Healthworld Agreement and Plan of Organization/UK
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AGREEMENT AND PLAN OF ORGANIZATION
Dated as of the 23rd day of October, 1997
by and between
HEALTHWORLD CORPORATION
and
WILLIAM LESLIE MILTON
Healthworld Agreement and Plan of Organization/UK
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TABLE OF CONTENTS
Page No.
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1 The Organization..........................................................................................................-6-
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1.1 Organization......................................................................................-7-
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1.2 Directors and Officers............................................................................-7-
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2 Conversion of Stock.......................................................................................................-7-
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2.1 Manner of Conversion..............................................................................-7-
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2.2 Beneficial Ownership of Shares....................................................................-8-
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2.3 Allocation of Shares..............................................................................-8-
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3 Delivery of U.K. Company Stock and Healthworld Stock......................................................................-9-
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4 Closing..................................................................................................................-10-
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5 Representations And Warranties of the U.K. Stockholder...................................................................-10-
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5.1 Due Organization.................................................................................-11-
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5.2 Prohibited Activities............................................................................-12-
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5.3 Capital Stock of the Company.....................................................................-12-
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5.4 Transactions in Capital Stock....................................................................-12-
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5.5 No Bonus Shares..................................................................................-13-
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5.6 Subsidiaries.....................................................................................-13-
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5.7 Predecessor Status; etc..........................................................................-13-
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5.8 Spin-off by the Company..........................................................................-13-
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5.9 Financial Statements.............................................................................-13-
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5.10 Liabilities and Obligations......................................................................-14-
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5.11 Accounts and Notes Receivable....................................................................-14-
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5.12 Permits and Intangibles..........................................................................-15-
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5.13 Environmental Matters............................................................................-15-
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5.14 Personal Property................................................................................-15-
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5.15 Significant Customers; Material Contracts and Commitments........................................-16-
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5.16 Real Property....................................................................................-17-
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5.17 Insurance........................................................................................-17-
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5.18 Compensation; Employment Agreements; Organized Labor Matters.....................................-17-
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5.19 Employee Benefits................................................................................-21-
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5.20 Conformity with Law; Litigation..................................................................-21-
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5.21 Taxes............................................................................................-22-
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5.22 No Violations....................................................................................-24-
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5.23 Government Contracts.............................................................................-24-
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5.24 Absence of Changes...............................................................................-24-
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5.25 Deposit Accounts; Powers of Attorney.............................................................-26-
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5.26 Brokers and Agents...............................................................................-26-
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5.27 Relations with Governments.......................................................................-26-
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5.28 Disclosure.......................................................................................-26-
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5.29 Authority; Ownership. ..........................................................................-27-
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5.30 Preemptive Rights................................................................................-27-
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5.31 No Intention to Dispose of Healthworld Stock.....................................................-28-
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6 Representations of Healthworld...........................................................................................-28-
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6.1 Due Organization.................................................................................-28-
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6.2 Authorization....................................................................................-28-
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6.3 Capital Stock of Healthworld.....................................................................-28-
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6.4 Transactions in Capital Stock....................................................................-28-
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6.5 Liabilities and Obligations......................................................................-29-
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6.6 Conformity with Law; Litigation..................................................................-29-
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6.7 Validity of Obligations..........................................................................-29-
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6.8 Limited Business Conducted.......................................................................-29-
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7 Covenants Prior to Closing...............................................................................................-30-
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7.1 Access and Cooperation; Due Diligence............................................................-30-
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7.2 Conduct of Business Pending Closing..............................................................-30-
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7.3 Prohibited Activities............................................................................-31-
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7.4 No Shop..........................................................................................-32-
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7.5 Further Assurances...............................................................................-33-
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7.6 Agreements.......................................................................................-33-
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7.7 Notification of Certain Matters..................................................................-33-
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7.8 Amendment of Schedules...........................................................................-33-
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7.9 Cooperation in Preparation of Registration Statement.............................................-34-
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8 Conditions Precedent to Obligations of the U.K. Stockholder..............................................................-34-
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8.1 Representations and Warranties; Performance of Obligations by U.S.
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Stockholders and Contributing Minority Stockholders..........................................................-34-
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8.2 Satisfaction.....................................................................................-35-
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8.3 No Litigation....................................................................................-35-
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8.4 Opinions of Counsel..............................................................................-35-
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8.5 Consents and Approvals...........................................................................-35-
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8.6 No Material Adverse Change.......................................................................-35-
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8.7 Secretary's Certificates; Good Standing.....................................................-35-
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8.8 Employment Agreement........................................................................-36-
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8.9 Simultaneous Closings.......................................................................-36-
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9 Conditions Precedent to Obligations of Healthworld..................................................................-36-
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9.1 Representations and Warranties; Performance of Obligations..................................-36-
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9.2 Satisfaction................................................................................-36-
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9.3 No Litigation...............................................................................-36-
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9.4 Opinion of Counsel..........................................................................-37-
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9.5 Consents and Approvals......................................................................-37-
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9.6 No Material Adverse Change..................................................................-37-
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9.7 Secretary's Certificates....................................................................-37-
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9.8 Employment Agreement........................................................................-37-
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9.9 Stockholder's Release.......................................................................-37-
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9.10 Termination of Related Party Agreements.....................................................-37-
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9.11 Simultaneous Closings.......................................................................-38-
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9.12 Cater Share Purchase........................................................................-38-
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10 Covenants of Healthworld and the U.K. Stockholder after Closing.....................................................-38-
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10.1 Release From Guarantees; Repayment of Certain Obligations...................................-38-
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10.2 Preservation of Tax and Accounting Treatment................................................-38-
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10.3 Preparation and Filing of Tax Returns.......................................................-38-
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10.4 Conformity With Girgenti/Milton Letter of Intent Regarding
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Governance..........................................................................................................-39-
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11 Indemnification.....................................................................................................-39-
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11.1 General Indemnification by the U.K. Stockholder.............................................-39-
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11.2 Indemnification by Healthworld..............................................................-40-
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11.3 Third Person Claims.........................................................................-40-
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11.4 Exclusive Remedy............................................................................-42-
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11.5 Limitations on Indemnification..............................................................-42-
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12 Termination of Agreement............................................................................................-43-
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12.1 Termination.................................................................................-43-
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12.2 Liabilities in Event of Termination.........................................................-43-
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13 Non-Competition; Non-Disclosure.....................................................................................-43-
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13.1 Non-Competition.............................................................................-44-
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13.2 Nondisclosure...............................................................................-45-
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13.3 Injunctive Relief; Damages..................................................................-46-
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13.4 Reasonable Restraint........................................................................-46-
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13.5 Severability; Reformation...................................................................-47-
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13.6 Independent Covenant........................................................................-47-
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13.7 Survival....................................................................................-47-
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14 Federal Securities Act Representations................................................................................-47-
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14.1 Compliance with Law.........................................................................-47-
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14.2 Economic Risk; Sophistication...............................................................-48-
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15 Registration Rights...................................................................................................-48-
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15.1 Piggyback Registration Rights...............................................................-48-
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15.2 Registration Procedures.....................................................................-49-
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15.3 Underwriting Agreement......................................................................-49-
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15.4 Availability of Rule 144....................................................................-49-
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16 General...............................................................................................................-49-
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16.1 Cooperation.................................................................................-49-
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16.2 Successors and Assigns......................................................................-49-
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16.3 Entire Agreement............................................................................-50-
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16.4 Counterparts................................................................................-50-
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16.5 Expenses....................................................................................-50-
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16.6 Notices.....................................................................................-51-
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16.7 Governing Law...............................................................................-52-
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16.8 Exercise of Rights and Remedies.............................................................-52-
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16.9 Time........................................................................................-52-
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16.10 Reformation and Severability................................................................-52-
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16.11 Remedies Cumulative.........................................................................-52-
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16.12 Captions....................................................................................-52-
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16.13 Amendments and Waivers......................................................................-53-
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Healthworld Agreement and Plan of Organization/UK
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of the
_______ day of October, 1997, by and between:
Healthworld Corporation, a Delaware corporation ("Healthworld"), and
William Leslie Milton (the "U.K. Stockholder"), residing at 17 Clappers
Meadow, Maidenhead, Berkshire SL6 8TT, United Kingdom.
