic International
March 19, 1998
Page 9
named as additional insured under the policies required by this paragraph. Your
insurance will be considered primary of any similar insurance carried by us. You
agree to deliver to us at least three (3) days prior to your event copies of
certificates of insurance for each policy required by us.
INDEMNIFICATION
To the extent permitted by law, you agree to protect, indemnify, defend and hold
harmless the Las Vegas Hilton Corporation, its parents, subsidiaries,
affiliates, successors and assigns, and the officers, directors, agents and
employees of each of them (collectively the "Indemnitee") against all claims,
losses or damages to persons or property, governmental charges or fines, and
cost (including reasonable attorney's fees), arising out of or connected with
your function, except those claims arising out of the negligence or willful
misconduct of hotel, its employees, officers, directors and agents. MAGIC
INTERNATIONAL'S indemnity obligations shall survive the termination of this
Agreement regardless of the reason for termination.
ENTIRE AGREEMENT
This agreement contains the entire agreement of the parties and supersedes all
previous agreements and understandings of the parties, written or oral. This
Agreement may be amended only in a writing signed by the parties.
SEVERABILITY
In the event a portion of this Agreement is declared invalid by a court of
competent jurisdiction, the remaining provisions shall remain in full force and
effect, unaffected by such declaration of invalidity. If the liquidated damages
provisions relating to the Performance Clause or Cancellation Policy are
declared to be invalid or unenforceable, the Las Vegas Hilton shall be entitled
to recover all of its actual damages for breach of these provisions.
ASSIGNMENT
This Agreement may not be assigned by MAGIC INTERNATIONAL without the prior
written consent of the Las Vegas Hilton, and shall be binding upon the
successors and permissible assignees of the parties.
LEGAL ACTION; ATTORNEY'S FEES; GOVERNING LAW
In the event of breach of this Agreement, the non-breaching party shall have the
remedies set forth herein and all remedies available at law or in equity. In
the event an action is commenced to enforce the terms of this Agreement, the
prevailing party in such action shall be entitled to payment
9
<PAGE>
Magic International
March 19, 1998
Page 10
LEGAL ACTION; ATTORNEY'S FEES; GOVERNING LAW
(continued)
of its reasonable attorney's fees by the losing party. Any such action must be
brought in Clark County, Nevada. This Agreement shall be governed by Nevada
law.
NOTICE
In the event it is necessary or desirable to give notice under the terms of this
Agreement, such notice shall be given by certified mail, return receipt
requested, by telefax or by a recognized overnight courier. Any notice sent by
certified mail shall be effective within three days of the date of mailing or
upon receipt, whichever is earlier. Notice sent by telefax shall be effective
upon confirmed transmission. Notice sent by a recognized overnight courier shall
be effective upon receipt. Any notice to the Las Vegas Hilton hereunder shall be
sent to 3000 Paradise Road, Las Vegas, Nevada 89109; Attention: Vice President
of Sales. Any notice to MAGIC INTERNATIONAL hereunder shall be sent to 6200
Canoga Ave., Suite 303, Woodland Hills, CA 91367. The parties may designate in
writing a new address for purposes of notice.
AUTHORIZATION
MAGIC INTERNATIONAL and the LAS VEGAS HILTON warrant and represent that the
executive signing this Agreement has authority to bind the MAGIC INTERNATIONAL
and the LAS VEGAS HILTON to the commitments made herein and such action is taken
with the full knowledge and approval of the governing body of the MAGIC
INTERNATIONAL and management of the LAS VEGAS HILTON.
IN WITNESS WHEREOF, the parties have signed this Agreement the day and year
indicated below:
LAS VEGAS HILTON CORPORATION MAGIC INTERNATIONAL
dba LAS VEGAS HILTON
By: /s/ Mark Rittorno By:
______________________________ ____________________________
Mark Rittorno
Sr. Vice President-Hotel Operations
By: /s/ Thomas E. Page By:
______________________________ ____________________________
Thomas E. Page
Vice President of Sales
By: By:
______________________________ ____________________________
Gregg Weiler
Director of Sales
10
<PAGE>
Magic International
March 19, 1998
Page 11
Date:______________________________ Date:____________________________
11
<PAGE>
Magic International
March 19, 1998
Page 12
EXHIBIT A
---------
RESPONSIBILITY CLAUSE FOR EXHIBITS
The MAGIC INTERNATIONAL shall assume responsibility for any claims arising out
of the use of the exhibition premises of the LAS VEGAS HILTON. In this regard,
the MAGIC INTERNATIONAL agrees to indemnify and defend the LAS VEGAS HILTON and
its Owners, agents and employees against any claims or expenses arising out of
the use of the exhibition premises.
