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AGREEMENT AND PLAN OF ORGANIZATION
Dated as of the _________ day of September, 1997
by and between
HEALTHWORLD CORPORATION,
and
XXXXXX XXXXXXXX,
XXXXXXX XXXXXX,
XXXXXXX XXXXXX,
and
XXXXXXX XXXXXXXXX
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TABLE OF CONTENTS
Page No.
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1 The Organization..............................................................................-6-
1.1 Organization................................................................-6-
1.2 Directors and Officers......................................................-6-
2 Conversion of Stock...........................................................................-7-
2.1 Manner of Conversion........................................................-7-
2.2 Beneficial Ownership of Shares..............................................-7-
2.3 Allocation of Shares........................................................-7-
3 Delivery of Company Stock and Healthworld Stock...............................................-9-
4 Closing.......................................................................................-9-
5 Representations And Warranties of U.S. Stockholders...........................................-9-
5.1 Due Organization...........................................................-10-
5.2 Prohibited Activities......................................................-11-
5.3 Capital Stock of the Company...............................................-11-
5.4 Transactions in Capital Stock..............................................-12-
5.5 No Bonus Shares............................................................-12-
5.6 Subsidiaries...............................................................-12-
5.7 Predecessor Status; etc....................................................-13-
5.8 Spin-off by the Company....................................................-13-
5.9 Financial Statements.......................................................-13-
5.10 Liabilities and obligations................................................-13-
5.11 Accounts and Notes Receivable..............................................-14-
5.12 Permits and Intangibles....................................................-14-
5.13 Environmental Matters......................................................-15-
5.14 Personal Property..........................................................-15-
5.15 Significant Customers; Material Contracts and Commitments..................-16-
5.16 Real Property..............................................................-17-
5.17 Insurance..................................................................-17-
5.18 Compensation; Employment Agreements; Organized Labor
Matters....................................................................-17-
5.19 Employee Plans.............................................................-22-
5.20 Compliance with ERISA......................................................-23-
5.21 Conformity with Law; Litigation............................................-24-
5.22 Taxes......................................................................-25-
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5.23 No Violations..............................................................-28-
5.24 Government Contracts.......................................................-29-
5.25 Absence of Changes.........................................................-29-
5.26 Deposit Accounts; Powers of Attorney.......................................-31-
5.27 Brokers and Agents.........................................................-31-
5.28 Relations with Governments.................................................-31-
5.29 Disclosure.................................................................-31-
5.30 Authority; Ownership. ....................................................-32-
5.31 Preemptive Rights..........................................................-33-
5.32 No Intention to Dispose of Healthworld Stock...............................-33-
6 Representations of Healthworld...............................................................-33-
6.1 Due Organization...........................................................-33-
6.2 Authorization..............................................................-33-
6.3 Capital Stock of Healthworld...............................................-34-
6.4 Transactions in Capital Stock..............................................-34-
6.5 Liabilities and Obligations................................................-34-
6.6 Conformity with Law; Litigation............................................-34-
6.7 Validity of Obligations....................................................-35-
6.8 Limited Business Conducted.................................................-35-
7 Covenants Prior to Closing...................................................................-35-
7.1 Access and Cooperation; Due Diligence......................................-35-
7.2 Conduct of Business Pending Closing........................................-36-
7.3 Prohibited Activities......................................................-37-
7.4 No Shop....................................................................-38-
7.5 Further Assurances.........................................................-39-
7.6 Agreements.................................................................-39-
7.7 Notification of Certain Matters............................................-39-
7.8 Amendment of Schedules.....................................................-39-
7.9 Cooperation in Preparation of Registration Statement.......................-40-
8 Conditions Precedent to Obligations of U.S. Stockholders.....................................-40-
8.1 Representations and Warranties; Performance of Obligations.................-40-
8.2 Satisfaction...............................................................-41-
8.3 No Litigation..............................................................-41-
8.4 Opinions of Counsel........................................................-41-
8.5 Consents and Approvals.....................................................-41-
8.6 No Material Adverse Change.................................................-42-
8.7 Secretary's Certificates; Good Standing....................................-42-
8.8 Employment Agreements......................................................-42-
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8.9 Conformity With Xxxxxxxx/Xxxxxx Letter of Intent and
Underwriters' Engagement Letter............................................-42-
9 Conditions Precedent to Obligations of Healthworld...........................................-43-
9.1 Representations and Warranties; Performance of Obligations.................-43-
9.2 Satisfaction...............................................................-43-
9.3 No Litigation..............................................................-43-
9.4 Opinion of Counsel.........................................................-43-
9.5 Consents and Approvals.....................................................-43-
9.6 No Material Adverse Change.................................................-44-
9.7 Secretary's Certificates...................................................-44-
9.8 Employment Agreements......................................................-44-
9.9 U.S. Stockholders' Release.................................................-44-
9.10 Termination of Related Party Agreements....................................-44-
9.11 Closings...................................................................-45-
10 Covenants of Healthworld and the U.S. Stockholders after Closing.............................-45-
10.1 Release From Guarantees; Repayment of Certain
Obligations................................................................-45-
10.2 Preservation of Tax and Accounting Treatment...............................-45-
10.3 Preparation and Filing of Tax Returns......................................-45-
10.4 Directors..................................................................-47-
10.5 Distributions for Estimated Taxes..........................................-47-
11 Indemnification..............................................................................-47-
11.1 General Indemnification by the U.S. Stockholders...........................-47-
11.2 Indemnification by Healthworld.............................................-48-
11.3 Third Person Claims........................................................-49-
11.4 Exclusive Remedy...........................................................-51-
11.5 Limitations on Indemnification.............................................-51-
12 Termination of Agreement.....................................................................-52-
12.1 Termination................................................................-52-
12.2 Liabilities in Event of Termination........................................-53-
13 Non-Competition; Non-Disclosure..............................................................-53-
13.1 Non-Competition............................................................-53-
13.2 Xxxxxxxxxxxxx..............................................................-00-
00.0 Xxxxxxxxxx Xxxxxx; Damages.................................................-56-
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13.4 Reasonable Restraint.......................................................-56-
13.5 Severability; Reformation..................................................-57-
13.6 Independent Covenant.......................................................-57-
13.7 Survival...................................................................-57-
14 Federal Securities Act Representations.......................................................-57-
14.1 Compliance with Law........................................................-57-
14.2 Economic Risk; Sophistication..............................................-58-
15 Registration Rights..........................................................................-58-
15.1 Piggyback Registration Rights..............................................-58-
15.2 Registration Procedures....................................................-59-
15.3 Underwriting Agreement.....................................................-59-
15.4 Availability of Rule 144...................................................-60-
16 General......................................................................................-60-
16.1 Cooperation................................................................-60-
16.2 Successors and Assigns.....................................................-60-
16.3 Entire Agreement...........................................................-60-
16.4 Counterparts...............................................................-60-
16.5 Expenses...................................................................-60-
16.6 Notices....................................................................-61-
16.7 Governing Law..............................................................-62-
16.8 Survival of Representations and Warranties.................................-62-
16.9 Exercise of Rights and Remedies............................................-62-
16.10 Time.......................................................................-62-
16.11 Reformation and Severability...............................................-62-
16.12 Remedies Cumulative........................................................-62-
16.13 Captions...................................................................-62-
16.14 Amendments and Waivers.....................................................-63-
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of
the ____ day of September, 1997, by and between:
Healthworld Corporation, a Delaware corporation ("Healthworld"),
Xxxxxx Xxxxxxxx ("Xxxxxxxx") residing at 0000 Xxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000, Xxxxxxx Xxxxxx ("Xxxxxx"), residing at Xxx Xxxxxxx
Xxxxx, Xxxxxxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxxx Xxxxxx
("Xxxxxx") residing at Xxxx Xxxxxx Xxx 0000, Xxxxx Xxxxxx, Xxx Xxxx
00000-0000, and Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx"), residing at 0000
Xxxxxx Xxxx, Xxxx Xxxxxx, Xxx Xxxx 00000-0000 (Girgenti, Hughes, Xxxxxx
and Xxxxxxxxx are hereafter referred to as the "U.S.
Stockholders").
WHEREAS, the U.S. Stockholders collectively own all of the issued and
outstanding shares of Girgenti, Hughes, Xxxxxx & XxXxxxxx, Inc. ("GHBM"), a New
York corporation, Black Cat Graphics, Inc. ("Black Cat"), a New York
Corporation, Medical Education Technologies, Inc. ("MET"), a New York
corporation, Brand Research Corporation ("Brand Research"), a New York
corporation, GHBM, Inc. ("GHBMINC"), a New York corporation and Syberactive,
Inc. ("Syberactive"), an Illinois corporation (each of GHBM, Black Cat, MET,
Brand Research, GHBMINC and Syberactive are hereafter referred to individually
as a "U.S. Company" and collectively as the "U.S. Companies"); and
WHEREAS, Xxxxxxx Xxxxxx Xxxxxx, (the "U.K. Stockholder") is the
registered and beneficial owner with full title guarantee of the entire issued
share capital of The Xxxxxx Marketing Group Limited, a company incorporated in
England and Wales with registered no. 3113109 (the "U.K. Company"); and
WHEREAS, various other individuals (the "Minority U.S. Stockholders")
own minority share interests in certain Subsidiaries of the U.K. Company; and
WHEREAS, the U.S. Stockholders are sometimes hereinafter referred to
individually as a U.S. Stockholder or collectively as the U.S. Stockholders; and
WHEREAS, the U.S. Companies are sometimes hereinafter referred to
individually as a Company and collectively as the Companies; and
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WHEREAS, Healthworld was formed on September 12, 1996, in the State of
Delaware, for the purpose of effecting the Healthworld Plan of Organization; and
WHEREAS, the U.S. Stockholders desire to contribute all of their shares
of stock in the U.S. Companies into Healthworld in exchange for Healthworld
Stock, the U.K. U.S. Stockholder desires to contribute all of his shares of
stock in the U.K. Company into Healthworld in exchange for Healthworld Stock,
and the Minority U.S. Stockholders desire to contribute all of their shares of
stock in the relevant Subsidiaries of the U.K. Company into Healthworld in
exchange for Healthworld Stock, all of the foregoing to occur contemporaneously
with the Pricing of the IPO; and
WHEREAS, all of the foregoing contributions together with the Pricing
of the shares to be offered by Healthworld in the IPO constitute the
"Healthworld Plan of Organization"; and
WHEREAS, the parties intend that the Healthworld Plan of Organization
shall qualify as a tax-free reorganization under Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code") and, where applicable, as a
reorganization within the meaning of Section 368 of the Code; and
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any Schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means any of the U.S. Companies and any Subsidiary
thereof.
"Affiliates" has the meaning set forth in Section 5.8.
"Aggregate Number of Founder Shares" has the meaning set forth in
Section 2.3.
"Xxxxxx" has the meaning set forth in the introductory paragraphs of
this Agreement.
"Balance Sheet Date" shall mean December 31, 1996.
"Closing" has the meaning set forth in Section 4.2.
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"Closing Date" has the meaning set forth in Section 4.2.
"Code" has the meaning set forth in the introductory paragraphs of this
Agreement.
"Company" has the meaning set forth in the introductory paragraphs of
this Agreement.
"Company Stock" has the meaning set forth in Section 2.1.
"Xxxxxxxxx" has the meaning set forth in the introductory paragraphs of
this Agreement.
"Encumbrance" means a mortgage, charge (whether fixed or floating),
pledge, lien, option, restriction, right of first refusal, right of preemption,
third party right or interest, other encumbrance or security interest of any
kind and whether legal or equitable, or another type of preferential arrangement
(including, without limitation, a title transfer and retention arrangement)
having similar effect.
"ERISA" has the meaning set forth in Section 5.19.
"Expiration Date" has the meaning set forth in Section 5.
"Xxxxxxxx" has the meaning set forth in the introductory paragraphs of
this Agreement.
"Xxxxxxxx/Xxxxxx Letter of Intent" means a certain letter of intent of
November 14, 1996 regarding a reorganization of the U.S. Companies and the U.K.
Company in connection with a contemplated IPO, executed by Xxxxxxxx, GHBM, the
U.K.
Stockholder and the U.K. Company.
"Healthworld" has the meaning set forth in the introductory paragraphs
of this Agreement.
"Healthworld License Agreement" means that certain License Agreement by
and between Healthworld and Healthworld, B.V. pursuant to which Healthworld has
licensed from Healthworld, B.V., among other things, the right to use the name
"Healthworld."
"Healthworld Plan of Organization" has the meaning set forth in the
introductory paragraphs of this Agreement.
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"Healthworld Stock" means the common stock, par value $0.01 per share,
of Healthworld.
"Xxxxxx" has the meaning set forth in the introductory paragraphs of
this Agreement.
"IPO" means the initial public offering of Healthworld Stock pursuant
to the Registration Statement.
"Key Consultant Agreement" means any agreement with a consultant
providing for the services of an individual and requiring payment to the
consultant of not less than $150,000 per annum.
"Key Employee" means any employee whose compensation is not less than
$150,000 per annum.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Minority U.S. Stockholders" has the meaning set forth in the
introductory paragraphs of this Agreement.
"Organization" means the contribution of all the shares of stock of the
Companies and all of its Subsidiaries (with the exception of Healthworld, B.V.)
to the capital of Healthworld in exchange for shares of Healthworld Stock.
"PBGC" has the meaning set forth in Section 5.20.
"Plans" has the meaning set forth in Section 5.19.
"Pricing" means the date of determination by Healthworld and the
Underwriters of the public offering price of the shares of Healthworld Stock in
the IPO.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on
Form S-1 (Registration No. 333 [ ]) and any amendments covering the shares of
Healthworld Stock to be issued in the IPO.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
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"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"U.S. Stockholders" has the meaning set forth in the introductory
paragraphs of this Agreement.
"Subsidiary" means any corporation or other entity of which the
relevant corporation or entity owns a controlling voting interest, and any other
corporation or other entity which is similarly controlled by a Subsidiary or
group of Subsidiaries of the relevant corporation or entity.