WHEREAS, the U.K. Stockholder is the registered and beneficial owner with
full title guarantee of the entire issued share capital of Milton Marketing
Group Limited, a company incorporated in England and Wales with registered no.
3113109 (the "U.K. Company"); and
WHEREAS, Bourne, Cater, Garnham and Moreton (the "Minority Stockholders")
own minority share interests in certain Subsidiaries of the U.K. Company; and
WHEREAS, the U.K. Company and its Subsidiaries are sometimes hereinafter
referred to individually as a "Company" and collectively as the "Companies"; and
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 collectively own all of the issued and
outstanding shares of Girgenti, Hughes, Butler & McDowell, 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, 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. Stockholder desires to contribute all of his shares of stock in the
U.K. Company into Healthworld in exchange for Healthworld Stock, and Garnham,
Moreton and Bourne 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 (as hereafter defined); and
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Healthworld Agreement and Plan of Organization/UK
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WHEREAS, all of the foregoing contributions together with the IPO
constitute the "Healthworld Plan of Organization"; and
WHEREAS, the parties intend that the Healthworld Plan of Organization shall
qualify as tax-free under Section 351 of the United States 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, Cater owns a portion of the issued share capital of Milton Cater
Limited, a company incorporated in England and Wales with registered no. 3196839
("MCL"); and
WHEREAS, Cater desires to transfer her shares of MCL in consideration for a
variation to her service agreement and not in exchange for Healthworld Stock;
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 United States Securities Act of 1933, as amended.
"1934 Act" means the United States Securities Exchange Act of 1934, as
amended.
"Absolute Representations" shall have the meaning set forth in subparagraph
(ii) of the preliminary paragraphs of Section 5.
"Acquired Party" means any of the U.K. Company 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.
"Balance Sheet Date" shall mean November 30, 1996.
"Bourne" means Michael Bourne, residing at 15 Eton Square, Eton, Windsor,
Berkshire, SL4 6BG, United Kingdom.
"Butler" means William Butler, residing at Post Office Box 1430, Olive
Bridge, New York 12461-0430.
"Cater" means Claire Cater, residing at Back of Beyond, 76 The High Street,
Ardingly, West Sussex, RH17 6TD, United Kingdom.
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Healthworld Agreement and Plan of Organization/UK
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"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"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 Financial Statements" has the meaning set forth in Section 5.9.
"Company Stock" has the meaning set forth in Section 2.1.
"Contributing Minority Stockholders" means Bourne, Garnham and Moreton.
"Disclosed Schemes" has the meaning set forth in Section 5.19.
"Disclosure Schedule" has the meaning set forth in the preliminary
paragraph of Section 5.
"Ehrenthal" means Herbert Ehrenthal, residing at 1447 Sylvan Lane, East
Meadow, New York 11554-4814.
"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.
"Expiration Date" has the meaning set forth in Section 5.
"Garnham" means Michael Garnham, residing at 42 The Burlings, Ascot,
Berkshire, SL5 8BY, United Kingdom.
"Girgenti" means Steven Girgenti, residing at 3312 Judith Drive, Bellmore,
New York 11710.
"Girgenti/Milton Letter of Intent" means a certain letter of intent of
November 14, 1996, as amended, regarding a reorganization of the U.S. Companies
and the U.K. Company in connection with a contemplated IPO, executed by
Girgenti, the U.S. Companies, the U.K. Stockholder, the U.K. Company and the
Subsidiaries of the U.K. Company.
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Healthworld Agreement and Plan of Organization/UK
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"Healthworld" has the meaning set forth in the introductory paragraphs of
this Agreement.
"Healthworld License Agreement" means that certain License Agreement dated
February 27, 1997 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.
"Healthworld Stock" means the common stock, par value $0.01 per share, of
Healthworld.
"Hughes" means Francis Hughes, residing at Two Beekman Place, Apartment 3C,
New York, New York 10022.
"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 (pound)93,750 per annum.
"Key Employee" means any employee whose compensation is not less than
(pound)93,750 per annum.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Minority Agreements of Organization" has the meaning set forth in Section
1.1.2.
"Minority Stockholders" has the meaning set forth in the introductory
paragraphs of this Agreement.
"Moreton" means Leonard Moreton, residing at "Southcroft," Copsem Lane,
Oxshott, Surrey, KT22 0NT, United Kingdom.
"Offering Price" means (i) the offering price in the IPO if the Closing
Date occurs contemporaneously with the Pricing and (ii) the proposed mid-range
offering price in the IPO as reflected in the Registration Statement, as most
recently amended, if the Closing Date occurs prior to the Pricing.
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Healthworld Agreement and Plan of Organization/UK
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"Organization" means the contribution of all the shares of stock of the
U.K. Company and all of its Subsidiaries (with the exception of Healthworld
B.V.) to the capital of Healthworld in exchange for shares of Healthworld Stock.
"Prevailing Conversion Rate" means the prevailing exchange rate, as shown
in The Financial Times, between the U.S. dollar and the U.K. pound sterling at
the close of business on the business day immediately prior to the Closing Date.
"Pricing" means the time and date of determination by Healthworld and the
Underwriters of the public offering price of the shares of Healthworld Stock in
the IPO and the execution of the Underwriting Agreement by Healthworld and the
Underwriters.
"Registration Statement" means that certain registration statement on Form
S-1 (Registration No. 333-34751) and any amendments thereto 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 or
Taxation.
"SEC" means the United States Securities and Exchange Commission.
"Stuart Diamond Employment Agreement" means that certain Employment
Agreement by and between Healthworld and Stuart Diamond, dated August 18, 1997,
pursuant to which Healthworld has engaged the services of Stuart Diamond.