The MAGIC INTERNATIONAL agrees to obtain and maintain during the use of the
exhibition premises, Comprehensive General Liability Insurance, including
contractual liability covering the MAGIC INTERNATIONAL'S indemnity in this
Responsibility Clause. Such insurance shall be in the amount of not less than
$1,000,000 combined single lime for personal injury and property damage. The LAS
VEGAS HILTON, its Owners and Hilton LAS VEGAS HILTON'S Corporation shall be
named as additional insured on such policy, and MAGIC INTERNATIONAL shall supply
the LAS VEGAS HILTON with Certificates of Insurance at least 30 days prior to
the use of the exhibition premises.
12
<PAGE>
EXHIBIT 12.1
ADVANSTAR COMMUNICATIONS INC.
COMPUTATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS PRO FORMA
PRO FORMA ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, YEAR ENDED MARCH 31, ENDED
--------------------------------------------- DECEMBER 31, -------------- MARCH 31,
1993 1994 1995 1996 1997 1997 1997 1998 1998
-------- -------- ------- ------- ------- ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pretax income from
continuing operations
before minority
interests.............. $(44,759) $(58,901) $ (978) $(4,869) $(8,309) $(8,510) $ (19) $ 474 $7,106
-------- -------- ------- ------- ------- ------- ------ ------ ------
Fixed Charges:
Interest expense....... 10,835 13,003 16,328 13,699 14,649 31,100 3,530 3,827 7,773
Amortization of debt
discounts............. 4,878 3,901 2,926 813 -- 31 -- -- 10
Amortization of
deferred debt cost.... 1,829 1,371 517 146 934 720 229 238 180
Interest factor on
rental expense........ 960 940 815 788 900 900 225 216 216
-------- -------- ------- ------- ------- ------- ------ ------ ------
Total fixed charges..... 18,502 19,215 20,586 15,446 16,483 32,751 3,984 4,281 8,179
-------- -------- ------- ------- ------- ------- ------ ------ ------
Pretax earnings before
fixed charges.......... 26,257 39,686 19,608 10,577 8,174 24,241 3,965 4,755 15,285
-------- -------- ------- ------- ------- ------- ------ ------ ------
Ratio of earnings to
fixed charges......... -- -- -- -- -- -- 1.00 1.11 1.87
Deficiency of earnings
to cover fixed
charges................ $ 44,759 $ 58,901 $ 978 $ 4,869 $ 8,309 $ 8,510
</TABLE>
<PAGE>
LIST OF REGISTRANT SUBSIDIARIES
EXHIBIT 21.1
ADVANSTAR HOLDINGS, INC.
ADVANSTAR COMMUNICATIONS INC.
(Wholly owned by Advanstar Holdings Inc.)
ADVANSTAR EXPOSITIONS CANADA LIMITED
(Wholly owned by Advanstar Communications Inc.)
ART EXPOSITIONS INTERNATIONAL INC.
(Wholly owned by Advanstar Communications Inc.)
EXPOCON MANAGEMENT ASSOCIATES, INC.
(Wholly owned by Advanstar Communications Inc.)
ON DEMAND MARKETING, INC.
(Wholly owned by Advanstar Communications Inc.)
TECHNOLOGY EVENTS COMPANY, LLC
(75% owned by Advanstar Communications Inc.)
(25% owned by Art Expositions International Inc.)
ADVANSTAR EDITORA E COMMUNICACOES LTDA
(Wholly owned by Advanstar Holdings Inc.)
H&T CONGRESSOS E FEIRAS LTDA.
(Wholly owned by Advanstar Editora E Communicacoes LTDA)
ADVANSTAR COMMUNICATIONS ASIA PACIFIC PARTNERSHIP
(50% owned by Advanstar Communications Inc.)
(50% owned by Art Expositions International Inc.)