"Tax or Taxes" means all Federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Underwriters" means Unterberg Harris and Pennsylvania Merchant
Group Ltd.
"Underwriters' Engagement Letter" means the letter dated July 17, 1997,
pursuant to which the Underwriters were engaged by Healthworld.
"U.K. Company" has the meaning set forth in the introductory paragraphs
of this Agreement.
"U.K. Stockholder" has the meaning set forth in the introductory
paragraphs of this Agreement.
"U.S. Companies" has the meaning set forth in the introductory
paragraphs of this Agreement.
"U.S. Stockholders" means Girgenti, Hughes, Xxxxxx & Xxxxxxxxx.
"Vote of a Majority in Interest of the U.S. Stockholders" means the
vote, by formal or informal meeting, in writing or otherwise, by U.S.
Stockholders having greater than 50% of the voting control of each of the U.S.
Companies.
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NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1 The Organization.
1.1 Organization. The Closing of this Agreement shall take place
as described in Section 4, and all of the issued and
outstanding shares of each of the U.S. Companies shall be
contributed by the U.S. Stockholders to the capital of
Healthworld in exchange for the number of shares of
Healthworld Stock set forth in Section 2.3. Simultaneously
with the contribution described in the immediately preceding
sentence, in exchange for shares of stock of Healthworld:
1.1.1 The U.K. Stockholder will be contributing all of the
issued and outstanding shares of the U.K. Company to
the capital of Healthworld, pursuant to an Agreement
of Organization of even date herewith (the "U.K.
Agreement of Organization"), and
1.1.2 The Minority U.S. Stockholders of all of the U.K.
Company's Subsidiaries (with the exception of
Healthworld, B.V.) will be contributing all of the
issued and outstanding shares of such U.K. Company's
Subsidiaries (with the exception of Healthworld,
B.V.) which are owned by them to the capital of
Healthworld, pursuant to separate Agreements of
Organization for each of the Subsidiaries of the U.K.
Company to which such contributions relate (the
"Minority Agreements of Organization").
The contributions made by the U.S. Stockholders pursuant to this Agreement, the
contribution made pursuant to the U.K. Agreement of Organization, the
contributions made pursuant to the Minority Agreements of Organization, and the
contributions of cash by the public and/or the Underwriter in connection with
the IPO shall be considered as a single integrated transaction intended to
qualify as tax-free under Code Section 351. The Closing will occur
contemporaneously with the Pricing of the IPO, and all of the steps of the
Closing and the completion of the IPO are an integrated series of steps in a
series of transactions, none of which would have occurred without the
expectation and anticipation that the other steps will occur or will have
occurred.
1.2 Directors and Officers. At the Closing, the directors and
officers of the Companies then holding office shall remain
unchanged.
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2 Conversion of Stock.
2.1 Manner of Conversion. The manner of converting the shares of
outstanding capital stock (the "Company Stock") of each of the
U.S. Companies issued and outstanding immediately prior to the
Closing into shares of Healthworld Stock shall be as follows:
At the Closing all of the shares of Company Stock issued and
outstanding immediately prior to the Closing shall, by virtue
of the capital contributions described in Section 1.1, and
without any action on the part of the holders thereof,
automatically be deemed to represent the right to receive the
number of shares of Healthworld Stock set forth in the table
in Section 2.3 below.
2.2 Beneficial Ownership of Shares. All Healthworld Stock received
by the U.S. Stockholders pursuant to this Agreement shall have
the same rights as all other shares of Healthworld Stock by
reason of the provisions of the Certificate of Incorporation
of Healthworld or as otherwise provided by the Delaware
General Corporation Law. All voting rights of such Healthworld
Stock received by the U.S. Stockholders shall be fully
exercisable by the U.S. Stockholders and the U.S. Stockholders
shall not be deprived nor restricted in exercising those
rights. At the Closing, Healthworld shall have no class of
capital stock issued and outstanding other than the
Healthworld Stock.
2.3 Allocation of Shares. It is anticipated that the U.S.
Stockholders, the U.K. U.S. Stockholders and the Minority U.K.
Stockholders will own, in the aggregate, 5,000,000 shares (the
"Aggregate Number of Founder Shares") of Healthworld Stock
immediately following the Closing of the IPO. With respect to
Xxxxxxxx, who presently owns one hundred (100) shares of
Healthworld Stock, the conversion shall be made in such a
manner as to issue to him only that number of additional
shares of Healthworld Stock which are necessary to attain the
percentage of shares set forth below. The allocation of the
Aggregate Number of Founder Shares among all of the U.S.
Stockholders, the U.K. Stockholder and the Minority U.K.
Stockholders shall be made as follows:
2.3.1 69% of the Aggregate Number of Founder Shares shall
be allocated to the U.S. Stockholders (the "U.S.
Percentage") and 31% of the Aggregate Number of
Founder Shares shall be allocated to the U.K.
Stockholders and the Minority U.K. Stockholders (the
"U.K. Percentage").
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2.3.2 The number of shares of Healthworld Stock which
results from applying the U.S. Percentage against the
Aggregate Number of Founder Shares shall be divided
among the U.S. Stockholders in the following
proportions:
Xxxxxxxx 63.65%
Xxxxxx 5.00%
Xxxxxx 14.06%
Xxxxxxxxx 17.29%
--------------------------------
Total 100.00%
2.3.3 The number of shares of Healthworld Stock which
results from applying the U.K. Percentage against the
Aggregate Number of Founder Shares shall be divided
among the U.K. Stockholder and the Minority U.K.
Stockholders in the following manner:
2.3.3.1 Xxxxxxx Xxxxxxx shall receive that number of
shares of Healthworld Stock having a value
of (pounds)1,000,000, based on the offering
price in the IPO and utilizing a conversion
rate of $1.65 dollars per pound sterling.
2.3.3.2 Xxxxxxx Xxxxxx shall receive that number of
shares of Healthworld Stock having a value
of (pounds)276,448.35, based on the offering
price in the IPO and utilizing a conversion
rate of $1.65 dollars per pound sterling.
2.3.3.3 Moreton shall receive that number of shares
having a value of (pounds)64,559 based on
the offering price of the IPO and utilizing
a conversion rate of $1.65 dollars per pound
sterling.
2.3.3.4 The U.K. Stockholder shall receive the
balance of the shares of Healthworld Stock.
2.3.3.5 Cater shall not receive any shares of
Healthworld stock.
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2.3.4 No Fractional Shares. No certificates or script
representing fractional shares of Healthworld shall
be issued upon the surrender and exchange of shares.
Each holder of shares who otherwise would have been
entitled to receive a fractional share of Healthworld
(after taking into account all certificates
surrendered by such holder) shall be entitled to
receive, in lieu thereof, a payment in the amount
(without interest) equal to such fractional part of a
share of Healthworld, multiplied by the offering
price in the IPO and, where appropriate, utilizing a
conversion rate of $1.65 dollars per pound sterling.
3 Delivery of Company Stock and Healthworld Stock.
At the Closing, the U.S. Stockholders shall deliver to Healthworld duly
executed stock transfer forms effective to transfer into the name of Healthworld
or its nominee the entire issued and outstanding Company Stock together with
definitive certificate(s) therefor. The U.S. Stockholders agree promptly to cure
any deficiencies with respect to the endorsement of the stock certificates or
other documents of conveyance with respect to such Company Stock or with respect
to the stock transfer form accompanying any Company Stock. Healthworld shall
issue in the name of the U.S. Stockholders and deliver to the U.S. Stockholders
that number of shares of its stock which results from applying the percentage as
is set forth in Section 2.3, dated the Closing Date.
4 Closing.
At or immediately prior to the Pricing, the parties shall take all
actions necessary to effect the Organization at the Closing, to effect the
conversion and delivery of shares referred to in Section 3 hereof, and to
consummate all transactions contemplated by this Agreement. The taking of such
actions shall occur at the offices of Todtman, Young, Nachamie, Xxxxxxx & Spizz,
P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The date on which such actions
occur shall be referred to as the "Closing Date" and the consummation of the
transactions occurring on such date shall be referred to as the "Closing."
5 Representations And Warranties of U.S. Stockholders.
Preliminary Matters in Respect of Representations and Warranties:
Annexed hereto and made a part hereof is a disclosure schedule
(individually a "Disclosure Schedule" and collectively the "Disclosure
Schedules") for the U.K. Company and each of the Subsidiaries, setting forth all
exceptions and/or qualifications to the
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representations and warranties made herein. It is understood and agreed that any
disclosure made on any Disclosure Schedule delivered pursuant hereto shall be
deemed to have been disclosed for purposes of any other Disclosure Schedule
required hereby. The U.K. Stockholder shall make a good faith effort to cross
reference disclosure, as necessary or advisable, between related Disclosure
Schedules.
For purposes of this Section 5, the term Company shall mean and refer
to the U.S. Company and each of the Subsidiaries of the U.S. Company.
The representations and warranties made herein are being made for the
benefit of Healthworld, the U.K. Stockholder and the Minority U.K. Stockholders.
The U.S. Stockholders jointly and severally represent and warrant that
all of the following representations and warranties in this Section 5 are true
at the date of this Agreement and, subject to Section 7.8 hereof, shall be true
on the Closing Date. All representations and warranties contained in this
Section 5, subsection (A) shall survive the Closing Date for a period of twelve
(12) months (the last day of such period being the "Expiration Date"), except
that
(i) the warranties and representations set forth in Section
5.22 hereof (regarding "Taxes") shall survive until such time
as the limitations period has run for all tax periods ended on
or prior to the Closing Date, which shall be deemed to be the
Expiration Date for Section 5.22;
(ii) the warranties and representations set forth in Section
5.30 hereof (regarding "Authority; Ownership") shall survive
forever; and
(iii) solely for purposes of determining whether a claim for
indemnification under Section 11.1.4 hereof has been made on a
timely basis, and solely to the extent that in connection with
the IPO, Healthworld actually incurs liability under the 1933
Act, the 1934 Act, or any other Federal or state securities
laws, the representations and warranties set forth herein
shall survive until the expiration of any applicable
limitations period, which shall be deemed to be the Expiration
Date for such purposes.
5.1 Due Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly authorized and
qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now
conducted
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except as set forth on Schedule 5.1 or where the failure to be
so authorized or qualified would not have a material adverse
effect on the business, operations, affairs, prospects,
properties, assets or condition (financial or otherwise), of
the Company, taken as a whole (as used herein with respect to
the Company, or with respect to any other person, a "Material
Adverse Effect"). Schedule 5.1 sets forth the jurisdiction in
which the Company is incorporated and contains a list of all
such jurisdictions in which the Company is authorized or
qualified to do business. In all material respects, all
accounts, books, ledgers, financial and other records of
whatsoever kind of the Company have been fully, properly and
accurately maintained and are up to date, are in the
possession of the Company and contain true and accurate
records of all matters required by law to be entered therein
and do not contain or reflect any material inaccuracies or
discrepancies. No notice or allegation that any of the said
records is incorrect, or should be rectified, in any material
respects has been received by the Company. The most recent
minutes of the Company, which are dated no earlier than ten
business days prior to the date hereof, affirm and ratify all
prior acts of the Company, and of its officers and directors
on behalf of the Company.
Within the five (5) year period ending with the date hereof, no order
has been made or petition presented or resolution passed for the winding-up or
administration of the Company nor has any distress, execution or other process
been levied against the Company or action taken to repossess goods in the
Company's possession and the Company is not insolvent or unable to pay its
debts.
Within the five (5) year period ending with the date hereof, no
receiver, administrative receiver or administrator has been appointed of the
whole or any material part of the assets of the Company nor are the U.S.
Stockholders aware of any circumstances likely to give rise to the appointment
of any such receiver, administrative receiver or administrator.
5.2 Prohibited Activities. Except as set forth on Schedule 5.2,
the Company has not, between the Balance Sheet Date and the
date hereof, taken any of the actions set forth in Section
7.3.
5.3 Capital Stock of the Company. The authorized capital stock of
the Company is as set forth in Schedule 5.3. All of the issued
and outstanding shares of the capital stock of the Company are
owned by the U.S. Stockholders in the amounts set forth in
Schedule 5.3. Except as set forth on Schedule 5.3, all of such
shares are owned free and clear of all Encumbrances and claims
of every kind. All of the issued and outstanding
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shares of the capital stock of the Company have been duly
authorized and validly issued, are fully paid and
nonassessable, and are owned of record and beneficially by the
U.S. Stockholders. Such shares were offered, issued, sold and
delivered by the Company in compliance with all applicable
state and Federal laws concerning the issuance of securities.
None of such shares were issued in violation of the preemptive
rights of any past or present stockholder.
5.4 Transactions in Capital Stock. Except as set forth on Schedule
5.4, the Company has not acquired any Company Stock since
January 1, 1995. Except as set forth on Schedule 5.4,
5.4.1 No person has the right (whether exercisable now or
in the future and whether contingent or not) to call
for the allotment, issue, sale, redemption or
transfer of any share or loan capital of the Company
under any option or other agreement (including
conversion rights and rights of pre-preemption);
5.4.2 The Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire
any of its shares or any interests therein (or of any
of its Subsidiaries) or to pay any dividend or make
any distribution in respect thereof, nor do any of
the Subsidiaries have any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire
any of their respective shares or any interest
therein or to pay any dividend or make any
distribution in respect thereof;
5.4.3 The Company has no obligation (contingent or
otherwise) to sell any of its shares or any interests
therein; and
5.4.4 Neither the voting rights attaching to the shares in
the capital of the Company nor the relative ownership
of shares among any of their respective stockholders
has been altered or changed in contemplation of the
Organization and/or the Healthworld Plan of
Organization.
5.5 No Bonus Shares. Except as set forth on Schedule 5.5, none of
the shares of Company Stock was issued pursuant to awards,
grants or bonuses.