"Subsidiary" has the meaning given thereto in Section 736 and 736A of the
United Kingdom Companies Act 1985 as substituted by Section 144 of the United
Kingdom Companies Act of 1989.
"Taxation" or "Tax" means all forms of tax, duty, levy or other imposition
whenever and by whatever authority imposed and whether of the United Kingdom or
elsewhere, including (without limitation) income tax, corporation tax, advance
corporation tax, capital gains tax, inheritance tax, value added tax, customs
duties, rates, stamp duty, stamp duty reserve tax, national insurance and social
security or other contributions, and any interest, penalty, fine or surcharge in
connection with any such taxation.
"Taxes Act" means the United Kingdom Income and Corporation Taxes Act 1988.
"Underwriters" means Unterberg Harris and Pennsylvania Merchant Group Ltd.
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Healthworld Agreement and Plan of Organization/UK
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"Underwriters' Engagement Letter" means the letter dated July 17, 1997,
pursuant to which the Underwriters were engaged by Healthworld.
"Underwriting Agreement" means the agreement to be negotiated between
Healthworld and the Underwriters regarding the Underwriters' representation of
Healthworld in the IPO.
"U.K. Company" has the meaning set forth in the introductory paragraphs of
this Agreement.
"U.K. Percentage" has the meaning set forth in Section 2.3.1.
"U.K. Stockholder" has the meaning set forth in the introductory paragraphs
of this Agreement.
"U.S. Agreement of Organization" has the meaning set forth in Section
1.1.1.
"U.S. Companies" has the meaning set forth in the introductory paragraphs
of this Agreement.
"U.S. Percentage" has the meaning set forth in Section 2.3.1.
"U.S. Stockholders" means Girgenti, Hughes, Butler & Ehrenthal.
"U.S. Tax" 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.
"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.
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.
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Healthworld Agreement and Plan of Organization/UK
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1.1 Organization. The Closing of this Agreement shall take place as
described in Section 4, and all of the issued share capital of the U.K. Company
shall be contributed by the U.K. Stockholder 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.S. Stockholders will be contributing all of the issued and
outstanding shares of the U.S. Companies to the capital of Healthworld,
pursuant to an Agreement of Organization of even date herewith (the "U.S.
Agreement of Organization"), and
1.1.2 the Contributing Minority Stockholders will be contributing all
of the issued and outstanding shares of such U.K. Company's Subsidiaries
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"), and
1.1.3 The U.K. Company shall, on or prior to the Closing Date,
purchase Cater's shares owned by her in the U.K. Company Subsidiary of
which she is a minority owner, pursuant to a certain Joint Venture
Agreement dated May 23, 1996.
The contributions made by the U.K. Stockholder pursuant to this Agreement, the
contributions made pursuant to the U.S. Agreement of Organization, the
contributions made pursuant to the Minority Agreements of Organization, and the
contributions of cash by the public and/or the Underwriters 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 U.K. Company and its Subsidiaries then holding office shall remain
unchanged.
2 Conversion of Stock.
2.1 Manner of Conversion. The manner of converting the share capital (the
"Company Stock") of the U.K. Company issued and outstanding immediately prior to
the Closing into shares of Healthworld Stock shall be as follows: At the Closing
all of the share capital of the U.K. Company 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
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Healthworld Agreement and Plan of Organization/UK
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the U.K. Stockholder, 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 to be received by
the U.K. Stockholder pursuant to this Agreement shall, except for restrictions
described in Section 14 hereof, 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 to be received by
the U.K. Stockholder shall be fully exercisable by the U.K. Stockholder and the
U.K. Stockholder 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. Healthworld will issue to the U.S. Stockholders,
the U.K. Stockholder and the Contributing Minority Stockholders, in the
aggregate, 5,000,000 shares (the "Aggregate Number of Founder Shares") of
Healthworld Stock at the Closing. With respect to the U.S. Stockholders, who
presently own one hundred (100) shares of Healthworld Stock in the aggregate,
the conversion shall be made in such a manner as to issue to them 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 Contributing Minority 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. Stockholder and the
Contributing Minority Stockholders (the "U.K. Percentage").
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:
Girgenti 63.65%
Hughes 5.00%
Butler 14.06%
Ehrenthal 17.29%
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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 Contributing Minority
Stockholders in the following manner:
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2.3.3.1 Garnham shall receive that number of shares of
Healthworld Stock having a value of (pound)1,000,000,
based on the Offering Price and utilizing the Prevailing
Conversion Rate.
2.3.3.2 Bourne shall receive that number of shares of
Healthworld Stock having a value of (pound)276,448.35,
based on the Offering Price and utilizing the Prevailing
Conversion Rate.
2.3.3.3 Moreton shall receive that number of shares of
Healthworld Stock having a value of (pound)53,677 based
on the Offering Price and utilizing the Prevailing
Conversion Rate.
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.
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 the
Prevailing Conversion Rate.
3 Delivery of U.K. Company Stock and Healthworld Stock.
At the Closing, the U.K. Stockholder shall deliver to Healthworld duly
executed stock transfer forms effective to transfer into the name of Healthworld
or its nominee the entire issued share capital of the U.K. Company together with
definitive certificate(s) therefor. The U.K. Stockholder agrees to cure any
deficiencies prior to the Closing with respect to the endorsement of the share
certificate(s) or other documents of conveyance with respect to the U.K. Company
Stock or with respect to the stock transfer form accompanying any U.K. Company
Stock. At the Closing, Healthworld shall issue in the name of the U.K.
Stockholder and deliver to the U.K. Stockholder that number of shares of
Healthworld Stock which results from applying the percentage as is set forth in
Section 2.3, dated the Closing Date.
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4 Closing.
On the earlier of November 12, 1997 or the Pricing, the parties shall take
all actions necessary to effect the Organization, 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, Nachamie, Hendler & Spizz, P.C., 425 Park
Avenue, New York, New York 10022. 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 the U.K. Stockholder.
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 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.K. Company and each of the Subsidiaries of the U.K. Company.
The representations and warranties made herein are being made for the
benefit of Healthworld, the U.S. Stockholders and the Contributing Minority
Stockholders. The U.K. Stockholder represents and warrants that all of the
following representations and warranties in this Section 5 are true with respect
to the U.K. Company and each of the Subsidiaries of the U.K. Company 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
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 5.21
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 5.21;
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(ii) the warranties and representations set forth in Sections 5.1, 5.3
and hereof (regarding "Due Organization; Capital Stock of the Company;
Authority; Ownership"), which shall be referred to in this Agreement
as the "Absolute Representations" shall survive forever; and
(iii) solely for purposes of determining whether a claim for
indemnification under Section 11.1 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 incorporated under
the laws of the jurisdiction of its incorporation, and is duly authorized and
qualified 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 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 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 respect, 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
for the purposes of the Insolvency Act 1986.
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
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Company nor is the U.K. Stockholder aware of any circumstances likely to give
rise to the appointment of any such receiver, administrative receiver or
administrator.