ADVANSTAR WIDEBAND PARTNERSHIP
(50% owned by Advanstar Communications Inc.)
HOME ENTERTAINMENT EVENTS PARTNERSHIP
(50% owned by Advanstar Communications Inc.)
MEN'S APPAREL GUILD IN CALIFORNIA, INC.
(Wholly owned by Advanstar Communications Inc.)
MAGIC KIDS, INC.
(Wholly owned by Men's Apparel Guild in California, Inc.)
APPLIED BUSINESS TELECOMMUNICATIONS
(Wholly owned by Advanstar Communications Inc.)
1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
June 16, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-4 of
our report dated June 24, 1997 on our audits of the consolidated balance
sheets of Men's Apparel Guild in California, Inc. and subsidiary as of May 31,
1997 and 1996, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three year
period ended May 31, 1997. We also consent to the reference to our firm under
the caption "Experts."
/s/ Coopers & Lybrand, L.L.P.
Los Angeles, California
June 17, 1998
<PAGE>
Exhibit 25.1
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
__________________________________________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
__________________________________________________
ADVANSTAR COMMUNICATIONS INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
New York 59-2757389
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
</TABLE>
<TABLE>
<CAPTION>
Table of Additional Registrants
--------------------------------
<S> <C> <C> <C>
Advanstar Holdings, Inc. Delaware 94-3243999
Art Expositions International, Inc. Delaware 41-1612863
Expocon Management Associates, Inc. Connecticut 06-0984189
On Demand Marketing, Inc. Connecticut 06-1382851
Men's Apparel Guild in
California, Inc. California 95-1568605
MagicKids, Inc. California 33-0753421
Technology Events Company, LLC Connecticut 06-1432203
Applied Business teleCommunications California 94-2896012
7500 Old Oak Boulevard
Cleveland, Ohio 44130-3369
(Address of principal executive offices) (Zip code)
</TABLE>
______________________
9-1/4% Senior Subordinated Notes due 2008
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
CONFORMED COPY
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of June, 1998.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1997, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin.................... $ 5,742,986
Interest-bearing balances............. 1,342,769
Securities:
Held-to-maturity securities........... 1,099,736
Available-for-sale securities......... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell..... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................. 35,019,608
LESS: Allowance for loan and
lease losses ....................... 627,350
LESS: Allocated transfer risk
reserve............................. 0
Loans and leases, net of unearned
income, allowance, and reserve 34,392,258
Assets held in trading accounts......... 2,521,451
Premises and fixed assets (including
capitalized leases)................... 659,209
Other real estate owned................. 11,992
Investments in unconsolidated
subsidiaries and associated
companies............................. 226,263
Customers' liability to this bank on
acceptances outstanding............... 1,187,449
Intangible assets....................... 781,684
Other assets............................ 1,736,574
-----------
Total assets............................ $56,153,587
===========
</TABLE>
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices................... $27,031,362
Noninterest-bearing .................. 11,899,507
Interest-bearing ..................... 15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 13,794,449
Noninterest-bearing .................. 590,999
Interest-bearing ..................... 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase... 2,338,881
Demand notes issued to the U.S.