5.6 Subsidiaries. Except as set forth on Schedule 5.6, the Company
has no Subsidiaries. Except as set forth in Schedule 5.6 and
except for any
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corporations or entities with respect to which the Company
owns less than 10% of the issued and outstanding stock, the
Company does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in
any corporation, association or business entity nor is the
Company, directly or indirectly, a participant in any joint
venture, partnership or other non-corporate entity.
5.7 Predecessor Status; etc. Set forth in Schedule 5.7 is a
listing of all names of all predecessor companies of the
Company, including the names of any entities acquired by the
Company (by stock purchase, merger, or otherwise) or owned by
the Company or from whom the Company previously acquired
material assets, since the earliest date upon which any U.S.
Stockholder acquired his or her stock in any Company. Except
as disclosed on Schedule 5.7, the Company has not been, within
such period of time, a Subsidiary or division of another
corporation or a part of an acquisition which was later
rescinded.
5.8 Spin-off by the Company. Except as set forth on Schedule 5.8,
there has not been any sale, spin-off or split-up of material
assets of either the Company or any other person or entity
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the Company ("Affiliates") since January
1, 1995.
5.9 Financial Statements. Attached hereto as Schedule 5.9 are
copies of the following financial statements (the "Company
Financial Statements") of the Company: the Company's audited
Consolidated Balance Sheets as of December 31, 1996 (the "1996
Balance Sheet"), 1995 and 1994 and Statements of Income, Cash
Flows and Retained Earnings for each of the years in the
three-year period ended December 31, 1996, the financial
statements for the period between the Balance Sheet Date and
June 30, 1997, and the unaudited balance sheet as of June 30,
1997. Such Financial Statements have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated
(except as noted thereon or on Schedule 5.9). Except as set
forth on Schedule 5.9, such Consolidated Balance Sheets as of
December 31, 1996, 1995 and 1994 present fairly the financial
position of the Company as of the dates indicated thereon, and
the Company Financial Statements present fairly the results of
operations for the periods indicated thereon.
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5.10 Liabilities and Obligations. Except (i) as set forth on
Schedule 5.10, (ii) for liabilities to the extent reflected or
reserved against in the 1996 Balance Sheet and (iii) for
obligations required by this Agreement, since the Balance
Sheet Date the Company has not incurred any material
liabilities of any kind, character and description, whether
accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary
course of business. Schedule 5.10 also includes, in the case
of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not
fixed or otherwise accrued or reserved, a good faith and
reasonable estimate of the maximum amount which may be
payable. For each such contingent liability or liability for
which the amount is not fixed or is contested, Schedule 5.10
includes the following information:
5.10.1 A summary description of the liability together with
the following:
(i) copies of all relevant documentation
relating thereto;
(ii) amounts claimed and any other action or
relief sought; and
(iii) name of claimant and all other parties to
the claim, suit or proceeding;
5.10.2 The name of each court or agency before which such
claim, suit or proceeding is pending;
5.10.3 The date such claim, suit or proceeding was
instituted; and
5.10.4 A good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable
with respect to each such liability. If no estimate
is provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
5.11 Accounts and Notes Receivable. Schedule 5.11 includes an
accurate list of the accounts and notes receivable of the
Company, as of the Balance Sheet Date, including any such
amounts which are not reflected in the balance sheet as of the
Balance Sheet Date, and including receivables from and
advances to employees and the U.S. Stockholders. The U.S.
Stockholders shall cause the Company to provide to
Healthworld, not later than the Closing Date:
5.11.1 an accurate list of all receivables obtained
subsequent to the Balance Sheet Date and
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5.11.2 an aging of all accounts and notes receivable showing
amounts due in 30 day aging categories.
Such list and such aging report (the "A/R Aging Reports") shall be current as of
the end of the calendar month which immediately precedes the Closing Date.
5.12 Permits and Intangibles. The Company holds all licenses,
permits and other governmental authorizations the absence of
any of which could have a Material Adverse Effect on its
business. Schedule 5.12 contains an accurate list and summary
description of all such licenses, permits and other
governmental authorizations, including permits, titles
(including motor vehicle titles and current registrations),
licenses, certificates, trademarks, tradenames, patents,
patent applications and copyrights owned or held by the
Company (including interests in software or other technology
systems, programs and intellectual property other than
software generally available in retail markets). To the
knowledge of the U.S. Stockholders, (a) the licenses, permits
and other governmental authorizations listed on Schedules 5.12
are valid, and (b) the Company has not received any notice
that any governmental authority intends to cancel, terminate
or not renew any such license, permit or other governmental
authorization. The Company has conducted and is conducting its
business in compliance in all material respects with the
requirements, standards, criteria and conditions set forth in
the licenses, permits and other governmental authorizations
listed on Schedules 5.12 and is not in violation of any of the
foregoing except where such non-compliance or violation would
not have a Material Adverse Effect on the Company. Except as
specifically provided in Schedule 5.12, the transactions
contemplated by this Agreement will not result in a material
default under or a material breach or violation of, or
materially adversely affect the rights and benefits afforded
to the Company by, any such licenses, permits or government
authorizations.
5.13 Environmental Matters. Except as set forth on Schedule 5.13,
the Company has, in all material respects, complied with and
is in compliance with all Federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, notices,
permits, judgments, orders and decrees applicable to it or any
of its respective properties, assets, operations and
businesses relating to environmental protection (collectively
"Environmental Laws"). The Company has no actual or contingent
liability in connection with any Environmental Laws which
would have a Material Adverse Effect.
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5.14 Personal Property. Schedule 5.14 contains an accurate
list of
5.14.1 all personal property with a value in excess of
$2,000 included (or that will be included) in
"depreciable plant, property and equipment" on the
1996 Balance Sheet,
5.14.2 all other personal property owned by the Company with
a value in excess of $2,000 as of the Balance Sheet
Date and acquired since the Balance Sheet Date and
5.14.3 all leases and agreements in respect of personal
property providing for payments of greater than
$1,000 per annum,
including, (1) true, complete and correct copies of all such leases and (2) an
indication as to which assets are currently owned, or were formerly owned, by
U.S. Stockholders, relatives of U.S. Stockholders, or Affiliates of the Company.
Except as set forth on Schedule 5.14,
5.14.4 all personal property used by the Company in its
business is either owned by the Company or leased by
the Company pursuant to a lease included on Schedule
5.14,
5.14.5 all of the personal property listed on Schedule 5.14
is in good working order and condition, ordinary wear
and tear excepted and
5.14.6 all leases and agreements included on Schedule 5.14
are in full force and effect and constitute valid and
binding agreements of the parties (and their
successors) thereto in accordance with their
respective terms.
5.15 Significant Customers; Material Contracts and Commitments.
Schedule 5.15 contains an accurate list of all significant
customers, it being understood and agreed that a "significant
customer," for purposes of this Section 5.15, means any
customer (or person or entity) representing 5% or more of the
Company's annual revenues for the one-year period ending with
the Balance Sheet Date. Except to the extent set forth on
Schedule 5.15, none of the Company's significant customers
have canceled or substantially reduced or, to the knowledge of
the Company, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services
provided by the Company. Schedule 5.15 contains a list of all
material contracts, commitments and similar
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agreements to which the Company is a party or by which it or
any of its properties are bound (including, but not limited
to, contracts with significant customers, joint venture or
partnership agreements, contracts with any labor
organizations, strategic alliances and options to purchase
land), other than agreements listed on Schedule 5.10, 5.14 or
5.16, and in each case the U.S. Stockholders have delivered
true, complete and correct copies of such agreements to
Healthworld. The Company has complied with all material
commitments and obligations pertaining to it, and is not in
default in any material respect under any contracts or
agreements listed on Schedule 5.15 and no notice of default
under any such contract or agreement has been received which
default would have a Material Adverse Effect on the Company.
Also included in Schedule 5.15 is a summary description of all
material plans or projects involving the opening of new
operations, expansion of existing operations, or the
acquisition of any personal property, business or assets.
5.16 Real Property. Schedule 5.16 includes an accurate list of all
real property owned or leased by the Company as of the Balance
Sheet Date and acquired since the Balance Sheet Date, and all
other real property, if any, used by the Company in the
conduct of its business. The Company has good and insurable
title to the real property owned by it, subject to no
mortgage, pledge, lien, conditional sales agreement,
encumbrance or charge, except as set forth in Schedule 5.16.
The U.S. Stockholders have delivered true, complete and
correct copies of all leases and agreements in respect of real
property leased by the Company. Schedule 5.16 indicates which
such properties, if any, are currently owned, or were formerly
owned, by U.S. Stockholders or business or personal affiliates
of the Company or U.S. Stockholders. All of such leases
included on Schedule 5.16 are in full force and effect and
constitute valid and binding agreements of the parties (and
their successors) thereto in accordance with their respective
terms.
5.17 Insurance. Schedule 5.17 includes
5.17.1 an accurate list as of the Balance Sheet Date of all
insurance policies carried by the Company; and
5.17.2 an accurate list of all insurance loss runs or
workers compensation claims received for the past
three (3) policy years.
The U.S. Stockholders have delivered to Healthworld true, complete and correct
copies of all insurance policies currently in effect. Such insurance policies
evidence all of the
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insurance that the Company is required to carry pursuant to all of its contracts
and other agreements and pursuant to all applicable laws. All of such insurance
policies are currently in full force and effect and shall remain in full force
and effect through the Closing Date. Since January 1, 1995, no insurance carried
by the Company has been canceled by the insurer and the Company has not been
denied any requested coverage.
5.18 Compensation; Employment Agreements; Organized Labor Matters.
5.18.1 Schedule 5.18 contains an accurate list showing all
officers, directors and Key Employees of the Company,
listing all employment agreements with such officers,
directors and Key Employees and the rate of
compensation (and the portions thereof attributable
to salary, bonus and other compensation,
respectively) of each of such persons as of the
Balance Sheet Date and the date hereof. The U.S.
Stockholders have delivered true, complete and
correct copies of any employment agreements for
persons listed on Schedule 5.18.
5.18.2 Except as set forth in Schedule 5.18, since the
Balance Sheet Date, there have been no increases in
the compensation payable or any special bonuses to
any officer, director, Key Employee or other
employee, except ordinary salary increases
implemented on a basis consistent with past
practices.
5.18.3 Except as set forth on Schedule 5.18, the Company is
not bound by or subject to (and none of its
respective assets or properties is bound by or
subject to) any arrangement with any labor union, no
employees of the Company are represented by any labor
union or covered by any collective bargaining
agreement, no campaign to establish such
representation is in progress and there is no pending
or, to the best of the U.S. Stockholders' knowledge,
any threatened labor dispute involving the Company
and any group of its employees nor has the Company
experienced any labor interruptions over the past
three years.
5.18.4 The U.S. Stockholders believe that the Company's
relationship with its employees is good.
5.18.5 Except as set forth in Schedule 5.18, all appropriate
notices have been issued under all statutes,
regulations and codes of
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conduct relevant to the relations between the Company
and its employees or any recognized trade union,
except for notices the absence of which would not
have a Material Adverse Effect upon the Company and
the Company has maintained adequate and suitable
records regarding the service of its employees.
5.18.6 Except as set forth in Schedule 5.18, the Company has
not entered into any currently effective collective
agreement or arrangement (whether legally binding or
not) with a trade union, association of trade unions
or other body representing any of its employees nor
has it done within the two-year period ending with
the date hereof any act which might reasonably be
construed as recognition of such a union or body.
5.18.7 Schedule 5.18 contains a listing of each written
agreement and a summary of the terms and conditions
of each unwritten agreement pursuant to which any
officers, directors and Key Employees and Key
Consultants of the Company (and their dependents) are
engaged. The summary of unwritten agreements shall
include, without limitation, details of all
participation, profit sharing, incentive, bonus,
commission, share option, medical, permanent health
insurance, directors and officers insurance, travel,
car and other benefits, arrangements and
understandings and whether legally binding upon the
Company or not and of all Key Consultant Agreements
with the Company which are in place now or will be in
place at the Closing.
5.18.8 Except as set forth in Schedule 5.18, since January
1, 1997, there have been no increases in the fringe
benefits payable to or changes in the terms of
service of any officer, director or Key Employee of
the Company.
5.18.9 Except as set forth in Schedule 5.18, there is not in
existence any contract of employment with officers,
directors or employees of the Company (or any
contract for services with any individual) which
cannot be terminated by three months notice or less
or (where such a contract has not been reduced to
writing) by reasonable notice without giving rise to
a claim
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for damages or compensation (other than statutory
compensation for unfair dismissal).
5.18.10 Except as set forth in Schedule 5.18, no promise has
been made and the Company is not obliged to increase
the fringe benefits payable to or to vary the terms
of service of any of its directors, other officers
and employees.
5.18.11 Except as set forth in Schedule 5.18, there are not,
nor will there be at Closing, outstanding offers of
employment or consultancy made by the Company and
there is no one who has accepted an offer of
employment or consultancy made by the Company but who
has not yet taken up that employment or consultancy.
5.18.12 Except as set forth in Schedule 5.18, neither the
Company nor any of its employees is involved in any
industrial or trade union dispute and there are no
facts known to the Company which might suggest that
there may be any trade union or industrial dispute
involving the Company or that the disposition of the
Company Stock may lead to any trade union or
industrial dispute.
5.18.13 Except as set forth in Schedule 5.18, there are no
amounts owing or promised to any present or former
directors, employees or consultants of the Company
other than remuneration accrued due or for
reimbursement of business expenses and no directors,
employees or consultants of the Company have given or
been given notice terminating their contracts of
employment or consultancy.
5.18.14 Except as set forth in Schedule 5.18, no claim has
been made and no liability has been incurred by the
Company (a) for breach of any contract of service or
for compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for
the reinstatement or re-engagement of any employee or
for the actual or proposed termination or suspension
of employment or variation of any terms of employment
of any present or former employee of the Company or
(b) in respect of any payment to be made or benefit
to be provided to any present or former director,
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employee or consultant of the Company in connection
with the consummation of the transactions
contemplated hereby, or (c) for the breach of or the
actual or proposed termination or variation of any
contract for services or consultancy agreement for
any present or former consultant to the Company.