The Company has complied in all material respects with the provisions of
the Companies Act 1985, and all Returns, particulars, resolutions and other
documents required under the legislation to be delivered on behalf of the
Company to the Registrar of Companies in the United Kingdom have in all material
respects been properly made and delivered.
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 and issued share capital
of each of the Companies is as set forth in Schedule 5.3. All of the issued and
outstanding shares of the U.K. Company are beneficially owned by and registered
in the name of the U.K. Stockholder with full title guarantee in the amounts set
forth in Schedule 5.3. All of the issued shares of each of the Subsidiaries are
beneficially owned by and registered in the name of the Company or the Minority
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 shares of capital
stock of the Company have been properly issued and allotted and are fully paid
or credited as fully paid. Such shares were offered, issued, sold and delivered
by the Company in compliance with all applicable 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 or any stock of any of the
Subsidiaries 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;
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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
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 "Disclosure Date" (hereafter defined). The term "Disclosure
Date" means, in the case of the U.K. Company, Milton Marketing Limited or Milton
Headcount Limited, the date of their respective incorporations, and, in the case
of any of the other Subsidiaries, July 1, 1992. 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 November 30,
1996 (the "1996 Balance Sheet") and 1995 and Profit and Loss Accounts,
Directors' and Auditors' reports thereon and the notes thereto and all other
documents annexed thereto for each of the years in the two-year period ended
November 30, 1996, the consolidated unaudited financial statements for the
period between the Balance Sheet Date and June 30, 1997, and the consolidated
unaudited balance sheet
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as of June 30, 1997. Such Company Financial Statements (other than the
consolidated unaudited financial statements for the period between the Balance
Sheet Date and June 30, 1997 and the consolidated unaudited balance sheet as of
June 30, 1997, which have been prepared in accordance with U.S. generally
accepted accounting principles) have been prepared in accordance with the
Companies Act 1985, generally accepted accounting principles including all
statements of U.K. Standard Accounting Practice and U.K. Financial Reporting
Standards 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 November 30, 1996, 1995 and 1994 give a true
and fair view of the assets and liabilities and the financial position of the
Company and the Subsidiaries of the Company as of the dates indicated thereon,
and the Company Financial Statements give a true and fair view of the profits
and losses for the periods indicated thereon.
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:
5.10.1.1 copies of all relevant documentation relating thereto;
5.10.1.2 amounts claimed and any other action or relief sought;
and
5.10.1.3 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
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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.K.
Stockholder. The U.K. Stockholder shall cause the Company to provide to
Healthworld, not later than the Closing Date, (i) an accurate list of all
receivables obtained subsequent to the Balance Sheet Date and (ii) 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.K. Stockholder, (a) the licenses, permits and other
governmental authorizations listed on Schedule 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 Schedule 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 material national, state, local and, so far as it is required, 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.
5.14 Personal Property. Schedule 5.14 contains an accurate list of
5.14.1 all personal property with a value in excess of (pound)1,250
included (or that will be included) in "depreciable plant, property and
equipment" on the 1996 Balance Sheet,
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5.14.2 all other personal property owned by the Company with a value
in excess of (pound)1,250 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 (pound)625 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
the U.K. Stockholder, relatives of the U.K. Stockholder, 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 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.K. Stockholder has 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.
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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.K. Stockholder has 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 any Affiliates, by the U.K.
Stockholder, by any relative of the U.K. Stockholder or by any entity that
directly, or indirectly through one or more intermediaries, is controlled by the
U.K. Stockholder or any of his relatives. 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.K. Stockholder has delivered to Healthworld true, complete and correct
copies of all insurance policies currently in effect. Such insurance policies
evidence all of the 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.K. Stockholder has 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,
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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.K. Stockholder's
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.K. Stockholder believes 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 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, works counsel, staff
association or 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, 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,
redundancy and other benefit schemes, 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, to the extent now
known, 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 emoluments payable to or changes in the
terms of service of any officer, director or Key Employee of the Company.
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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 for damages or compensation (other than a statutory redundancy
payment or 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 emoluments 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 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 redundancy payments (including protective
awards) 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, 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.
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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 of
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.K. Stockholder, threatened
against the Company:
5.18.16.1 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
5.18.16.2 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:
5.18.17.1 all laws and codes of conduct and practice relevant to
the relations between it and its employees,
prospective employees or any trade union;
5.18.17.2 all collective agreements and customs and practices
for the time being dealing with the terms and
conditions of service of its employees; and
5.18.17.3 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.
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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 of
capital stock or a commission or remuneration of any kind calculated by
reference in whole or in part to turnover, profits or sales.
5.18.20 Except as set forth in Schedules 5.18 or 5.19 or as provided
for in the 1996 Balance Sheet, 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 given
notice of any redundancies to the United Kingdom Secretary of State or
started consultations with any independent trade union or association of
unions.
5.19 Employee Benefits. Except as set forth in Schedule 5.19, the Company
has no superannuation fund, retirement benefit or other pension schemes or
arrangements. In respect of any such funds, schemes or arrangements which are
disclosed in Schedule 5.19 ("Disclosed Schemes") the Company has no unfunded
contingent obligations and any such funds, schemes or arrangements which are
funded are solvent and are so funded at a level which a prudent employer acting
on actuarial advice would consider as being adequate to secure the benefits
which may be payable in respect of service prior to the Closing and (insofar as
the provision of any pension is concerned) having regard to probable future
salary increases, or in connection with which the Company is to become or may
become liable to make any payment and no undertakings or assurances have been
given to the employees of the Company as to the continuance or introduction or
increase or improvement of any pension rights or entitlement which the Company
and/or Healthworld would be required to implement in accordance with good
industrial relations practice and whether or not there is any legal obligation
so to do.
5.20 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 national, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them which would have a 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 national, 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,
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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 national, 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.
5.21 Taxes. Except as set forth in Schedule 5.21:
5.21.1 the provisions for Taxation, including provisions for deferred
tax included in the Company Financial Statements, have been made in
accordance with generally accepted accounting principles and will be
sufficient (on the basis of the rates of tax current at the date of this
Agreement) to cover all Taxation for which the Company was at the Balance
Sheet Date liable or may after that date become or have become liable for
any period ended on or before the Balance Sheet Date and in particular (but
without prejudice to the generality of the foregoing) will be sufficient to
cover such Taxation on or in respect of or by reference to any profit,
gains or income (including deemed profits gains or income) for any period
ended on or before the Balance Sheet Date.
5.21.2 the Company has duly and punctually paid all Taxation to the
extent that the same ought to have been paid and is under no liability to
pay any fine, penalty or interest or to give any security in connection
therewith.