Treasury.............................. 173,851
Trading liabilities..................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less............................. 1,905,330
With remaining maturity of more than
one year through three years........ 0
With remaining maturity of more than
three years......................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,195,923
Subordinated notes and debentures....... 1,012,940
Other liabilities....................... 2,018,960
----------
Total liabilities....................... 51,192,576
----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 36,866
Cumulative foreign currency transla-
tion adjustments...................... (36,184)
----------
Total equity capital.................... 4,961,011
----------
Total liabilities and equity
capital .............................. $56,153,587
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
<PAGE>
Exhibit 7
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
]
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
]
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR YEAR ENDED DECEMBER 31, 1997 AND THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001062771
<NAME> ADVANSTAR COMMUNICATIONS INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 MAR-31-1998
<CASH> 7,024 8,095
<SECURITIES> 0 0
<RECEIVABLES> 19,372 20,647
<ALLOWANCES> 553 551
<INVENTORY> 1,921 1,919
<CURRENT-ASSETS> 37,706 41,257
<PP&E> 17,301 18,671
<DEPRECIATION> 5,155 5,824
<TOTAL-ASSETS> 298,497 337,864
<CURRENT-LIABILITIES> 58,066 61,067
<BONDS> 0 0
0 0
0 0
<COMMON> 10 10
<OTHER-SE> 89,724 90,280
<TOTAL-LIABILITY-AND-EQUITY> 298,497 90,290
<SALES> 0 0
<TOTAL-REVENUES> 187,656 55,748
<CGS> 0 0
<TOTAL-COSTS> 126,103 36,895
<OTHER-EXPENSES> 54,748 14,261
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 15,117 3,814
<INCOME-PRETAX> (8,312) 778
<INCOME-TAX> 583 54
<INCOME-CONTINUING> (8,895) 724
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,895) 724
<EPS-PRIMARY> (8.90) .72
<EPS-DILUTED> (8.90) .72
</TABLE>
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
Offer for Any and All Outstanding
9-1/4 % Senior Subordinated Notes due 2008
in Exchange for
9-1/4 % Senior Subordinated Notes due 2008
Which Have Been Registered Under the Securities Act of 1933
Pursuant to the Prospectus dated _______ ___, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. NEW YORK CITY
TIME, ON __________ ____, 1998, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent For The Exchange Offer Is:
The Bank of New York
<TABLE>
<CAPTION>
By Hand Or Overnight Delivery: Facsimile Transmissions: (Eligible By Registered Or Certified Mail:
Institutions Only)
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Confirm By Telephone: Attn: Reorganization Section
New York, New York 10286 (212) 815-6333
Attn: Reorganization Section
For Information Call:
(212) 815-6333
</TABLE>
Delivery of this letter of transmittal to an address other than as set
forth above or transmission of this letter of transmittal via facsimile to a
number other than as set forth above does not constitute a valid delivery.
The undersigned acknowledges that he or she has received the Prospectus,
dated ---------- ---, 1998 (the "Prospectus"), of Advanstar Communications Inc.,
a New York corporation ("Advanstar" or the "Company") and this Letter of
Transmittal, which together constitute Advanstar's offer (the "Exchange Offer")
to exchange an aggregate principal amount of up to $150,000,000 of the Company's
9-1/4% Senior Subordinated Notes due 2008, which have been registered under the
Securities Act of 1933, as amended (the "Securities Act") (the "Exchange Notes")
for a like principal amount of the Company's issued and outstanding 9-1/4%
Senior Subordinated Notes due 2008 (the "Original Notes") from the holders
thereof.
-1-
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
This Letter of Transmittal is to be completed by holders of Original Notes
if the Original Notes are to be forwarded herewith or if tenders of Original
Notes are to be made by book-entry transfer to an account maintained by The Bank
of New York (the "Exchange Agent") at The Depository Trust Company (the
"Book-Entry Transfer Facility" or "DTC") pursuant to the procedures set forth in
"The Exchange Offer -- Procedures for Tendering Notes" in the Prospectus.
Holders of Original Notes whose certificates (the "Certificates") for such
Original Notes are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date (as defined in the Prospectus) or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Original
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Procedures for Tendering" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
-2-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ORIGINAL NOTES 1 2 3
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate
Principal Principal Amount of
Amount of Original Notes
Name(s) and Address(es) of Registered Holder(s): Certificate Original Tendered
(Please fill in, if blank) Number(s)* Notes Owned (if less than all) **
- ------------------------------------------------ ------------ ----------- ---------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Notes are being tendered by book-entry holders.