5.18.15 Except as set forth in Schedule 5.18, no gratuitous
payment has been made or promised by the Company in
connection with the disposition of the Company Stock
or in connection with the actual or proposed
termination or suspension of employment or variation
of any contract or employment of any present or
former director or employee or in connection with the
proposed termination or suspension or variation of
any contract for services or consultancy agreement.
5.18.16 Except as set forth in Schedule 5.18, there are no
material claims pending or, to the knowledge of the
U.S. Stockholders, threatened against the Company:
(i) by a present or former employee, director,
consultant or third party, in respect of an
accident or injury which is not fully
covered by insurance; or
(ii) by a present or former employee, director or
consultant in relation to his terms and
conditions of employment or (as the case may
be) consultancy.
5.18.17 Except as set forth in Schedule 5.18, the Company has
in relation to each of its employees (and so far as
relevant to each of its former employees and persons
seeking employment) complied with in all material
respects:
(i) all laws and codes of conduct and practice
relevant to the relations between it and its
employees, prospective employees or any
trade union;
(ii) all collective agreements and customs and
practices for the time being dealing with
the terms and conditions of service of its
employees; and
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(iii) all relevant orders, declarations and awards
made under any relevant law or code of
conduct and practice affecting the
conditions of service of its employees.
5.18.18 Except as set forth in Schedule 5.18, no Key Employee
has ceased to be employed by the Company (other than
through death or retirement at normal retirement age)
during the twelve months prior to the date hereof and
the Company has no reason to believe that such
employees intend or are likely to leave their
employment otherwise than through retirement as
aforesaid within the twelve months following the
Closing.
5.18.19 Except as set forth in Schedule 5.18, there are no
agreements, arrangements or schemes in operation by
or in relation to the Company pursuant to which any
of its employees or officers and/or former employees
or officers and/or their relatives and dependents is
entitled to shares or a commission or remuneration of
any kind calculated by reference in whole or in part
to revenues, profits or sales.
5.18.20 Except as set forth in Schedule 5.18, there is no
liability whatsoever to make payment to or for the
benefit of any director or employee or ex-director or
ex-employee or the wife or widow or any other
relative of any director, ex- director, employee or
ex-employee of the Company in respect of past
service, retirement, death or disability by way of
pension contribution, pension, retirement benefit
lump sum, gratuity or otherwise.
5.18.21 Except as set forth in Schedule 5.18, the Company has
not within a period of one year preceding the date of
this Agreement started consultations with any
independent trade union or association of unions.
5.19 Employee Plans. Schedule 5.19 contains an accurate list and
summary of all employee benefit plans (the "Plans") maintained
by the Company ( or any member of the Company's Controlled
Group) or to which the Company or any member of its Controlled
Group contributes or is obligated to contribute, including all
employment agreements and other agreements or arrangements
containing "golden parachute" or other similar provisions, and
deferred compensation agreements. The U.S. Stockholders
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have delivered true, complete and correct copies of each of
the Plans and any agreements or trusts related thereto. Except
for the Plans, the Company does not sponsor, maintain or
contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor has the
Company any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement
account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or any
non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit
plan" shall have the same meaning as is given that term in
Section 3(2) of ERISA and the term "Controlled Group" shall
mean the Company and each other corporation or other entity
aggregated within the Company under the provisions of Section
414(b), (c), (m) or (o) of the Code. The Company has not
sponsored, maintained or contributed to any employee pension
benefit plan other than the Plans, nor is the Company required
to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing
the terms and conditions or employment of any of Company's
employees. The Company is not now, nor can it as a result of
its past activities become, liable to the Pension Benefit
Guaranty Corporation (the "PBGC") or to any multi-employer
employee pension benefit plan under the provisions of Title IV
of ERISA. All Plans and the administration thereof are in
compliance in all material respects with their terms and all
applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal,
state and local statutes, ordinances and regulations. All
accrued contribution obligations of the Company with respect
to any Plan have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of
the Balance Sheet Date.
5.20 Compliance with ERISA. All the Plans that are intended to
qualify (the "Qualified Plans") under Section 401(a) of the
Code are, and have been so qualified and have been determined
by the Internal Revenue Service to be so qualified, and true,
correct and complete copies of such determination letters have
been delivered to Healthworld by the U.S. Stockholders. All
reports and other documents required to be filed with any
governmental agency or distributed to Plan participants or
beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or
distributed, and true, correct and complete copies thereof
have
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been delivered by the U.S. Stockholders. Neither the U.S.
Stockholders, any Plan, nor the Company has engaged in any
transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No Plan has incurred an
accumulated funding deficiency (whether or not waived), as
defined in Section 412(a) of the Code and Section 302(l) of
ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service nor
any liability to the PBGC. The U.S. Stockholders further
represent that: there have been no terminations, partial
terminations or discontinuance of contributions to any
Qualified Plan without notice to and approval by the Internal
Revenue Service; no Plan subject to the provisions of Title IV
of ERISA has been terminated; there have been no "reportable
events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any Plan; neither the Company nor any member
of its Controlled Group has incurred liability under Sections
4062 or 4069 of ERISA; and no circumstances exist pursuant to
which the Company could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to
any multi-employer plan or penalty, or payment of any such
liability) with respect to any plan maintained by any member
of the Controlled Group. The Company is not subject to any
legal, contractual, equitable, or other obligation to (i)
establish as of any date any employee benefit plan of any
nature, including, without limitation, any pension, profit
sharing, welfare, post-retirement welfare, stock option, stock
or cash award, non-qualified deferred compensation or
executive compensation plan, policy or practice or (ii)
continue any employee benefit plan of any nature, including,
without limitation any employee benefit or any other pension,
profit sharing , welfare, or post-retirement welfare, plan, or
any stock option, stock or cash award, non-qualified deferred
compensation or executive compensation plan, policy or
practice (or to continue their participation in any such
benefit plan, policy or practice) on or after the Closing
Date; and (b) the Company may, in any manner, and without the
consent of any employee, beneficiary or other person,
terminate, modify or amend any such employee benefit plan or
any other plan, program or practice (or its participation in
such employee benefit plan or any other plan, program or
practice) effective as of any date before, on or after the
Closing Date.
5.21 Conformity with Law; Litigation. Except to the extent set
forth on Schedule 5.10 or 5.13, the Company is not in
violation or contravention of any law or regulation or any
order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them which
would have a
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Material Adverse Effect; and except to the extent set forth on
Schedule 5.10 or 5.13, there are no material claims, actions,
suits or proceedings, commenced or, to the knowledge of the
Company, threatened, against or affecting the Company, at law
or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over any of them
and no notice of any material claim, action, suit or
proceeding, whether pending or threatened, has been received.
The Company has conducted and is conducting its business in
compliance, in all material respects, with the requirements,
standards, criteria and conditions set forth in applicable
Federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations,
including all such permits, licenses, orders and other
governmental approvals set forth on Schedules 5.12 and 5.13,
and is not in violation of any of the foregoing which might
have a Material Adverse Effect.
5.22 Taxes. Except to the extent reflected or reserved against in
the 1996 Balance Sheet, full details of every matter or
circumstance which (whether of itself or by reason of any
connection with any other one or more transaction or events)
will or may give rise to any liability to Taxation for which
the Company is or will or may become liable is contained in
Schedule 5.22 and the following warranties are without
prejudice to the generality of the foregoing.
5.22.1 The Company's methods of accounting have not changed
in the past five years. The Company reports its
income on the cash basis of accounting. Upon the
consummation of the transactions contemplated hereby,
the Company will be required to change its method of
accounting to the accrual basis and will be required
to report an adjustment in its income pursuant to
Section 481 of the Code. Such adjustment will not
exceed $___________.
5.22.2 There have been properly completed and filed on a
timely basis and in correct form all Returns required
to be filed on or prior to the date hereof. As of the
time of filing, the foregoing Returns correctly
reflected the facts regarding the income, business,
assets, operations, activities, status or other
matters of the Company or any other information
required to be shown thereon. In particular, the
foregoing returns are not subject to penalties under
section 6662 of the Code,
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relating to accuracy-related penalties (or any
corresponding provision of the state, local or
foreign Tax law). An extension of time within which
to file any Return which has not been filed has not
been requested or granted.
5.22.3 With respect to all amounts in respect of Taxes
imposed upon the Company, or for which the Company is
or could be liable, with respect to all taxable
periods or portions of periods ending on or before
the Closing Date, all applicable tax laws and
agreements have been fully complied with, and all
such amounts required to be paid by the Company to
taxing authorities on or before the Closing Date
have, or shall have, been paid on or before the
Closing Date.
5.22.4 No issues have been raised (and are currently
pending) by any taxing authority in connection with
any of the Returns. No waivers of statutes of
limitation with respect to the Returns for any
taxable years for which the statute of limitations
has not yet expired have been given by or requested
from the Company. Schedule 5.22 sets forth (with
respect to taxable years for which the statute of
limitations has not yet expired, either by reason of
waiver or otherwise) those years for which
examinations have been completed, those years for
which examinations are presently being conducted,
those years for which examinations have not been
initiated, and those years for which required Returns
have not yet been filed. Except to the extent shown
on Schedule 5.22, all deficiencies asserted or
assessments made as a result of any examinations have
been fully paid, or are fully reflected as a
liability in the Financial Statements or the Company,
or are being contested and an adequate reserve
therefor has been established and is fully reflected
in the Financial Statements of the Company.
5.22.5 There are no outstanding liens for Taxes upon the
assets of the Company.
5.22.6 The Company has never been a member of an affiliated
group of corporations, within the meaning of section
1504 of the Code.
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5.22.7 All material elections with respect to Taxes
affecting the Company as of the date hereof are set
forth in Schedule 5.22. Schedule 5.22 sets forth the
date the Company commenced operations. For those
Companies which have elected to be treated as an S
Corporation, Schedule 5.22 sets forth the date of
such election for federal purposes and, where
applicable, for state purposes. Since such dates the
Companies which have made such elections have filed
all reports consistent with, and to maintain, their S
Corporation status for federal and state income tax
purposes. Further, neither the Company nor its
shareholders have revoked the S Corporation status of
the Company and neither the Company nor its
shareholders have done anything to cause a
termination of such status.
5.22.8 The Company has not filed a consent pursuant to the
collapsible corporation provisions of section 341(f)
of the Code (or any corresponding provision of state,
local or foreign income Tax law) or agreed to have
section 341(f)(2) of the Code (or any corresponding
provision of state, local or foreign income Tax law)
apply to any disposition of any asset owned by it.
5.22.9 None of the assets of the Company is property which
the Company is required to treat as being owned by
any other person pursuant to the so-called "safe
harbor lease" provisions of former section 168(f)(8)
of the Code.
5.22.10 None of the assets of the Company directly or
indirectly secures any debt the interest on which is
tax exempt under section 103(a) of the Code.
5.22.11 None of the assets of the Company is "tax-exempt use
property" within the meaning of Section 168(h) of the
Code.
5.22.12 The Company has not participated in and will not
participate in) an international boycott within the
meaning of section 999 of the Code.
5.22.13 The Company is not a party to any agreement contract,
arrangement or plan that has resulted or would
result,
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separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of
section 280G of the Code.
5.22.14 The Company is not, and has not been a United States
real property holding corporation (as defined in
section 897(c)((2) of the Code) during the applicable
period specified in section 897(c)(1)(A)(ii) of the
Code.
5.22.15 None of the U.S. Stockholders is a person other than
a United States person within the meaning of the
Code.
5.22.16 The transaction contemplated herein is not subject to
the tax withholding provisions of Code section 3406,
or of subchapter A of Chapter 3 of the Code or of any
other provision of law.
5.22.17 The Company does not have and has not had a permanent
establishment in any foreign country, as defined in
any applicable Tax treaty or convention between the
United States of America and such foreign country.
5.22.18 Except as set forth in Schedule 5.22, the Company is
not a party to any joint venture, partnership, or
other arrangement or contract which could be treated
as a partnership for federal income tax purposes.
5.23 No Violations. Neither the Company nor, to the knowledge of
the Company, any other party thereto, is in default in any
material respect under any lease, instrument, agreement,
license, or permit set forth on Schedule 5.12, 5.13, 5.14,
5.15 or 5.16, or any other material agreement to which it is a
party or by which its properties are bound (the "Material
Documents"). Except as set forth in Schedule 5.23,
5.23.1 The rights and benefits of the Company under the
Material Documents will not be materially adversely
affected by the transactions contemplated hereby;
5.23.2 The execution of this Agreement and the performance
of the obligations hereunder and the consummation of
the transactions contemplated hereby will not result
in any material violation or breach or constitute a
material default under, any of the terms or
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provisions of the Material Documents or the Company's
certificate of incorporation or by-laws;
5.23.3 None of the Material Documents requires notice to or
the consent or approval of, any governmental agency
or other third party with respect to any of the
transactions contemplated hereby in order to remain
in full force and effect; and
5.23.4 Consummation of the transactions contemplated hereby
will not give rise to any right to termination,
cancellation or acceleration or loss of any right or
benefit.
Except as set forth on Schedule 5.23, none of the Material Documents prohibits
the use or publication by Healthworld or any of its Subsidiaries of the name of
any other party to such Material Document, and none of the Material Documents
prohibits or restricts the Company from freely providing services to any other
customer or potential customer of the Company, Healthworld, or any of their
respective Subsidiaries.
5.24 Government Contracts. Except as set forth on Schedule 5.24,
the Company is not now a party to any governmental contract
subject to price redetermination or renegotiation.