5.21.3 the Company has made under deduction of Taxation all payments
to any person which ought to have been made under deduction of Taxation
(with particular reference to Sections 134, 347 to 350 and 524 of the Taxes
Act) and has (if required by law to do so) accounted to the Inland Revenue
for the Taxation so deducted;
5.21.4 the Company has in all material respects properly operated the
P.A.Y.E. system, and all National Insurance Contributions and sums payable
to the Inland Revenue and the Department of Social Security under the
P.A.Y.E. system (including ex gratia payments and compensation for loss of
office) (Section 148 of the Taxes Act) (Sections 153 to 168G of the Taxes
Act) due and payable by the Company up to the date hereof have been paid;
5.21.5 the Company has duly paid all Taxation shown to be due to the
Inland Revenue by all Returns required to be made under Schedule 13 to the
Taxes Act (advance corporation tax);
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5.21.6 the Company has correctly operated a statutory sick pay scheme
in accordance with the provisions of the United Kingdom Social Security
Contributions and Benefits Act 1992;
5.21.7 prior to the Closing all documents to which the Company is a
party and all documents in the enforcement of which the Company may be
interested or to the production of which the Company is entitled which are
necessary to establish the title of the Company to any asset and which
attract stamp duty in the United Kingdom or elsewhere have been properly
stamped and the appropriate stamp duty has been paid and all duty payable
in respect of the capital of the Company has been paid and the Company has
duly paid any stamp duty reserve tax for which it has at any time been
liable.
5.21.8 the Company has and at Closing will have duly and punctually
made all Returns, given all notices and accounts and supplied all other
information which ought to have been made given or supplied for the purpose
of and in respect of Taxation in the United Kingdom and, so far as the U.K.
Stockholder is aware, elsewhere, to the Inland Revenue, H.M. Commissioners
of Customs and Excise or to any other governmental authority (including any
governmental authority of a foreign jurisdiction) and has and at Closing
will have kept and maintained all records, invoices and other documents
which ought to have been kept or maintained for such purposes and:
5.21.8.1 all such information, Returns, accounts, notices,
records, invoices and other documents were, are, and at the
Closing will be, in all material respects, up-to-date,
accurate, and made on the proper basis and are not, nor, is
likely to be, the subject of any dispute with the Inland
Revenue, H.M. Commissioners of Customs and Excise or other
appropriate authorities concerned;
5.21.8.2 the Company has not within the preceding seven years
been the subject of a back duty, PAYE or other audit or
investigation by the Inland Revenue or H.M. Commissioners of
Customs and Excise (or other similar authority outside the
United Kingdom);
5.21.8.3 all clearances and consents obtained from H.M. Treasury,
the Inland Revenue, H.M. Commissioners of Customs and Excise
or other authority whether in the United Kingdom or
elsewhere have been obtained after full, complete and
accurate disclosure of all material facts and considerations
and no such clearances or consent is, to the knowledge of
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the U.K. Stockholder, liable to be withdrawn, modified or
rendered void and, to the knowledge of the U.K. Stockholder,
all such clearances and consents have been disclosed to
Healthworld.
5.22 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 5.22,
5.22.1 the rights and benefits of the Company under the Material
Documents will not be materially adversely affected by the transactions
contemplated hereby;
5.22.2 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 provisions of the Material
Documents or the Company's Memorandum and Articles of Association.
5.22.3 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
5.22.4 consummation of the transactions contemplated hereby will not
give rise to any right to termination, cancellation or acceleration or loss
of any material right or benefit.
Except as set forth on Schedule 5.22, 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.
5.23 Government Contracts. Except as set forth on Schedule 5.23, the
Company is not now a party to any governmental contract subject to price
redetermination or renegotiation.
5.24 Absence of Changes. Since the Balance Sheet Date, except as set forth
on Schedule 5.24, there has not been:
5.24.1 any Material Adverse Effect on the Company;
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5.24.2 any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Company;
5.24.3 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;
5.24.4 any declaration or payment of any dividend or distribution in
respect of the shares in the capital of the Company or any direct or
indirect redemption, purchase or other acquisition of any of the shares in
the capital of the Company;
5.24.5 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;
5.24.6 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;
5.24.7 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.K. Stockholder and his affiliates;
5.24.8 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 the U.K. Stockholder
or any affiliate thereof;
5.24.9 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;
5.24.10 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;
5.24.11 any waiver of any material rights or claims of the Company;
5.24.12 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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Healthworld Agreement and Plan of Organization/UK
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5.24.13 any transaction by the Company outside the ordinary course of
its respective businesses;
5.24.14 any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or
any other distribution to or for the benefit of the U.K. Stockholder of property
or assets by the Company.
5.25 Deposit Accounts; Powers of Attorney. Schedule 5.25 contains an
accurate schedule as of the date of the Agreement of:
5.25.1 the name of each financial institution in which the Company has
accounts or safe deposit boxes;
5.25.2 the names in which the accounts or boxes are held;
5.25.3 the type of account and account number; and
5.25.4 the name of each person authorized to draw thereon or have
access thereto.
Schedule 5.25 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.
5.26 Brokers and Agents. Except as disclosed on Schedule 5.26, the U.K.
Stockholder did not employ any broker or agent in connection with this
transaction.
5.27 Relations with Governments. Except for political contributions made in
a lawful manner which, in the aggregate, do not exceed (pound)6,250 per year for
each year in which the U.K. 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. If
political contributions made by the Company have exceeded (pound)6,250 per year
for each year in which the U.K. Stockholder has been a stockholder of the
Company, each contribution in the amount of (pound)3,125 or more shall be
described on Schedule 5.27.
5.28 Disclosure.
5.28.1 If, on or prior to the 25th day after the date of the final
prospectus of Healthworld utilized in connection with the IPO, the U.K.
Stockholder becomes aware of any
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fact or circumstance which would change (or, if after the Closing Date, would
have changed) a representation or warranty of the U.K. Stockholder in this
Agreement or would affect any document delivered pursuant hereto in any material
respect, the U.K. Stockholder 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.K. Stockholder of his obligations
under this Agreement.
5.28.2 The U.K. Stockholder acknowledges and agrees:
5.28.2.1 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;
5.28.2.2 that neither Healthworld nor any of its officers,
directors, agents or representatives nor any Underwriter
(other than as provided in the Underwriting Agreement) shall
have any liability to the Company, the U.K. Stockholder 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
5.28.2.3 that the decision of U.K. Stockholder 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 IPO.
5.29 Authority; Ownership. The U.K. Stockholder has the full legal right,
power and authority to enter into this Agreement. The U.K. Stockholder is the
registered and beneficial owner with full title guarantee of the shares of the
Company Stock identified in Schedule 5.3 as being owned by the U.K. Stockholder
and neither owns nor has any right, title or interest in or to any other Company
Stock, and, except as set forth on Schedule 5.29, such Company Stock is owned
free and clear of all Encumbrances and claims of every kind.
5.30 Preemptive Rights. The U.K. Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of Company Stock or
Healthworld Stock that the
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U.K. Stockholder has or may have had other than rights of the U.K. Stockholder
to acquire Healthworld Stock pursuant to this Agreement or any option granted by
Healthworld.
5.31 No Intention to Dispose of Healthworld Stock. The U.K. Stockholder is
not under any binding commitment or contract to sell, exchange or otherwise
dispose of shares of Healthworld Stock to be 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.