** Original Notes may be tendered in whole or in part in denominations of $1,000
and any integral thereof. See instruction 4. Unless otherwise indicated in the column, a holder will be deemed to
have tendered all Original Notes represented by the Original Notes indicated in Column 2. See Instruction 4.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING
Name of Tendering Institution
------------------------------------
Account Number
-----------------------------------------------
Transaction Code Number
----------------------------------------
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY
IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY
-3-
<PAGE>
PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
-------------------------------------
Window Ticket Number (if any)
------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------
Name of Institution which Guaranteed Delivery
--------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution
------------------------------------
Account Number
---------------------------------------------------
Transaction Code Number
------------------------------------------
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED
ORIGINAL NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER
FACILITY ACCOUNT NUMBER SET FORTH ABOVE.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL NOTES
FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "EXCHANGING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
------------------------------------------------------------------
Address:
---------------------------------------------------------------
Ladies and Gentleman:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Advanstar Communications Inc., a New York
corporation (the "Company"), the above described aggregate Principal Amount of
the Company's 9-1/4% Senior Subordinated Notes due 2008 (the "Original Notes")
in exchange for a like aggregate Principal Amount of the Company's 9-1/4% Senior
Subordinated Notes due 2008 (the "Exchange Notes") which have been registered
under the Securities Act upon the terms and subject to the conditions set forth
in the Prospectus dated __________
-4-
<PAGE>
____, 1998 (as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Original Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sell, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Original Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Original Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Original Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Notes to be issued in exchange for such
Original Notes, (ii) present Certificates for such Original Notes for transfer,
and to transfer the Original Notes on the books of the Company, and (iii)
receive for the account of the Company all benefits and otherwise exercise all
rights of beneficial ownership of such Original Notes, all in accordance with
the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
ORIGINAL NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE ORIGINAL NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL
DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR
DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE ORIGINAL
NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS
UNDER THE REGISTRATION RIGHTS AGREEMENTS. THE UNDERSIGNED HAS READ AND AGREES TO
ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Original
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Original Notes. The
Certificate number(s) and the Original Notes that the undersigned wishes to
tender should be indicated in the appropriate boxes above.
-5-
<PAGE>
If any tendered Original Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Original Notes
than are tendered or accepted for exchange, Certificates for such nonexchanged
or nontendered Original Notes will be returned (or, in the case of Original
Notes tendered by book-entry transfer, such Original Notes will be credited to
an account maintained at DTC), without expense to the tendering holder, promptly
following the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Original Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions attached hereto will, upon
the Company's acceptance for exchange of such tendered Original Notes,
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, the
Company may not be required to accept for exchange any of the Original Notes
tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Original Notes, that such Exchange Notes be credited to the account
indicated above maintained at DTC. If applicable, substitute Certificates
representing Original Notes not exchanged or not accepted for exchange will be
issued to the undersigned or, in the case of book-entry transfer of Original
Notes, will be credited to the account indicated above maintained at DTC.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please deliver Exchange Notes to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING ORIGINAL NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY, (II) ANY EXCHANGE NOTES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE
UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE
IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES
TO BE RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE
NOTES. BY TENDERING ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING
THIS LETTER OF TRANSMITTAL, A HOLDER OF ORIGINAL NOTES WHICH IS A BROKER-DEALER
REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF OF THE DIVISION OF
-6-
<PAGE>
CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES,
THAT (A) SUCH ORIGINAL NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A
NOMINEE, OR (B) SUCH ORIGINAL NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME)
MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF
SUCH EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE EXCHANGE AND
REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A EXCHANGING BROKER-DEALER (AS
DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE
FOR ORIGINAL NOTES, WHERE SUCH ORIGINAL NOTES WERE ACQUIRED BY SUCH EXCHANGING
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION DATE
OR, IF EARLIER, WHEN ALL SUCH EXCHANGE NOTES HAVE BEEN DISPOSED OF BY SUCH
EXCHANGING BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED
ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES (AN "EXCHANGING BROKER-DEALER"), BY TENDERING SUCH ORIGINAL NOTES AND
EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM
THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH
MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS
UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED THEREIN, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE EXCHANGE AND REGISTRATION
RIGHTS AGREEMENT, SUCH EXCHANGING-DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES
PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE
PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF
THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE EXCHANGING DEALER OR THE COMPANY
HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE
MAY BE.
-7-
<PAGE>
Holders of Original Notes whose Original Notes are accepted for exchange
will not receive accrued interest on such Original Notes for any period from and
after the last interest payment date to which interest has been paid or duly
provided for on such Original Notes prior to the original issue date of the
Exchange Notes or, if no such interest has been paid or duly provided for, will
not receive any accrued interest on such Original Notes, and the undersigned
waives the right to receive any interest on such Original Notes accrued from and
after such Interest Payment Date or, if no such interest has been paid or duly
provided for, from and after ____________, 1998.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Original Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
ORIGINAL NOTES AS SET FORTH IN SUCH BOX.
