Comtek Expositions, Inc. - Page 11

                                       - 11 -                                         
          Bortzov (Bortzov), the deputy managing director of Crocus,                  
          explained Crocus’s view of the business rationales behind the               
          royalty agreement.  Bortzov declared:                                       
               9.  By 1995, the existing arrangement was                              
               unsatisfactory to Crocus.  Crocus was dissatisfied                     
               because it believed that Comtek was collecting                         
               exhibitor fees and using them to pay expenses of the                   
               United States trade shows and the United States                        
               operation before reimbursing Crocus for its expenses.                  
               10.  Crocus also perceived that Comtek’s United States                 
               overhead allocations to the foreign Trade Shows were                   
               unreasonable considering the limited nature of the                     
               services provided by Comtek.                                           
               11.  Comtek, for its part, complained that it believed                 
               that Russian expenses were becoming too great a                        
               percentage of Trade Show receipts.  Comtek’s United                    
               States’ shareholders accused Crocus of not using                       
               absolute best efforts to reduce Crocus direct expenses.                
               12.  Finally, Comtek never fully understood (a) how                    
               difficult it was to do business in Russia or (b) that                  
               dealing with quasi-government agencies in Russia is a                  
               sensitive mixture of politics, negotiation, and money.                 
               However, it was my understanding that everyone involved                
               agreed that ECI’s participation in the Trade Shows                     
               would facilitate the conduct of the Trade Shows,                       
               including the allocation of space from Expocentr.                      
               13.  Crocus recommended that Comtek and Crocus enter                   
               into an agreement with ECI to facilitate the conduct of                
               future Russian Trade Shows.                                            
               Like the stockholders’ agreement, the royalty agreement                
          contains internal inconsistencies and discrepancies with                    
          stipulated facts.  First, Article 3.2 of the royalty agreement              
          designates ECI as “payment agent” to receive all payments of fees           
          for trade shows outside the United States, while all fees for               
          trade shows in the United States are to be remitted to                      





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011