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 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 the U.S. Stockholders in
the amounts set forth in Schedule 6.3. All of such shares are owned free and
clear of all 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 and are fully paid and nonassessable. Such shares were
offered, issued, sold and delivered by Healthworld in compliance with all
applicable state and Federal laws concerning the issuance of securities.
6.4 Transactions in Capital Stock. Except for the obligations under the
agreements which form a part of the Healthworld Plan of Organization or the
obligations which will arise
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Healthworld Agreement and Plan of Organization/UK
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under the Underwriting Agreement, 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.K. Stockholder 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.K.
Stockholder 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, for fees
incurred in connection with the transactions contemplated hereby and thereby,
and any liabilities and obligations which may exist under the Stuart Diamond
Employment Agreement and the Healthworld License Agreement, copies of which are
annexed to Schedule 6.5.
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 12,
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 Stuart Diamond Employment
Agreement, the Healthworld License Agreement and has engaged in other limited
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startup activities. It is anticipated that prior to the Closing, Healthworld
will adopt a Stock Option Plan; however, Healthworld covenants that no options
will be granted before the Registration Statement is declared effective by the
SEC.
7 Covenants Prior to Closing.
For purposes of this Section 7, the term Company shall mean and refer to
the U.K. Company and each of the Subsidiaries of the U.K. Company.
7.1 Access and Cooperation; Due Diligence. Between the date of this
Agreement and the Closing Date, the U.K. Stockholder will cause the Company to
afford to the U.S. Stockholder reasonable access to all of the Company's 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 Company as may from time to time be reasonably requested.
The U.K. Stockholder will cooperate, and will cause the Company 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. The U.K. Stockholder and the Company 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.K. Stockholder shall cause the Company 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;
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Healthworld Agreement and Plan of Organization/UK
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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 except as may be reasonably necessary to effectuate the IPO;
and
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 or as
otherwise contemplated by this Agreement, between the date hereof and the
Closing Date, the U.K. Stockholder will not permit the Company to:
7.3.1 make any change in its Memorandum and Articles of Association;
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 shares whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares;
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 (pound)6,250 and except if it involves the
performance of services in the ordinary course of business;
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 (pound)6,250 necessary or
desirable for the conduct of the businesses of the Company,
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Healthworld Agreement and Plan of Organization/UK
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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) or
7.3.5.3 materialmen's, mechanics', workers', repairmen's,
employees' or other like liens arising in the ordinary
course of business, or
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;
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. The U.K. Stockholder shall not, and he shall not permit the
U.K. Company or any of its Subsidiaries, nor any agent, officer, director,
trustee or any representative of any of the foregoing, 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,
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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.
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.K. Stockholder shall and he shall cause the Company
and the Minority Stockholders, as applicable, 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 hereto
on or prior to the Closing Date.
7.7 Notification of Certain Matters. The U.K. Stockholder shall give prompt
notice to Healthworld and the U.S. Stockholders 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.K. Stockholder 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 the U.K. Stockholder, the Company or any
of its Subsidiaries 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
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Healthworld Agreement and Plan of Organization/UK
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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
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.K.
Stockholder shall furnish or cause to be furnished to Healthworld and the
Underwriters all of the information concerning the Companies and the U.K.
Stockholder 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.K. Stockholder agrees 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.K. Stockholder becomes incorrect or incomplete in any
material respect, and to provide the information needed to correct such
inaccuracy. The U.K. Stockholder represents and warrants 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.K. Stockholder shall not have
responsibility for any such inclusions or omissions to the extent they relate to
the U.S. Companies and do not relate to the U.K. Companies.
8 Conditions Precedent to Obligations of the U.K. Stockholder.
The obligations of the U.K. Stockholder 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 by U.S.
Stockholders and Contributing Minority Stockholders. All representations and
warranties of the U.S. Stockholders and the Contributing Minority Stockholders
contained in their respective Organization Agreements shall, if qualified as to
materiality, be true and correct in all material respects, and if not so
qualified, be true and correct, as of the Closing Date as though such
representations and warranties had been made as of that time. All of the terms,
covenants and conditions of the U.S. Stockholders and the Contributing Minority
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 each
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of the U.S. Stockholders and the Contributing Minority Stockholders, shall have
been delivered to the U.K. Stockholder.
8.2 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement and the respective Organization Agreements
of the U.S. Stockholders and the Contributing Minority Stockholders and any
other agreement incidental hereto or thereto and all other related legal matters
shall be reasonably satisfactory to the U.K. Stockholder and his counsel. The
U.K. Stockholder shall be reasonably 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.K.
Stockholder 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 the U.K. Company or any of
its Subsidiaries or the U.K. Stockholder as a result of which the U.K.
Stockholder deems it inadvisable to proceed with the transactions hereunder.
8.4 Opinions of Counsel. The U.K. Stockholder shall have received an
opinion from counsel for each of the U.S. Stockholders, Healthworld and the
Contributing Minority Stockholders, dated the Closing Date, in form and
substance reasonably acceptable to counsel for the U.K. Stockholder.
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.
8.6 No Material Adverse Change. No event or circumstance shall have
occurred with respect to any of the U.S. Companies which would constitute a
Material Adverse Effect.
8.7 Secretary's Certificates; Good Standing. The U.K. Stockholder shall
have received (a) certificates, dated the Closing Date and signed by the
secretary of the U.S. Companies certifying the truth and correctness of attached
copies of the U.S. Companies' respective Certificates of Incorporation
(including amendments thereto) and By-Laws (including amendments thereto) and
such other matters as may reasonably be requested by the U.K. Stockholder, (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
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incorporation (including amendments thereto) and by-laws (including amendments
thereto) and such other matters as may reasonably be requested by the U.K.
Stockholder, and (c) a certificate of good standing for Healthworld in the State
of Delaware.
8.8 Employment Agreement. Healthworld shall have executed an employment
agreement substantially in the form of Exhibit hereto, for the annual
compensation set forth on Schedule 8.8.
8.9 Simultaneous Closings. The Closings pursuant to the Organization
Agreements with respect to the U.S. Stockholders and the Contributing Minority
Stockholders shall have occurred simultaneously with the Closing hereunder.
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. Stockholder contained in this
Agreement shall, if qualified as to materiality, be true and correct in all
material respects, and if not so qualified, be true and correct, 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.K. Stockholder and
the U.K. Company on or before the Closing Date shall have been duly performed or
complied with in all material respects; and the U.K. Stockholder shall have
delivered to Healthworld certificates dated the Closing Date and signed by him
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.S. Stockholders and the Contributing Minority Stockholders and any
other agreement incidental hereto or thereto and all other related legal matters
shall be reasonably satisfactory to Healthworld and its counsel. Healthworld
shall be reasonably 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
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or made any request of Healthworld or any Company 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. Stockholder, dated the Closing Date, in form and substance
reasonably acceptable to counsel for Healthworld.
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.