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE __)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY
INSTRUCTION 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) for the Original Notes hereby tendered or on the Company's
register of holders or by an person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
opinions of counsel, certifications and other information as may be required by
the Company for the Original Notes to comply with the restrictions on transfer
applicable to the Original Notes). If signature is by an attorney-in-fact,
executor, administrator, trustee, guardian, officer of a corporation or another
acting in a fiduciary capacity or representative capacity, please set forth the
signer's full title. See Instruction 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-8-
<PAGE>
(SIGNATURE(S) OF HOLDER(S))
Date: _________________199__
Name(s)
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
-----------------------------------------------------------
Address
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date:_______________, 199__
Name of Firm
--------------------------------------------------------------------
Capacity (full title)
--------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
-9-
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or Original Notes not tendered are to
be issued in the name of someone other than the registered holder of the
Original Notes whose name(s) appear(s) above.
Issue
[_] Original Notes not tendered to:
[_] Exchange Notes to:
Name(s)
-------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and
Telephone Number
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Notes or Original Notes not tendered are to be
sent to someone other than the registered holder of the Original Notes whose
name(s) appear(s) above, or such registered holder(s) at an address other than
that shown above.
Mail
[_] Original Notes not tendered to:
[_] Exchange Notes to:
Name(s)
-------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and
Telephone Number
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
-10-
<PAGE>
INSTRUCTIONS FORMING PART OF THE TERMS
AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering" in the Prospectus. Certificates, or timely
confirmation of a book-entry transfer of such Original Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein on or prior to
the Expiration Date. Original Notes may be tendered in whole or in part in the
principal amount of $1,000.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedures for delivery by book-entry transfer on a timely basis, may tender
their Original Notes by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedures for Tendering" in the Prospectus. Pursuant to
such procedures: (i) such tender must be made by or through an Eligible
Institution (as defined below); (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Company, must be received by the Exchange Agent on or prior to the Expiration
Date; and (iii) the Certificates (or book-entry confirmation (as defined in the
Prospectus)) representing all tendered Original Notes, in proper form for
transfer, together with a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent within five New York Stock Exchange, Inc. trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer--Procedures for Tendering Original Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Original Notes to
be properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.
-11-
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any
participant in DTC whose name appears on the Company's register of
holders maintained by the Company as the owner of the Original Notes)
of Original Notes tendered herewith, unless such holder(s) has
completed either the box entitled "Special Issuance Instructions" or
the box entitled "Special Delivery Instructions" above, or
(ii) such Original Notes are tendered for the account of a firm that
is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Original Notes" is inadequate, the Certificate number(s) and/or
the principal amount of Original Notes and any other required information should
be listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Original Notes will be
accepted only in the principal amount of $1,000 and integral multiples thereof.
If less than all the Original Notes evidenced by any Certificate submitted are
to be tendered, fill in the principal amount of Original Notes which are to be
tendered in the box entitled "Principal Amount of Original Notes Tendered (if
less than all)." In such case, new Certificate(s) for the remainder of the
Original Notes that were evidenced by your old Certificate(s) will only be sent
to the holder of the Old Capital Security, promptly after the Expiration Date.
All Original Notes represented by Certificates delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
-12-
<PAGE>
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Original Notes to be
withdrawn, the aggregate principal amount of Original Notes to be withdrawn, and
(if Certificates for Original Notes have been tendered) the name of the
registered holder of the Original Notes as set forth on the Certificate for the
Original Notes, if different from that of the person who tendered such Original
Notes. If Certificates for the Original Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Certificates for the Original Notes, the tendering holder must submit the serial
numbers shown on the particular Certificates for the Original Notes to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Original Notes tendered for the
account of an Eligible Institution. If Original Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in the Prospectus
under "The Exchange Offer--Procedures for Tendering," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Original Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, or
facsimile transmission. Withdrawals of tenders of Original Notes may not be
rescinded. Original Notes properly withdrawn will not be deemed validly tendered
for purposes of the Exchange Offer, but may be retendered at any subsequent time
on or prior to the Expiration Date by following any of the procedures described
in the Prospectus under "The Exchange Offer-- Procedures for Tendering."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, any of its affiliates or assigns, the Exchange Agent or any
other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Original Notes which have been tendered but
which are withdrawn will be returned to the holder thereof without cost to such
holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Original
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Original Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
-13-
<PAGE>
If any tendered Original Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of each such person's
authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Original Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the registered holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Original Notes listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the registered owner(s) appear(s) on the Certificates, and also must
be accompanied by such opinions of counsel, certifications and other information
as the Company may require in accordance with the restrictions on transfer
applicable to the Original Notes. Signatures on such Certificates or bond powers
must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Original Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Original Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer--Certain Conditions
to the Exchange Offer" or any conditions or irregularity in any tender of
Original Notes of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Original Notes will be
-14-
<PAGE>
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. The Company, any of its affiliates or assigns
of the Company, the Exchange Agent, or any other person shall not be under any
duty to give notification of any irregularities in tenders or incur any
liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a holder whose tendered Original Notes are accepted for exchange is
required to provide the Exchange Agent with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with respect to Original Notes
exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Original Notes or of the last transferee appearing on the transfers attached
to, or endorsed on, the Original Notes. If the Original Notes are registered in
more than one name or are not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which number to report.