5.25 Absence of Changes. Since the Balance Sheet Date, except as
set forth on Schedule 5.25, there has not been:
5.25.1 any material adverse change in the financial
condition, assets, liabilities (contingent or
otherwise), income or business of the Company;
5.25.2 any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting
the properties or business of the Company;
5.25.3 any change in the authorized capital of the Company
or its outstanding securities or any change in its
ownership interests or any grant of any options,
warrants, calls, conversion rights or commitments;
5.25.4 any declaration or payment of any dividend or
distribution in respect of the capital stock or any
direct or indirect redemption, purchase or other
acquisition of any of the
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capital stock of the Company (except for dividends
which the Company may declare and pay pursuant to
Section hereof);
5.25.5 any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become
payable by the Company to any of its officers,
directors, stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with
past practice;
5.25.6 any work interruptions, labor grievances or claims
filed, or any other event or condition of any
character materially adversely affecting the business
of the Company;
5.25.7 any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of
the Company to any person, including, without
limitation, the U.S. Stockholders and their
affiliates;
5.25.8 any cancellation, or agreement to cancel, any
material indebtedness or other obligation owing to
the Company, including without limitation any
material indebtedness or obligation of any U.S.
Stockholders or any affiliate thereof;
5.25.9 any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any
interest in any of the assets, property or rights of
the Company or requiring consent of any party to the
transfer and assignment of any such assets, property
or rights;
5.25.10 any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property,
rights or assets outside of the ordinary course of
the Company's business;
5.25.11 any waiver of any material rights or claims of the
Company;
5.25.12 any material breach, amendment or termination of any
material contract, agreement, license, permit or
other right to which the Company is a party;
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5.25.13 any transaction by the Company outside the ordinary
course of its respective businesses;
5.25.14 any cancellation or termination of a material
contract with a customer or client prior to the
scheduled termination date; or
5.25.15 any other distribution to or for the benefit of the
U.K. Stockholder of property or assets by the
Company.
5.26 Deposit Accounts; Powers of Attorney. Schedule 5.26 contains
an accurate schedule as of the date of the Agreement of:
5.26.1 the name of each financial institution in which the
Company has accounts or safe deposit boxes;
5.26.2 the names in which the accounts or boxes are held;
5.26.3 the type of account and account number; and
5.26.4 the name of each person authorized to draw thereon or
have access thereto.
Schedule 5.26 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the Company and
a description of the terms of such power.
5.27 Brokers and Agents. Except as disclosed on Schedule 5.27, the
U.S. Stockholders did not employ any broker or agent in
connection with this transaction.
5.28 Relations with Governments. Except for political contributions
made in a lawful manner which, in the aggregate, do not exceed
$10,000 per year for each year in which any U.S. Stockholder
has been a stockholder of the Company, the Company has not
made, offered or agreed to offer anything of value to any
governmental official, political party or candidate for
government office nor has it otherwise taken any action which
would cause the Company to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended or any law of
similar effect. If political contributions made by the Company
have exceeded $10,000 per year for each year in which any U.S.
Stockholder has been a stockholder of the Company, each
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contribution in the amount of $5,000 or more shall be
described on Schedule 5.28.
5.29 Disclosure.
5.29.1 If, prior to the 25th day after the date of the final
prospectus of Healthworld utilized in connection with
the IPO, the U.S. Stockholders become aware of any
fact or circumstance which would change (or, if after
the Closing Date, would have changed) a
representation or warranty of the U.S. Stockholders
in this Agreement or would affect any document
delivered pursuant hereto in any material respect,
the U.S. Stockholders shall immediately give notice
of such fact or circumstance to Healthworld. However,
subject to the provisions of Section 7.8, such
notification shall not relieve the U.S. Stockholders
of their respective obligations under this Agreement.
5.29.2 The U.S. Stockholders each acknowledge and agree:
(i) that there exists no firm commitment,
binding agreement, or promise or other
assurance of any kind, whether express or
implied, oral or written, that a
Registration Statement will become effective
or that the IPO pursuant thereto will occur
at a particular price or within a particular
range of prices or occur at all;
(ii) that neither Healthworld nor any of its
officers, directors, agents or
representatives nor any Underwriter shall
have any liability to the Company, the U.S.
Stockholders or any other person affiliated
or associated with the Company for any
failure of the Registration Statement to
become effective, the IPO to occur at a
particular price or within a particular
range of prices or to occur at all; and
(iii) that the decision of the U.S. Stockholders
to enter into this Agreement, has been or
will be made independent of, and without
reliance upon, any statements, opinions or
other communications, or due diligence
investigations which have been or will be
made or performed by any prospective
underwriters, relative to Healthworld or the
prospective IPO.
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5.30 Authority; Ownership. Such U.S. Stockholder has the full legal
right, power and authority to enter into this Agreement. Such
U.S. Stockholder owns beneficially and of record all of the
shares of the Company Stock identified in Schedule 5.3 as
being owned by such U.S. Stockholder, and, except as set forth
on Schedule 5.30, such Company Stock is owned free and clear
of all Encumbrances and claims of every kind.
5.31 Preemptive Rights. Such U.S. Stockholder does not have, or
hereby waives, any preemptive or other right to acquire shares
of Company Stock or Healthworld Stock that such U.S.
Stockholder has or may have had other than rights of any U.S.
Stockholder to acquire Healthworld Stock pursuant to this
Agreement or any option granted by Healthworld.
5.32 No Intention to Dispose of Healthworld Stock. No U.S.
Stockholder is under any binding commitment or contract to
sell, exchange or otherwise dispose of shares of Healthworld
Stock received in connection with the Organization.
6 Representations of Healthworld.
Healthworld represents and warrants that all of the following
representations and warranties in this Section 6 are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true on the Closing Date
and the Closing Date. All such representations and warranties shall survive the
Closing Date for a period of twelve (12) months (the last day of such period
being the "Expiration Date"), except that, solely for purposes of determining
whether a claim for indemnification under Section 11.2.4 hereof has been made on
a timely basis and solely to the extent that in connection with the IPO any
person claiming indemnification from Healthworld hereunder actually incurs
liability under the 1933 Act, the 1934 Act, or any other Federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes.
6.1 Due Organization. Healthworld is a corporation duly organized,
validly existing and in good standing under the laws of the
state of Delaware, and is duly authorized and qualified to do
business under all applicable laws, regulations, ordinances
and orders of public authorities to carry on its business in
the places and in the manner as contemplated.
6.2 Authorization. The representatives of Healthworld executing
this Agreement have the authority to enter into and bind
Healthworld to the
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terms of this Agreement. Healthworld has the full legal right,
power and authority to enter into this Agreement.
6.3 Capital Stock of Healthworld. The authorized capital stock of
Healthworld is as set forth in Schedule 6.3. All of the issued
and outstanding shares of the capital stock of Healthworld are
owned by Xxxxxxxx in the amount set forth in Schedule 6.3. All
of such shares are owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions,
encumbrances and claims of every kind. All of the issued and
outstanding shares of the capital stock of Healthworld have
been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by
Xxxxxxxx. Such shares were offered, issued, sold and delivered
by Healthworld in compliance with all applicable state and
Federal laws concerning the issuance of securities. None of
such shares were issued in violation of the preemptive rights
of any past or present stockholder of Healthworld.
6.4 Transactions in Capital Stock. Except for the obligations
under the agreements which form a part of the Healthworld Plan
of Organization, no option, warrant, call, conversion right or
commitment of any kind exists which obligates Healthworld to
issue any of its authorized but unissued capital stock, and
Healthworld has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or
make any distribution in respect thereof. At the time of
issuance thereof, the Healthworld Stock to be delivered to the
U.S. Stockholders pursuant to this Agreement will constitute
valid and legally issued shares of Healthworld, fully paid and
nonassessable. The shares of Healthworld Stock to be issued to
the U.S. Stockholders pursuant to this Agreement will not be
registered under the 1933 Act, except as provided in Section
15 hereof.
6.5 Liabilities and Obligations. Healthworld does not have any
liabilities, contingent or otherwise, except as set forth in
or contemplated by this Agreement and the other agreements
forming a part of the Healthworld Plan of Organization,
including without limitation, the underwriting agreement to be
entered into between Healthworld and the Underwriters for fees
incurred in connection with the transactions contemplated
hereby and thereby, and any liabilities and obligations which
may exist under the Healthworld License Agreement, a copy of
which is annexed to Schedule 6.5.
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6.6 Conformity with Law; Litigation. Healthworld is not in
violation of any law or regulation or any order of any court
or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having
jurisdiction over it which would have a Material Adverse
Effect; and there are no material claims, actions, suits or
proceedings pending or, to the knowledge of Healthworld,
threatened against or affecting Healthworld, at law or in
equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it and no notice of
any claim, action, suit or proceeding, whether pending or
threatened, has been received. Healthworld is not in violation
of its certificate of incorporation, its by-laws or any other
corporate governing instrument.
6.7 Validity of Obligations. The execution and delivery of this
Agreement by Healthworld and the performance of the
transactions contemplated herein have been duly and validly
authorized by the Board of Directors of Healthworld. This
Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding
obligation of Healthworld.
6.8 Limited Business Conducted. Healthworld was formed on
September 13, 1996 solely for the purpose of entering into and
consummating the Healthworld Plan of Organization. Healthworld
has not filed any Returns or extension requests in respect of
tax. Healthworld has not since its formation conducted any
business, acquired any assets, incurred any liabilities or
entered into any agreements, except Healthworld has entered
into the Healthworld License Agreement and has engaged in
other limited startup activities. It is anticipated that prior
to the Closing, Healthworld will institute an Incentive Stock
Option Plan; however, Healthworld covenants that no options
will be granted before the Closing.
7 Covenants Prior to Closing.
7.1 Access and Cooperation; Due Diligence. Between the date of
this Agreement and the Closing Date, the U.S. Stockholders
will cause the Companies to afford to the U.K. Stockholder and
his authorized representatives reasonable access to all of the
respective Companies' sites, properties, books and records
during normal business hours and will furnish such additional
financial and operating data and other information as to the
business and properties of the respective Companies as may
from
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time to time be reasonably requested. Each of the respective
U.S. Stockholders will cooperate, and will cause the Companies
to cooperate, in the preparation of any documents or other
material which may be reasonably required in connection with
any documents or materials required by this Agreement. Each
U.S. Stockholder and the Company or other person will treat
all information obtained in connection with the negotiation
and performance of this Agreement or the due diligence
investigations conducted as confidential in accordance with
the provisions of Section 13.2 hereof.
7.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, the U.S. Stockholders shall
cause the Companies to, except as set forth on Schedule 7.2 of
its respective Disclosure Schedule:
7.2.1 carry on its respective businesses in substantially
the same manner as it has heretofore been conducted
and not introduce any material new method of
management, operation or accounting;
7.2.2 maintain, in all material respects, its respective
properties and facilities, including those held under
leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
7.2.3 perform in all material respects all of its
respective obligations under agreements relating to
or affecting its respective assets, properties or
rights;
7.2.4 keep in full force and effect present insurance
policies or other comparable insurance coverage;
7.2.5 use its reasonable best efforts to maintain and
preserve its business organization intact, retain its
respective present key employees and maintain its
respective relationships with suppliers, customers
and others having business relations with the
Company;
7.2.6 maintain compliance with all material permits, laws,
rules and regulations, consent orders, and all other
orders of applicable courts, regulatory agencies and
similar governmental authorities;
7.2.7 maintain present debt and lease instruments and not
enter into new or amended debt or lease instruments,
except in the ordinary course of business; and
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7.2.8 maintain or reduce present salaries and commission
levels for all officers, directors, employees and
agents except for ordinary and customary bonus and
salary increases for employees in accordance with
past practices.
7.3 Prohibited Activities. Except as disclosed on Schedule 7.3,
between the date hereof and the Closing Date, the U.S.
Stockholders will not permit the Company to:
7.3.1 make any change in its certificate of incorporation
or by-laws;
7.3.2 issue any securities, options, warrants, calls,
conversion rights or commitments relating to its
securities of any kind other than in connection with
the exercise of options or warrants listed in
Schedule 5.4;
7.3.3 declare or pay any dividend, or make any distribution
in respect of its stock whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire
or retire for value any shares of its stock (provided
that the Company may declare and pay dividends
pursuant to Section 10.5 hereof);
7.3.4 enter into any contract or commitment or incur or
agree to incur any liability or make any capital
expenditures, except if it involves an amount not in
excess of $10,000;
7.3.5 create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets
or properties whether now owned or hereafter
acquired, except:
7.3.5.1 with respect to purchase money liens incurred
in connection with the acquisition of equipment with
an aggregate cost not in excess of $10,000 necessary
or desirable for the conduct of the businesses of the
Company,
7.3.5.2 liens for taxes either not yet due or being
contested in good faith and by appropriate
proceedings (and for which contested taxes adequate
reserves have been established and are being
maintained)
7.3.5.3 materialmen's, mechanics', workers',
repairmen's, employees' or other like liens arising
in the ordinary course of business, or
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7.3.5.4 liens set forth on Schedule 5.10 hereto;
7.3.6 sell, assign, lease or otherwise transfer or dispose
of any property or equipment except in the ordinary
course of business;
7.3.7 negotiate for the acquisition of any business or the
start-up of any new business;
7.3.8 merge or consolidate or agree to merge or consolidate
with or into any other corporation;
7.3.9 waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust
bills in the course of good faith disputes with
customers in a manner consistent with past practice,
provided, further, that such adjustments shall not be
deemed to be included in Schedule 5.11 unless
specifically listed thereon;
7.3.10 commit a material breach or amend or terminate any
material agreement, permit, license or other right of
the Company; or
7.3.11 enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
7.4 No Shop. None of the U.S. Stockholders shall, and they shall
not permit any of the Companies, nor any agent, officer,
director, trustee or any representative of any of the
foregoing will, during the period commencing on the date of
this Agreement and ending with the earlier to occur of the
Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly, to:
7.4.1 solicit or initiate the submission of proposals or
offers from any person for,
7.4.2 participate in any discussions pertaining to, or
7.4.3 furnish any information to any person other than
Healthworld or its authorized agents relating to, any
acquisition or purchase of all or a material amount
of the assets of, or any equity interest in, the
Company, or a consolidation or business combination
of the Company.