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 respective properties or assets, whether or not covered
by insurance, which change, loss or damage materially affects or impairs the
ability of any of the Companies to conduct their respective businesses.
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 U.K.
Company's and the Subsidiaries' Certificate of Incorporation (including
amendments thereto), and Memorandum and Articles of Association (including
amendments thereto).
9.8 Employment Agreement. The U.K. Stockholder shall have executed an
employment agreement substantially in the form of Exhibit hereto, for the annual
compensation set forth on Schedule 8.8.
9.9 Stockholder's Release. The U.K. Stockholder shall have delivered to
Healthworld an instrument dated the Closing Date releasing the Company from any
and all claims of the U.K. Stockholder against the Company and Healthworld and
obligations of the Company and Healthworld to the U.K. Stockholder, except for
(x) items specifically identified on Schedules 5.10 and 5.15 as being claims of
or obligations to the U.K. Stockholder, (y) continuing obligations to the U.K.
Stockholder relating to his employment by Healthworld 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 9.10, all existing agreements between any of the Companies, the U.K.
Stockholder and the Minority Stockholders shall have been canceled effective as
of the Closing Date.
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9.11 Simultaneous Closings. The Closings pursuant to the Organization
Agreements with respect to the U.S. Stockholders and the Contributing Minority
Stockholders shall occur simultaneously with the Closing hereunder.
9.12 Cater Share Purchase. The U.K. Company shall have purchased Cater's
shares as described in Section 1.1.3.
10 Covenants of Healthworld and the U.K. Stockholder after Closing.
10.1 Release From Guarantees; Repayment of Certain Obligations. Healthworld
shall use commercially reasonable efforts to have the U.K. Stockholder released
from any and all guarantees on any indebtedness or obligation that he personally
guaranteed and from any and all pledges of assets that he pledged to secure such
indebtedness or obligation for the benefit of the Company, with all such
guarantees on indebtedness or obligation being assumed by Healthworld. In the
event that Healthworld cannot obtain such releases from the lenders of any such
guaranteed indebtedness or the obligee of any guaranteed obligation on or prior
to 120 days subsequent to the Closing Date, Healthworld shall pay off or
otherwise refinance or retire such indebtedness or obligation. From and after
the Closing Date and until such time as all of such indebtedness or obligation
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 the U.K. Stockholder.
Furthermore, Healthworld shall assume all obligations which the U.K. Stockholder
may have incurred to guarantee any lease of the Company and shall indemnify and
hold harmless the U.K. Stockholder from any cost or expense arising under any
such lease guarantee.
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 Companies shall file or cause to be filed all required
separate Returns of any Acquired Party for all taxable periods that end on
or before the Closing Date in a manner prepared under the instructions of
the U.K. Stockholder, consistent with historical practices.
10.3.2 Healthworld shall file or cause to be filed all required
separate Returns of, or that include, any Acquired Party for all taxable
periods ending after the Closing Date.
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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 Healthworld and the U.K. Stockholder shall comply with, and the
U.K. Stockholder shall cause the Companies to 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.
10.4 Conformity With Girgenti/Milton Letter of Intent Regarding Governance.
Corporate governance at the date of the closing of the IPO shall be in
accordance with section 1.3 of the Girgenti/Milton Letter of Intent.
11 Indemnification.
The U.K. Stockholder and Healthworld each make the following covenants that
are applicable to them, respectively:
11.1 General Indemnification by the U.K. Stockholder. The U.K. Stockholder
covenants and agrees he 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:
11.1.1 any breach of the representations or warranties of the U.K.
Stockholder set forth herein or on the Disclosure Schedules or certificates
delivered by him in connection herewith,
11.1.2 any breach of any covenant or agreement on the part of the U.K.
Stockholder under this Agreement, or
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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.K.
Stockholder, and provided to Healthworld or its counsel by the U.K.
Stockholder 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.K. Stockholder required to
be stated therein or necessary to make the statements therein not
misleading.
11.2 Indemnification by Healthworld. Healthworld covenants and agrees that
it will indemnify, defend, protect and hold harmless the U.K. Stockholder 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.K. Stockholder as a result of or arising from:
11.2.1 any breach by Healthworld of its representations and warranties
set forth herein or on the Disclosure Schedules or certificates delivered
by it in connection herewith;
11.2.2 any breach of any covenant or agreement on the part of
Healthworld under this Agreement, or
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 any representation or warranty relating to Healthworld's right,
authority or capacity to enter into and consummate the terms of this
Agreement.
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
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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 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
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Party settle any 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 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 the U.K. Stockholder until such time as, and solely to
the extent that, the aggregate of all claims which Healthworld may have
against the U.K. Stockholder shall exceed one-half (0.5%) percent of the
value of the Healthworld Stock delivered to the U.K. Stockholder,
calculated at the IPO price (the "Indemnification Threshold"), provided,
however, that Healthworld may assert and shall be indemnified for any claim
under any Absolute Representation at any time, regardless of whether the
aggregate of all claims which such persons may have against the U.K.
Stockholder exceeds the Indemnification Threshold, it being understood that
the amount of any such claim under any Absolute Representation shall not be
counted towards the Indemnification Threshold.
11.5.2 The U.K. Stockholder shall not 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.K.
Stockholder may have against Healthworld shall exceed (pound)31,250,
provided, however that the U.K. Stockholder may assert and shall be
indemnified for any claim under Section 11.2.4 at any time, regardless of
whether the aggregate of all claims which the U.K. Stockholder may have
against Healthworld exceeds (pound)31,250, it being understood that the
amount of any such claim under Section 11.2.4 shall not be counted towards
such (pound)31,250 amount.
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), the U.K. Stockholder shall not be
liable under this Section 11 for an amount which exceeds the value of the
Healthworld Stock to be received by the U.K. Stockholder in connection with
the Organization, provided that the U.K. Stockholder's indemnification
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obligations pursuant to any Absolute Representation shall not be limited. For
purposes of calculating the value of the Healthworld Stock to be received by the
U.K. 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 the U.K. 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 request of the U.K. Stockholder, with the consent of the
U.S. Stockholders;
12.1.2 by the U.K. Stockholder if the transactions contemplated by
this Agreement to take place at the Closing shall not have been consummated
by December 31, 1997, unless the failure of such transactions to be
consummated is due to the willful failure of the U.K. Stockholder to
perform any of his obligations under this Agreement to the extent required
to be performed by him prior to or on the Closing Date;
12.1.3 by the U.K. Stockholder, 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; or
12.1.4 by the U.K. Stockholder or by Healthworld, if a material breach
or default shall be made by any U.S. Stockholder or any Contributing
Minority Stockholder 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.
12.2 Liabilities in Event of Termination.
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.
13 Non-Competition; Non-Disclosure.
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13.1 Non-Competition. The U.K. Stockholder will not, for a period (the
"Restrictive Period") commencing with the date hereof and concluding two (2)
years following the Closing Date, for any reason whatsoever, directly or
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
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative (except
that the U.K. Stockholder may be employed by an entity engaged in the
advertising business so long as the U.K. Stockholder does not have contact
with or provide services to or for the benefit of any such client) within
the "Territory" (hereafter defined):
13.1.1.1 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 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 engage in any other business engaged in by Healthworld
or any of its subsidiaries at any time during the "Contact
Period" (hereafter defined).