-15-
<PAGE>
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather,
the U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus. 11. NO
CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders of Original Notes, by execution
of this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of their Original Notes for exchanges.
Neither the Company, the Exchange Agent nor any other person is obligated
to given notice of any defect or irregularity with respect to any tender of
Original Notes nor shall any of them incur any liability for failure to give any
such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Original Notes have been lost, destroyed or stolen, the holder
should promptly notify the Exchange Agent. The holder will then be instructed as
to the steps that must be taken in order to replace the Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen Certificate(s) have been
followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Original Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Original Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Original Notes in connection with the Exchange Offer, then
the amount of any such transfer tax (whether imposed on the registered holder or
any other person) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
-16-
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE
THEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
-17-
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Name
- ---------------------------------------------------------------------------------------------------------------------
Business name, if different from above.
- ---------------------------------------------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.)
- ---------------------------------------------------------------------------------------------------------------------
City state, and ZIP code
- ---------------------------------------------------------------------------------------------------------------------
PART 1-PLEASE PROVIDE YOUR TIN ON THE LINE AT TIN:_________________________
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Social Security Number or
Employer Identification Number
---------------------------------------------------------------------------------------
PART 2--TIN Applied For [_]
---------------------------------------------------------------------------------------
SUBSTITUTE CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) the number shown on this form is my correct taxpayer identification number (or I
Department of The Treasury am waiting for a number to be issued to me).
Internal Revenue Service
(2) I am not subject to backup withholding either because (i) I am exempt from
Payor's Request For backup withholding, (ii) I have not been notified by the Internal Revenue
Taxpayer Service ("IRS") that I am subject to backup withholding as a result of a failure
Identification Number to report all interest or dividends, or (iii) the IRS has notified me that I am
("TIN") no longer subject to backup withholding, and
and Certification
(3) any other information provided on this form is true and correct.
Signature____________________________ Date__________________, 1998
- ---------------------------------------------------------------------------------------------------------------------
You must cross out item (iii) in Part 2 above if you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-18-
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments made to me on account of the Exchange Notes shall be retained until I
provide a taxpayer identification number to the Exchange Agent and that, if I do
provide a taxpayer identification number to the Exchange Agent and that, if I do
not provide my taxpayer identification number within 60 days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
Signature _________________________ Date: _______________, 1998
- --------------------------------------------------------------------------------
-19-
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
ANY AND ALL OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
OF
ADVANSTAR COMMUNICATIONS INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 9 1/4% Senior Subordinated
Notes due 2008 (the "Original Notes") are not immediately available, (ii)
Original Notes, the Letter of Transmittal and all other required documents
cannot be delivered to The Bank of New York (the "Exchange Agent") on or prior
to 5:00 P.M. New York City time, on the Expiration Date (as defined in the
Prospectus referred to below) or (iii) the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand, overnight courier or mail, or transmitted by
facsimile transmission, to the Exchange Agent. See "The Exchange Offer --
Procedures for Tendering" in the Prospectus. In addition, in order to utilize
the guaranteed delivery procedure to tender Original Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal relating to
the Original Notes (or facsimile thereof) must also be received by the Exchange
Agent prior to 5:00 P.M. New York City time, on the Expiration Date.