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7.5 Further Assurances. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further
instruments or documents or take such other action as may be
reasonably necessary or convenient to carry out the
transactions contemplated hereby
7.6 Agreements. The U.S. Stockholders shall, and they shall cause
the Company to, terminate any stockholders agreements, voting
agreements, voting trusts, options, warrants and employment
agreements between the Company and any employee listed on
Schedule 9.10 on or prior to the Closing Date. Such
terminations shall be delivered to the Escrow Agent on the
Closing Date.
7.7 Notification of Certain Matters. The U.S. Stockholders shall
give prompt notice to Healthworld and the U.K. Stockholder of:
7.7.1 the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely
to cause any representation or warranty of the U.S.
Stockholders contained herein to be untrue or
inaccurate in any material respect at or prior to the
Closing; and
7.7.2 any material failure of any U.S. Stockholder or any
Company to comply with or satisfy any covenant,
condition or agreement to be complied with or
satisfied by such person hereunder.
The delivery of any notice pursuant to this Section 7.7 shall not be deemed to
7.7.3 modify the representations or warranties hereunder of
the party delivering such notice, which modification
may only be made pursuant to Section 7.8,
7.7.4 modify the conditions set forth in Sections 8 and
9, or
7.7.5 limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
7.8 Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party
contained in this Agreement, such party shall have the
continuing obligation until 24 hours prior to the anticipated
effectiveness of the Registration Statement to supplement or
amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at
the
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date of this Agreement, would have been required to be set
forth or described in the Schedules, provided however, that
supplements and amendments to Schedules 5.10, 5.11, 5.14 and
5.15 shall only have to be delivered at the Closing Date,
unless such Schedule is to be amended to reflect an event
occurring other than in the ordinary course of business.
7.9 Cooperation in Preparation of Registration Statement. The U.S.
Stockholders shall furnish or cause to be furnished to
Healthworld and the Underwriters all of the information
concerning the Companies and the U.S. Stockholders required
for inclusion in, and will cooperate with Healthworld and the
Underwriters in the preparation of, the Registration Statement
and the prospectus included therein (including audited and
unaudited financial statements, prepared in accordance with
generally accepted accounting principles, in form suitable for
inclusion in the Registration Statement). The U.S.
Stockholders agree promptly to advise Healthworld if at any
time during the period in which a prospectus relating to the
IPO is required to be delivered under the 1933 Act, any
information contained in the prospectus concerning the
Companies or the U.S. Stockholders becomes incorrect or
incomplete in any material respect, and to provide the
information needed to correct such inaccuracy. Insofar as the
information relates solely to each respective U.S. Stockholder
and the Companies respectively owned by them, each U.S.
Stockholder represents and warrants, as to such information
with respect to such Company and himself that the Registration
Statement will not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading;
provided, however, that the U.S. Stockholders shall not have
responsibility for any such inclusions or omissions to the
extent they relate to the U.K. Company or any of its
subsidiaries and do not relate to the U.S. Companies.
8 Conditions Precedent to Obligations of U.S. Stockholders.
The obligations of the U.S. Stockholders with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of all of the following conditions.
8.1 Representations and Warranties; Performance of Obligations.
All representations and warranties of the U.K. Stockholder and
the Minority U.K. Stockholders contained in their respective
Organization Agreements shall be true and correct in all
material respects as of the Closing Date as
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though such representations and warranties had been made as of
that time. All of the terms, covenants and conditions of the
U.K. Stockholder and the Minority U.K. Stockholders contained
in their respective Organization Agreements shall have been
duly complied with and performed in all material respects.
Certificates to the foregoing effect dated the Closing Date,
signed by the U.K. Stockholder and each of the Minority U.K.
Stockholders, shall have been delivered to the U.S.
Stockholders.
8.2 Satisfaction. All actions, proceedings, instruments and
documents required to carry out this Agreement and the
respective Organization Agreements of the U.K. Stockholder and
the Minority U.K. Stockholders and any other agreement
incidental hereto or thereto and all other related legal
matters shall be satisfactory to the U.S. Stockholders and
their respective counsel. The U.S. Stockholders shall be
satisfied that the Registration Statement and the prospectus
forming a part thereof, including any amendments thereof or
supplements thereto, shall not contain any untrue statement of
a material fact, or omit to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that the condition
contained in this sentence shall be deemed satisfied if the
U.S. Stockholders shall have failed to inform Healthworld in
writing prior to the effectiveness of the Registration
Statement of the existence of an untrue statement of a
material fact or the omission of such a statement of a
material fact.
8.3 No Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted
or threatened to restrain or prohibit the Organization or the
IPO and no governmental agency or body shall have taken any
other action or made any request of any of the Companies or
the U.S. Stockholders as a result of which the U.S.
Stockholders deem it inadvisable to proceed with the
transactions hereunder.
8.4 Opinions of Counsel. The U.S. Stockholders shall have received
an opinion from counsel for the U.K. Stockholder and counsel
for the Minority U.K. Stockholders, dated the Closing Date.
8.5 Consents and Approvals. All necessary consents of and filings
with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have
been obtained and made.
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8.6 No Material Adverse Change. No event or circumstance shall
have occurred with respect to the U.K. Company or any of its
Subsidiaries which would constitute a Material Adverse Effect.
8.7 Secretary's Certificates; Good Standing. The U.S. Stockholders
shall have received (a) certificates, dated the Closing Date
and signed by the secretary of the U.K. Company and each of
its Subsidiaries, certifying the truth and correctness of
attached copies of the U.K. Company's and each of its
Subsidiaries' Memorandum and Articles of Association
(including amendments thereto) and such other matters as may
reasonably be requested by the U.S. Stockholders, (b) a
certificate dated the Closing Date and signed by the secretary
of Healthworld, certifying the truth and correctness of
attached copies of Healthworld's certificate of incorporation
(including amendments thereto) and by-laws (including
amendments thereto), and (c) a certificate of good standing
for Healthworld in the State of Delaware.
8.8 Employment Agreements. Each of the persons listed on Schedule
shall have entered into an employment agreement substantially
in the form of Exhibit hereto, for the annual compensation set
forth on Schedule 8.8.
8.9 Conformity With Xxxxxxxx/Xxxxxx Letter of Intent and
Underwriters' Engagement Letter.
8.9.1 Corporate governance of Healthworld shall be in
accord with Section 1.3 of the Xxxxxxxx/Xxxxxx Letter
of Intent;
8.9.2 An agreement shall have been executed by and among
the U.K. Stockholder and the U.S. Stockholders
providing for the rights of refusal upon private
sale, as contemplated by Section 1.5.1 of the
Xxxxxxxx/Xxxxxx Letter of Intent.
8.9.3 The Pricing shall have occurred.
8.9.4 The closing of the Organization agreements with
respect to the U.K. Stockholder and the Minority U.K.
Stockholders shall simultaneously occur with the
closing of the transactions contemplated by this
Agreement.
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9 Conditions Precedent to Obligations of Healthworld.
The obligations of Healthworld with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions.
9.1 Representations and Warranties; Performance of Obligations.
All the representations and warranties of the U.K.
Stockholders and the Company contained in this Agreement shall
be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and
warranties had been made on and as of such date; all of the
terms, covenants and conditions of this Agreement to be
complied with or performed by the U.S. Stockholders and the
Company on or before the Closing Date shall have been duly
performed or complied with in all material respects; and the
U.S. Stockholders shall have delivered to Healthworld
certificates dated the Closing Date and signed by them to such
effect.
9.2 Satisfaction. All actions, proceedings, instruments and
documents required to carry out this Agreement and the
respective Organization Agreements of the U.K. Stockholder and
the Minority U.K. Stockholders and any other agreement
incidental hereto or thereto and all other related legal
matters shall be satisfactory to Healthworld and its counsel.
Healthworld shall be satisfied that the Registration Statement
and the prospectus forming a part thereof, including any
amendments thereof or supplements thereto, shall not contain
any untrue statement of a material fact, or omit to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading.
9.3 No Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted
or threatened to restrain or prohibit the Organization or the
IPO and no governmental agency or body shall have taken any
other action or made any request of Healthworld as a result of
which the management of Healthworld deems it inadvisable to
proceed with the transactions hereunder.
9.4 Opinion of Counsel. Healthworld shall have received an opinion
from counsel to the U.K. Stockholders, dated the Closing Date,
in form and substance acceptable to Counsel for Healthworld.
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9.5 Consents and Approvals. All necessary consents of and filings
with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have
been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the
Organization and no governmental agency or body shall have
taken any other action or made any request of any Company as a
result of which Healthworld deems it inadvisable to proceed
with the transactions hereunder.
9.6 No Material Adverse Change. No event or circumstance shall
have occurred with respect to any of the Companies which would
constitute a Material Adverse Effect, and none of the
Companies shall have suffered any material loss or damages to
any of its properties or assets, whether or not covered by
insurance, which change, loss or damage materially affects or
impairs the ability of the Company to conduct its business.
9.7 Secretary's Certificates. Healthworld shall have received
certificates, dated the Closing Date and signed by the
secretary of each of the Companies, certifying the truth and
correctness of attached copies of each of the Company's
Certificate of Incorporation (including amendments thereto),
By-Laws (including amendments thereto).
9.8 Employment Agreements. Each of the persons listed on Schedule
shall have entered into an employment agreement substantially
in the form of Exhibit hereto, for the annual compensation set
forth on Schedule 8.8.
9.9 U.S. Stockholders' Release. Each of the U.S. Stockholders
shall have delivered to Healthworld an instrument dated the
Closing Date releasing the Company from any and all claims of
such U.S. Stockholder against the Company and Healthworld and
obligations of the Company and Healthworld to such U.S.
Stockholder, except for (x) items specifically identified on
Schedules 5.10 and 5.15 as being claims of or obligations to
such U.S. Stockholder, (y) continuing obligations to such U.S.
Stockholder relating to his employment by the Company and (z)
obligations arising under this Agreement or the transactions
contemplated hereby.
9.10 Termination of Related Party Agreements. Except as set forth
on Schedule , all existing agreements between the Company and
the U.S. Stockholders shall have been canceled effective as of
the Closing Date.
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9.11 Closings. The closing of the Organization agreements with
respect to the U.K. Stockholder and the Minority U.K.
Stockholders shall simultaneously occur with the closing of
the transactions contemplated by this Agreement.
10 Covenants of Healthworld and the U.S. Stockholders after Closing.
10.1 Release From Guarantees; Repayment of Certain Obligations.
Healthworld shall use its best efforts to have the U.S.
Stockholders released from any and all guarantees on any
indebtedness that they personally guaranteed and from any and
all pledges of assets that they pledged to secure such
indebtedness for the benefit of the Company, with all such
guarantees on indebtedness being assumed by Healthworld. In
the event that Healthworld cannot obtain such releases from
the lenders of any such guaranteed indebtedness on or prior to
120 days subsequent to the Closing Date, Healthworld shall pay
off or otherwise refinance or retire such indebtedness. From
and after the Closing Date and until such time as all of such
indebtedness is paid off, refinanced or retired, Healthworld
shall maintain unencumbered funds in amounts sufficient to
provide for such pay off, refinancing or retirement, provided
that Healthworld may use such funds for other purposes, in its
sole discretion, with the prior written consent of each U.S.
Stockholder who has not as of that time been released from his
or her guarantee as described above and whose indebtedness as
described above has not as of that time been paid off,
refinanced or retired.
10.2 Preservation of Tax and Accounting Treatment. Except as
contemplated by this Agreement or the Registration Statement,
after the Closing Date, Healthworld shall not and shall not
permit any of its Subsidiaries to undertake any act that would
jeopardize the tax-free status of the Organization.
10.3 Preparation and Filing of Tax Returns.
10.3.1 The U.S. Stockholders shall cause the Company shall,
if possible, file or cause to be filed all separate
Returns of any Acquired Party for all taxable periods
that end on or before the Closing Date.
Notwithstanding the foregoing, the U.S. Stockholders
shall file or cause to be filed all separate Federal
income Tax Returns (and any State and local Tax
Returns filed on the basis similar to that of S
Corporations under Federal income Tax rules) of any
Acquired Party for all taxable periods that end on or
before the Closing Date.
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Each U.S. Stockholder shall pay or cause to be paid
all Tax liabilities (in excess of all amounts already
paid with respect thereto or properly accrued or
reserved with respect thereto on the Company
Financial Statements) shown by such Returns to be
due.
10.3.2 Healthworld shall file or cause to be filed all
separate Returns of, or that include, any Acquired
Party for all taxable periods ending after the
Closing Date.
10.3.3 Each party hereto shall, and shall cause its
Subsidiaries and affiliates to, provide to each of
the other parties hereto such cooperation and
information as any of them reasonably may request in
filing any Return, amended Return or claim for
refund, determining a liability for Taxes or a right
to refund of Taxes or in conducting any audit or
other proceedings in respect of Taxes. Such
cooperation and information shall include providing
copies of all relevant portions of relevant Returns,
together with relevant accompanying schedules and
relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities
and relevant records concerning the ownership and Tax
basis of property, which such party may possess. Each
party shall make its employees reasonably available
on a mutually convenient basis at its cost to provide
explanation of any documents or information so
provided. Subject to the preceding sentence, each
party required to file Returns pursuant to this
Agreement shall bear all costs of filing such
Returns.
10.3.4 Each of the Companies, Healthworld and each U.S.
Stockholder shall comply with the Tax reporting
requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the
transaction as a tax-free contribution under Section
351(a) of the Code.
10.3.5 Without limiting the generality of the foregoing,
Healthworld shall retain, and shall cause the Company
to retain, and the U.S. Stockholders shall retain,
until the applicable statutes of limitations
(including any extensions) have expired, copies of
all Returns, supporting work schedules and other
records or information which may be relevant to such
Returns for all tax periods or portions thereof
ending before or including the Closing Date and shall
not destroy or otherwise dispose of any such records
without first
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providing the other party with a reasonable
opportunity to review and copy the same.