The term "Territory" means each of the geographic areas which lie within a 100
mile radius of any location at which Healthworld or any of its subsidiaries
(which were subsidiaries of Healthworld at any time during the "Contact Period,"
hereafter defined) conducted any business during the Restrictive Period. The
term "Contact Period" means the period commencing with the date hereof and
ending with the later to occur of (i) the Closing Date or (ii) the date upon
which the U.K. Stockholder is no longer engaged as an officer, employee or
director of Healthworld or any of its subsidiaries.
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.K. Stockholder shall be
permitted to call upon and hire any member of his or her immediate family;
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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;
13.1.4 call upon any prospective acquisition candidate, on the U.K.
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.K.
Stockholder after due inquiry, was called upon by Healthworld (including
the subsidiaries thereof) at any time during the Restrictive Period or for
which, to the actual knowledge of the U.K. Stockholder after due inquiry,
Healthworld (or any subsidiary thereof) at any time during the Restrictive
Period 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 U.K. Stockholder 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. The U.K. Stockholder 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:
13.2.1.1 which becomes known to the public generally through no
fault of the U.K. Stockholder,
13.2.1.2 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 13.2.1.2, the U.K. Stockholder shall give prior
written notice thereof to Healthworld and provide
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Healthworld with the opportunity to contest such disclosure,
or
13.2.1.3 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.K. 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
13.2.2.1 to authorized representatives of Healthworld,
13.2.2.2 during the course of the U.K. Stockholder's employment
by Healthworld or any of its Subsidiaries, such information
may be disclosed by the U.K. Stockholder as is required in
the course of performing his duties and
13.2.2.3 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, the U.K. Stockholder agrees that the foregoing covenants may be
enforced by Healthworld in the event of breach by the U.K. Stockholder, 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.K.
Stockholder in light of the activities and business of Healthworld (including
the Subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of Healthworld contained in the Registration Statement.
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13.5 Severability; Reformation. The covenants in this Section 13 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 the U.K. 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 13.1, during which the agreements and
covenants of the U.K. Stockholder made in Section 13.1 shall be effective, shall
be computed by extending the Restrictive Period by the amount of time during
which the U.K. Stockholder is in violation of any provision of Section 13.1. The
covenants contained in this Section 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.K. Stockholder acknowledges that the shares of Healthworld Stock to
be delivered to him 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 the U.K. Stockholder
pursuant to this Agreement is being acquired solely for his own account, 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.K. Stockholder covenants, warrants and
represents that none of the shares of Healthworld Stock issued to him will be
offered, sold, assigned, pledged, hypothecated, 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
issued pursuant to the transactions contemplated hereby 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.
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14.2 Economic Risk; Sophistication. The U.K. Stockholder is 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 has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the proposed investment in the
Healthworld Stock. The U.K. Stockholder has 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 U.K.
Stockholder, and any plans for additional acquisitions and the like. The U.K.
Stockholder has asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to his 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 a registration statement on Form S-4, Form S-8, or any successor
form), Healthworld shall give the U.K. Stockholder prompt written notice of its
intent to do so. Upon the written request of the U.K. Stockholder 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.K. Stockholder
pursuant to this Agreement (including any stock issued as (or issuable upon the
conversion or exchange of any convertible security, warrant, right or 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 the U.K. 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 tax 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).
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15.2 Registration Procedures. All expenses incurred in connection with the
registrations under this Article 15 (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 commercially reasonable
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 underwriters in such form and containing such provisions as
are customary in the securities business for such an arrangement between the
underwriters 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 the U.K. 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 the U.K. Stockholder.
16 General.
16.1 Cooperation. The U.K. Stockholder and Healthworld shall each deliver
or cause to be delivered, and the U.K. 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.K.
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
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
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inure to the benefit of the parties hereto, the successors of Healthworld, and
the heirs and legal representatives of the U.K. Stockholder.
16.3 Entire Agreement. Except as otherwise provided herein, 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.K. Stockholder 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.K. Stockholder and
Healthworld (acting through its officers, duly authorized by its Board of
Directors).
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 preparation and filing of the registration statement, the
underwriting and the IPO, 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 Arthur Andersen, LLP,
Rosenman & Colin LLP, Todtman, Nachamie, Hendler & Spizz, P.C. (as they relate
to the subject matter described in this paragraph), the Underwriters or any
other person or entity retained by Healthworld (the "IPO costs").
If the transactions herein contemplated shall not be consummated, then the IPO
costs 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.
If the transactions herein contemplated shall be consummated, Healthworld shall
pay the fees, expenses and disbursements of Healthworld and the U.K. Stockholder
and his agents, representatives, accountants and counsel incurred in connection
with the negotiation and
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consummation of this Agreement and any amendments thereto, including all counsel
and professional costs of the U.K. Stockholder relating to the negotiation and
consummation of this Agreement (the "Reorganization Costs"), but not including
the cost of any broker or agent described in Section 5.26.
If the transactions herein contemplated shall not be consummated, the U.K.
Stockholder shall pay his Reorganization Costs.
Any other costs and expenses of the U.K. Stockholder which are not described as
IPO Costs or Reorganization Costs shall be paid by the U.K. Stockholder,
including but not limited to the cost of any broker or agent described in
Section 5.26, except that Healthworld shall pay all stock transfer and/or
recording taxes or duties imposed with respect to stock transfers effectuated
pursuant to the Organization. The U.K. 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
the U.K. Stockholder in connection with the transactions contemplated hereby,
except as otherwise specifically contemplated in this Section 16.5.
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.
16.6.1 If to Healthworld,
100 Avenue of the Americas
New York, New York 10013
Attn: Chairman of the Board and
Chief Executive Officer
With copies to:
Rosenman & Colin LLP Todtman, Nachamie,
575 Madison Avenue Hendler & Spizz, P.C.
New York, New York 10022 425 Park Avenue
Attn: Howard Jacobs, Esq. New York, New York 10022
Attn: Alex Spizz, Esq.
16.6.2 If to the U.K. Stockholder, addressed to him at his address
first set forth hereinabove, together with copies to
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Reid & Priest, LLP Rakisons
40 W. 57th St. 20 Chancery Lane
New York, New York 10024 London WC2A INF
Attn: Burton K. Haimes Attn: Jonathan Polin
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 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.
16.9 Time. Time is of the essence with respect to this Agreement.
16.10 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.
16.11 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.
16.12 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.
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16.13 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 the mutual
consent of Healthworld and the U.K. Stockholder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
HEALTHWORLD CORPORATION
By:__________________________________
Steven Girgenti, Chairman and CEO
And By:_______________________________
William Leslie Milton, President
______________________________________
WILLIAM LESLIE MILTON
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