Capitalized terms not defined herein have the meanings assigned to them in the
Prospectus.
The Exchange Agent For The Exchange Offer Is:
The Bank of New York
<TABLE>
<CAPTION>
By Registered or Certified Mail Facsimile Transmissions: By Hand Or Overnight Delivery
(Eligible Institutions Only)
<S> <C> <C>
The Bank of New York The Bank of New York
101 Barclay Street, 7E (212) 571-3080 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attn: Reorganization Section Confirm By Telephone: Ground Level
(212) 815-6333 New York, New York 10286
Attn: Reorganization Section
For Information Call:
(212) 815-6333
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
<PAGE>
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Advanstar Communications Inc., a New York
Corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated ______________, 1998 (as the same may be amended
or supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Original Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering."
Aggregate Principal Amount Name(s) of Registered Holder(s):
----------
Amount Tendered: $
--------------- -------------------------------------------
Certificate No(s)
if available):
-------------------
$
--------------------------------
(Total Principal Amount Represented by
Original Notes Certificate(s)
If Original Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number:
--------------
Date:
----------------------------
<PAGE>
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X
------------------------ -----------------
X
------------------------ -----------------
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
-------------------------------
Must be signed by the holder(s) of the Original Notes as their name(s)
appear(s) on certificates for Original Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
Please print name(s) and address(es)
Name(s):
-------------------------------------------
-------------------------------------------
-------------------------------------------
Capacity:
-------------------------------------------
Address(es):
-------------------------------------------
-------------------------------------------
-------------------------------------------
<PAGE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
learning agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Original
Notes tendered hereby in proper form for transfer, or confirmation of the book-
entry transfer of such Original Notes to the Exchange Agent's account at The
Depository Trust Company ("DTC"), pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together with one or more
properly completed and duly executed Letter(s) of Transmittal (or facsimile
thereof) and any other required documents within five business days after the
date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Original Notes tendered hereby to the Exchange Agent within
the time period set forth above and that failure to do so could result in a
financial loss to the undersigned.
- ------------------------------------- ------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- ------------------------------------
Address Title
- ------------------------------------- ------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No. Dated:
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS FORM. CERTIFICATES
FOR ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Exhibit 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
of
Advanstar Communications Inc.
9-1/4% Senior Subordinated Original Notes due 2008
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of Advanstar Communications Inc., a New York
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer to
exchange $1,000 principal amount of its 9-1/4% Senior Subordinated Notes due
2008, which have been registered under the Securities Act of 1933 (the "Exchange
Notes") for a like principal amount of its outstanding 9-1/4 Senior Subordinated
Notes due 2008, (the "Original Notes"), which have not been so registered (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Original Notes held by you for the account of
the undersigned.
The aggregate face amount of the Original Notes held by you for the account
of the undersigned is (fill in amount):
$ of the 9-1/4% Senior Subordinated Original Notes due 2008.
---------------
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] TO TENDER the following Original Notes held by you for the account of
the undersigned (insert principal amount of Original Notes to be
tendered if any):
$
-------------------
[ ] NOT TO TENDER any Original Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Original Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to, the representations that (i) the
undersigned is acquiring the Exchange Notes in the ordinary course of business
of the undersigned, (ii) the undersigned is not participating, does not intend
to participate, and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iii) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Act"), in connection with a secondary resale transaction of the Exchange Notes
acquired by such person and
<PAGE>
-2-
cannot rely on the position of the Staff of the Securities and Exchange
Commission set forth in no action letters that are discussed in the section of
the Prospectus entitled "The Exchange Offer --Purposes and Effects of the
Exchange Offer" and (iv) the undersigned is not an "affiliate," as defined in
Rule 405 under the Act, of the Company or a broker-dealer tendering Original
Notes acquired directly from the Company for its own account; (b) to agree, on
behalf of the undersigned as set forth in the Letter of Transmittal; and (c) to
take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Original Notes.
SIGN HERE
Name of beneficial owner(s):
-------------------------------------------------
Signature(s):
----------------------------------------------------------------
Name (please print):
---------------------------------------------------------
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Telephone Number:
------------------------------------------------------------
Taxpayer Identification or Social Security Number:
---------------------------
Date:
------------------------------------------------------------------------