10.3.6 Each U.S. Stockholder shall furnish Healthworld with
an affidavit, stating, under penalty of perjury, the
transferor's United States taxpayer identification
number and that the transferor is not a foreign
person, pursuant to section 1445(b)(2) of the Code.
10.4 Directors. The persons named in the Registration Statement
shall be appointed as directors and elected as officers of
Healthworld, as and to the extent set forth in the
Registration Statement, promptly following the Closing Date.
10.5 Distributions for Estimated Taxes. The Company may, after the
Balance Sheet Date and on or before the Closing Date, pay to
each U.S. Stockholder the amount equal to the sum of his
estimated Federal, state and local income taxes on the
Company's S Corporation earnings taxable to such U.S.
Stockholder for (i) the period after the Balance Sheet Date
and ending with the Closing and (ii) for the fiscal year
ending with the Balance Sheet Date; provided, however, that
distributions described in clause (ii) immediately above may
be made only to the extent not made prior to the Balance Sheet
Date. Unless otherwise demonstrated by a U.S. Stockholder, it
shall be presumed that a combined effective tax rate of 45%
shall apply in determining the estimated taxes to be
distributed pursuant to this section.
11 Indemnification.
The U.S. Stockholders and Healthworld each make the following covenants
that are applicable to them, respectively:
11.1 General Indemnification by the U.S. Stockholders. The U.S.
Stockholders covenant and agree that they, jointly and
severally, will indemnify, defend, protect and hold harmless
Healthworld at all times, from and after the date of this
Agreement until the Expiration Date, from and against all
claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by Healthworld as
a result of or arising from:
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11.1.1 any breach of the representations and warranties of
the U.S. Stockholders set forth herein or on the
Disclosure Schedules or certificates delivered in
connection herewith,
11.1.2 any breach of any covenant or agreement on the part
of the U.S. Stockholders under this Agreement,
11.1.3 any liability under the 1933 Act, the 1934 Act or
other Federal or state law or regulation, at common
law or otherwise, arising out of or based upon any
untrue written statement or alleged untrue written
statement of a material fact relating to any of the
Companies or the U.S. Stockholders, and provided to
Healthworld or its counsel by the U.S. Stockholders
in the Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a
material fact relating to any of the Companies or the
U.S. Stockholders required to be stated therein or
necessary to make the statements therein not
misleading or
11.1.4 the matters described on Schedule 11.1.4,
provided, however, that no U.S. Stockholder shall be liable for any
indemnification obligation pursuant to this Section 11.1 to the extent
attributable to a breach of any representation, warranty or agreement made
herein individually by any other U.S. Stockholder. To the extent that any U.S.
Stockholder shall have indemnified Healthworld in an amount which exceeds his
proportionate share of the total amount indemnified, he shall have the right of
indemnification against the other U.S. Stockholders to the extent they have paid
less than their respective proportionate shares, with proportions being
determined in relation to relative stock ownership in the Company as of the date
hereof.
11.2 Indemnification by Healthworld. Healthworld covenants and
agrees that it will indemnify, defend, protect and hold
harmless the U.S. Stockholders at all times from and after the
date of this Agreement until the Expiration Date, from and
against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses
(including specifically, but without limitation, reasonable
attorneys, fees and expenses of investigation) incurred by the
U.S. Stockholders as a result of or arising from:
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11.2.1 any breach by Healthworld of its representations and
warranties set forth herein or on the Disclosure
Schedules or certificates attached hereto,
11.2.2 any breach of any covenant or agreement .on the part
of Healthworld under this Agreement,
11.2.3 any liability under the 1933 Act, the 1934 Act or
other Federal or state law or regulation, at common
law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a
material fact relating to Healthworld or any of the
other company forming a part of the Healthworld Plan
of Organization contained in any preliminary
prospectus, the Registration Statement or any
prospectus forming a part thereof, or any amendment
thereof or supplement thereto, or arising out of or
based upon any omission or alleged omission to state
therein a material fact relating to Healthworld or
any other company forming a part of the Healthworld
Plan of Organization required to be stated therein or
necessary to make the statements therein not
misleading, or
11.2.4 the matters described on Schedule 11.2(iv).
11.3 Third Person Claims. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of
or has knowledge of any claim by a person not a party to this
Agreement ("Third Person"), or the commencement of any action
or proceeding by a Third Person, the Indemnified Party shall,
as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification
pursuant to Section 11.1 or 11.2 hereof (hereinafter the
"Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or
proceeding. Such notice shall state the nature and the basis
of such claim and a reasonable estimate of the amount thereof.
The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such
matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying
Party shall not settle any criminal proceeding or any other
proceeding to the extent that relief other than the payment of
money is sought, without the written consent of the
Indemnified Party. If the Indemnifying Party undertakes to
defend or settle, it shall promptly notify the Indemnified
Party of its intention to do so, and the Indemnified Party
shall cooperate with the Indemnifying Party
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and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books,
records or information reasonably requested by the
Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by
Indemnifying Party, provided that if counsel to the
Indemnifying Party shall have a conflict of interest that
prevents counsel for the Indemnifying Party from representing
Indemnified Party, Indemnified Party shall have the right to
participate in such matter through counsel of its own choosing
and Indemnifying Party shall reimburse the Indemnified Party
for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall
not be liable for any additional legal expenses incurred by
the Indemnified Party in connection with any defense or
settlement of such asserted liability, except as set forth in
the preceding sentence and to the extent such participation is
requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying
Party for reasonable additional legal expenses and
out-of-pocket expenses. If the Indemnifying Party desires to
accept a final and complete settlement of any such Third
Person claim and the Indemnified Party refuses to consent to
such settlement, then the Indemnifying Party's liability under
this Section with respect to such Third Person claim shall be
limited to the amount so offered in settlement by said Third
Person. Upon agreement as to such settlement between said
Third Person and the Indemnifying Party, the Indemnifying
Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the
amount agreed to in such settlement and the Indemnified Party
shall, from that moment on, bear full responsibility for any
additional costs of defense which it subsequently incurs with
respect to such claim and all additional costs of settlement
or judgment. If the Indemnifying Party does not undertake to
defend such matter to which the Indemnified Party is entitled
to indemnification hereunder, or fails diligently to pursue
such defense, the Indemnified Party may undertake such defense
through counsel of its choice, at the cost and expense of the
Indemnifying Party, and the Indemnified Party may settle such
matter, and the Indemnifying Party shall reimburse the
Indemnified Party for the amount paid in such settlement and
any other liabilities or expenses incurred by the Indemnified
Party in connection therewith, provided, however, that under
no circumstances shall the Indemnified Party settle any
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Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the
Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for insurance
proceeds in determining the amount of any indemnification
obligation under this Section.
11.4 Exclusive Remedy. The indemnification provided for in this
Section 11 shall (except as prohibited by ERISA) be the
exclusive remedy in any action seeking damages or any other
form of monetary relief brought by any party to this Agreement
against another party, provided that, nothing herein shall be
construed to limit the right of a party, in a proper case, to
seek injunctive relief for a breach of this Agreement.
11.5 Limitations on Indemnification.
11.5.1 Healthworld shall not assert any claim for
indemnification hereunder against any U.S.
Stockholders until such time as, and solely to the
extent that, the aggregate of all claims which
Healthworld may have against such U.S. Stockholder
shall exceed one-half (0.5%) percent of the value of
the Healthworld Stock delivered to such U.S.
Stockholder, calculated at the IPO price (the
"Indemnification Threshold"), provided, however, that
Healthworld may assert and shall be indemnified for
any claim under Section 11.1(iv) at any time,
regardless of whether the aggregate of all claims
which such persons may have against such U.S.
Stockholder exceeds the Indemnification Threshold, it
being understood that the amount of any such claim
under Section 11.1(iv) shall not be counted towards
the Indemnification Threshold.
11.5.2 None of the U.S. Stockholders shall assert any claim
for indemnification hereunder against Healthworld
until such time as, and solely to the extent that,
the aggregate of all claims which the U.S.
Stockholders may have against Healthworld shall
exceed $50,000, provided, however that the U.S.
Stockholders may assert and shall be indemnified for
any claim under Section 11.2(iv) at any time,
regardless of whether the aggregate of all claims
which the U.S. Stockholders may have against
Healthworld exceeds $50,000, it being understood that
the amount of any such claim under Section 11.2(iv)
shall not be counted towards such $50,000 amount.
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11.5.3 No person shall be entitled to indemnification under
this Section 11 if and to the extent that such
person's claim for indemnification is directly or
indirectly related to a breach by such person of any
representation, warranty, covenant or other agreement
set forth in this Agreement. Notwithstanding any
other term of this Agreement (except the proviso to
this sentence), no U.S. Stockholder shall be liable
under this Section 11 for an amount which exceeds the
value of the Healthworld Stock received by such U.S.
Stockholder in connection with the Organization,
provided that a U.S. Stockholder's indemnification
obligations pursuant to Section 11.1(iv) shall not be
limited. For purposes of calculating the value of the
Healthworld Stock received by a U.S. Stockholder,
Healthworld Stock shall be valued at its initial
public offering price as set forth in the
Registration Statement. It is hereby understood and
agreed that a U.S. Stockholder may satisfy an
indemnification obligation through payment of
Healthworld Stock, such satisfaction to be to the
extent of the then fair market value of Healthworld
Stock conveyed by the Indemnifying Party pursuant to
such indemnification.
12 Termination of Agreement.
12.1 Termination. This Agreement may be terminated at anytime prior
to the Closing Date solely:
12.1.1 by mutual consent of all of the U.S. Stockholders,
with the consent of the U.K. Stockholder;
12.1.2 by Vote of a Majority in Interest of the U.S.
Stockholders if the transactions contemplated by this
Agreement to take place at the Closing shall not have
been consummated by ______________, 1997, unless the
failure of such transactions to be consummated is due
to the willful failure of the party seeking to
terminate this Agreement to perform any of its
obligations under this Agreement to the extent
required to be performed by it prior to or on the
Closing Date;
12.1.3 by Vote of a Majority in Interest of the U.S.
Stockholders, on the one hand, or by Healthworld, on
the other hand, if a material breach or default shall
be made by the other party in the observance or in
the due and timely performance of any of the
covenants, agreements or conditions contained herein,
and the curing of such default shall not have been
made on or before the Closing Date;
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12.1.4 by either a Vote of a Majority in Interest of the
U.S. Stockholders or by Healthworld, if a material
breach or default shall be made by the U.K.
Stockholder or the Minority U.K. Stockholders in the
observance or in the due and timely performance of
any of the covenants, agreements or conditions
contained in their respective agreements, and the
curing of such default shall not have been made on or
before the Closing Date; or
12.1.5 pursuant to Section 4 hereof.
12.2 Liabilities in Event of Termination.
12.2.1 The termination of this Agreement will in no way
limit any obligation or liability of any party based
on or arising from a breach or default by such party
with respect to any of its representations,
warranties, covenants or agreements contained in this
Agreement including, but not limited to, legal and
audit costs and out of pocket expenses.
12.2.2 Upon termination of this Agreement, except as
otherwise provided for herein, any and all payments
required to be made by the U.S. Companies or the U.K.
Companies as provided for in the Underwriters'
Engagement Letter shall be paid 69% by the U.S.
Companies and 31% by the U.K. Company. The U.S.
Companies and the U.K. Company shall contribute to
(and, if necessary, reimburse each other for) any
such required payments in such proportions.
Notwithstanding the foregoing, in the event any
indemnity obligation arises to the Underwriters,
pursuant to any agreement between the Underwriters
and Healthworld, the U.K. Stockholder, the U.S.
Stockholders, the U.K. Company and/or the U.S.
Companies with respect to the Underwriters' services
in contemplation of the IPO, then the breaching party
shall be solely responsible for such indemnification
obligations and the non- breaching party shall be
entitled to reimbursement from the breaching party
for any payment made by the non-breaching party in
respect thereof.
13 Non-Competition; Non-Disclosure.
13.1 Non-Competition. Each of the U.S. Stockholders will not, for a
period (the "Restrictive Period") commencing with the date
hereof and concluding five (5) years following the Closing
Date, for any reason whatsoever, directly or
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indirectly, for himself or on behalf of or in conjunction with
any other person, persons, company, partnership, corporation
or business of whatever nature:
13.1.1 as an officer, director, shareholder, owner, partner,
joint venture, or in a managerial capacity, whether
as an employee, independent contractor, consultant or
advisor, or as a sales representative (except that a
U.S. Stockholder may be employed by any entity
engaged in the advertising business so long as he
does not have contact with or provide services to or
for the benefit of any such client):
13.1.1.1 anywhere in the world, engage in any
advertising business having as a client any
corporation or any other entity which was a
client of Healthworld or any of its
Subsidiaries at any time within the
Restrictive Period; or
13.1.1.2 anywhere in the world, engage in any mass
media communication of health-related
information, whether by means of publishing,
television, radio, the internet or
otherwise; or
13.1.1.3 within 200 miles (the "Territory") of where
Healthworld or any of its Subsidiaries
conducted any other business during the
Restrictive Period, engage in any such other
business;
13.1.2 call upon any person who is, at that time, an
employee of Healthworld (including the subsidiaries
thereof) in a sales representative or managerial
capacity for the purpose or with the intent of
enticing such employee away from or out of the employ
of Healthworld (including the subsidiaries thereof),
provided that the U.S. Stockholders shall be
permitted to call upon and hire any member of his or
her immediate family;
13.1.3 call upon any person or entity which is, at that
time, or which has been, at any time within the
Restrictive Period, a customer of Healthworld
(including the subsidiaries thereof) for the purpose
of soliciting or selling products or services in
direct competition with Healthworld within the
Territory;
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13.1.4 call upon any prospective acquisition candidate, on
the U.S. Stockholder's own behalf or on behalf of any
competitor in the advertising business or in the
business of communicating health information through
mass media, which candidate, to the actual knowledge
of the U.S. Stockholder after due inquiry, was called
upon by Healthworld (including the subsidiaries
thereof) or for which, to the actual knowledge of the
U.S. Stockholder after due inquiry, Healthworld (or
any subsidiary thereof) made an acquisition analysis,
for the purpose of acquiring such entity; or
13.1.5 disclose customers, whether in existence or proposed,
of Healthworld (or any subsidiary thereof) to any
person, firm, partnership, corporation or business
for any reason or purpose whatsoever except to the
extent that Healthworld (or any subsidiary thereof)
has in the past disclosed such information to the
public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the any of the U.S. Stockholders from acquiring as an investment not
more than one percent (1%) of the capital stock of a competing business whose
stock is traded on a national securities exchange or over-the-counter.
13.2 Nondisclosure.
13.2.1 Definitions. Each of the U.S. Stockholders recognizes
and acknowledges that he has had in the past,
currently has, and in the future may possibly have,
access to certain confidential information of
Healthworld or any of its Subsidiaries, such as
operational policies, and pricing and cost policies
that are valuable, special and unique assets of
Healthworld and its Subsidiaries, and/or their
respective businesses (the "Confidential
Information"). Confidential Information shall not
include any information:
(i) which becomes known to the public generally
through no fault of the U.S. Stockholder,
(ii) as to which disclosure is required by law or
the order of any governmental authority
under color of law; provided, that prior to
disclosing any information pursuant to this
clause (b), the U.S. Stockholder shall give
prior written notice thereof to
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Healthworld and provide Healthworld with the
opportunity to contest such disclosure, or
(iii) as to which the disclosing party reasonably
believes that such disclosure is required in
connection with the defense of a lawsuit
against the disclosing party.
13.2.2 Covenant to Maintain Confidentiality. The U.S.
Stockholder agrees that until the later to occur of
(i) five (5) years following the Closing Date or (ii)
with respect to any portion of the Confidential
Information the date upon which such portion no
longer meets the definition of "Confidential
Information", he will not disclose Confidential
Information to any person, firm, corporation,
association or other entity for any purpose or reason
whatsoever, except
(i) to authorized representatives of
Healthworld,
(ii) during the course of the U.S. Stockholder's
employment by Healthworld or any of its
Subsidiaries, such information may be
disclosed by the U.S. Stockholder as is
required in the course of performing his
duties and
(iii) to counsel and other advisers, provided that
such advisers (other than counsel) agree to
the confidentiality provisions of this
Section 13.2.
13.3 Injunctive Relief; Damages. Because of the difficulty of
measuring economic losses to Healthworld as a result of a
breach of the foregoing covenants in this Section 13, and
because of the immediate and irreparable damage that could be
caused to Healthworld for which it would have no other
adequate remedy, each of the U.S. Stockholders agrees that the
foregoing covenants may be enforced by Healthworld in the
event of breach by him, by injunctions and restraining orders.
Nothing herein shall be construed as prohibiting Healthworld
from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
13.4 Reasonable Restraint. It is agreed by the parties hereto that
the foregoing covenants in this Section 13 impose a reasonable
restraint on the U.S. Stockholder in light of the activities
and business of Healthworld (including
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the subsidiaries thereof) on the date of the execution of this
Agreement and the current plans of Healthworld.
13.5 Severability; Reformation. The covenants in this Section are
severable and separate, and the unenforceability of any
specific covenant shall not affect the provisions of any other
covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it
is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
13.6 Independent Covenant. All of the covenants in this Section 13
shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or
cause of action by a U.S. Stockholder against Healthworld
(including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to
the enforcement by Healthworld of such covenants. It is
specifically agreed that the Restrictive Period stated at the
beginning of Section 13, during which the agreements and
covenants of the U.S. Stockholder made in Section 13 shall be
effective, shall be computed by extending the Restrictive
Period by the amount of time during which the U.S. Stockholder
is in violation of any provision of Section 13. The covenants
contained in this 13 shall not be affected by any breach of
any other provision hereof by any party hereto.
13.7 Survival. The obligations of the parties under this Section 13
shall survive the termination of this Agreement.
14 Federal Securities Act Representations.
The U.S. Stockholders acknowledge that the shares of Healthworld Stock
to be delivered to the U.S. Stockholders pursuant to this Agreement have not
been and will not be registered under the 1933 Act and therefore may not be
resold without compliance with the 1933 Act. The Healthworld Stock to be
acquired by such U.S. Stockholders pursuant to this Agreement is being acquired
solely for their own respective accounts, for investment purposes only, and with
no present intention of distributing, selling or otherwise disposing of it in
connection with a distribution.
14.1 Compliance with Law. The U.S. Stockholders covenant, warrant
and represent that none of the shares of Healthworld Stock
issued to such U.S. Stockholders will be offered, sold,
assigned, pledged, hypothecated,
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transferred or otherwise disposed of except after full
compliance with all of the applicable provisions of the Act
and the rules and regulations of the SEC. All the Healthworld
Stock shall bear the following legend: THE SHARES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED
IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND APPLICABLE
SECURITIES LAW.
14.2 Economic Risk; Sophistication. The U.S. Stockholders are able
to bear the economic risk of an investment in the Healthworld
Stock acquired pursuant to this Agreement and can afford to
sustain a total loss of such investment and have such
knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of
the proposed investment in the Healthworld Stock. The U.S.
Stockholders party hereto have had an adequate opportunity to
ask questions and receive answers from the officers of
Healthworld concerning any and all matters relating to the
transactions described herein including, without limitation,
the background and experience of the current and proposed
officers and directors of Healthworld, the plans for the
operations of the business of Healthworld, the business,
operations and financial condition of the companies which are
entering into the Organization but are not owned by the
respective U.S. Stockholder, and any plans for additional
acquisitions and the like. The U.S. Stockholders have asked
any and all questions in the nature described in the preceding
sentence and all questions have been answered to their
satisfaction.
15 Registration Rights.
15.1 Piggyback Registration Rights. At any time commencing one (1)
year following the Closing, whenever Healthworld proposes to
register any Healthworld Stock for its own or others' account
under the 1933 Act for a public offering, other than any shelf
registration of shares to be used as consideration for
acquisitions of additional businesses by Healthworld and
registrations relating to employee benefit plans, Healthworld
shall give each of the U.S. Stockholders prompt written notice
of its intent to do so. Upon the written request of any of the
U.S. Stockholders given within 30 days after receipt of such
notice, Healthworld shall cause to be included in such
registration all of the Healthworld Stock issued to the U.S.
Stockholders pursuant to this Agreement (including any stock
issued as (or issuable upon the conversion or exchange of any
convertible security, warrant, right or
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other security which is issued by Healthworld as) a dividend
or other distribution with respect to, or in exchange for, or
in replacement of such Healthworld Stock) which any such U.S.
Stockholder requests, provided that Healthworld shall have the
right to reduce the number of shares included in such
registration to the extent that inclusion of such shares
could, in the opinion of counsel to Healthworld or its
independent auditors, jeopardize the status of the
transactions contemplated hereby and by the Registration
Statement as a tax-free organization or jeopardize the ability
of Healthworld to utilize pooling-of-interest accounting. In
addition, Healthworld shall have the right to reduce the
number of shares included in such registration if and to the
extent Healthworld is advised by the Underwriters of an
underwritten offering of the securities being offered pursuant
to any registration statement under this Section 15.1 that the
number of shares to be sold by persons other than Healthworld
is greater than the number of such shares which can be offered
without adversely affecting the offering. Any such reduction
shall be made pro rata based on the number of shares offered
for the accounts of such persons (based upon the number of
shares held by such person) to a number deemed satisfactory by
such the Underwriter.
15.2 Registration Procedures. All expenses incurred in connection
with the registrations under this Article (including all
registration, filing, qualification, legal, printer and
accounting fees, but excluding underwriting commissions and
discounts), shall be borne by Healthworld. In connection with
registrations under Section 15.1, Healthworld shall use its
best efforts to prepare and file with the SEC as soon as
reasonably practicable, a registration statement with respect
to the Healthworld Stock and use its best efforts to cause
such registration to promptly become and remain effective for
a period of at least 90 days (or such shorter period during
which holders shall have sold all Healthworld Stock which they
requested to be registered); use its best efforts to register
and qualify the Healthworld Stock covered by such registration
statement under applicable state securities laws as the
holders shall reasonably request for the distribution for the
Healthworld Stock; and take such other actions as are
reasonable and necessary to comply with the requirements of
the 1933 Act and the regulations thereunder.
15.3 Underwriting Agreement. In connection with each registration
pursuant to Section 15.1 covering an underwritten registration
public offering, Healthworld and each participating holder
agree to enter into a written agreement with the underwriter
in such form and containing such provisions as are customary
in the securities business for such an arrangement between
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the underwriter and companies of Healthworld's size and
investment stature, including indemnification.
15.4 Availability of Rule 144. Healthworld shall not be obligated
to register shares of Healthworld Stock held by any U.S.
Stockholder at any time when the resale provisions of Rule
144(k) (or any similar or successor provision) promulgated
under the 1933 Act are available to such U.S. Stockholder.
16 General.
16.1 Cooperation. The U.S. Stockholders and Healthworld shall each
deliver or cause to be delivered and the U.S. Stockholder
shall cause the Companies to deliver, to the other on the
Closing Date, and at such other times and places as shall be
reasonably agreed to, such additional instruments as the other
may reasonably request for the purpose of carrying out this
Agreement. The U.S. Stockholder shall cause the Companies to
cooperate and use their reasonable efforts to have their
respective present officers, directors and employees cooperate
with Healthworld on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in
connection with any Tax Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the
Closing Date.
16.2 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of
law) and shall be binding upon and shall inure to the benefit
of the parties hereto, the successors of Healthworld, and the
heirs and legal representatives of the U.S. Stockholders.
16.3 Entire Agreement. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents
delivered pursuant hereto constitute the entire agreement and
understanding among the U.S. Stockholders and Healthworld and
supersede any prior agreement and understanding relating to
the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and
may be modified or amended only by a written instrument
executed by the U.S. Stockholders and Healthworld (acting
through its officers, duly authorized by its Board of
Directors).
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16.4 Counterparts. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one
and the same-instrument.
16.5 Expenses. If the transactions herein contemplated shall be
consummated, Healthworld will pay the fees, expenses and
disbursements of Healthworld and its agents, representatives,
accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by
Healthworld under this Agreement, including the fees and
expenses of Xxxxxx Xxxxxxxx, XX, Xxxxxxxx & Xxxxx, LLP,
Todtman, Young, Nachamie, Xxxxxxx & Spizz, P.C. or any other
person or entity retained by Healthworld, and the costs of
preparing the Registration Statement. If the transactions
herein contemplated shall not be consummated, then such costs
and expenses shall be paid 69% by the U.S. Company and 31% by
the U.K. Company.
Each U.S. Stockholder shall pay his own costs and expenses. Each U.S.
Stockholder shall pay all sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees ("Transfer
Taxes") imposed in connection with the Organization, other than Transfer Taxes,
if any, imposed by the State of Delaware. Each U.S. Stockholder shall file all
necessary documentation and Returns with respect to such Transfer Taxes. In
addition, each U.S. Stockholder acknowledges that he, and not Healthworld, will
pay all taxes due upon receipt of the consideration payable pursuant to Section
2 hereof, and will assume all tax risks and liabilities of such U.S. Stockholder
in connection with the transactions contemplated hereby.
16.6 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing
the same in United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with
return receipt requested, or by delivering the same in person
to an officer or agent of such party.
(a) If to Healthworld:
000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chairman of the Board and
Chief Executive Officer
With copies to:
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Rosenman & Colin LLP Todtman, Young, Nachamie,
000 Xxxxxxx Xxxxxx Xxxxxxx & Spizz, P.C.
Xxx Xxxx, X.X. 00000 000 Xxxx Xxxxxx
Xxxx: Xxxxxx Xxxxxx, Esq. Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxx, Esq.
If to any U.S. Stockholder, addressed to him at his address
first set forth hereinabove together with copies to:
Xxxx & Priest, LLP Rakisons
00 X. 00xx Xx. 20 Chancery Lane
New York, N.Y. 10024 Xxxxxx XX0X INF
Attn: Xxxxxx X. Xxxxxx, Esq. Attn: Xxxxxxxx Xxxxx, Esq.
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 16.6 from time to time.
16.7 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York, without giving effect
to any requirements thereof which might otherwise cause the
application of the law of another jurisdiction, and the
parties consent to New York as the exclusive venue for
resolving any and all disputes that may arise concerning this
Agreement.
16.8 Survival of Representations and Warranties. Except as
otherwise specifically provided in this Agreement, the
representations, warranties, covenants and agreements of the
parties made herein and at the Closing Date or in writing
delivered pursuant to the provisions of this Agreement shall
survive the consummation of the transactions contemplated
hereby and any examination on behalf of the parties until the
Expiration Date.
16.9 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement
shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed
a waiver of any other breach or default occurring before or
after that waiver.
16.10 Time. Time is of the essence with respect to this Agreement.
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16.11 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it
shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as to most nearly
retain the intent of the parties, and if such modification is
not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired thereby.
16.12 Remedies Cumulative. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each
shall be cumulative with all other rights, remedies an
elections available at law or in equity.
16.13 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this
Agreement or be used to construe or interpret any provision
hereof.
16.14 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may
be waived only by consent of Healthworld and persons to whom
is allocated pursuant to Section an aggregate of at least
2,500,001 shares of Healthworld Stock. Any amendment or waiver
effected in accordance with this Section shall be binding upon
each of the parties hereto, any other person receiving
Healthworld Stock in connection with the Organization and each
future holder of such Healthworld Stock.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HEALTHWORLD CORPORATION
By:
----------------------------------------
Xxxxxx Xxxxxxxx, Chairman and CEO
and By:
--------------------------------------
Xxxxxxx Xxxxxx Xxxxxx, President
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